Supreme Court Upholds Mortgagee in Limitation Act Acknowledgment Dispute. Letter by Mortgagor to Mortgagee Referenced Subsisting Jural Relationship and Debt, Satisfying Section 19 of Indian Limitation Act, 1908.

Mortgage suit for recovery of Rs. 64,213-5-3 on mortgages, seeking preliminary mortgage decree and appointment of receiver; limitation issue concerning acknowledgment.

Respondent 1, the mortgagee, sought to recover mortgage debt and have the acknowledgment letter dated March 5, 1932 treated as valid under Section 19 of the Indian Limitation Act, 1908 to bring claims for advances of Rs. 20,000 and Rs. 35,000 within limitation; the appellant, auction purchaser, disputed the acknowledgment.

Mortgagee filed suit on May 18, 1944 to recover mortgage dues; the dispute arose as to whether the letter of March 5, 1932 constituted an acknowledgment of liability sufficient to save limitation for advances made on September 10, 1926.

Trial judge Banerjee J. held the letter did not amount to an acknowledgment and decreed only Rs. 5,000, the last item of Rs. 2,500 being considered in time; the Calcutta High Court in appeal reversed this finding, held the letter valid, determined principal amounts of Rs. 55,000 and Rs. 2,500 with 8% simple interest subject to the Money-lenders' Act maximum, and drew a preliminary decree in favour of respondent 1; the appellant then appealed to the Supreme Court.

Whether the letter dated March 5, 1932 written by the mortgagor to the mortgagee constituted a valid acknowledgment of liability under Section 19 of the Indian Limitation Act, 1908, so as to extend limitation for the mortgagee's claim in respect of sums advanced on September 10, 1926.

Appellant argued that the letter did not amount to an acknowledgment under Section 19 because it did not contain a clear admission of debt owed by the mortgagor to respondent 1; it merely referred to the sale of property and an appeal to take up the whole, without expressly admitting the mortgagee's right. Respondent 1 contended that in the context of the earlier letter appealing to save the property from a prior mortgagee's sale, the letter referred to respondent 1's interest as puisne mortgagee and the phrase 'take up the whole' meant the entirety of the mortgagee's interest, thereby acknowledging the subsisting jural relationship of mortgagor and mortgagee.

A valid acknowledgment under Section 19 of the Indian Limitation Act, 1908 must be in writing signed by the party against whom the right is claimed, made before expiry of the period of limitation, relate to a present subsisting liability, indicate the existence of a jural relationship such as mortgagor-mortgagee, and be made with intention to admit that relationship, which may be inferred from the nature of the admission and surrounding circumstances. The acknowledgment merely renews the debt and does not create a new right of action. In construing such statements, oral evidence of contents is excluded but surrounding circumstances can be considered, and the words must be read in their own tenor and context rather than by reference to decisions on similar documents unless identical.

In my view an acknowledgment is an admission by the writer that there is a debt owing by him, either to the receiver of the letter or to some other person on whose behalf the letter is received but it is not enough that he refers to a debt as being due from somebody. The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Since admittedly the only subsisting relation between the parties at the date of the letter was that of mortgagee and mortgagor and the letter acknowledged the existence of that jural relationship, it clearly amounted to an acknowledgment under s. 19 of the Act.

The mortgage suit was filed on May 18, 1944 by respondent 1, the mortgagee, in the Calcutta High Court against the heirs of the mortgagor John Carapiet Galstaun and others. The appellant was added as a party defendant on August 23, 1944 as the auction purchaser of premises 167/1 at a sale held by the Sheriff of Calcutta on May 3, 1944 in execution of a decree in Suit No. 2356 of 1931, with the sale confirmed on July 6, 1944. The trial judge, Banerjee J., held that the letter of March 5, 1932 did not amount to an acknowledgment and decreed only Rs. 5,000 in favour of respondent 1, representing the last advance of Rs. 2,500 which was within time due to the letter of February 17, 1943. Respondent 1 appealed to the Calcutta High Court, which by judgment dated August 6, 1954 reversed the trial court, held the letter valid, found principal amounts of Rs. 55,000 and Rs. 2,500 with interest at 8% simple subject to the Money-lenders' Act maximum, and drew a preliminary decree. The appellant then brought Civil Appeal No. 77 of 1957 to the Supreme Court with a certificate from the High Court.

• Indian Limitation Act, 1908: Section 19
• Code of Civil Procedure, 1908: Order XXXIV Rule 4
• Indian Evidence Act, 1872: