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Petitioner: MESSRS M. G. KADIR & Co VS Respondent: ABDUL LATIF
Court Name: Sindh High Court Judge(s): Muhammad Hayat Junejo, Noorul Arfin Title: MESSRS M. G. KADIR & Co vs ABDUL LATIF Case No.:L. P. A. No. 25 of 1964 L. P. A. No. 25 of 1964 L. P. A. No. 25 of 1964 Letters Patent
JUDGMENT
Reported As: PLD 1970 Karachi 708 Result: Q. Judgment JUDGMENT NOORUL ARFIN, J.--This Letters Patent Appeal questions the judgment in Abdul Latif v. M. G. Kadir & Co., of a learned Single Judge given in a suit brought by the respondent for recovery from the appellants of a principal amount of Rs. 20,500 and interest in the sum of Rs. 6,697.50. The judgment is reported in PLD 1964 Kar. 556. The case set out by the respondent in his plaint is that he had advanced a loan of Rs. 45,500 to the appellants on 13th July 1948, that out of this amount a sum of Rs. 25,000 was repaid to him on 31st August 1949, thereby leaving a balance of Rs. 20,500; and that the liability for payment of this balance was acknowledged by the appellants by a letter, Exh. P/11, dated 19th June 1952. The appellants denied their indebtedness to the respondent and stated that two sums, amounting to Rs. 45,000, had been paid by the respondent to the appellants for purchase of cotton seeds, but that these transactions were rescinded, and the amount advanced by the respondent was allowed to be kept with the appellants for the purpose of adjustments to be made in the accounts of two, firms in which the appellants and the respondent were partners together with another person, namely, Zahid Husain. One of these was stated to have carried on business at Hyderabad and the other at Mehrabpur. According to the appellants these accounts remained unsettled due to the inaction of the respondent himself but that on 31st August 1949 the respondent took back Rs. 25,000 on the representation that the balance of Rs. 20,500 may be retained against the losses resulting from the business carried on at Mehrabpur. The appellants further averred that the Mehrabpur business showed a loss of Rs. 52,000 and was further subjected to income-tax liability of Rs. 1,45,644 due to the respondent's failure to render accounts of this business, and that in addition to
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these liabilities a sum of Rs. 1,00,000 was also due to Mr. M. G. Kadir, a partner in the appellant-firm on account of two cotton ginning factories which had been let out to the firms at Hyderabad and Mehrabpur respectively. On these allegations, the appellants maintained that on proper accounting the respondent would be found to be liable for payment of a sum much larger than the amount of Rs. 45,000 which he had allowed to be kept in account with the appellants. 3. On the pleadings of the parties, the Court settled several issues, which it is not necessary to be set out in this judgment. The result of the findings on these issues, however, was that the respondent's suit was decreed only for the principal amount of Rs. 20,500 with interest at 6 per cent. From the date of suit until payment. 4. At the hearing of this appeal before us, Mr. Dingomal Ramchandani, the appellants' learned Advocate, confined his case to two points only, that is- (1) that the learned Single Judge erred in holding that the suit was not barred by limitation and in treating, Exh. P/ 11, the appellants' letter dated 19-6-1952, as sufficient acknowledgment of liability under section 19 of the Limitation Act, 1908; and (2) that the learned Single Judge erroneously declined to place reliance on Exh. D/27, and in excluding evidence which the appellants had offered to tender in support of the genuineness of this document. 5. It is agreed that but for Exh. P/11, dated 19th June 1952, the suit of the respondent would have been barred by limitation. The question, therefore, is whether this document constitutes sufficient acknowledgment of liability within the meaning of section 19 of the Limitation Act. This document reads as under :- Date 19th June 1952. My dear Latif Sahib, I am rather surprised to receive your letter dated 6th June 1952 to which I could not, reply earlier on account of my illness. You are no doubt correct in stating that there is a credit balance of Rs. 20,500. In your personal account in my books, but I failed to understand as to how you arrived at the figure of Rs. 44,234-12- 9 as due to you on account of the partnership in the cotton ginning and pressing factory at Mehrabpur and Hyderabad. You are no doubt aware that the Hyderabad account books which are with Mr. Ajaz Hussain, brother of late Mr. Zahid Hussain, have not been shown to me at any stage nor have I seen an audit report in respect of these accounts. However, according to the returns and statements filed at the Income-tax Officer in regard to their business the not profit has been shown as under :- Hyderabad Cotton Ginning Factory Rs. 48,571-10-9. Hyderabad Cotton Press Rs. 9,759-7-0. The same remarks as above apply in respect of Mahrabpur accounts which are in your possession. The statement filed by you in the Income-tax Office shows that this business resulted in a loss of Rs. 52,212-4-6. In view of these figures, which if accepted for the time being, I fail to see by what process of calculation and reasoning you arrived at the conclusion that Rs. 44,204-12-9 were due to you on account of these particulars. You have already been furnished with the copies of Mahrabpur and Hyderabad Mills account appearing in my books which have already been duly checked by you and your representative, from which it is clear that there is a credit balance of Rs. 7,478-12-3 in Hyderabad account, and a debit balance of Rs. 51,181-7-3 in Mahrabpur account. There is a not debt balance of Rs. 43,712-11-0. These balances have been arrived at after ignoring the lease money of Rs. 50,000 for each factory which we have foregone merely in deference to your wishes. With kind regards. Yours sincerely, (Sd.) M. G. Kadir."
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6. Mr. Dingomal Ramchandani's contention is that there was no conscious or unequivocal admission of a subsisting liability or of jural relationship of creditor and debtor in this document, which, therefore could not be treated as acknowledg--ment under section 19 of the Limitation Act. In support of his contention, the learned Advocate placed reliance on several decisions, and with our permission also referred to some cases from the Indian jurisdiction. The first case to which the learned Advocate referred is that of Venkata v. Parthasaradhi (I L R 16 Mad. 220) wherein it was held that an acknowledgment, in order to satisfy the requirements of section 19 of the Limitation Act must be an admission of the debt as such and of a subsisting relation of debtor and creditor, and that an intention to continue it until it is lawfully determined must also be evident from the document. The next case is the decision in Hukumatsing Kundanmal v. Nenumal Rijhoomal (AIR 1928 Sind 45=22 S L R 117) in which the principle contained in section 19 of the Limitation Act was stated to be that the acknowledgment should be a conscious and distinct admission of an existing liability or jural relationship between the parties. Mr. Ram--ohandani then placed before us two decisions of the Indian Supreme Court. In the first case, Shapoor Freedoom Mazda v. Durga Prosad Chamaria and others (AIR 1961 SC 1236) the view was expressed that the words used in the document which is set up as an acknowledg--ment must indicate the existence of jural relationship between the parties and it must appear that the statement is made with the intention to admit such jural relationship, though the intention may be inferred by implication from the nature of the admission and need not be expressed in words. This view was affirmed by the same Court in a subsequent decision, Tilak Ram and others v. Nathu and others (AIR 1967 SC 935) wherein it was further held that mere statement expressing jural relationship between the parties was not an acknowledgment, and that it must appear from the statement that it was made with the intention of admitting that such jural relationship subsisted at the time the statement was made, that is, in other words, it should be shown that when the document was written, the writer had in his mind the question of his liability. Another line of decisions cited by Mr. Dingomal Ramchandani consists of cases in which an admission of liability was made coupled with the claim that the debt had been discharged in a particular mode, whereupon the Courts held that such documents did not constitute acknowledg--ment of liability under section 19 of the Limitation Act. One such case is Badri Das v. Manohar Das ((1913) 20 1 C 10) in which the writing contained the statement that the debt had been discharged by the debtor paying off the amount of the Hundi on account of the proprietor of the creditor. In K. Shaikh Meera Sahib & Co. v. Shaik Nainar Lubbay Marcayar ((1913) 21 1 C 30) the Court held that a statement containing the plea that no debt was owing from the debtor, and that if it was so, it must be set off against an amount due from the plaintiff, did not constitute acknowledgment of liability. In Rangaswami Chetti v. Thangavelu Chetti (I L R 42 Mad. 637) the Court held that a statement in the deposition that there was once a debt but that it had been discharged, was not an admission of a subsisting liability. To the same effect is the decision in Karamadai Naicken v. R. Raju Pillai and another (AIR 1949 Mad. 401) Mr. Ramchandani next referred to the decisions of this Court. One is Yacoob Habib Kaliya v. A. A. Sattar (PLD 1958 Kar. 534) in which it was held that an acknowledgment must be an unqualified admission of a subsisting liability, and that a statement in the letter of a seller of goods to the buyer to the effect that the buyer was not entitled to refund of the earnest money or advance price, as the buyer was himself liable for damages to the seller for not taking delivery of the goods, was not an acknowledgment, as such a statement amounted to a clear denial of liability to pay the amount claimed by the buyer. The next case is that of Muhammad Akbar Khan v. The Province of West Pakistan (PLD 1959 Lah. 295) in which the following statement made by the defendant's Advocate in Court was not accepted as an acknowledg--ment of a liability :- "It is correct that when prohibition was enforced from the 1st October 1948, stock worth Rs. 65,000 or Rs. 66,000 belonging to the plaintiff, was handed over to Edulji. It is also correct that the sale
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proceeds of this stock have not been deducted from the amount of the demand notes issued to the plaintiff. This will be deducted." This decision was based on the view that mere admission of the plaintiff's claim without in any way implying that there is any liability for payment was not a sufficient acknowledgment, and, further, that a statement which contains denial that any sum is due to the plaintiff and claims that it is the plaintiff who owes the defendant a certain sum, which claim is coupled by the admission that the plaintiff is entitled to a set-off, is also not an acknowledg--ment of liability. Mr. Ramchandani lastly contended that the principle laid down by the learned Single Judge in the impugned judgment with regard to sufficiency of a writing for the purpose of acknowledgment of liability under section 19 of Limitation Act should not be regarded as good law in view of the learned Judge's own decision in a later case, namely, The Bank of Bahawalpur v. Karim Hayat (PLD 1965 Kar. 519). The document which was set up in this case as acknowledgment reads as follows :- "This is to request you that when the amount of our bills on account of furniture supplied by us to the Government of Bahawalpur in 1954 is received by you from the State P. W. D., the balance amount, after adjusting our outstanding accounts with you, may please be credited to the account of Messrs Mahmud & Co., Naz Chambers, 2nd Floor, Frere Road, Karachi, in lieu of our accounts with them." The learned Judge construed this document in the light of the deposition of the defendant himself, and relying on the decision in Sambasiva Ayyar v. Subramania Pillai (I L R 1935 Mad. 312) refused to treat this document as acknowledgment of liability as the document, in the opinion of the learned Judge, did not contain an unequivocal admission of a subsisting debt. But we pointed out to the learned Advocate the judgment in the Province of West Pakistan v. Sind Purchasing Board L. P. A. No. 25 of 1964 to which one of us as well as the learned Judge whose judgment is impugned before us, and who also decided The Bank of Bahawalpur v. Karim Hayat were parties, and in which case Mr. Ramchandani had himself made appearance on behalf of the plaintiffs. In this judgment each of the several letters of the Sind Provincial Government, containing reference to the existence of accounts between the parties, though the reference was either coupled with claim for adjustments or refusal to pay unless the various points raised by the Government Auditors were clarified, was treated as sufficient acknowledgment of liability as also the minutes of a meeting between the representa--tives of the plaintiffs and the Government incorporating the memorandum of a settlement. Mr. Ramchandani, however, urged that the correct rule as to when a writing should be treated as acknowledgment of liability under section 19 of the Limitation Act is that laid down by the learned Single Judge in his later decision in The Bank of Bahawalpur v. Karim Hayat. There is no doubt that this decision appears to lend support to the learned advocate's contention and accordingly we are faced with the difficulty of reconciling the judgment impugned before us with the decision on which reliance is placed by Mr. Ramchandani, and also with the still subsequent judgment in the Province of West Pakistan v. Sind Purchasing Board. 7. The question as to when a statement can be treated as acknowledgment under section 19 of the Limitation Act and when not, has come up for consideration of the High Courts very frequently. Quite often the decisions of the various High Courts, and sometimes the decisions in the same High Court, appear to be irreconcilable. We find it therefore, necessary to dwell at length on this question. The expression "acknowledgment" itself has not been defined in the Limitation Act, but we may accept the definition followed by the Courts in England as well as by the High Courts in India and Pakistan, given by Fry, L. J. In Green v. Humphreys ((1884) 26 Ch. D 474). According to this definition, an acknowledgment is an admission by the writer that there is a debt owed by him. Proceeding further, Fry. L. J. Observed that in order to take the case out of the statute of limitation, there must, upon the fair construction of the letter, read in the light of the surrounding circumstances, be an admission that the writer owes the debt. Next, some rules have to be
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observed in construing a document which is set up as an acknowledgment of liability. One principle is, that the Limitation Act being a statute in derogation of the right to sue, exceptions in the Act must be construed liberally. A writing claimed to be an acknowledgment must, therefore, be A interpreted liberally, so as to maintain the right to sue rather than in negation or derogation of such right. This principle has been recognized in several cases, including two decisions on which reliance is placed by Mr. Ramchandani that is, Muhammad Akbar Khan v. Province of West Pakistan (PLD 1959 Lah. 295) and Shapoor Freedoom Mazda v. Durga Prosad Chamaria and others (AIR 1961 SC 1236). Another rule which has to be kept in mind is that an acknowledgment, like any other document, should be construed according to the intention of the parties, but this intention is the intention as revealed by the language of the body of the deed. If the deed is ambiguous, surrounding circumstances may be looked into, but it is not open to the parties to come to the Court to say that their intention was wholly different from that expressed in the language of the deed. This is the principle laid down by the Judicial Committee of the Privy Council and by the High Courts in this Sub-Continent in several decisions to which we shall refer later in this judgment. 8. Mr. Dingomal Ramchandani's contention throughout in the long discussion before us has been that to constitute an acknowledgment a deed must show that it was written with the conscious intention to admit a liability and to continue the jural relationship of debtor and creditor between the parties, and that this admission must be unequivocal as held by the learned trial Judge in his decision in The Bank of Bahawalpur v. Karim Hayat. Some of the decisions placed before us by Mr. Ramchandani, and several more which have been noted in the Commentaries on the Limitation Act, appear to take this view. In other words, according to these decisions the acknowledgment should show that it was written with the conscious intention of admitting a liability, that is when the deed was written, the writer knew, and his intention was directed to this, that he was acknowledging a liability under section 19 of the Limitation Act. To us, this view appears to place a rather rigid and strict construction on the language of section 19 of the Limitation Act. This view also appears to be contrary to that has been said by the Judicial Committee of the Privy Council on this question and in several decisions of authority wherein it has been held that implied and indirect admission of liability would constitute an acknowledg--ment and also to the view taken in many decisions that admission of mere existence of an account is sufficient acknowledgment of liability under section 19 of the Limitation Act. We think that it will be useful to refer here to the leading decisions on these points. 9. The first case to which our attention turns is the decision of the Judicial Committee of the Privy Council, Maniram Seth v. Seth Rupchand (33 I A 165). In this case the respondent was named as one of the executors of the will of a creditor and accordingly applied for probate of the will. An objection was raised that he was indebted to the estate. The respondent, in the petition signed by him, made this statement :- "for the last five years lie had open and current accounts with the deceased; the alleged indebtedness does not affect his right to apply for probate.'" It will be seen that there was admission only of the existence of an account. The respondent did not admit liability for any debt, and was careful to use the words "alleged indebtedness". This writing, therefore, according to the view expressed by the learned Judge in his judgment in The Bank of Bahawalpur v. Karim Hayat could not have been said to have been written with the conscious intention of admitting or acknowledging liability for a debt, or could not even be treated as unequivocal admission of liability. Still, the Judicial Committee held that the respon--dent's statement was sufficient acknowledgment under section 19 of the Limitation Act. Their Lordships held that if there was admission of the existence of an open and current account between the parties, then the admission raised the legal consequences that at that date either of the parties had a right as against the other to an account. Their Lordships further observed:-
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---It follows equally that, whoever on the account should be shown to be the debtor to the other, was bound to pay his debt to the other, and it appears to their Lordships that the inevitable deduction from this admission is that the respondent acknowledged his liability to pay his debt to Motiram or his representative, if the balance should be ascertained to be against him.--- Referring to the English decision, Re: Rivers Steam Company-- Mitchell's Claim (L R (1871) 6 Ch. A 822) their Lordships proceeded by say :- ---Lord Justice Mellish laid it down that an acknowledgment to take the case out of the Statute of Limitation, must be either one from which an absolute promise to pay can be inferred, or, secondly, an unconditional promise to pay the specific debt, or, thirdly, there must be a conditional promise to pay the debt, and evidence that the condition has been performed . . . . . An unconditional acknowledgment has always been held to imply a promise to pay, because that is the natural inference, if nothing is said to the contrary. It is what every honest man would mean to do. There can be no reason for giving a different meaning to an acknowledgment that there is a right to have the accounts settled, and no qualification of the natural inference that, however is the creditor shall be paid when the condition is performed by the ascertainment of a balance in favour of the claimant. It is a case of the third proposition of Lord Justice Mellish, a conditional promise to pay and the condition performed.--- "You have not shown me the deed of assignment under which you make the claim. Further I have been issued an injunction order prohibiting me from paying the amount to anybody. A third party named Sundara Row has sent me a notice that the amount was due to him . . . . You are informed that you must send me the amount of subscription and I cannot give you credit for anything." The Chief Court of Oudh, in the case reported as Balbhaddar Singh and another v. Sheo Pearey Lal (AIR 1930 Oudh 67) took the view that section 19 of the Limitation Act did not prescribe that an acknowledgment should be express and it was sufficient for the purposes of this section if the admission of liability could be implied from the disputed writing. This view was reiterated in a later decision, Shah Muhammad Khan v. Ahmed All Khan (AIR 1935 Oudh 170) in which it was further held that an admission, however indirect, and even if accompanied by refusal to pay, was a sufficient acknowledgment of liability. The High Court of Allahabad, in its decision in Pandit Salig Ram v. Radhay Shiam (AIR 1931 All. 560) followed the Privy Council decision in Maniram Seth v. Seth Rupchand and held that undue stress should not be laid on the literal meaning of the words but regard should be had to what can be implied from the writing. In another case decided by the same High Court, B. Adya Prasad Singh v. Lal Girjish Bahadur P.I (AIR 1933 All. 364) the decree- holder gave a letter to the judgment-debtor agreeing not to take execution of the decree up to a certain date, which letter the judgment-debtor annexed to an application which he made to the Court praying that the letter be kept on record. Niamatullah. J. Delivering the judgment of the Division Bench, held that the application accompanied by the decree-holder's letter was sufficient acknowledgment of liability on the debtor's part. It may be mentioned that in the application the judgment---debtor said no more than that the decree-holder's letter be kept on record. This application could not be said to have been written with the conscious intention of acknowledging a liability or unequivocally admitting a debt. Still, the application together with the letter was held to constitute valid acknowledgment. The Rangoon High Court has also taken the view that acknowledgment under section 19 need not be express or definite admission of liability. We may in this connection refer to the case of M. K. Kasiviswanathan Chettyar v. R. M. S. L. Kakshmanan Chettyar (AIR 1938 Rang. 84). In this case there was on the back of a promissory note for Rs. 12,500 an endorsement in the hand of the debtor that a sum of Rs. 410 had been paid. It was held that the only reasonable inference that could be drawn from this endorsement was that the debtor had acknowledged liability to pay the balance due on the promissory-note and, therefore, the endorsement amounted to an acknowledgment. It will be interesting to take note of the decision of
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the High Court of Madras in Natesa Chetty v. Y. M. Subba Raya Chetty (AIR 1962 Mad. 389) wherein a tenant acknowledged liability for payment of rent, but at a lower rate, and claimed that whole arrears had thus been paid off. It was held that the assertion of the tenant that the rate was lower than that adjudged subsequently by the Court, and that therefore no arrears were due from him, was not sufficient to operate as repudiation of liability by the tenant, as acknowledgment of liability must be taken to be distinct from the dispute with regard to the rate of rent. In this connection we would refer to the English decision in Quincey v. Sharpe and another ((1876) 1 Ex. D 72) wherein the following letters were held to constitute acknowledg--ment of liability "I shall be obliged to you to send in your account, made up to Christmas last. I shall have much work to be done this spring, but cannot give further orders till this be done. You have not answered my note. I again beg of you to send in your…
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