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Judgment
Walter Salis Schwabe, K.C., C.J.—This is an appeal from a judgment of Coutts-Trotter, J. on what is undoubtedly a difficult point under
the Limitation Act. The case has been very clearly argued before us by Mr. O. T. Govindan Nambiyar for the appellant and Mr. Anantakrishna
Aiyar for the respondent. The facts appear clearly from the judgment of the Court below and it is sufficient to state them shortly for the purpose of
this judgment.
The Official Assignee is suing here as the representative of the estate of an insolvent, one K. R. Narayana Aiyar, who is since deceased. He was
a mortgagee having obtained a mortgage in October 1894 from one Narayani Ammal for Rs. 1,000. She was a dancing girl. She died in August
1900 and she made the mortgagee the executor of her will. In that will she referred to the debt due to him, and, in applying for probate, he stated
the amount of the mortgage encumbrance due by the deceased lady at Rs. 1,620. In November 1912 a suit was brought by one T. S.
Kothandarama Chetti against, among others, the mortgagee. He claimed to be entitled to the mortgagee''s interest in that mortgage having as he
alleged purchased that interest at Court auction and he sued the mortgagee in his capacity of executor for the mortgagor, he being as such in
possession of the mortgaged property, and in February 1913, he (the mortgagee) put in a written statement defending that suit. The Official
Assignee, who is representing the estate of the mortgagee, has now found it beneficial to the estate to claim on that mortgage and he is met by a
plea of limitation. According to the law of this country it is necessary for him in bringing this suit to show that his claim is not barred by limitation,
and in order to do so he relies on two acknowledgments of liability by Narayana Aiyar on behalf of the mortgagor, The first acknowledgment
relied upon is contained in the affidavit by the mortgagee made by him in his capacity as executor under the will in claiming probate. He sets out in
that affidavit a mortgage debt of Rs. 1,620. I am quite satisfied that the mortgage debt referred to there was the mortgage debt to himself as
mortgagee. I have no doubt that that is a matter which can be proved by reason of the wording of explanation (1) to Section 19 of the Limitation
Act. I am quite satisfied that strict proof of the fact was dispensed with in the Court below because the defendants would have been totally unable
to suggest that there was any other encumbrance which he could have been referring to. In my judgment that admission is an admission which
keeps the debt alive down to that date.
The second alleged admission is contained in the written statement of February 1913, and the learned trial Judge has held that that is not an
admission sufficient for the purposes of Section 19 of the Act. I do not agree with him. An admission to prevent the running of time under the
Limitation Act need not be in the full sense of the word an admission of the existence of liability at the date of the admission, if the proper inference
to be drawn from the admission which is made is that it was intended to represent the debt as then subsisting. The law on the point is stated by the
Privy Council in Maniram Seth v. Seth Rupchand ILR (1906) C 1047 particularly at page 16 MLJ 300, where there was a statement of what was
held to amount to an admission of a debt at a time antecedent to the date of the statement, that is to say, the statement relied upon referred to the
debt as having existed at a previous date. It was held under the circumstances of the case that, as the statement did not, as it would naturally if it
had been a fact, do, go on to say that the position has altered since, it must be taken that the natural presumption was that the debt still continued
down to the date of the statement, and that was held under those circumstances to be enough. That case has been discussed in subsequent cases
by Miller, J. in Ranganayakalu Aiya v. Subbayyan (1909) 5 MLT 71, by the Division Bench of this Court, (Napier and Odgers, JJ.) in Subbarama
Iyer v. Veerabadra Pillai 42 MLJ 268 and finally in the recent case in Subbarama Aiyar Vs. A.P.T. Veerabadra Pillai, by Ayling and
Venkatasubba Rao, JJ. I think that the statement of the law as made by Ayling, J., and concurred in by Venkatasubba Rao, J., in the latter case is
certainly correct. My only doubt is whether it goes far enough, but in that case, he in effect states his interpretation of the Privy Council judgment to
be that you have got to look at all the facts at the time of the statement which is claimed to be an admission and then say whether the proper
inference to draw is that it was the intention to make an admission of the then existence of the debt. Now in this case the plaint in answer to which
the written statement relied upon was put in alleged definitely the execution of the mortgage in October 1894 and it further alleged that there was
due in respect of the mortgage at that date a sum which was equal to the principal amount and a very large arrear of interest. In the written
statement the mortgagee, who was contesting the action in his capacity as executor of the mortgagor and in that capacity only, in terms admits the
mortgage. He then deals with the plaint paragraph by paragraph, but, when he comes to paragraph 19 in the plaint which was in these terms:
There will be now due for principal and interest in respect of the said mortgage a sum of Rs. 2,629-4-0,"" he passes it over in silence. He does not
suggest in any part of his written statement that the amount was no longer due, that the mortgage had been discharged in any way or the debt
repaid. Under the rules applicable to pleadings in this Court, viz., Rule 5, O. VIII of the CPC of 1908, every allegation of fact in a plaint not
denied specifically or by necessary implication or stated to be not admitted in the pleading of the defendant shall be taken to be admitted. The
effect of that is that that written statement in law amounted to an express admission first of the existence of the mortgage debt at the date of that
written statement and then that the amount due was Rs. 2,629-4-0. It is argued that the admission must be express and it is not sufficient for this
purpose that it should be an admission which the law implies under the rules by reason of the absence of any denial in the written statement.
Speaking for myself 1 do not agree. I think that for the purpose of preventing the running of the statute of limitation it would be quite enough, if
there was such a passing over of a certain allegation in silence in a written statement signed by the party making the admission which in law
amounted to an admission; because he must be taken to know the law and therefore he would be making an admission at that time; for the purpose
of limitation an admission made to some other person is sufficient. But, if I am wrong about that, I am quite clear that applying the test stated by
Ayling, J., in the case referred to above, that one of the circumstances to look at is to see what was being pleaded and what was being denied in
the defence, and it can hardly to my mind be open to doubt that the intention of the'' person who signed the written statement in February 1913
was to admit the continuance of the mortgage debt at the date of that document. That being so the case is taken out of the Statute of Limitation. In
my judgment, the judgment appealed against is wrong, and the plaintiff is entitled to succeed.
I think the question remains as to how much he is entitled to succeed for and I think the amount that he would be entitled to take is proved here
as the amount shown in the first of the admissions plus interest since that date. As a result there will be the usual mortgage decree for the Official
Assignee for Rs. 3,450 with costs here and in the Court below. Time for payment is six months. Interest will be at 9 per cent. till then and 6 per
cent. thereafter.
Krishnan, J.
The decision of this appeal turns purely upon a question of law, namely one of limitation. The suit is brought to enforce a mortgage executed by
one Narayani Am-mal, to whom the suit property originally belonged, mortgaging the property in 1894 in favour of one Narayana Iyer. In 1900
Narayana Iyer became insolvent and whatever rights he had under this mortgage passed to the Official Assignee. This suit is brought by the Official
Assignee to enforce the mortgage by sale of the property as against the representatives of the original mortgagor Narayani Ammal and others.
Prima facie, as the learned Judge remarks in his judgment, the suit will be barred, and to save it from the bar of limitation the Official Assignee
relics upon two acknowledgments and what we have to consider in this appeal is whether these acknowledgments are good acknowledgments or
not u/s 19 of the Limitation Act to give fresh starting points for limitation to run. One is said to be contained in Ex. IV, a petition which Narayana
Iyer, as the executor and trustee appointed under the will by Narayani Ammal, filed in 1903 for the probate of that will. In the schedule of assets
and liabilities attached to that petition there is an entry to the effect, "" Item 3-Amount of mortgage encumbrances Rs. 1,620."" The other
acknowledgment relied on is said to be contained in a written statement filed in 1913 by the same Narayana Iiyer in a suit brought in 1912 by one
Kothandarama Chetti. The learned Judge who tried this case has considered only the question whether the second of these acknowledgments is a
good acknowledgment or not, for as he came to the conclusion that it was not, the suit failed. I take therefore, that point for consideration first.
Before dealing with the argument adduced regarding the question whether it is a good acknowledgment or not, I shall briefly state under what
circumstances this written statement came to be filed, as in construing a written statement it is necessary to refer to the plaint in answer to which it
was filed, and for that purpose it is necessary that we should know how the plaint came to be filed. There was one Devaraja Mudali who had a
money claim against Narayana Iyer and he brought a suit in the Small Cause Court and obtained a decree against Narayana Aiyar the mortgagee.
He then got the decree transferred to the City Civil Court and in execution of that decree, sold the right, title, and interest of Narayana Iyer in the
mortgage and purchased it himself. Subsequently he brought a suit, as mortgagee whose rights he claimed to have obtained by this auction
purchase in the City Civil Court, to enforce the mortgage against the mortgagor by sale of the property. This was in 1906. By that time Narayani
Ammal was dead, she having died in 1900. In bringing the suit he made one Murugammai the legal representative of the said Narayani Ammal and
conducted the suit. He obtained a decree in the City Civil Court which was confirmed in appeal, and in execution of that decree, this property was
brought to sale by the Court. In that sale one Kothandarama Chetti became the purchaser in August 1911. He tried to obtain possession through
Court but failed as he was obstructed by Narayana Iyer, and there upon he brought the suit O.S. No. 425 of 1912 in November 1912 in which he
claimed, first of all to recover possession of the property from the obstructer after removing the obstruction and secondly, if the Court found that
he had not obtained a proper title to the property, he claimed that he had at least become the owner of the mortgage interest and therefore he
should be given a decree for the mortgage amount which he stated to be Rs. 2,629 odd on that date, as against the estate. He also made certain
other claims against certain other persons with which we are not now concerned. In that suit Narayana Iyer was one of the parties and the Official
Assignee was also added as a party--Narayana Iyer was then representing the estate of Narayani Ammal as the executor and trustee under her
will and the Official Assignee was representing the mortgagee''s interest that passed to him by virtue of the Insolvency of Narayana Iyer. The
written statement was filed in that suit by Narayana Iyer as mortgagor and it is Ex. VI in this case. It is contended for the plaintiff that there is a
sufficient acknowledgment in that written statement of the liability of the estate for the mortgage debt. The clause relied upon as containing that
acknowledgment is the first clause in the written statement which runs thus: "" This defendant admits that Narayanamma referred to in para. 3 of the
plaint, was the owner of the plaint property and that she mortgaged the same in favour of this defendant on or about the 6th October 1894, as
alleged in the said paragraph. "" it is contended for the other side that this is not a sufficient acknowledgment to take the case out of the bar of
limitation because it merely says that there was a mortgage in 1894 and that it makes no statement whatsoever admitting any existing liability to pay
the mortgage debt. It is also contended that this statement should not be taken as having been made by Narayana Iyer as representing the estate of
the mortgagor, at any rate that it is uncertain whether it was made by him in his capacity as the representative of the mortgagor or in his own
capacity as mortgagee, and it is argued that this is also one reason for refusing to accept the statement as a sufficient acknowledgment of the
liability u/s 19 of the Limitation Act, under which the acknowledgement must be made by the debtor or on behalf of the debtor by a person duly
authorised to make the same. These two arguments have been supported by the learned Judge who tried the case, but after hearing the arguments
in appeal, I agree with the learned Chief Justice that there are not sufficient grounds for refusing to accept this statement in the written statement as
constituting a proper acknowledgment u/s 19.
As regards the objection, that it is not clear that this acknowledgment was made by Narayana Iyer in his capacity as representing the
mortgagor''s interest and not in his own capacity as mortgagee, it must be remembered that he was made a party in that suit mainly as representing
the mortgagor''s interest, because the mortgagee''s interest had already passed to the Official Assignee. No doubt there are certain statements in
the written statement wherein he does refer to his interest as mortgagee also; nevertheless I think in the main he was in the suit as representing the
estate of the mortgagor; and I think we are bound to give effect to any statements made by him apparently in his capacity as the mortgagor''s
representative and not say that it is doubtful whether he made it in one capacity or other and reject it. Where it is clear from the context, that any
statement in the written statement is made by him in his capacity as mortgagor, of course we must take it that it refers to his capacity as such and
not to his capacity as mortgagee though the written statement as a whole is a combined one. I have no doubt, therefore, that this argument fails, as
I have come to the conclusion that the statement in paragraph (i) of the written statement may very reasonably be attributed to him as being made
on behalf of the mortgagor of the estate which he was representing in that suit.
As regards the second argument, which is a little more difficult to deal with, there can be no doubt, as pointed out by the learned Chief Justice,
that there is an implied admission if not an express admission in the written statement that the mortgage debt on the date of the written statement
was standing at the figure of Rs. 2,629 or thereabouts; it was so expressly claimed in the plaint against the estate. There is no denial whatever of
that in the written statement, and that being so, it certainly can be inferred that the amount was admitted under O. 8, Rule 5 of the Civil Procedure
Code. I think the same inference may be drawn in this case also in construing the written statement for the purpose of seeing whether the
acknowledgment in the first paragraph was that of a dead mortgage or of a mortgage that was then subsisting, and that we are justified in holding
that he was there referring to a subsisting mortgage. The learned Judge has referred to certain other paragraphs in the written statement as showing
the contrary, namely, paragraphs 6, 8 and 15, but they do not seem to me to refer to the subsisting character of the mortgage at all. All that is said
in those paragraphs is that the plaintiff was not entitled to claim anything under the mortgage because Kothandarama Chetti had not got a proper
title as the person who was added as the legal representative in the suit by Devaraja Mudaliar had never occupied that position at all.
Our attention has been called to the case of Maniram Seth v. Seth Rupchand 16 MLJ 300. In that case an acknowledgment was made by a
person as the representative of a deceased person called Motiram, that Motiram had an open and current account with the defendant at the time of
his death. This was treated as a sufficient acknowledgment of a subsisting liability although the acknowledgment itself was made only about a year
after he died. At page 1059 their Lordships say this: ""The acknowledgment, to which attention has been directed, is followed in the same
paragraph by the following sentence: ""The alleged indebtedness does not affect his (the respondent''s) right to apply for probate. "" Stress was laid
by the Civil Judge upon the word '' alleged. '' He was of opinion that the word '' had '' in the sentence '' for the last five years he had open and
current accounts with the deceased '' and the word '' alleged '' were fatal to the validity of the acknowledgment. Their Lordships cannot share this
opinion. The first sentence shows that there were open accounts at the death of Motiram. If nothing further is alleged the natural presumption is that
they continued unsettled at the time the statement was made. The sentence which follows is perfectly consistent with this admission. The meaning is
'' even if there is a balance against the respondent that does not disqualify him from fulfilling the duties of an executor '' and it has been pointed out
that what is relied upon here is an acknowledgment subject to the condition that an adverse balance really exists, and the condition is fulfilled in
fact. "" In this paragraph the sentence occurs, "" If nothing further is alleged, the natural presumption is that they continued unsettled at the time the
statement was made. "" As At present advised I am not prepared to go so far as Miller, J. in thinking that their Lordships have laid down a general
rule that, whenever a debt is said to have been incurred at an anterior date and no statement is made that it has been paid off, we must necessarily
draw an inference that that debt is admitted to be still subsisting at the date of the acknowledgment. I am prepared to accept the interpretaion put
by the ruling of this Court of Ayling and Venkatasubba Rao, JJ. in Kandaszcami Reddi v. Suppammal 42 MLJ 268, where Ayling, J., who
delivered the judgment in which Venkatasubba Rao, J. concurred, says: ""I can see no ground whatever for holding that their Lordships were
considering anything but the circumstances of that case or intended to lay down any rule of legal inference. The presumption in that case was very
strong. "" Then he considers how the presumption arose from the facts of that case, and then his Lordship says, "" That is the meaning of the
paragraph quoted taken as a whole. If the defendant had been in a position to say that the account had been settled between the 6th October,
1898 and the 20th September, 1899, he would certainly have said so; for this would have been a much better answer to the plaintiff''s objection.
As he did not say so, the inference that the accounts still remained unsettled is natural and obvious. "" It follows then that in each case we have to
consider the circumstances in which the statement was made that there was a debt and see whether it was really intended to convey an impression
that that debt was subsisting at the date of the statement or not and if we can from the circumstances infer that the intention of the person making
the statement was to convey the impression that the debt was still subsisting we will be justified in holding that it is an acknowledgment of subsisting
liability. I do not think that a mere statement that a debt existed at one time without anything further, as was the case in Second Appeal No. 52 of
1921 to which our attention has been drawn, a decision to which I was a party--is sufficient to enable the Court to say that there is an
acknowledgment of a subsisting liability even though the person who makes the statement does not go on to say that the liability has ceased. In that
Second Appeal a man was being examined as a witness and he had to answer questions put to him. He had no opportunity of saying anything
further than that he had executed a mortgage bond for a prior debt and he therefore said nothing; and Spencer, J. and I held that there was no
acknowledgment of a subsisting liability there. I adhere to that opinion. But in this case, as I have already pointed out, the circumstances are
perfectly dear to show that, when Narayana Iyer made his statement in paragraph 1 of the written statement, he really meant to say not only that
there was a mortgage created in 1894 but also that that mortgage was subsisting on the date of the written statement. That being so, I think it
complies with the requirements of law contained in Section 19 of the Limitation Act. One other case cited to us is Subbarama Aiyar Vs. A.P.T.
Veerabadra Pillai, . In that case and also in the case decided by Miller, J., there were circumstances from which the inference was drawn in those
cases that the acknowledgments were of subsisting debts.
I shall now deal with the other acknowledgment pleaded. In order to show that the acknowledgment in the written statement is effective in
saving limitation the plaintiff has to show that it was made at a time when the mortgage debt was subsisting and for that purpose he has to rely on
another acknowledgment because the second acknowledgment was made more than 12 years from the date of the mortgage itself. The first
acknowledgment is in Ex. IV. I have already stated its character, and there can be no doubt whatever that that acknowledgment refers to this
mortgage debt. It is said by the learned Counsel for the Official Assignee before us that there was no other mortgage encumbrance which Narayani
Ammal had created on any part of her property; and the amount of the mortgage encumbrance mentioned in Ex. IV is certainly over the amount of
the suit mortgage and probably represents the amount then due, of principal Rs. 1,000 and interest thereon; possibly some interest had been paid
off. Had the other side objected to our identifying this mortgage encumbrance as the plaint mortage one it would have been necessary to allow the
plaintiff to adduce evidence to prove the identity of the two as he could be allowed to do u/s 19, explanation 1 of the Limitation Act; but
apparently the point was not pressed in the lower Court and therefore I agree with the learned Chief Justice that it is not necessary to send the case
down to have the matter cleared up.
In the view I take the plaintiff''s suit must be held to be in time, and there being no other defence of any importance or value in the case and as
the parties are not in dispute with regard to the amount of the mortgage, I agree with the learned Chief Justice that we should give a mortgage
decree for the amount due with costs in both Courts.