KHUDA BAKHSH MARRI, J.--This appeal is directed against the judgment and Decree of a First Class Sub Judge, Mirpurkhas, dated the 19th of March 1962, whereby he dismissed the appellant's suit for the recovery of Rs, 34,050 as principal and Rs, 7939/12 as interest at the rate of 6 per cent. per annum.
2. The case set out by the appellant in his plaint filed on the 21st of September 1960, in short is, that he had friendly relations with respondent No, 3 Ghulam. Hussain since 1954, this Ghulam Hussain along with his brother Mohammad Shall (respondents Nos, 3 & 2 and respectively) were partners in a firm (respondent No, 1) known as the Popular Metal Works with its Head Office at Gujranwala and a branch office at Marriot Road, Karachi. Respondent No, 3 was Incharge of the Karachi business of the firm.
3. He further states, that in the month of June 1956, respondent No, 3 requested him for a loan of Rs, 35,00) which was urgently required by the firm for the construction of a hotel at Karachi. As he knew the respondents, he advanced a loan of Rs, 35,503 on various dates between 5-6-1956 and 21-1-1957, in favour of respondent No, 1, the Popular Metal Works by Bank drafts and cheques. The sums were duly credited in the account of the firm, with Habib Bank Builder Road, Karachi.
Endorsements by respondent No, 3 Ghulam Hussain as partner appear on these documents which are Exhs. 24 to 30 and Exh. 40.
4. It is further alleged by the appellant that out of a total loan of Rs, 35,500 a small sum of Rs, 1,450 was repaid by respondent No,
3. The last payment of Rs, 450 was made in April 1959, leaving a sum of Rs, 34,050 still due as the principal amount on which he claimed the usual 6 per cent. interest per annum till repayment. In support of the allegation of the repayment of Rs, 1,450 the appellant proved copies from his account books, which are Exhs. 41/1 to 41/5. He requested the respondents on various occasions for the repayment of the balance of the loan. The respondent, it is alleged though did not deny the liability, yet evaded payment. Ultimately on the 10th of June 1960, he issued a notice of demand Exh. 42/1 for payment within a week, which was duly replied to by respondent No, 3, requesting the appellant to withhold legal proceedings for a fortnight and again promised to pay his dues within a fortnight vide his reply dated the 27th of June 1960, Exh. 43/4, but the promise did not materialise, therefore the suit was filed as stated.
5. Respondent No, 2 Mohammad Shall, a partner of the firm, filed a joint written statement for himself and on behalf of the firm respondent No, 1, denying the liability to pay, throwing the responsibility on respondent No, 3, by staling that owing to his "luxurious habits" he used to borrow money from friends in his personal capacity and that the partnership had been dissolved on 1-4- 1960 because the respondent No, 3 did not maintain proper accounts of the Karachi Bench. He further pleaded that a suit for settlement of accounts was "being filed" against respondent No,
3. He questioned the jurisdiction of the Court, denied that any acknowledgment of debt was made and pleaded that the suit was challenged as barred by limitation.
6. On the contrary, respondent No, 3, Ghulam Hussain, admitted in bis written statement each and every plea raised in the plaint filed by the appellant. The trial Court framed as many as 11 issues, out of which the important issues are Nos, 5 and 7, concerning the acceptance of liability of the loan by respondents Nos, 1 and 2, and the bar of limitation. On the appellant's side, the plaintiff/appellant himself went into the witness-box as P. W. 2, in support of his claim, produced the statement of accounts, a copy of demand notice dated 10-6-1960, and the letters of respondents written to him between 10-11-57 to 27-6-1960, which are Exhs. 42/1 and 43/1 to 43/4 and Exh.
44. He also produced P. W. 1, Tanvir Ahmed, a Sub-Accountant of the National Bank who proved the 5 cheques issued by the appellant in favour of respondent No,
3. They are Exhs. 24 to 28.
7. On the respondents side, Mohammad Shafi respondent No, 2, representing respondent No, 1 as well examined himself, and produced Mohammad Afzal. Respondent No, 2, in his statement before the Court admitted that respondent No, 3 Ghulam Hussain was his partner, and was in full control of the business at Karachi, but he denied that he had any liability to pay a loan to the appellant, not only this, he also denied all knowledge, either of the sums advanced and proved to have been credited in the firm's account at Karachi. He further shows his ignorance of the correspondence between the parties and of the demands made by the appellant from the firm or from respondent No, 3, yet he admits that the appellant did go to Gujranwala in July 1960, but explains it that he went there to meet respondent No, 3 Ghulam Hussain who is his friend. P. W. Mohammad Afzal's statement is of no consequence, except that in 1959, respondent No, 3 Ghulam Hussain showed him certain account books of the firm with a request to mediate between him and respondent No, 2 Muhammad Shafi his brother and partner, but his efforts did not materialise.
8. The learned trial Court, by its judgment, decided all the issues in favour of the appellant except issue No, 7 under which he held that the suit was filed after the expiry of 3 years and dismissed the same as time-barred. The relevant portion of the judgment is as under :-- "In this case it is not proved that Exh. 43/1 Is written by defendant Ghulam Hussain, partner of the Firm Popular Metal Works. Typed letter on printed letter head of Popular Metal Works would not be affectual compliance with provisions of section 19 of Limitation Act.
Acknowledgment of liability having not been proved as required by section 19, Limitation Act, fresh period of Limitation cannot be computed from 10-11-1957. Suit for recovery of loan could have been filed within 3 years from the date when the loan was made, that is 21-1-1957. This suit was filed on 21-9-1960, that is, some eight months after the period of limitation expired and is therefore, barred by limitation."
This appeal was first heard by our learned brothers Mr. Justice A. S. Faruqui and Mr. Justice Noorul Arfin on the 7th of December 1966, who ordered that the evidence of respondent No, 3 Ghulam Hussain be recorded. The following report was received by this Court after the witness was examined :- "...............respondent No, 3 Ghulam Hussain was examined by the trial Court on 22-4-68. His statement verbatum is as under :- "I see Exh. 43/1, it is signed by me. I had signed this letter on the request of Harchandrai. He further told me to post this letter to him. I posted the letter. Neither the contents of this letter were read over to me nor explained, I could not read myself because I do not know English. I had signed this letter without understanding and just on the request of the plaintiff who is my friend. This letter was signed by me at Karachi on my shop. ..............to Mr. Nasir for the plaintiff.
I see Exh.
22. It is signed by me. I see Exhs. 24 to 28, cheques of N. B. of Pak. These are in the name of my firm the Popular Metal and they are signed by me. I have got these cheques cashed on behalf of the firm.
No cross to other defendant.
To Court. At the request of the witness : "Myself, Muhammad Shafi, Muhammad Hussain deceased who were also the partners of Popular Metal Works had jointly constructed a hotel at Karachi namely, Shabina Hotel. The above amount was given by plaintiff to us for construction of the above hotel. I do not know whether this amount was given as a loan, as a gift or as a charity. No re."
The fate of this case hinges on the legal value to be attached to Exh. 43/1. Whether or not this letter amounts to "acknowledgment of a liability" under section 19 of the Limitation Act, 1908? Whether other surrounding circumstances in this case can be looked into or not for the purpose of determining whether the liability was acknowledged within the terms of section 19 ?
9. Learned counsel of both the parties confined their arguments to the question of limitation under section 19 of the Act, and the legal value to be attached to Exh. 43/1. For better understanding of the arguments of learned counsel for the parties it is necessary to reproduce Exh. 43/1 which is as under :- "Government Contractors Established 1940, Phone 2069, The Popular Metal Works Regd.
Water, Steam &/Oil Cocks of Brass Gun Metal & Cast Iron, Filters, Hand Pump Machine & their Accessories.
H. 0. & Factory G. T. Road, Gujranwala Branch office, Marriot Road, Karachi-2. Dated 10-11-57.
To Dear Brother, Seth Harchand Roy Esqr. Mir Pore Khas Namaste.
Regreved (sic) to open that reply of my letter of last week is still awaited. May I hope that your goodself will not feel trouble in doing some more favour with us.
Our Income-tax Officer required some permanent evidence in support of the financial aid of Thirty- five thousand given by your goodself for the construction of Shabina Hotel last accounting year.
He required either your Balance Sheet if you have got Account Books duly attested by your Income-tax Officer or a certificate duly attested by any Magistrate of the following Lines "I hereby certifying that I have given Rs, 35,000 Loan Messrs Popular Metal Works (Regd.) G. T. Road, Gujranwala, for the construction of Hotel Building at Karachi in the following form : Cheque No, Bank Name Amount and date.
I may further add that I am a Big Landlord of Tharparkar District of Hyderabad and hold Square land and paying Rs as revenue.
This certificate is required very urgently and it is therefore humbly requested to please do the needful expeditedly and oblige.
Accept our Salams. Yours Truly, Ghulam Hussain, c/o Popular Metal Works Road, Gujranwala (Sd.) In Urdu i,e, Ghulam Hussain."
The learned counsel for the appellant Mr. Naimuddin argued that a bare reading of this document makes it clear that the respondent Ghulam Hussain was conscious of an existing debt of Rs, 35,000 therefore, requested for the favour of a certificate of advancement of money so that it could be produced before the Department of Income-tax. This becomes clear if we notice the statement in the letter that financial aid given by the appellant was used by the respondents for the construction of their Shabina Hotel at Karachi. Counsel argued that if this request was not an acknowledgment of an existing liability there could be no reason for the respondent to ask for a duly attested balance-sheet of the appellant. From this request an inference can be easily drawn that proof was needed of the entry of the loan in the account books of the appellant. Counsel referred to other documents Exhs. 43/2 and 43/3 dated 28-11-1957 and 23-8-1959 respectively. Exh.
43/2 is an acknowledgment by respondent No, 2 Mohammad Shafi to the appellant of the receipt of desired certificate. It is as under :- "Dear Sir, Received your letter for income-tax department with thanks and the same has been handed over to the department on 22-11-57.
We are enjoying good health and wish you good health too.
Pay my Salam to your friends and Love to Children. Yours truly, Muhammad Shafi c/o Popular Metal Works G. T. Road, Gujranwala. (Sd.) In Urdu. i,e, Mohammad Shafi."
The next letter Exh. 43/3, dated the 23rd of August 1959, by the Manager of the firm, in the opinion of learned counsel for the appellant is equally important for purposes of establishing the acknowledgment of liability. This letter says : "Dear Brother Seth Harchandrai Esqr., Mirpur Khas. Dear Sir, May we hope that your goodself will let us know the amount taken back from your account through Mr. Ghulam Hussain, the partner of this firm to enable us to adjust the account, as the account maintained by Mr. Ghulam Hussain is not satisfactory.
An early action in this respect is humbly requested. Yours faithfully, The Popular Metal Works (Regd.) G. T. Road, Gujranwala (Sd.) (Illegible) Manager."
Counsel argued that this letter indicated that the respondents wanted to know how much money was repaid so that it might be adjusted in their account books and that this request proved that the partners had a jural relationship with the appellant the relationship of borrowing money and repayment of sums in business. He further submitted that due weight be given to Exh. 43/4, the reply dated 27-6-1960 of Ghulam Hussain to the legal notice issued by the appellant on the 10th of June 1960. This is an admission of the debt in it without any claim for set off. Had there been no debt against the respondents, there was no need to request the claimant for withholding legal action against the firm; he could simply deny the allegation, there was no need to consult his brother nor to ask for time for settlement of the demand which was made in the notice. The gist of his arguments is that Exh. 43/1, is an acknowledgment of liability by respondent No, 3 of the loan and Exhs. 43/2 to 43/4 and Exh. 44, if read in conjunction to Exh. 43/1 support his point of view to bring the case within the scope of section 19 of the Limitation Act, 1908. Section 19 of the Limitation Act is as under :- "19. Effect of acknowledgment in writing.--(1) Where, before the expiration of the period prescribed for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by some person through whom he derives title or liability, a fresh period of limitation shall be computed from the times when the acknowledgment was so signed.
(2)Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Evidence Act, 1872 oral evidence of its contents shall not be received.
Explanation I.--For the purposes of this section an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment, has not yet come, or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to a set off, or is addressed to a person other than the person entitled to the property or right.
Explanation II --For the purposes of this section, 'signed' means signed either personally or by an agent duly authorised in this behalf.
Explanation III.--For the purposes of this section an application for the execution of a decree or order is an application in respect of a right."
He submitted that there were enough surrounding circumstances lending credence to the appellant's contention and fixing the liability on the respondents, taking the case out of 3 years period of limitation and entitling the appellant to have a fresh start of limitation. He therefore, contended that the suit was within time and that the plaintiff-appellant is entitled to the decree as prayed.
10. In support of his contention counsel for the appellant referred us to Shah Muhammad Khan v.
Ahmed Ali Khan , Shapoor Fredoom Mazda v. Durga Prosad Chamaria , Maniram v. Seth Rupchand , Sukhamani Chowdhrani v. Ishan Chunder Roy and lastly be relied on Messrs M. G.
Kadir & Co. v. Abdul Latif.
11.In the case of Shah Muhammad Khan v. Ahmed All Khan, Division Bench took the view that-- "Explanation (1) of section 19 is very wide in its scope. It shows that admission however indirect, and even if accompanied by a refusal to pay, can be sufficient as an acknowledgment. Where in a reply to a letter from a creditor demanding money, the secretary of the debtor replied that all arrears would be paid by certain date and subsequently asked for a detailed account. Held : The statement was made by a duly authorized agent and it constituted a sufficient acknowledgment of liability under the provisions of section 19."
12.The next case relied upon is of Maniram v. Seth Rupchand is a decision of the Judicial Committee of the Privy Council. In this case the respondent was named as one of the executants of the will of a creditor and accordingly applied for probates of the will. An objection was raised that he was indebted to the estate. The respondent in the petition signed by him made the following statement : "For the last five years he had opened current accounts, with the deceased. The alleged indebtedness does not affect his right to apply for probate."
13.It is evident that there was only an admission of the existence of an account, liability of indebtedness was not admitted by the respondent. Therefore, it could not be said that this reply did not amount to a conscious admission or acknowledgment of liability, yet the Judicial Committee held : "In a suit to recover an admitted balance of account from the debtor, that this was a sufficient acknowledgment of his liability within the meaning of section 19 of Act XV of 1877. It was a clear admission of open and current accounts, that either party had a right to an account and that whoever turned out to be debtor was bound to pay."
14.Our attention has been drawn to another judgment of their Lordships of the Judicial Committee of the Privy Council in the case of Sukhamoni Chowdhrani v. Ishan Chunder Roy. This was a decision in appeal from a suit brought by one of 3 joint debtors. It appears that they had earlier petitioned to the Court to appoint a manager to protect their joint property and had prayed that the money received by the manager should be applied for the payment of the debts of the creditors specified in the list annexed to the petition. The petition was held by the Privy Council to constitute an acknowledgment of liability under the statute of limitation although the request to apply the receipts towards the adjustment of debt was not addressed to the creditors.
15.Much reliance was, however, placed by learned counsel for the appellant on a recent Division Bench judgment of this Court reported as Messrs M. G. Kadir & Co. v. Abdul Latif. Incidentally, counsel for the respondent while referring to some reported cases of Indian jurisdiction has also relied on the above judgment of this Court and tried to persuade us to agree to the opposite point of view set out in the cases of the Province of West Pakistan v. Sind Purchasing Board L. P. A. No, 25 of 1965 and Messrs Yacoob Habib Kaliya v. Messrs A. A. Sattar these are the cases which have been discussed by the latter Bench judgment of this Court.
16. Before reaching the conclusion as to which one of the two views are to be adopted, we would like to refer to the cases of Indian jurisdiction relied upon by learned counsel for the respondents.
They are Meharban Singh v. Panna Lal , Venkata v. Parthasaradhi and Sheikh Hub Ali v. Wazir-un- Nissa . Now except the Allahabad case, the rest of the cases referred, are either not helpful to the point of view enunciated by the learned counsel or they have been along with other reported1 2 3 4 5 6 7 8 9 important cases of Indo-Pakistan sub-continent as well as of Privy Council on section 19 of the Limitation Act have been amply discussed by the Division Bench judgment of this Court reported as Messrs M. G. Kadir & Co. v. Abdul Latif. It is necessary to refer to the test by which an acknowledgment of liability under section 19 of the Limitation Act is to be determined. The latest Division Bench decision of this Court in Messrs M. G. Kilda. & Co. v. Abdul Latif contain an elaborate discussion of the case-law and proceed to lay down that : "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 Court very frequently. Quite often the decisions of the various 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 'acknowledgement' 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 surrounding circumstances, be an admission that the writer owes the debt. Next, some rules have to be 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 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 Freedoon Mazda v. Durga Prosad Chamaria and others. 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 the 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 Court in this sub-continent in several decisions to which we shall refer later in this judgment."
Agreeing with the view enunciated in Maniram Seth v. Seth Rupchand it was held : "Taking into consideration the rule laid down by the Judicial Committee in Maniram Seth v. Seth Rupchand and in the several other decisions reviewed above, according to which an admission of liability need not be expressed but may be inferred by implication from the language of the writing and the surrounding circumstances, we should think that the test is--
(I) Whether there is admission of liability or of jural relationship ;
(ii) Whether this admission is relatable to a subsisting liability or jural relationship, so that in the latter case, on ascertainment of facts consitituting the jural relationship, as in the case of accounts between the parties, a debt or liability shall be found to exist against one or the other of the parties.
This admission may be evident from the language of the writing itself, or may be inferred by implication, or by ascertainment from the surrounding circumstances if there be any ambiguity in the writing. This test, in our view, appears to be in accord with the decision in Maniram Seth v. Seth Rupchand and with several other cases which we have had occasion to review at length in this judgment."
17. The writing set up as acknowledgment of liability within section 19 of the Limitation Act, in the present case is Exh. 43/I, which is dated 27-11-1957 and has already been reproduced in full. This letter expressly acknowledges "financial aid of Rs, 35,000 given by your goodself for construction of Shabina Hotel, last accounting year". On the part of the respondents although this certificate or letter was required as a piece of evidence by the respondents to be produced before the Income- tax Officer, this does not lessen its value because in the same latter the respondent goes a step further, and his position of indebtedness becomes further clear when he suggested the pro forma of the certificate as "I hereby certify that I have given Rs, 35,000 Loan Messrs Popular Metal Works (Regd.) G. T. Road, Gujranwala, for the construction of Hotel Building at Karachi." In the same letter respondent No, 3 requested the appellant either to send the requisite certificate or "your balance- sheet if you have got Account Books duly attested by your Income-tax Officer." From this it is evident that the respondent was conscious of an existing liability against him, because he wanted account books duly attested by the Income-tax Officer wherein mention of Rs, 35,000 loan towards the respondent was a necessity to lessen his own burden of income-tax. There is another aspect of the matter as well. It is a well known practice of businessmen that they keep a record of their correspondence for future reference. Knowing that the other side does the same, therefore, the respondents being businessm en would not have ordinarily taken the risk of making a request for a certificate from the appellant which on the face of it amounted to a certificate of indebtedness and which could be used by the appellant at any time against them, unless they really meant to acknowledge the debt.
18.There is not a single occasion at which respondent No, 3 either denied the indebtedness or claimed a set-off. He took the same stand even in the witness-box when he was examined under orders of this Court. He proved the document and acknowledged his signature as well.
19.It is well settled that the liability of one partner is the liability of the other partners jointly and severally. This view B was taken by the trial Court also which held that respondent No, 2 Mohammad Shafi and the firm were liable to repay the loan but for the bar of limitation. It is rather strange that respondent No, 2 in his anxiety to wriggle out of an existing debt in his written statement as well as in his evidence before the Court, denied knowledge of the debt and went to the extent of stating that he was not even acquainted with the appellant. It is more so when we see Exh. 43/2 written by him in a moment of gratitude to the appellant for meeting his firm's urgent need of a certificate. This letter is dated 28-11-1957, signed by nobody else than the respondent No, 2 Mohammad Shafi himself. The letter is as under : "Received your letter for Income-tax Department with thanks and the same has been handed over to the department on 22-11-57.
We are enjoying good health and wish you good health too. Pay my salam to your friends and love to children."
This document is counter-signed by his manager also. Then we have another letter Exh. 43/3 written by the manager of respondent on 23-8-59 requesting the appellant "let them know the amount taken back from your account through Mr. Ghulam Hussain, the partner of this firm to enable us to adjust the account, as the account maintained by Mr. Ghulam Hussain is not satisfactory," The plea of limitation of three years does not help the respondents at all, for the simple reason that Exh. 43/1 was written on 10-11-57 and the suit was filed on 21-9-60, the period of limitation starts from 10-11-57, the suit is well within time of three years, therefore, the learned trial Judge was in error in holding that the appellant failed to prove the acknowledgment of liability as required by section 19 of the Limitation Act.
20. In the conclusion we hold that Exh. 43/1 dated 10-11-57 considered with other documents produced and evidence recorded, are sufficient in the eye of law as a proof of acknowledgment of liability on the part of the respondents, thus the suit is within limitation. The appeal is accepted. The judgment and decree of the trial Court dated 19-3-1962 are hereby set aside with costs throughout in favour of the appellant His suit is decreed as prayed.
AIR 1935 Oudh 170 AIR 1961 SC 1236 33 I A 165 25 I A 95 PLD 1970 Kar. 708 PLD 1958 Kar. 535 AIR 1926 All. 75 LLR 16 Mad. 220 33 I A 107