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TMI Blog1968 (1) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ated was 9 per cent. The payee, Brahmayya, died on 10th September, 1957, issueless and intestate. The receiver, who filed the suit, is the mother of Brahmayya. Brahmayya left behind him not only his mother, the plaintiff, but also his widow, Anasuyamma. The plaintiff filed O.S. No. 53 of 1958, in the Subordinate Judge's Court, Tenali, against Anasuyamma for partition of Brahmayya's properties and for possession of a half share therein. The present two promissory notes were shown in the "C" schedule to the plaint as Brahmayya's outstandings. Anasuyamma, however, in her written statement denied the existence of those assets. Thereupon, the plaintiff filed I. A. No. 23 of 1960 in that suit for appointing her as receiver to collect the two outstandings. She also issued a notice to the second defendant dated 22nd April, 1959, exhibit A-2, about these two promissory notes. The second defendant did not send any reply to this notice. On 17th February, 1960, the plaintiff was appointed as receiver. Thereupon, she got issued another notice to defendants Nos. 1 to 3 on 11th August, 1960 (exhibit A-4), demanding payment of the two debts. The second defendant sent a reply dated 4th September, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 of the Indian Limitation Act and that the suit was within time. It, however, found that the third defendant was not liable for the suit claim. In the result, it decreed the suit, with costs against the second defendant personally and against the assets of the first defendant firm in the hands of the second defendant and dismissed the suit, without costs, against the third defendant. It also directed the plaintiff to execute an indemnity bond for the decretal amount before she executes the decree. Defendants Nos. 1 and 2 filed the appeal. In appeal all the objections taken by defendants Nos. 1 and 2 to the plaintiff's claim were reiterated. In addition, it was also contended that the income-tax return, dated 12th December, 1957, was not admissible in evidence. The first of the contentions is that, without filing a succession certificate, the plaintiff could not maintain the suit. Reliance was placed upon section 214(1)(a)(iii) of the Indian Succession Act in support of this contention. The said provision reads: "214. (1) No court shall- (a) pass a decree against a debtor of a deceased person for payment of his debt to a person claiming on succession to be entitled to the effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claims of any person upon such instrument. It has already been noticed that the lower court gave a direction to the plaintiff to give an indemnity bond. Therefore, this requirement was satisfied. What was, however, contended for the appellants was that there is no sufficient proof on record that the two promissory notes were lost. The plaintiff sought to explain the non-production of the promissory notes by stating in paragraph 7 of her plaint that: "On his death, all the pronotes and records of late Brahmayya, including the suit pronotes came into the possession of his wife. But colluding with the other defendants she has suppressed them and denied the suit debts. In the circumstances, the suit pronotes could not be filed along with the suit." The second defendant who filed the written statement on behalf of himself and the first defendant stated in paragraph 4 that: "The plaintiff is not in possession of the pronotes referred to in the plaint. Admittedly two pronotes were executed by the 2nd defendant and as the plaintiff did not file them into court, the plaintiff cannot file the suit on the strength of the said pronotes as they are negotiable instruments. The plaintiff h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to partition, the said Anasuyamma, with the evil intention of causing loss to my client and of obtaining wrongful gain having colluded with you, suppressed the promissory notes where under you owe money. Not knowing whether you had executed the aforesaid promissory notes on your personal liability or on behalf of the firm, my client got a registered notice issued to the 2nd individual of you on 22nd April, 1959, demanding the payment of the amounts due under the aforesaid promissory notes. The second individual of you received the said notice on 23rd April, 1959, and has not given a reply for it. Nor has he repaid the debt. Therefore, within a week of the receipt of this notice, you shall pay the amounts due under the aforesaid promissory notes to my client and obtain a proper receipt, failing which a suit will be filed against you and the amount will be realised from you together with costs. You are hereby again informed that you will be put to unnecessary expense and loss of time." It is seen from this notice that once again the plaintiff reiterated her case that her daughter-in-law colluded with the defendants and suppressed the promissory notes. To this notice the second def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar notice to the daughter-in-law, Anasuyamma, because right from the beginning it was the plaintiff's case that the daughter-in-law was suppressing them. Under the circumstances, it cannot be held that the plaintiff did not do what all she could, to secure the production of the promissory notes into court. It is true that she did not examine herself to prove her case. But she examined her grandson as P.W. 2. P.W. 2 is Ravuri Krishna Rao, who is alleged under exhibit A-4 to have accompanied the plaintiff, in company of the daughter-in-law's younger brother, to demand from the second defendant, the payment of the amount due under the promissory notes. This witness stated in his evidence that: "After the death of Brahmayya all his documents and records came into the custody of his wife, Anasuyamma. Within one month after his demise, P. Koteswara Rao, the younger brother of Anasuyamma, S. Subba Rao, and myself, went and demanded D-2 to pay the pronote debts due to the deceased, Brahmayya. P. Koteswara Rao brought the two pronotes with him. D-2 said that he had no money and that he would pay after the crops were realised." In cross-examination he said that: "Anasuyamma (daughter-in-l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement. The second defendant undertook, under the agreement, to discharge all the liabilities of the partnership firm. Later, Brahmayya pressed for the repayment of the promissory notes. In order to meet that demand the second defendant approached his father, Ammayya. Since Brahmayya himself owed Rs. 1,000 to Ammayya under a promissory note, that was set off against the debt the second defendant owed to Brahmayya. Ammayya borrowed Rs. 2,000 under a promissory note dated 13th May, 1957, from one Hanumayyamma and paid the amount to Brahmayya. He also borrowed from D.W. 1 another sum of Rs. 4,000 under exhibit B-1 dated 20th May, 1957, and paid the amount to Brahmayya. With this payment both the promissory notes were completely discharged on 20th May, 1957. Endorsements of cancellation also were made on the promissory notes and the discharged promissory notes were returned. I have already adverted to the failure of the second defendant to produce the discharged promissory notes. The production of the discharged promissory notes would have been the clearest proof of discharge pleaded by the second defendant. But they were not produced. The case that was set up in the present suit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have stated, there is no other evidence excepting the oral evidence of D.Ws. 1 and 5. I cannot, therefore, accept this case of set-off. The second step in the case of discharge is that Ammayya borrowed Rs. 2,000 from one Hanumayamma on 13th May, 1957, and paid the amount to Brahmayya. The promissory note, which is said to have been executed by Ammayya to Hanumayamma, was not produced. Her brother, however, was examined as D.W. 3. He stated that the purpose of the loan was not noted in the promissory note, executed in favour of Hanumayamma. He did not remember how the money of Hanumayamma was available for lending it to Ammayya. He did not know how Ammayya utilised the amount borrowed from Hanumayamma. I am not at all impressed by the evidence of this witness, nor the lower court, which had the opportunity of watching his demeanour. There is no other evidence in support of this borrowing by Ammayya or that Ammayya utilised this amount to pay it to Brahmayya. In the absence of any supporting evidence, I am not prepared to place reliance upon the sole evidence of D.W. 3. Therefore, I cannot uphold this payment of Rs. 2,000 to Brahmayya. The third payment is claimed to be of Rs. 4,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set up by the second defendant falls to the ground. The lower court gave very cogent reasons for rejecting the case of discharge. I am satisfied that the lower court was right in its conclusion. I, therefore, hold against the defendant in regard to discharge. The next contention I will take up for consideration is as to the admissibility of exhibit A-1. Exhibit A-1 is not an income-tax return as such. It is a trial balance-sheet enclosed with the income-tax return sent by the second defendant in the year 1956-57. It was filed into court by the plaintiff and was marked by consent. P.W. 2, who conducted the suit on behalf of the plaintiff, explained how he had come into custody of this trial balance-sheet filed by the second defendant on behalf of the first defendant-firm. He stated that: "D-3 gave me that copy of the income-tax return, exhibit A-1, for the year 1956-57, when I enquired about it from him, as the pronotes were not available." In cross examination, he further clarified the position by stating that: "D-3 gave me exhibit A-1 in August or September, 1960. I do not know about such income-tax return till exhibit A-1 was given to me by D-3." It should be noted that D-3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 483 as due to Alaparthy Brahmayya. That was the amount due to Brahmayya from the firm (which) was dissolved." Since he chose to speak about exhibit A-1 in his examination-in-chief itself, he was cross-examined on this aspect. He stated there that: "I signed in the income-tax return, the original of exhibit A-1. The account books which were produced by me yesterday were in my custody from the beginning. I have been bringing them to court for every hearing of this suit. I have shown only the debts subsisting by the date 27th April, 1957, in the return, exhibit A-1. There was no note made in the return that subsequently some debts were discharged. The khata of A. Brahmayya has not been shown as closed in the account books of the firm. No debit entries have been made in the account books showing the discharge of the debts due to him." In the light of this evidence of D.W. 5, it was contended for the plaintiff-respondent that D.W. 5 must be deemed to have waived the privilege as to the income-tax return and his objections, if any, to the admissibility of exhibit A-1. There is considerable force in this argument. The attitude of the second defendant in the lower court lends considerab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax return is made inadmissible in evidence. No such rule was brought to my notice. I cannot, therefore, hold that exhibit A-1 is inadmissible in evidence. The learned counsel for the appellant referred me to a large number of decisions. His main emphasis was, however, on the Bench decision of the Madras High Court in Mythili Ammal v. Janaki Ammal. The principal question that arose for decision in that case was, whether income-tax returns can be proved by secondary evidence. Construing the provisions of section 65 and section 74 of the Evidence Act and section 54 of the Income-tax Act, the learned judges took the view that an income-tax return is not a public document within the meaning of section 74 of the Evidence Act. The learned judges, therefore, concluded that income-tax returns cannot be proved by evidence under section 65 of the Evidence Act. This view of the Division Bench was overruled by a Full Bench of the Madras High Court in Katikineni Venkata Gopala Narasimha Rama Rao v. Chitluri Venkataramayya. The Full Bench held that a profit and loss statement and a statement showing the details of net income filed by an assessee in support of his return of income, furnished und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertified copy of an order of assessment which has been given to one of the partners by the income-tax authorities and which contains certain statements by other partners when those statements are otherwise relevant under the provisions of the Evidence Act. The provisions of section 26A indicate that it was not the policy of the legislature to preclude from the cognizance of the court an information regarding the aforesaid statements contained in the order of assessment." It was also observed, that the use of the word "disclosure" in clause (2) of section 54 implies that the disclosure must be to a stranger and not to the party who made the statement. Where one partner makes a statement on behalf of the partnership, it is not possible to hold that the grant of copies of that statement to other members of the partnership is illegal. It is, therefore, clear that the third defendant was entitled to obtain a copy of the income-tax return and statements filed by the second defendant on behalf of the first defendant-firm and that the court is not precluded by section 54 of the Act from admitting such copies. The assertion of P. W. 2 that exhibit A-1 was given to him by the third defendan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the contesting defendant-appellants is that the income-tax return and the balance-sheet were for the period from 1st April, 1956, to 27th April, 1957. The balance-sheet does not disclose any transaction after 27th April, 1957 and does not acknowledge any debt subsisting after 27th April, 1957. Though the second defendant signed it on 12th December, 1957, it was not an acknowledgment of any liability as subsisting on 12th December, 1957. It was merely an acknowledgment of a debt as subsisting on 27th April, 1957. It was, therefore, contended that exhibit A-1 did not constitute an acknowledgment of a subsisting liability as on 12th December, 1957, and would not, therefore, save the suit from the bar of limitation. The relevant provisions of section 19 may be noted here. Section 19(1) reads: "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson making the admission intended to refer to a subsisting liability as at the date of the statement. In construing words used in the statements made in writing, on which a plea of acknowledgment rests, oral evidence has been expressly excluded but surrounding circumstances can always be considered. Stated generally, courts lean in favour of a liberal construction of such statements though it does not mean that, where no admission is made, one should be inferred, or where a statement was made clearly without intending to admit the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or farfetched process of reasoning. Broadly stated that is the effect of the relevant provisions contained in section 19, and there is really no substantial difference between the parties as to the true legal position in this matter. The following rules emerge from the above observations of the Supreme Court: (1) The acknowledgment must relate to a present subsisting liability. (2) The exact nature of the liability need not be indicated in words but the words used must indicate the existence of the relationship of debtor and creditor between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the presentation of the balance-sheet either to the general meeting of the company or to the income-tax authorities would constitute an acknowledgment of a subsisting liability as on the date of the signature and presentation of the balance-sheet. The Punjab High Court also took a similar view in Lahore Enamelling and Stamping Co. Ltd. v. A. K. Bhalla. In paragraph 37 it was laid down as follows: "Debts due to creditors not mentioned by name but included in the item relating to 'loans (unsecured)' or as due to 'sundry creditors' mentioned in the balance-sheet amount to an acknowledgment within the provisions of section 19 of the Indian Limitation Act, so as to extend the period of limitation with effect from the date of the signing of the acknowledgment." In coming to this conclusion, the learned judge of the Punjab High Court relied on the Madras decision in Rajah of Vizianagaram v. Vizianagaram Mining Co. Ltd. Thus, the Punjab High Court also took the view that the period of limitation is extended from the date of the signing of the balance-sheet. The Calcutta High Court also expressed a similar view. In Bengal Silk Mills Co. v. Ismail Golam Hossain Ariff, a Bench o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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