Tulsi Ram vs Same Singh
1980 Latest Caselaw 422 Del

JUDGMENT

Sultan Singh, J.

(1) This is second appeal under Section 100 of the Code of Civil Procedure as it stood prior to its amendment by the Code of Civil Procedure (Amendment) Act, 1976. The solitary, question for decision is whether the suit filed by the plaintiff-respondent is within time. The appellant executed a pronote for Rs. 1300.00 on 5th January 1963 in favor of the respondent and promised to pay the amount with interest at 15 per Mensem on demand. The amount was not paid. The plaintiff also did not file the suit within three years from the date of the pronote. On 10th July, 1966 the defendant made the following endorsement on the back of the pronote itself:

"ISpronote ko main manzoor karta hoota ki yeh agle teen saal ke liye theek hai"

ITStranslation would read as under : "I accept this pronote and it is valid for the next three years."

The plaintiff's contention is that this endorsement is not a mere acknowledgment but a .promise to pay in writing within the meaning of Clause (3) of Section 25 of the Indian Contract Act, 1972 (hereinafter called 'the Act') and therefore he is entitled to recover the same on the basis of the said endorsement. It is not dispute that the present suit was filed on 2nd March, 1968. The suit would be within time if it is held that the said endorsement is a promise to pay within the meaning of Clause (3) of Section 25.

(2) Section 25 of the Act is as under

"S. 25 : An agreement made without consideration is void unless : (1) Agreement without consideration void unless it is writing and registered it is expressed in writing and registered under the law for the time being in force for the registration of documents and is made on account of natural love and affection between parties standing in a near relation to each other, or unless

(2)or is a promise to compensate for something done it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do, or unless

(3)or is a promise to pay a debt, barred by limitation law : it is a promise made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

In any of these cases, such an agreement is a contract. Explanation I-Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made. Explanation 2-An agreement to which the consent of the promisor is freely given is not void merely because the consideration in inadequate; but the inadequacy of the consideration may be taken into account by the court in determining the question whether the consent of the promisor was freely given."

(3) The plaintiff claims that his case is covered by Clause (3) of Section 25 of the Act. This clause requires that there should be promise in writing, that it should be signed by the debtor or his agent and that this promise should be to pay wholly or in part a debt barred by time. If these conditions are fulfillled an agreement made without consideration amounts to a contract.

SECTION 9 of the Act reads as under : "S. 9 : Promises; express and implied-In so far as the proposal or acceptance of any promise is made in words, the promise is said to be express. In so far as such proposal or acceptance is made otherwise than in words, the promise is said to be implied."

(4) The contracts that are made in words are known as express contracts and if they are made otherwise than in words, such contracts are known as implied contracts. Clause 3 of Section 25 of the Act uses the words 'promise made in writing to pay". Thus it seems to me that there should be an express promise to pay a barred debt to constitute a contract which may be the basis of the suit. Various authorities have been cited before me on behalf of the appellant contending that if no express promise to pay is spelt by the writing, such writing cannot be the basis of a suit His contention is that reading of the endorsement must make it definite that there is a promise to pay and if promise to pay cannot be spelt, the suit on the basis of such a writing would not be maintainable. On behalf of the respondent-plaintiff it is contended that if there is a mere acknowledgment in writing the same may not be the basis of a suit within the meaning of Clause (3) of Section 25 of the Act, but if there is something more than mere acknowledgment and promise to pay can be spelt out from such a writing the suit would be covered by the said clause. Reading of Section 9 and Clause (3) of Section 25 of the Act it makes clear that though the word 'express' is not used in Clause (3) of Section 25, it is essential that the promise to pay must be clear and express. It also appears'to me that otherwise there will be no promise to pay in writing as required under this clause. In other words, an implied promise is not sufficient to satisfy the condition of Claujse (3) of Section 25 of the Act.What is required is a clear promise. The language of the document is to be studied to find out if there is a clear and fresh promise. The question thus is whether the writing in suit amounts to an acknowledgment or a promise to pay. If it is only an acknowledgment, it cannot be the basis of the suit. But if it is a promise to pay, the suit would be maintainable. The Privy Council in Maniram. Seth v. Seth Rupchaind, 2nd 33 Calcutta 1047 observed that an unconditional acknowledgment implies a promise to pay. In that case the acknowledgment was made before the expiry of the period of limitation. Such an acknowledgment was held to be a sufficient acknowledgment within the meaning of Section 19 of the Limitation Act. Learned counsel for the appellant refers to the various observations in this judgment but I do not get any assistance to interpret Clause (3) of Section 25 of the Act. In Gobind Das and others v. Sarju Das, 2nd 30 Allahabad 268 it was held, under Section 25 Sub-section 3 of the Indian Contract Act a promise made in writing and signed by the person to be charged therewith to pay a barred debt is a good consideration, but there must be a distinct promise and not a mere acknowledgment". Again in Maganlal Barjtbhai and another v. Amichand Gulubji ami others, 2nd 52 Bombay 521 it was held that an implied promise to pay, inferred from an acknowledgment which contains no express promise to pay a time-barred debt, cannot bemade the basis of a suit under Section 25(3) of the Indian Contract Act. In Ganesh Prasad s/o Dau Laxmanarayan Bania and others v. Mr. Bombati Bai w/o Gajanand and others, Air 1942 Nagpur 92, a receipt by the debtor was executed after understanding he account. It stated that a certain amount was justify due from the debtor. It was held that although the words meant an implied promise to pay, certainly they did not amount to an express promise in writing such as Section 25(3) of Contract Act required. In Basheshar Nath Goela, Official Receiver v. Baij Nath and others, Air 1938 Lahore 264 it was observed that mere acknowledgment of liability without any express promise to pay or without any inference to the future liability to pay does not fall within the mention of Section 25 of the Act The writing was in the following form

'THEbahi account having been checked and understood, the sum of Rs. 6459-1-6 was found due from me and my minor sons whose lawful guardian I am, to the firm Gobind Parshad Shibban Lal and I admit the amount to be due from me'. --- *** --- On the basis of this writing it was contended that it was an express promise to pay. It was held by the Division Bench that this writing cannot be read to contain an express promise to pay. There was no reference to the future liability to pay the amount. It was merely an acknowledgment of liability. It does not call within section 25 of the Act. In Shad.i Ram v. Prabhu, it was held that simple acknowledgment of the form of 'Baqi rahe' does not amount to promise to pay and does not give fresh cause of action under section 25(3) of the Act. It is further observed that the words 'the promise to pay, necessary to bring a case within section 25(3) of the Indian Contract Act, must be in writing and under section 9 of the Contract Act, such a promise is an express promise and the document must bear words like 'I promise to pay' or 'I undertake to pay', must appear in the document. Learned counsel for the plaintiff-respondent submits that the writing in question is covered by section 25 clause 3 of the Act and relied upon various judgments. In Bhagwan Singh v. Munshi Ram and. another, AIR.1937 Lahore 432, balance struck more than three years after the date of the last item in a bahi account is duly signed by the debtor with an additional statement that interest at a specified rate will be realisable along with the said balance. In those circumstances such an agreement was held to be a contract under section 25(3) of the Act and constituted a fresh cause of action. There are various other authorities which it is not necessary to refer at this stage in which it has been held that if the debtor has agreed to pay interest along with striking of the balance in the bahi account it amounts to a promise to pay. In Kishan Lal v. Gobi, Air 1938 Lahore 757 referred to by the learned counsel for the respondent-plaintiff it was observed, 'that an acknowledgment is a promise to pay within the meaning of section 25(3) of Contract Act. It was further held that it was a valid agreement for the purpose of suing irrespective of whether debts covered thereby are time barred. The actual words of the writing in this judgment are not clear and therefore I do not get any assistance. This is a judgment of the single judge. There is a division bench judgment in Basheshar Nath Goela, Official Receiver, (supra) where it has been held that mere acknowledgment of liability without any express promise to pay or without any reference to the future liability to pay does not fall within the meaning of section 25 of the Act. Again in Hannn Ram and another v Janda Singh and others, Air 1929 Lahore 591 (1) it is observed that an unqualified acknowledgment of debt implies a promise topay. A reference to the judgment does not reveal the actual words contained in the writing which amounted to promise to pay. In Ram Mangal Prasad Shahi v. Achhaibur Prasad Shahi & Others, there was an acknowledgment which was held to be a promise to pay within the meaning of section 25(3) of the Act. The substance of the recital in that judgment is that the executant has to pay Rs. 1264-8-0 half of the amount due under the mortgage bond dated 15thJune, 1927 as per account made up todate. Thus there was a promise to pay a sum of Rs. 1264-8-0. It was a case of an express.promise to pay the amount mentioned therein Learned counsel for the respondent referred to Hiralal & Others v. Badkulal & others, wherein the observation has been made that an acknowledgment operates as a fresh cause of action. The acknowledgment in that judgment was signed by H with the following endorsement : "After adjusting the accounts Rs. 34,000.00 found' correct and payable". Thus from the actual writing in that judgment, it is clear that there was an express promise to pay. The courts below have held that the said endorsement on the back of the pronote in question incorporates a promise to pay a time barred debt on the ground that the defendant not only accepted the pronote which had become barred by time as correct but he specifically revalidated it for the next three years. This writing was held to tentamount to novation of the contract meaning thereby that the liability under the pronote would remain alive for another three years. It was therefore observed by the courts below that it was not an acknowledgment simplicitor. Reading of the endorsement on the back of the pronote, it seems, amounts to only an admission of the pronote and that it is valid for next three years. The existence of the pronote is not denied but I do not find any Words expressing, any promise to pay by the defendant to the plaintiff. The pronote is admitted and the endorsement says that it is valid for three years. To my mind this endorsement is meaningless At best it can mean that the defendant has acknowledged the existence of the pronote. In other words, it may amount to an acknowledgment for purpose of limitation but admittedly this endorsement was not made within the period of limitation. It does not appear to me a promise to pay within the meaning of section 25 of the Act. There are no words to conclude that the defendant intended to pay or promised to pay. Learned counsel for the plaintiff-respondent further contends that the acceptance of the pronote means reading of the words contained in the pronote which is a demand promissory note. In other language he means to say if the pronote is read it means that the defendant promised to pay and that he accepted the validi of the pronote for the next three years. The execution of the pronote is not in dispute. The question for determination is whether the endorsement on the back of it amounts to a promise to pay or not. Reading the endorsement as a whole I am of the view that it is not a promise to pay in writing within the meaning of section 25(3) of the Act. Learned counsel for the plaintiff-respondent relies upon Mrs. Swaiya B gum v. M. Hamid Ali Khan, Air 1949 Oudh 41. In this case it was held that the writing in question constituted a mere acknowledgment and only an implied promise. It was observed, "the promise as required by sub-section 3 of section 25 of the Act must be a distinct or express promise in .the sense that the language must indicate a statement of the borrower that payment would be made in future. It has to be something more than mere acknowledgment of debt where a promise can be usually read only by implication. There is a consensus of opinion in the courts in India that for the purposes of the subsection a written promise should be discernible in the agreement itself In this view the benefit of the sub-section has been occasional extended to cases where in addition to the acknowledgment of an amount due future interest or future Installments are fixed. In the case before us the appellant has been constrained to ask us to read the endorsement in conjunction with the promise contained in the promissory note. This is clearly unjustifiable, for there is nothing in the language of the endorsement to warrant such a course". I therefore find that the plaintiff does not get any assistance from this judgment. On the contrary there is an observation that the real question is one of true construction to be placed upon the writing and it would be useless to refer to decided cases. After my careful consideration, I am of the view that promise to pay must be an express promise and there must be some indication in writing itself to show that the writer agreed to pay the debt though it may the barred by time. The courts below, it seems to me have erred that there was a promise to pay the barred debt. The words of endorsement are plain. I do not find any indication that there was any promise to pay the debt by the defendant. This appeal relates to the question of interpretation of the writing in suit. The courts below have erred in interpreting this writing as a promise to pay within the meaning of Section 25(3) of the Act. I, therefore, set aside the decree of the courts below and dismiss the suit of the plaintiff-respondent. In the circumstances of the case, parties shall bear their own costs throughout.