Orissa High Court

Bhaiji Air Cooler Works vs G.M. on 15 February, 2022

             IN THE HIGH COURT OF ORISSA AT CUTTACK

                              ARBA No.1 Of 2019
                            (Through hybrid mode)

        Bhaiji Air Cooler Works                  ....              Appellant

                                                Mr. S. Routray, Advocate

                                    -versus-

        G.M., D.I.C. and another                 ....        Respondents

Mr. P.P. Mohanty, AGA

CORAM: JUSTICE ARINDAM SINHA Order ORDER No. 15.02.2022

4. 1. Mr. Routray, learned advocate appears on behalf of appellant

and submits, the learned District Judge did not appreciate challenge of

his client against award dated 28th June, 2016. Though his client

supplied between 3rd July, 1998 to 8th July, 1998, respondent partly

paid Rs.30,000/- on 8th March, 2004. His client filed the claim before

the council on 1st July, 2004. The claim consisted of unpaid principal

and interest. Subsequent to filing the claim, respondent, on 8th January,

2005, paid balance principal of Rs.4,820/- but thereafter did not pay

on the interest claim. There is patent illegality in the award for

dismissing his client's claim as barred by limitation.

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2. He submits, in event the payment made on 8th March, 2004

does not qualify as payment on account of a debt before expiry of the

prescribed period, such payment comes within sub-section (3) in

section 25 of Contract Act, 1872 for his client to have thereafter

enforced its claim on reliance thereon, regardless of the law for the

limitation of suits.

3. He relies on following judgments.

(i) Judgment of the Supreme Court in Khan Bahadur Shapoor

Fredoom Mazda v. Durga Prosad Chamaria reported in AIR 1961

SC 1236, paragraph-6 (Manupatra print). The paragraph is reproduced

below.

" It is thus clear that acknowledgment as prescribed by s. 19 merely renews debt; it does not create a new right of action. It is a mere acknowledgment of the liability in respect of the right in question; it need not be accompanied by a promise to pay either expressly or even by implication. The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledge judgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the

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intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person 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 s. 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 G. without intending to admit the existence of jural relationship such intention could' be fastened on the maker of the statement by an involved or far-fetched process of reasoning. Broadly stated that is the effect of the relevant provisions contained in s. 19, and there is really no substantial difference between the parties as to the true legal position in this matter."

(ii) Views of a Division Bench of the High Court of Bombay in

South Eastern Roadways v. U.P. State Agro Industrial

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Corporation Ltd. reported in AIR 1993 Bom 300, paragraph-4

(Manupatra print), in which, inter alia, following was said.

"If Ex.35 does not amount to an acknowledgment within the meaning of that expression appearing in S.18 of the Limitation Act, the same certainly attracts sub-sec. (3) of S.25 of the Indian Contract Act. Therefore, however looked at, the claim was within limitation and we so hold."

(iii) Views of a learned Judge of the High Court of Karnataka in

Adivelu v. Narayanachari reported in AIR 2005 Kant 236,

paragraphs 5, 6, 8, 12, 13 and 16.

(iv) Views of a learned Judge in the High Court of Delhi by

judgment dated 22nd August, 2012 in I.As. no. 85618562/2011 in CS

(OS) 389/2009 (Suresh Kumar Joon v. Mool Chand Motors and

others), paragraph-5 (Manupatra print).

4. Mr. Mohanty, learned advocate, Additional Government

Advocate appears on behalf of respondent and submits, the claim is

barred by limitation as correctly found by the Tribunal. There is no

patent illegality in the award. The appeal should be dismissed.

5. In Durga Prosad Chamaria (supra), relied upon paragraph-6

was where the Apex Court discussed nature and character of an

admission, for it to be acknowledgment as prescribed by section 19 in

Limitation Act, 1963. The Court said the acknowledgement renews the

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debt and it need not be accompanied by a promise to pay either

expressly or even by implication. As such, the decision is of no help to

appellant.

6. In South Eastern Roadways, Bombay (supra), the Division

Bench was dealing with whether Ext.35 in the suit could be said to be

an acknowledgment. Text of Ext.35, as appearing from the judgment, is

reproduced below.

"Please refer to your notice dated 15th May, 1978 given by you on behalf of your client (plaintiff) .... In this regard it is to inform you that matter will be settled between our General Manager, Shri S.N. Khanna, who is on tour to Bombay......"

It is clear that the views expressed were in respect of the writing

(Ext.5), relied upon by appellant therein. Said Court found that the

writing (Ext.5) was an acknowledgment, if not under section 18 in

Limitation Act, 1963, an acknowledgment under sub-section (3) in

section 25, Contract Act, 1872. Said provision in the Contract Act talks

about a promise made, to become an agreement without consideration,

to pay wholly or in part, a debt, which the creditor might have enforced

payment but for the law for the limitation of suits. This decision is

distinguishable on facts. Sub-section (3) in section 25 requires an

agreement by a promise, to make an agreement without consideration,

valid. Where a person owes money but the creditor cannot enforce the

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debt because it is barred by limitation, the debtor can always

subsequently promise to pay such a debt. That agreement will not be

void as being an agreement without consideration. Appellant says

respondent made a payment beyond the prescribed period. Fresh period

commenced, within which the reference. The record does not disclose

any term accompanying in the payment. Court has ascertained that the

payment was made of part of balance claim of appellant. The payment

simpliciter cannot be interpreted to be a promise to pay further. The

terms are not available. Whether by making the payment respondent

agreed to pay further cannot be inferred from the act of payment, for it

to be a promise under sub-section (3) of section 25. As aforesaid, in

Durga Prosad Chamaria (supra), the Supreme Court referred to there

being no need for a promise accompanying the acknowledgement under

section 19 in the Limitation Act.

7. In Suresh Kumar Joon (supra) a learned Judge of the High

Court of Delhi said in paragraph-5 (Manupatra print) as reproduced

below.

"6. The next contention of learned counsel for the plaintiff was that Section 25(3) of The Indian Contract Act expressly saves the agreement which is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or

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in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits. Illustration (e) states that if A owes B Rs. 1, 000, but the debt is barred by the Limitation Act and A signs a written promise to pay B Rs. 500 on account of the debt, this is a contract. Therefore, if defendants have made an agreement in writing, promising to pay either whole or part of the amount which the plaintiff claims to have lent to them, such an agreement would be perfectly legal and enforceable in law.

Above view does not equate an acknowledgment prescribed under

section 19 (Limitation Act) with a promise under section 25(3)

(Contract Act), as contended by appellant. Illustration under the

provision in the Contract Act makes clear that after a debt has become

unenforceable, a person can promise to pay it. Once such promise is

made, it is an agreement without consideration, valid and enforceable

on a fresh period of limitation commencing from the date of the

promise.

8. Section 19 in Limitation Act, 1963 provides for effect of

payment on account of, inter alia, debt. It says that a fresh period of

limitation can start on payment made before expiry of the period of

limitation. Facts are that the supply was complete on 8th July, 1998.