VANKATACHALATAH, J. ( 1 ) IN this Appeal by the defendants, the correctness of the judgment and decree di-21-9-1971 of the Civil Judge, Civil Station, Bangalore, in OS. 42 of 1971 on his file granting to the respondent a decree for Rs. 20,910-57 with costs and pendents lite and future interest is challenged ( 2 ) THE relevant and undisputed facts are the following. The National small Industries Corporation Ltd. the respondent, is a Government company establishmed for the purpose of assisting Small Scale Industries, inter-alia, by arranging supply of machinery to Industrial Enterpreneurs on hire purchase basis in terms of the scheme formulated by it. The first appellant, a firm of partners, of which the other appellants are partners applied to respondent under Ext. PS d/-2-4-1957 which was accepted by respondent, requesting supply on hire purchase certain machine tools which included what was known as a 'kirloskar Lathe'. However, by letter Ext p4dj-12-5-1959, the said appellant sought a change preferring a lathe manufactured by Mjs Hindustan Machine Tools Ltd, Bangalore, in place of the said 'kirloskar Lathe'. By Ext. P9 d/-16-5-1961, the first appellant requested the respondent to send the requisite agreement forms and also issue delivery instructions to the manufacturer, viz, M|s Hindustan Machine tools Ltd, to deliver the said lathe to appellants. By letter Ext. P10 d/-20-5- 1961 the first appellant represented to the respondent that it had ensured supply of the said HMT Lathe at the old rate of Rs. 16,000 and that the prices had since gone up to Rs. 23,000 and requested respondent to issue immediate delivery instructions to M/s Hindustan Machine Tools Ltd, assuring respondent that the first appellant was prepared to sign any documents that were required to be executed in respect of this transaction. The terms of the hire purchase under the scheme formulated by the respondent was well known to the appellants as they, by then, had availed themselves of the benefit of the said Hire Purchase Scheme under Ext. P46 to P50. On 15-6-1961, respondent issued delivery instructions, as per ext. P19, authorising Hindustan Machine Tools Ltd, to deliver the concerned machine to the said appellant. This was followed by letter Ext. P20 d|-27-6-1961 to the said appellant forwarding agreement-forms and the statement of account Ext. P20 (a) pertaining to the hire purchase transaction. Ext. P20 (a) particularised the total amount of the hire-purchase price of Rs. P19, authorising Hindustan Machine Tools Ltd, to deliver the concerned machine to the said appellant. This was followed by letter Ext. P20 d|-27-6-1961 to the said appellant forwarding agreement-forms and the statement of account Ext. P20 (a) pertaining to the hire purchase transaction. Ext. P20 (a) particularised the total amount of the hire-purchase price of Rs. 21,273-78; the amount of earnest money of Rs. 3,540; net amount due from the hirer of Rs. 17,743-78; and the amount of the first and subsequent instalments of hire. Ext. P20 (a) also contained a aote that a sum of rs. 772-50 stood to the credit of the said appellant representing the money paid in excess of the earnest money. In Exhibit P26 d|-7-7-1961 the said appellant acknowledged delivery of the machine and stated that the price therefor would be paid by the respondent In reply to Ext. P21 d,-9-8-196i by which respondent asked the said appellant to return the agreement forms duly executed, the said appellant by reply ext. P23 d -7-12-1961 told respondent that agreement forms had been sent to the concerned department at Vidhana Soudha fnr the embossing of the stamp duty and that they would be sent duly executed after the forms were received back from Vidhana Soudha. Thereafter a long spell of silence followed attributable to certain administrative changes under which the control of transactions in the Mysore area, was transferred from the respondent's Bombay Office to its Branch Office at Madras, in the process of which, respondent appears to have misplaced the relevant papers and consequently lost touch with the matter. On 3-1-1966, respondent's Madras office appears to have traced the papers and reverted to the matters by its letter Ext. P29. After seme correspondence that followed, appellant wrote ext. P33 d -22-3-1966 promising to pay the sum of Rs 15,077-78 towards the arrears of hire charges ( 3 ) THIS promise not having been fulfilled this suit was filed on 31-1-68 as OS. P29. After seme correspondence that followed, appellant wrote ext. P33 d -22-3-1966 promising to pay the sum of Rs 15,077-78 towards the arrears of hire charges ( 3 ) THIS promise not having been fulfilled this suit was filed on 31-1-68 as OS. 3 of 1968 on the file of the Civil Judge, Bangalore City, and was later transferred to the Civil Judge, Civil Station, Rangalorn and therein renumbered as OS 42 of 1971 the appellants' defences were that the transaction respecting the marhanery in question was a sale and not a hire-purchase; that the absence of a written hire-purchase-agreement precluded an enforceable contract between the parties and that, at all events, the suit claim was statute barred. There was also some dispute as to the quantum of liability ( 4 ) THE Court below, on an assessment of evidence, both oral and documentary, accepted respondent's case, reipcted the defence and entered a decree for respondent for the sum of Rs. 20,910-57 and interest and costs. It also directed that the sum of Rs. 772-50 remised in excess of the earnest money be refunded to the said appellant with interest at 12 per cent ( 5 ) THOUGH a number of grounds are taken in the memorandum of appeal Sri B. Vendanta Iyengar, learned Counsel for the appellants has urged two contentions in support of the appeal. His first contention was that the execution of a formal deed was a condition precedent to the enfor- ceability of the contract and its absence preclude the enforceability of the suit claim based on contract. The second contention was that the suit claim v. as barred by time, and, that Ext. P33 being in the nature of mere acknowledgment, coming into existence after the expiry of the period of limitation, could not keep the claim alive ( 6 ) THE questions that arise for our determination in this appeal, therefore, are (a) whether the non-execution of a formal contract of hire purchase precluded the enforceability of respondent's claim based on contract? and, (b) whether the respondent's suit was barred by limitation? ( 7 ) WE have earlier referred to the correspondence between the parties in some detail to show that therefrom the terms of tht agreement entered into between the parties could clearly be spelled out The terms an'l conditions of the hire purchase were embodied in Exts. and, (b) whether the respondent's suit was barred by limitation? ( 7 ) WE have earlier referred to the correspondence between the parties in some detail to show that therefrom the terms of tht agreement entered into between the parties could clearly be spelled out The terms an'l conditions of the hire purchase were embodied in Exts. P20 and P20 (a) in its reply d -7-12-1961 as per Ext P23 the first appellant refers to Ext p20 and Ext. P20 (a) wvith reference 10 and in the context of the 'hmt lathe' in question and agrees to the terms in Ext. P20. The account-sheets as per Ext,p20 (a) were examined and certain adjustments were pointed out. In Ext. P11 from Hindustan Machine Tools Ltd, to respondent, a copy of which was duly sent to the said appellant, the latter is specifically referred to as the hirer. The combined effect of Exts. PS, P4, P9, P10, p11, P16, P19, P20 P23 read with Ext. P33 renders the conclusion inescapable that the parties had reached a sompleted hire purchase agreement and that delivery of the said 'hmt Lathe' was in pursuance of the said agreement. The contention however is that the parties did not intend to be bound till a formal document was executed, ( 8 ) IN Chitty on Contracts (23rd Edn) It is stated"stipulation for the execution of a formal document The question whether the parties have reached a complete agreement most frequently arises where there has been an agreement in general terms but the parties have stipulated for the execution of some further formal document or have said that the agreement which they have reached is "subject to contract". The problem then is whether the agreement is too general to be valid in itself and is dependent on the making of a formal contract or whether the parties have in fact completed their agreement so that the making of a further formal contract though desirable is not essential This is a question of construction for the Court. In the words of Parker J in Vou Hatzfeldt-Wildenburo v alexander ( (1912) 1 Ch 281. 288-289 ). In the words of Parker J in Vou Hatzfeldt-Wildenburo v alexander ( (1912) 1 Ch 281. 288-289 ). "it appears to be well settled bv the authorities that if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the furher contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognise a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored". " ( 9 ) IN Halsbury's Laws of England (IV Edn) Vol. 9 at para 262 it is stated:"262. Contracts by correspondence. If a contract depends on a series of letters or other documents, and it appears from them that the drawing up of a formal instrument is contemplated, it is a question of construction whether the letters or other documents constitute a binding agreement or whether there is no binding agreement until the instrument has been drawn up. The whole of the correspondence or documents must be considered"at para 263 it is stated :"provisional agreements; Where there is an informal agreement which expressly requires or envisages the subsequent execution of a formal contract, the legal effect of that prior informal agreement depends on the intention of the parties: they may have entered into a binding provisional agreement, whilst envisaging its subsequent replacement by a more formal one; or they may evince an intention only to be bound on the execution of the formal contract, the prior informal agreement being of no legal effect. If the envisaged formal contract doee materialise, it may exactly refect the terms of the prior provisional agreement in which case it may have little more than as evidential value. Alternatively, it may differ materially from the provisional agreement so that it may be material to deride whether it has replaced that provisional agreement. If the envisaged formal contract doee materialise, it may exactly refect the terms of the prior provisional agreement in which case it may have little more than as evidential value. Alternatively, it may differ materially from the provisional agreement so that it may be material to deride whether it has replaced that provisional agreement. "at para 270 it is stated :"partially erecuted corecments: Where an agreement' remains expeutprv on one side but has been whollv or partially executed on the other the very fect of exesution may itself tend to lead to the conclusion that the 'agreement' is binding;. . . . . . . "in "the Law fo Contract" by Cheshire and Fifoot (7th Edn), the proposition is stated thus :"it must therefore be in caech case a question of construction whether the parties intended to undertake immediate, if temporary. obligations of whether they were suspending all liability until the conslusion of formalities. Have they in other words made the opertion their coptract aonditinal upon the execution a further document, in which case their obligations will be susnended or have they made an immediately binding agreement though one which is later to be merged into a more formal cintract. "the task of the courts is to extract the intension cf the parties both from the ferms if their correspondence and from the circumstances which surrornd and follor it, an the question of interpretation may thus be stated Is the preparation of a further document a condition precedent yo the crpation of a contract or is it an incident in the performence of an alrendy binding obligation ? As in all questions of con truction the comparison fo decided cases is apt to confuse ravner than to illuminate. ""the problem for a Court cf construction", said Lord Tomlin must always be so to balance matters that without the violation of essont ial principle, the dealings of men may as far as possible be treated as offective and that the law may not incur the reproach of being the destroyer of bargairs". ""the problem for a Court cf construction", said Lord Tomlin must always be so to balance matters that without the violation of essont ial principle, the dealings of men may as far as possible be treated as offective and that the law may not incur the reproach of being the destroyer of bargairs". "it is therefore a question of consrruction whether the execution of the further formal agreement in the prescribed form in the present case is a mere expression of the desgre of the parties as to the manner in which the transaction already agreed to will in fact go through; or whether it is a condtion or term of the bargain. In the letter case, it may be that either there was never a contract between the parties becarse they did not intend to be bound except upon the drawing up of a formal agreement in writing or that there was a contract, one term cf which was that the parties should join in executing a written instrument embcdving its terms and that only when such an instrument has been executed, the contract should be enforceable. From a perusal cf Ext P10, it is plain and beyond doubt that the said appellant sought the performance cf the agreemant already entered into by asking respondent to issue instructions to Hindustan Machine Tools ltd, to deliver the machine in question. The clear implication of this is that the siguing of the agreement in due course though desirable was no osscptial. The effect cf the correspondence and the conduct of the parties are not such as to lead to the inference that the parties intended to be bornd only when a formal agreement was executed. On the contrary, 1here is ample evidence to show that both the parties intended to make and believed that they had made a binding agreement. The view of the court blolw that in this rase the intention to put the agreement into formal shape did not affect its validity is both good-sense and good law. The first contention of Sri B. Vedanta Tyengar, therefore, fails. ( 10 ) THE second contention turns upon the effect of Ext. P33. Qusetion is whether the writing in Ext. P33 relating to the debt in question rmornts to a mere ackncwledgment or contains an express promise. In decrding it, the language of Ext. P33 is to be considered. In Ext. ( 10 ) THE second contention turns upon the effect of Ext. P33. Qusetion is whether the writing in Ext. P33 relating to the debt in question rmornts to a mere ackncwledgment or contains an express promise. In decrding it, the language of Ext. P33 is to be considered. In Ext. P33, the appellant, inter-alia, savs :"in order to avcid any kind of unpleasantness and also in the interest of runaing our indus smoothly and to pet the additional help for the present by way of getting the air Compresscr, I am arrang'ng to pay the amount of about Es. 15 077-78 as below: bs 2500 by cash on 92-3-1966. The rest of the amounts, I will arrange to send a Bank Guarantee. "the Court below has held that Ext. P. 33 contained a promise to pay a debt which but for the law of limitation, was enforceable at law by respondent this conelusion in our opinion is proper and correct. Expressions to those obtaining Ext. P. 33 are construed to amount to a prorise to pay witin the meaning of S25 (3) of the Contract Act (See: B. Barncnna v. Mallikariuna Co-operative Society Ltd, 1964 Myslj, Supp. 290. Therefore, the second contention of Sri B. Vendantha Ivengar also fails. This appeal, therefore, fails and is dismissed with costs. --- *** --- .