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2014 DIGILAW 4076 (MAD)

S. Balan v. M. R. Narayanan

2014-10-31

P.DEVADASS

body2014
Judgment Since the appellant/defendant and the respondent/plaintiff are same in both the second appeals and they were directed as against the common Decree and Judgments of the Appellate Court, they were heard together and are being disposed of by this sole Judgment. 2. The litigation involved in this matter has witnessed zigzag trend decision, namely, in the Trial Court the appellant/defendant won the case and in the Appellate Court, the respondent/plaintiff has won the case. 3. The respondent/plaintiff instituted the suit in O.S.No.478 of 2004, on the file of the I Additional District Munsif, Kumbakonam, for recovery of Rs.72,570/- based on the promissory note, dated 01.01.2001 (Ex.A2). 4. The very same respondent/plaintiff, as against the very same appellant/defendant, instituted another suit in O.S.No.366 of 2004, in the same Trial Court, for the recovery of Rs.89,933.35, based on the promissory note, dated 01.07.2000 (Ex.A1). 5. In both the suits, the appellant/defendant filed separate written statements, taking kindred stand that the promissory notes were not executed by him as pleaded in the plaint, but were obtained from him in blank forms in 1996 paying only a lesser amount and that were also paid, however, subsequently, the blank forms were made as suit promissory notes. 6. The Trial Court tried the suits together, appreciating the evidence, came to the conclusion that there was no passing of consideration for execution of Exs.A1 and A2, acknowledgment for Exs.A1 and A2 promissory notes, should be for a subsisting debt, however, as the acknowledged debt is time barred and there is no consideration for the same, Exs.A1 and A2 are invalid and therefore Exs.A1 and A2 cannot be enforceable in a Court of law and thus dismissed the suits, by a common Judgment. 7. The unsuccessful respondent/plaintiff in both the suits appealed to the Additional Sub Court, Kumbakonam in A.S.Nos.209 of 2005 as against the Decree and Judgment made in O.S.No.366 of 2004 and A.S.No.210 of 2005, as against the Decree and Judgment made in O.S.No.478 of 2004. 8. The First Appellate Court brought Exs.A1 and A2 under the category of acknowledgment of time barred debt and referring to Section 25(3) of the Indian Contract Act, even without passing of any consideration, such an acknowledgment is valid, thus reversed the finding of the Trial Court and allowed the appeals, by a common Judgment. 9. 8. The First Appellate Court brought Exs.A1 and A2 under the category of acknowledgment of time barred debt and referring to Section 25(3) of the Indian Contract Act, even without passing of any consideration, such an acknowledgment is valid, thus reversed the finding of the Trial Court and allowed the appeals, by a common Judgment. 9. In such circumstances, the appellant/defendant preferred the second appeal in S.A.(MD) No.689 of 2009, as against the Decree and Judgment made in A.S.No.210 of 2005 and second appeal in S.A.(MD) No.1058 of 2009 as against Decree and Judgment made in A.S.No.209 of 2005. 10. At the time of admission of the second appeals, the then Honourable Brother formulated the following substantial questions of law: In S.A.(MD) No.689 of 2009: i. Whether the lower appellate Court is right in reversing the Judgment of the Trial Court, when the time barred debit is not acknowledged as per the provision under Section 25(3) of the Contract Act? ii. Whether Exs.A1 and A2, the fresh promissory notes, can be treated as acknowledgment of pre-existing time barred debt in the absence of corroborated evidence through documents mentioned in Exs.A1 and A2, when admittedly there was no consideration was passed on the date of Exs.A1 and A2? i. Whether Exs.A1 and A2 are the promissory notes or the acknowledgment of liability? In S.A.(MD) No.1058 of 2009: 11. The learned counsel for the appellant/defendant contended that both the suits are barred by time. Under Exs.A1 and A2, the respondent/plaintiff instituted both the suits well after bar of limitation and there was no consideration for Exs.A1 and A2. 12. On the other hand, the learned counsel for the respondent/plaintiff contended that the suits are filed within the prescribed period of three years from the date of execution of Exs.A1 and A2. Section 18 nor Section 19 of the Limitation Act is applicable to the instant case. The proper applicable section of law to the present case is Section 25(3) of the Indian Contract Act. As per that for the acknowledgment of a time barred debt, there need not be any consideration. In the circumstances, the First Appellate Court has rightly set aside the common Decree and Judgment of the Trial Court and substituted it with it's own Judgment and Decree. 13. As per that for the acknowledgment of a time barred debt, there need not be any consideration. In the circumstances, the First Appellate Court has rightly set aside the common Decree and Judgment of the Trial Court and substituted it with it's own Judgment and Decree. 13. I have anxiously considered the rival submissions, perused the Judgments and Decrees of the Courts below and the records of the case. 14. There are twin suits. Twin promissory notes, namely, Exs.A1 and A2.Ex.A1 promissory note is dated 01.07.2000. It is relevant to the suit in O.S.No.366 of 2004. It was filed on 27.06.2003. Ex.A2 promissory note is dated 01.01.2001. It is relevant to the suit in O.S.No.478 of 2004. It was filed on 30.12.2003. Calculating the dates of filing of the suits, it is seen that both the suits are filed well within the prescribed time. 15. There were continuous money transactions between the respondent and the appellant and on particular dates, namely, 01.07.2000 and 01.01.2001 respectively, between them, the outstanding amounts were calculated and consolidated at Rs.64,000/- and Rs.65,000/- respectively. With reference to Rs.64,000/- Ex.A1, dated 01.07.2000, and with reference to Rs.65,000/-Ex.A2, dated 01.01.2001, were executed. The signatures therein were of the appellant/defendant. 16. The prior debts that are mentioned in Exs.A1 and A2 were all already time barred. Those debts became unenforceable because of law of Limitation. However, mind full of such legal disability arising under the law of limitation, appellant/defendant had executed Exs.A1 and A2 promissory notes. Admittedly, at the time of execution of Exs.A1 and A2, no single paise was given to the appellant/defendant. 17. The Trial Court noticed Sections 18 and 19 of the Limitation Act. It is true that those Sections deals with acknowledgment of debt prior to the expiry of the limitation period. The Trial Court propounded a wrong proposition that acknowledgment of debt must always be with reference to a subsisting debt and it must be a pre-existing debt and thus termed Exs.A1 and A2 as invalid. 18. However, contrary view has been taken by the First Appellate Court on the anvil of Section 25(3) of the Indian Contract Act. 19. Section 25 of the Indian Contract Act runs as under:- “25. 18. However, contrary view has been taken by the First Appellate Court on the anvil of Section 25(3) of the Indian Contract Act. 19. Section 25 of the Indian Contract Act runs as under:- “25. Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law.-An agreement made without consideration is void, unless- (1) ........... (2) ........... (3) 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.” 20. In Srinivasa Raghavan v. R. Jayaraman and another [ 1975 (1) MLJ 414 ], the essential requirements for invoking Section 25(3) of the Indian Contract Act have been cataloged as under: “(1) the promise to pay, must refer to a debt of which the creditor might have enforced payment, but for the law of limitation, in other words, the consideration for the promise should be an identifiable debt, the recovery of which is barred by limitation, (2) it should be a distinct promise to pay wholly or in part such a debt; and (3) the promise must be in writing and signed by the person or his duly authorised agent.” 21. A contract is an agreement enforceable in a Court of Law. An agreement comprises of acceptance of offer supported by consideration. An agreement without consideration is “nudum pactum”. Consideration has been made an integral part of agreement under the Indian Contract Act and “consideration” has been explained in Section 2(d) of the Indian Contract Act. Consideration may be in different dimensions. Sufferance itself has been considered a valid form of consideration. 22. It would be profitable to extract hereunder the word 'consideration' explained in Section 2(d) of the Indian Contract Act. It reads as under: “When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise.” 23. It reads as under: “When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise.” 23. On reading sections 2(d) and 25(3) of the Indian Contract Act, we can get the rudimentary principle of Indian Contract Act that acknowledgment of a time barred debt, even without receiving any consideration, is valid, because sufferance itself is a consideration for a fresh promise. This is a marked difference between the English Contract Act and the Indian Contract Act, although Indian Contract Act is mainly modeled on the English Contract Act. Thus, a debt, which has become unenforceable because of bar of limitation should be acknowledged, but, it must be unambiguous, clear cut and manifest, by a person that would create a new liability-fresh promise. 24. Money in prasenti need not be passed for acknowledgment of a time bared debt, because the very such sufferance itself is a valid consideration (see Section 2(d) of Indian Contract Act). Thus, it is seen that the Trial Court misconstrued the true position of Section 25(3) of the Indian Contract Act and heavily relied on Section 18, ex facie it is inapplicable to the fact situation. However, the First Appellate Court has rightly understood the meaning and scope of Section 25(3) of Indian Contract Act and applied the law correctly to the facts of the present case and rendered a correct finding resulting in reversed of the Decree and Judgment of the Trial Court. 25. In view of the above detailed deliberations and the position of law, we concur with the view taken by the First Appellate Court. The substantial questions of law are answered against the appellant. 26. Ultimately, both the second appeals fails and are dismissed. The common Judgment and Decree of the First Appellate Court in A.S. Nos. 209 & 210 of 2005 are confirmed. Consequently, connected miscellaneous petitions are closed. However, in the facts and circumstances, parties are left to bear their respective costs in the second appeals.