Implied promise to pay in a liability acknowledgment can support suit, but interest needs contract or proved usage.

A khata entry acknowledging liability may support a suit where, on its wording and the surrounding dealings, it reflects a bilateral arrangement with an implied promise to pay; a mere limitation-saving acknowledgment does not by itself create a fresh cause of action. The document here was treated as sufficient to found the claim because it recorded a balance struck between the parties and indicated payment was due. Interest was not recoverable in the absence of a contractual stipulation or proved usage, so recovery was confined to the principal amount. The contrary view noted that an acknowledgment only extends limitation and cannot itself be sued upon.

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Issues: (i) Whether the khata entry Ex. 1, containing an acknowledgment of liability and the words indicating that the amount was to be paid, could be treated as a sufficient basis for the suit; (ii) whether interest was recoverable on the amount claimed under Ex. 1.

Issue (i): Whether the khata entry Ex. 1, containing an acknowledgment of liability and the words indicating that the amount was to be paid, could be treated as a sufficient basis for the suit.

Analysis: The entry was not a mere unilateral acknowledgment in the abstract; it was made after the parties went through their dealings and struck a balance, and the words used indicated an implied promise to pay. A mere acknowledgment under the law of limitation does not, by itself, create a new right of action, but where the document reflects a bilateral arrangement amounting to an agreement with an implied promise, it may furnish the basis of a suit. The majority held that the Supreme Court authorities, properly understood, did not preclude such a conclusion, and that the document in question was not to be discarded merely as a limitation-saving acknowledgment.

Conclusion: Ex. 1 could form the basis of the suit, and the appeal succeeded to that extent in favour of the appellants.

Issue (ii): Whether interest was recoverable on the amount claimed under Ex. 1.

Analysis: The lower appellate court had found no proved usage or stipulation supporting the claim for interest. In the absence of a contractual term or established usage, the claim for interest could not be sustained on the basis of the document alone.

Conclusion: Interest was not recoverable as claimed, and the decree was confined to the principal amount.

Final Conclusion: The appeal was allowed in part, the decree was restored with modification as to the amount recoverable, and the claim for interest was reduced accordingly.

Ratio Decidendi: A document acknowledging liability may support a suit where, on its construction and surrounding circumstances, it embodies a bilateral agreement with an implied promise to pay, but a mere acknowledgment intended only to save limitation does not by itself create a fresh cause of action.

Dissenting Opinion: D.S. Dave, C.J. held that an acknowledgment, whether conditional or unconditional, does not form the basis of a suit and only extends limitation; he would have remanded the matter to permit amendment of the plaint to sue on the original cause of action.

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