1980 (11) TMI 175 - HC - Indian Laws

Appeal allowed, plaintiff's suit dismissed for endorsement not constituting promise to pay time-barred debt.

Tulsi Ram Versus Same Singh

Tulsi Ram Versus Same Singh - TMI Issues Involved:1. Whether the suit filed by the plaintiff-respondent is within time.2. Whether the endorsement made by the defendant on the pronote constitutes a promise to pay a time-barred debt under Clause (3) of Section 25 of the Indian Contract Act, 1972.Issue-wise Detailed Analysis:1. Whether the suit filed by the plaintiff-respondent is within time:The primary question for decision in this second appeal under Section 100 of the Code of Civil Procedure is whether the suit filed by the plaintiff-respondent is within the prescribed limitation period. The appellant executed a pronote for Rs. 1300.00 on 5th January 1963 in favor of the respondent, promising to pay the amount with interest at 15 per mensem on demand. The amount was not paid, and the plaintiff did not file the suit within three years from the date of the pronote. However, on 10th July 1966, the defendant made an endorsement on the back of the pronote stating, 'I accept this pronote and it is valid for the next three years.' The plaintiff contends that this endorsement is a promise to pay in writing within the meaning of Clause (3) of Section 25 of the Indian Contract Act, 1972, and therefore, the suit filed on 2nd March 1968 would be within time if this endorsement is held to be a promise to pay.2. Whether the endorsement made by the defendant on the pronote constitutes a promise to pay a time-barred debt under Clause (3) of Section 25 of the Indian Contract Act, 1972:Section 25 of the Indian Contract Act, 1972, states that an agreement made without consideration is void unless it falls under specific exceptions, one of which is a promise to pay a debt barred by limitation law. Clause (3) of Section 25 requires that there should be a promise in writing, signed by the debtor or his agent, to pay wholly or in part a debt that the creditor might have enforced payment for but for the law of limitation.The plaintiff argues that the endorsement made by the defendant on the pronote is not a mere acknowledgment but a promise to pay within the meaning of Clause (3) of Section 25. The courts below held that the endorsement on the back of the pronote incorporated a promise to pay a time-barred debt, interpreting it as a novation of the contract, thereby keeping the liability under the pronote alive for another three years.However, the judgment emphasizes that the language of the document must be studied to determine if there is a clear and express promise to pay. Various authorities were cited, indicating that an implied promise to pay, inferred from an acknowledgment, does not satisfy the condition of Clause (3) of Section 25. The judgment refers to several cases, including Maniram Seth v. Seth Rupchaind, Gobind Das v. Sarju Das, Maganlal Barjtbhai v. Amichand Gulubji, and others, which consistently held that a mere acknowledgment without an express promise to pay does not constitute a valid promise under Section 25(3).The endorsement in question stated, 'I accept this pronote and it is valid for the next three years.' The judgment concludes that this endorsement amounts to only an admission of the pronote's existence and validity for the next three years, but it does not contain any words expressing a promise to pay. Therefore, it is not a promise to pay within the meaning of Section 25(3) of the Act. The courts below erred in interpreting this endorsement as a promise to pay a time-barred debt.Conclusion:The appeal is allowed, and the decree of the courts below is set aside. The suit of the plaintiff-respondent is dismissed. The endorsement made by the defendant on the pronote does not constitute a promise to pay a time-barred debt under Clause (3) of Section 25 of the Indian Contract Act, 1972. The parties shall bear their own costs throughout.