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The Indian Contract Act, 1872
Section 25(3) in The Indian Contract Act, 1872
Article 1 in The Constitution Of India 1949
The Indian Stamp Act, 1899
Section 19 in The Indian Contract Act, 1872

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Punjab-Haryana High Court
Shadi Ram vs Prabhu on 17 June, 1952
Equivalent citations: AIR 1953 P H 28
Author: Weston
Bench: Weston



JUDGMENT
 

 Weston, C.J.  

1. This revision application arises from a money suit in which by reason of Section 102, Civil P. C., no second appeal lies.

2. The suit was to recover an amount of Rs. 300/-. The defendant raised a number of contentions which need not be mentioned. His main ground was that the debt dated back to the year 1928 and was the debt of his father and that any acknowledgments given by him (defendant) were not sufficient to keep alive the cause of action up to the date of the present suit. It appears that the original debt was incurred in February 1928 and was for amount of Rs. 142/-. It appears that there was an acknowledgment about one month later for Rs. 250/-, the difference representing interest. On the 6th of March 1931, there was another acknowledgment for Rs. 300/-. On the 1st of March 1934 there was another acknowledgment for Rs. 300/-, Rs. 100/- being shown to have been paid, and on the 24th of March 1937 there was again an acknowledgement for Rs. 300/-, and there were later acknowledgements, all within three years of each other. The acknowledgement of the 24th of March 1937, however, was made more than three years after the acknowledgement immediately before it. The trial Court decided the suit in favour of the plaintiff mainly it would seem on the ground that there was no reason why a false claim should be made. On the question of limitation it merely looked at the last acknowledgment of the year 1943 and finding the suit to be within three years of the date of this acknowledgement held the suit to be within time. In appeal the learned Senior Subordinate Judge considered what really was the main question in the case, namely whether the acknowledgement of the 24th of March 1937 could be held to be a promise to pay in writing and therefore came within Clause (3) of Section 25 of the Indian Contract Act; for, if the acknowledgement could not be held to be a promise to pay in writing then the cause of action had ceased to be enforceable for all later acknowledgements were in identical terms with the acknowledgement of the 24th of March 1937.

3. The promise to pay necessary to bring a case within Clause (3) of Section 25 of the Indian Contract Act must be in writing. Under Section 9 of the Contract Act such a promise is an express promise. I should have thought it beyond question that words such as "I promise to pay" or "I undertake to pay" must appear in the document. It is urged, however, that the Punjab High Court has taken a different view, and I am referred to 'Shanti Parkash and another v. Harnam Das and others', ILR 19 Lah 193 FB. That was a case where there was not only an acknowledgement of balance but also a statement of future interest payable, although the word 'payable' did not find place in the written agreement. It was held by the Full Bench, although I think with considerable reluctance, that in view of previous authority of the Lahore High Court it must be held that this was sufficient to bring the agreement within Section 25(3) of the Contract Act. In a later case - 'Shiv Ram-Punnun Ram v. Faiz', (ILR 23 Lah 282), the question came up whether an acknowledgement containing words such as "baqi rahe lene lekha kar ke", "baqi rahe", "baqi rahe lene", "baqi rahe dene", "baqi lene" or "baqi dene" amounted to mere acknowledgment chargeable with stamp duty of one anna only under Article 1, Schedule I of the Indian Stamp Act or constituted an agreement or bond chargeable with duty under Articles 5 and 15 respectively of the First Schedule. In the judgment of this later case, emphasis was laid upon the necessity of dealing with each case on its own merits. It was held that words such as "baqi rahe", "baqi dene" and the other expressions I have set out amounted to mere acknowledgments. They did not import a promise to pay and therefore did not fall within the category of agreements or bonds.

4. The whole difficulty in these matters has arisen from the importation into India considered to be required by observations of the Privy Council, particularly in -- 'Maniram v. Seth Rupchand', (33 IA 165), of the rules of English Law now considered well-established, namely that an unconditional acknowledgment by a debtor contains an implied promise to pay and further furnishes to the creditor a fresh cause of action. These rules did not spring from any fundamental principle of law but were judge-made to avoid a rigid rule of limitation imposed by the Statute of James I. In India, a signed acknowledgment of liability made in writing before the expiration of the period of limitation is enough to start a fresh period of limitation, and it is enough not only when the acknowledgment is unconditional but even when the acknowledgment is coupled with a refusal to pay. When the debt has become barred by limitation there is Section 25(3) of the Contract Act and there can be no doubt under the section itself that the written promise to pay falling within this furnishes a fresh cause of action. The doctrine that an acknowledgment without written promise made before the expiry of the period of limitation should furnish a fresh cause of action is tor India quite unnecessary. In 'Maniram's case', the question was only whether the particular document amounted to an acknowledgement for the purposes of Section 19 of the Limitation Act and it is not easy to understand why reference to English principles was made. I have had some experience of the unfortunate results of the importation of the rule of fresh cause of action. In places where the ignorant and illiterate debtor is not protected by legislation which not only enables but requires the Courts to go behind transactions and ascertain their true nature, the debtor having given successive acknowledgements of amounts rising in rapid progression has often found himself ruined by a suit based on the latest acknowledgment without the Court having inquired into the true nature of the transaction. The general law contained in the Usurious Loans Act, is not always enough to afford protection. Conditions in India are by no means the same as in England.

5. In the present instance, however, the ac knowledgements are simple acknowledgements of the form "baki rahe" and even under the later Full Bench decision of the Lahore High Court would not amount to promises to pay and therefore would not give fresh causes of action to the creditor under Section 25(3) of the Contract Act. I consider therefore that the learned Judge below was right in holding that the cause of action had not survived by reason of lapse of more than three years between the acknowledgement of the year 1934 and that of the year 1937. I therefore discharge the rule in this case. The applicant must pay the costs of the respondent in this Court which I assess at Rs. 30/-.