Hariprabha Govindlal Parekh and Another vs Dhirubhai Bhogilal Gandhi

M.D. Shah, J.—This appeal filed by the appellant-original plaintiffs arises from the judgment and decree dated 24-2-1984 passed by the learned Judge, Court No. 7, City Civil Court, Ahmedabad, in Summary Civil Suit No. 681 of 1980 whereby the suit was partly decreed in favour of the plaintiffs.

The short facts are that the plaintiffs advanced an amount of Rs. 5,000/- to the defendant and the interest used to be paid and the promissory note used to be renewed by the defendant. However, as the defendant was not paying the total amount of Rs. 8,000/- including principal and interest, even after serving of notice upon the defendant on 5-5-1979, the aforesaid suit was filed by the plaintiffs. The defendant filed a leave to defend application at Ex.16 which was adopted as his written statement by filing purshis at Ex.27. It was contended that for a sum of Rs. 3,600/- borrowed by him, a promissory note for an amount of Rs. 5,000/- was executed in 1962 by the defendant No. 1. It was further contended that though he renewed the promissory in 1965 and 1968, he did not receive the said amount during the said period. He further contended that he did not have any personal contact with the plaintiffs but all transactions were being done by their relative, Mr. V.P. Mehta, an advocate. It was further contended that the suit was barred by limitation as for the suit promissory note dated 1-2-1977, there was a reference of earlier promissory note dated 1-7-1974. Learned Judge however partly decreed the suit against the defendant. Hence, the present appeal.

Heard learned Counsel, Mr. J.A. Adeshra for for the appellants-original plaintiffs. Learned Counsel, Mr. M.M. Dalal for the respondent-original defendant, however, is not present. This Court has gone through the oral as well as documentary evidence together with the impugned judgment.

Mr. Adeshra submitted that on reading the promissory note Ex.44, the case of the plaintiffs is covered u/s 25(3) of the Indian Contract Act and not u/s 18 of the Limitation Act and hence, plaintiffs would be entitled to the suit amount of Rs. 5,000/-.

In order to find out whether the case of the appellants would fall u/s 25(3) or not, Section 25(3) of the Indian Contract Act will have to be seen and it reads as under:

It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized 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.

It is clear from the aforesaid Sub-section that for attracting Section 25(3), there has to be a writing under the signature of a person owing a debt undertaking to pay the debt in part or full which is barred by time. It is to be noted that there is a writing of promissory note at Ex.44 under the signature of defendant undertaking the liability to pay the debt. It has to be seen whether such writing of promissory note Ex.44 would entitle the plaintiff to recover the time barred debts from the defendant or not.

It has been held by the Apex Court in the case of Hiralal and Others Vs. Badkulal and Others, as under:

Defendant H who had mutual dealing with the plaintiff, signed an entry in the plaintiff''s khata (Ledger) on which earlier mutual accounts had been entered, to the following effect: Rs. 34,000 balance due to be received and to Bhadon sudi 11 Sam. 2006 made by check and understanding of accounts with H''s books''. The acknowledgment was signed by H with the following endorsement. ''After adjusting the accounts Rs. 34,000 found correct and payable''. The plaintiff brought a suit on the basis of the entry for recovery of the amount:

Held that the unqualified acknowledgment contained in the entry and the statement of accounts under which the entry was made were sufficient to furnish a cause of action to the plaintiff for maintaining the suit. Truly speaking, the suit was not based merely on the acknowledgment but was based on the mutual dealings and the accounts stated between them and was thus clearly maintainable: 33 Cal 1047 (PC); AIR 1929 Lah 263 and AIR 1929 Lah 264, Ref. (Para 11)

Relying on the principle laid down by the Apex Court in Hiralal (supra), the Bombay High Court in M/s. R. Sureshchandra and Co. Vs. M/s. Vadnere Chemical Works and others, held in para 10 as under:

There is another reason why the claim is good in law even if we assume that Ex.D was not executed before the expiry of period of limitation. Section 25(3) Contract Act validates a promise to pay a debt barred by limitation. This, it was argued, is not the stand of the plaintiff and cannot therefore be taken into consideration. The pleadings do not have to reflect legal submissions. They are to incorporate only the material facts. The making of the acknowledgment has been pleaded and this is cited as a reason for the claim in suit being within time. Not describing the acknowledgment as a promise would not deprive plaintiff of the right to have recourse to the legal provision applicable. I understand that after the expiry of the period of limitation, nothing short of a clear promise can provide a fresh period of limitation. But such a promise can also be inferred by necessary implication. The Supreme Court in Hiralal and Others Vs. Badkulal and Others, quoted with approval a Privy Council decision in Maniram v. Seth Rupchand 33 Ind App 165 (PC) (C), that an unconditional acknowledgement was sufficient to furnish a cause of action for it implied a promise to pay. A decision of the Allahabad High Court to the contrary Ghulam Murtaza Vs. Mt. Fasiunnissa Bibi, was held as not laying down good law. There is nothing ambiguous about Ex.D. It says that as on 13-11-1974 defendant 1 is indebted to the plaintiff to the extent of Rs. 3,40,652.26 ps. The balance sheet is signed by defendant 3 who is a partner of the firm. Her competence to bind the firm is not disputed. Being thus clear, it amounts to a promise within the meaning of Section 25(3) of the Contract Act. If so, the suit is plainly within time.

The Allahabad High Court in Bishambhar Dayal (deceased by L.Rs.) and Others Vs. Vishwanath Agarwal, in the case of Bishambhar Dayal (deceased by L.Rs.) and Ors. v. Vishwanath Agarwal has held as under:

It is not required under the law that the promissory note mentions that this was in lieu of a time barred debt or even that the defendants should have been conscious that the debt had become barred by limitation.

Now this Court would see the contents of writing of promissory note Ex.44 which reads as under:

I, the undersigned, Dhirubhai Bhogilal Gandhi, resident of Ahmedabad has borrowed from Smt. Hariprabha Govindlal Parikh and Kantilal Kasturchand Parekh, resident of Ahmedabad, Rs. 5,000/-, baki of Pro.note dated 1.1.74 and baki of Rs. 1800/- of interest and Rs. 1200/- in cash today totalling Rs. 8,000/-. The aforesaid amount is taken for the business and that on demand shall be paid to you or your order where and when with 12 per cent per annum. The Pro.note of 1.1.74 and other previous Pro.notes are taken back.

U.P.C. Revenue stamp (stamp) 1/2/77

Plain reading of the wordings of promissory note Ex.44 in light of the law laid down by the Apex Court as also the Bombay High Court in the aforesaid decisions makes it abundantly clear that defendant has voluntarily accepted the entire time barred borrowed amount. Hence, Section 25(3) of the Contract Act would squarely apply in this case and Section 18 of the Limitation Act would not have any application and hence, the plaintiffs are entitled to get the decree of the amount of Rs. 5,000/-. However, the court below erred in disbelieving the say of the plaintiffs by holding that the payment was made in 1964 and promissory note was renewed upto 1974. However, as there was no acknowledgment for the previous dues of Rs. 5,000/- during the period from 1974 to 1977 nor did he renew the promissory note, it was held that promissory note at Ex.44 issued in favour of the plaintiffs by the defendant in February, 1977 would not be a valid acknowledgment u/s 18 of the Limitation Act and so, the suit was partly decreed and suit for Rs. 5,000/- was dismissed by the trial court.

However, as discussed above, it is crystal clear from the wordings of the promissory note itself that the defendant, in no uncertain terms, had undertaken the entire debts including the implied time barred debt and hence, in view of the principles enunciated by the Apex Court as also the Bombay High Court, the plaintiffs are entitled to get the entire suit amount of Rs. 5,000/- together with the interest over and above the amount decreed by the trial court. It is to be noted that the original defendant did not challenge the impugned judgment by filing an appeal and hence, the findings qua other aspects of the impugned judgment have become final.

The appeal is accordingly allowed. The plaintiffs shall recover from the defendant the suit amount of Rs. 5,000/- with interest @ 9% p.a. from the date of the suit till realization in addition to the amount decreed by the court below by the impugned judgment. Decree to be drawn accordingly. The impugned judgment and decree are modified to that extent.