Sri Kapaleeswarar Temple, Mylapore vs T. Tirunavukarasu

Natarajan, J.—The plaintiff in suit No. 3118 of 1969 on the file of the Third Judge. Court of Small Causes. Madras, who was the applicant

in N. T. A. No. 82 of 1971 on the file of the Court of Small Causes, Madras, is the revision petitioner. The plaintiff, viz., Sri Kapaleeswarar

Temple by Chairman. Board of trustees, filed a suit against the respondent for recovery of a sum of Rs. 324 being the arrears of rent due from the

respondent for the period March 1960 to December. 1968 on a monthly rent of Rs. 3/-. The respondent opposed the suit claim and contended

that the claim was barred by limitation and secondly that two payments of Rs. 30/- made by him had not been given credit to. In support of his

claim the plaintiff placed reliance on a letter Ex. P-1 executed by the respondent on 2-11-1968. The learned trial Judge came to the conclusion

that Exhibit P-1 can keep alive the rent claimed by the plaintiff only for a period of three years prior to the date of its execution and in that view he

held that the plaintiff was entitled to recover arrears of rent from the respondent only from the month of October, 1965 onwards and rejected the

plaintiff''s claim for rent for the period prior to October 1965 as barred by limitation. Aggrieved by the limited relief given to him in the suit, the

plaintiff preferred New Trial Application No. 82 of 1971. The Bench which considered this application took the view that unless the debt itself was

alive on the date of acknowledgment, the acknowledgment made by the debtor would not have the effect of keeping alive a timebarred debt, and

in that view the Bench held that Ex. P-1 cannot save limitation to the plaintiff for any period prior to three years of its execution. It is to assail this

finding of the Bench that the plaintiff has preferred this revision.

I am clearly of the opinion that the trial Judge as well as the New Trial Bench have committed a grievous error in their approach to the claim

made by the plaintiff in the suit. Both the lower Courts have considered the case of the plaintiff only with reference to the provision contained in

Section 18 of the Limitation Act and have totally failed to consider another equally important and salient provision of law which has got to be taken

into consideration in deciding a controversy as the one on hand. Section 18 of the Limitation Act reads as follows:

Section 18(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an

acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is

claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the

acknowledgment was so signed.

(2) .....

From this it is quite clear that if a debtor makes an acknowledgment of his liability and the subsistence of the claim before the expiration of the

prescribed period, then a fresh period of limitation is made available to the creditor from the time when the acknowledgment is made. However, in

this case, the contention of the plaintiff is that by the execution of Exhibit P-1 the respondent has obligated himself under a fresh contract and such

obligation is enforceable by the plaintiff irrespective of the fact whether the debt or liability agreed to be discharged by the respondent as

undertaken in Ex. P-l is referable to a debt within time or a debt barred by limitation. To understand the case of the plaintiff in this behalf, it is

necessary to make reference to the terms of Ex. P-1.

(Original in Tamil language. Transliterated in English--Ed.)

2-11-1968

Thirumavilai Sri Kabaleeswarar Devasthanam Thiru Nirvaga Adhigari avargalukku merpadi devasthana anubogathil ulla ne. 74. kothaval savadi

theru. Saida-pettai, kali manaiyil kudivirukkum T. Thirunavakkarasu mikka vanakkathudan eludhikoduthadhu merpadi devasthanathai serndha

kaliyidathirku madham onnukku roo 3/- veedham vadagaivai 31-10-1968 mudiya roo 312/- i devasthanathukku seluthadhu irukkum ip

bakhithogaivai madham roo 10/- veedham oworu madhamum 10 thedhikkul devasthanathil selu-thi raseedhu petrukolgiren. Mudhal thavanaiyai

10-11-1968 il seluthugiren. Thavarinal en peril nadavadikkai edukka sammadhikkiren.

Satchigal: Ippadikku

(3d) C. Kanagasabai (Sd) T. Thirunavakkarasu

(Sd) O. S. Ramudu 2-11-68

Having regard to the terms of Ex. P-1, it is clear that the respondent had calculated the entire rent for the period ending 31-10-1968 at Rs. 312/-

and has further given a promise thereunder that he would pay off the sum of Rs. 312 at the rate of Rs. 10/- per month, that the first instalment was

to commence from 10-11-1968 onwards and that if he committed any default it was open to the plaintiff to take appropriate action against him. It

is therefore rendered clear that Ex. P-1 forms the basis of a fresh contract between the respondent and the plaintiff and the plaintiff is entitled to

base that as the cause of action and institute a suit against the respondent for recovery of the amount undertaken to be paid by the respondent by

and under the terms of Ex. P-1. The question as to whether any portion of the sum of Rs. 312/- acknowledged to be paid by the respondent under

Exhibit P-1 to the plaintiff in monthly instalment of Rs. 10/- was barred by limitation or not on the date of the execution of Ex. P-1 has no relevancy

or significance and is a factor which has to be totally eschewed from consideration. It is to cases of this kind that Section 25(3) of the Indian

Contract Act would apply. Section 25(3) of the Indian Contract Act reads as follows:

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.

In any of these cases, such an agreement is a contract.

* * * *

It is apposite to refer to the illustration (e) to this section:

(e) A owes B Rs. 1,000/-, but the debt is barred by the Limitation Act. A signs a written promise to Pay B Rs. 500/-on account of the debt. This

is a contract.

If only the trial Judge or the Bench of Judges who decided the New Trial Application had adverted their mind to this signal provision in the

Indian Contract Act. they would not have held the plaintiff to be entitled only to a portion of the amount claimed by him. But, instead, would have

held that the plaintiff was entitled to sustain his entire claim against the respondent on the basis of Ex. P-1. The reason for the Legislature having

enacted a provision as Section 25(3) of the Indian Contract Act is not far off to see. It is, no doubt, true that the Limitation Act provides a certain

period during which alone a creditor is entitled to institute action against the debtor for recovery of the debt and if the creditor fails to institute the

action within the time allowed to him by law, the debtor sets a vested right and is afforded opportunity to resist the action of the plaintiff on the

ground that the claim is barred by limitation. However, it is equally open to the debtor to renounce or waive the right conferred on him by the Law

of Limitation and bind or obligate himself afresh to discharge the debt incurred by him irrespective of the fact the debt had become barred by

limitation on the date he gives the fresh undertaking to the creditor to pay off the debt. The principle is now well known that a person may

renounce a benefit of law made for his own protection.

Inasmuch as Section 25 clearly lays down that all the cases referred to in Sub-clauses (1) to (3) of Section 25 is a contract, a creditor who has

the benefit of such a contract as is contemplated in Sub-clauses (11 to (3) of Section 25 from the debtor is entitled in law to enforce the contract

against the obliger and seek recovery of the amount agreed to be paid by the debtor under the contract.

The question as to how far a contractual obligation created u/s 25(3) of the Indian Contract Act is enforceable in a Court of law has come up

for consideration in several ways. In Kishen Lal v. Gohli, AIR 1938 Lah 757 it was held that when a promise falls under Sub-section (3) of

Section 25. it constitutes a valid agreement for the purpose of suing, whether there is a fresh consideration for the promise or not and it is

immaterial whether the debts covered thereby are within limitation or not."" Niaz Ahmad Khan and Another Vs. Parsottam Chandra and Another

holds that where a mortgage was executed in lieu of an amount due on an earlier bond, a suit on which bond had abated, the mortgage does not

fall to the ground owing to the absence of consideration. In Varadaraja Appa Rau v. Suryaprakasa Rau (1899) 9 MLJ 330 a Bench of this Court

held:

In order to satisfy the requirements of Section 25, Clause (3). Contract Act, a document need not show any intention of creating a fresh obligation

in consideration of the barred debt: nor need the debt be known to be barred at the date of the document.

Kasturchand Jiwaji v. Manekchand Devchand, AIR 1943 Bom 447 also lays down :

The conditions necessary to constitute a promise within Section 25(3) are that it should be made in writing: be signed by the person to be charged

therewith; and be a promise to pav wholly or in part a debt, of which the creditor might have enforced payment but for the law for the limitation of

suits. The clause does not require that in the writing itself the consideration should be described as past debt, when in fact it was such past debt

and was known to the debtor as such.

David Sutherland. Clark v. Rose Grimshaw. 73 Ind Cas 652 : AIR 1923 Lah 481 holds a written promise to pay a barred debt is not a bond

within the meaning of the Stamp Act and is not required by any of the provisions of the Act to be stamped, and conseauently the suit was within

limitation from the date of the letters, although the debt had become barred before the letters were written. A Bench decision of this Court in Mrs.

C. Simon v. M. G. Arogiasami Pillai, 25 Ind Cas 361 : AIR 1915 Mad 242 in my opinion, provides a complete answer for the matter in question

in this revision petition. The Bench held as follows :

A barred debt is a valid consideration for a promise to pay u/s 25 of the Indian Contract Act even if the promiser did not know it to be barred on

the date of the promise.

Repelling the contention of the defendant therein that part of the claim was barred by limitation on the date the letter was executed and

consequently the letter cannot be treated as evidence of an agreement u/s 25 of the Contract Act to pay a barred debt, the Bench observed as

follows:

Assuming that the debt or a portion thereof was barred, the letter contains an unconditional promise to pay whatever balance might be found to be

due to the plaintiff. This is a valid agreement u/s 25 of the Contract Act.

It is thus clear that there are a catena of decisions and plethora of authority for holding that though a debt might have become time-barred on the

date a debtor entered into a fresh obligation with the creditor to Day the liability, the said obligation, if it satisfies the conditions laid down in

Section 25(3) of the Indian Contract Act, will amount to a fresh contract in the eye of law and can certainly be made the basis of an action for

recovering the amount promised and acknowledged therein by the debtor. While Section 18 of the Limitation Act (Section 19 of the old Act) deals

with an acknowledgment made by a debtor within the period of limitation, the contractual obligation which a debtor enters into under the terms of

Section 25(3) has no reference whatsoever to the acknowledged debt being within time or not. In that sense, the provision contained in Section

25(3) is far wider in scope than the acknowledgment contemplated in Section 18 of the Limitation Act. The contract entered into u/s 25(3) is an

independent and enforceable contract and has no reference to the debt acknowledged under the contract being a live one in the sense that it had

not become barred under the law of limitation. This aspect of the matter has been totally lost sight of by the lower Courts. As already stated, the

respondent has categorically stated under Ex. P-1 that he was indebted to the plaintiff in a sum of Rs. 312/- till 31-10-1968 and consequently his

undertaking under the terms of Ex. P-1 to discharge this amount at the rate of Rs. 10/- per mensem is an independent contract and is clearly

enforceable by the plaintiff. Both the lower Courts were, therefore, clearly in error in holding that the plaintiff was entitled to maintain his action only

in respect of a portion of the claim. Consequently the orders of both the lower Courts are set aside and the revision petition will stand allowed. The

plaintiff will be entitled to sustain his action for the total amount claimed by him in the plaint on the basis of Ex. P-1. There will be no order as to

costs.