1. This appeal arises out of a suit to recover Rs. 1,005 due on a khata for Rs. 1,000 dated October 17, 1931, followed by another khata for Rs. 1,175 dated September 24, 1934. The suit was filed on September 20, 1937. The defence was that the khatas had not been passed for any cash consideration but for past debts found due on accounts, that the plaintiff used to take similar khatas from time to time, that as one of such previous khatas passed in 1929 was taken after the debt had become time-barred, the khata in suit must be treated as without consideration and that the claim was time-barred.
2. The trial Court held that the defendant did not prove that he got no consideration for the transaction in suit evidenced by the khata of 1931 and that the suit transaction was not for balance for past transaction as alleged by defendant No. 1 and that the claim was not time-barred. The plaintiff was therefore given a decree for the amount claimed with future interest and costs.
3. In appeal the learned District Judge found that there was no cash consideration for the khata of 1931, that it had been passed for balance due on previous khatas and that the suit was barred by limitation. He, therefore, allowed the appeal and dismissed the suit with costs.
4. The dealings between the parties commenced with a loan of Rs. 1,000 on July 10, 1918, for which the khata, exhibit 21, was passed in favour of the plaintiff. The receipt of its consideration in cash is admitted. Thereafter the plaintiff took a khata for Rs. 1,150 in 1922 (exhibit 23), a khata for Rs. 1,300 in 1926 (exhibit 24) and a khata for Rs. 1,300 in 1929 (exhibit 25). The plaintiff says that on every occasion defendant No. 1 repaid the dues under the old khata in cash and then immediately took back the amount on passing a fresh khata. This procedure was not only superfluous but unnatural. It is true that in the accounts of the plaintiff the amount due on the previous khata used to be credited every time as received in cash and a new khata duly signed and stamped used to be taken. But it is usual for money-lenders to show that every time the account is settled a new contract is entered into, but it is common knowledge that the recital in the new document that the consideration is received in cash is only formal and not genuine. This practice was judicially recognised in Hukumchand v. Hiralal I.L.R. (1876) 3 Bom. 159. The learned District Judge is, therefore, right in holding that when the two khatas in suit exhibits 16 and 17 were passed no cash consideration was actually paid. Moreover this is a finding of fact based on probabilities and inferences drawn from the various khatas produced in evidence in the case: and is, therefore, unassailable in second appeal : Secretary of State v. Romeshvaram Devasthanam : (1934)36BOMLR539
5. Mr. Coyajee argues that this finding is fatal to the plaintiff's claim which is based on the allegation that the consideration of the khatas in suit was cash and that the plaintiff should not be allowed to make out a new case that if it was not cash he should be given a decree on the basis that its consideration was past debt. Such a contention was negatived in the case of Hukumchand v. Hiralal cited above, where the question related to a deed of sale in which the consideration was described to be Rs. 100 in ready cash received and the evidence showed that the consideration was an old bond for Rs. 63-12-0 and Rs. 36-4-0 in cash, and it was held that there was no real variance between the statement in the deed and the evidence as to consideration. Melvill J. observed (p. 160) :-.it is, no doubt, customary in this country, when a bond is given wholly Off partially in consideration of an existing debt, to describe the consideration as being 'ready money received'.
6. Hence it is necessary to consider what was the real consideration of the khatas and whether they are void for want of good consideration.
7. It is necessary to clear the ground and state definitely the stand taken by the plaintiff. He has taken in all six khatas and the last two khatas, exhibits 16 of 1931 and 17 of 1934, are the only ones referred to in the plaint. It is conceded that the khata of 1934 does not create a fresh contract and is sought to be used as an acknowledgment to save the bar of limitation under Section 19 of the Indian Limitation Act, 1908, while the khata of 1931, exhibit 16, is sought to be made the basis of the claim in suit. It is not disputed for the defence that the amounts mentioned in the different khatas were due on the. dates on which they were passed, but it is urged, and the learned District Judge has found, that the debt mentioned in the khata of April 5, 1926, (exhibit 24) was time-barred when the next khata (exhibit 25) was passed on May 2, 1929. Hence he held that exhibit 25 as an acknowledgment could not save the bar of limitation and therefore the khata in suit, exhibit 16, is void for want of good consideration, Regarding the bar of limitation he has observed in paragraph 4 of his judgment :-
For the purpose of this contention (about the bar of limitation) it is necessary to realise that if we come to the conclusion that any one of the previous khatas was passed beyond the period of limitation, that is to say, on a date on which its predecessor had already become time-barred, neither that khata itself nor any of its successors could be considered sufficient to save limitation.
8. This would be true if the khatas be regarded as mere acknowledgments and not new contracts. But if exhibit 16 be regarded as creating a fresh contract, then it does not matter whether the previous khatas, even if they be regarded as mere acknowledgments, were not passed within the period of limitation. Assuming that the original loan of Rs. 1,000 borrowed in 1918 under exhibit 21 was not repaid till 1931 and was still due and no khatas or acknowledgments were passed in the interval, the debt due under the khata of 1918 may not be recoverable in a Court of law. Yet, if by a fresh contract that debt is promised to be paid, then it would be a good consideration and the contract would be valid under Section 25, Sub-section (3), of the Indian Contract Act, 1872. The basis of the suit is not any of the acknowledgments, but the contract contained in the khata of 1931. But if that khata also amounts to an acknowledgment, then the present suit, founded on the acknowledgment, would not be maintainable. It is, therefore, first necessary to see whether exhibit 16 is a mere acknowledgment of the previous debt or a fresh contract.
9. There is nothing in the wording of exhibit 16 to indicate that its consideration was past debt. It says that Rs. 1,000 were received in cash and were payable. The Gujarati wording is 'nagad rokada polia lidha te deva'. In Ranchhoddas Nathubhai v. Jeychand Khushalchand (1884) I.L.R. 8 Bom. 405 Sargent C.J. observed that the Gujarati words 'baki deva' are of common use in balancing accounts and import no more than the English words 'balance due', from which doubtless an unwritten contract may be inferred but which do not of themselves amount to a promise to pay. This interpretation was accepted in Maganlal v. Amichand : AIR1928Bom319 , where the words baki deva at the foot of a Gujarati account were held not to amount to a promise. In Balkrishna v. Jayshankar : AIR1938Bom460 , Wassoodew J. observed that the question in each case is essentially one of construction of the language of the document itself, and held that even if the words 'baki deva' were followed by the word 'sahi', they did not expressly connote a promise to pay the balance of the debt found due. But, as observed by Sargent C.J. in Ranchhoddas Nathubhai v. Jeychand Khushalchand, it is possible that the ordinary meaning of the word 'deva' may be enlarged by the context. Thus in the case of Nagindas Dharamchand v. Trikumdas Thakarsi (1877) P.J. 239 the words were 'balance struck payable (deva) by two instalments', and it was held that they amounted to a promise to pay and constituted a new contract. Similarly in this case the words nagad rokada polia lidha, which precede the words te deva, indicate that the parties contemplated a new contract. The assertion that the amount was received in cash, followed by the words that the amount was payable, shows that it was not a mere acknowledgment of something that was already due. The khata by itself does not show that it was passed for any balance found due on settlement of accounts, and an acknowledgment necessarily imports the acknowledgment of an existing debt. As no such existing debt was referred to in the khata, it follows that it was meant to be a new transaction, and the recital of the receipt of an amount in cash and the liability to repay the amount necessarily indicates a promise to pay that amount. A new contractual relation came into existence and the person who purported to have received the amount agreed to repay it. Hence exhibit 16 must not be treated as a mere acknowledgment of past debt but as a fresh promise to pay the amount which was purported to have been received in cash. The plaintiff's suit on the basis of such a promise is therefore maintainable. The subsequent khata of 1934 (exhibit 17) does not contain such words as to make it a new contract and, therefore, it is sought to be used only as an acknowledgment to save the bar of limitation. As it was passed within three years after exhibit 16 was executed, the plaintiff's claim based on exhibit 16 is in time.
10. Moreover, there are two other letters written by defendant No. 1 to the plaintiff, one of July 27, 1935 (exhibit 27), and the other of September 6, 1937 (exhibit 31), in both of which he promised to pay the amount due. The suit being thus in time, the real question for consideration is whether the khata on which the suit is based is void for want of consideration.
11. It has been found that the recital in the khata that the amount of its consideration was paid in cash is not true. But, as I have said, it is open to the plaintiff to prove what the real consideration was, as was allowed to be done in the case of Hukumchand v. Hiralal cited above. It has been further found that the real consideration of exhibit 16 was the amount due for the loan borrowed in 1918 in respect of which three other khatas were passed before the khata in suit. It is not necessary to consider whether any of those khatas created a fresh contract or were mere acknowledgments or whether those acknowledgments were made within the period of limitation when the debt due was still recoverable in a Court of law. Obviously the khata of 1929, (exhibit 25), was not passed within three years of the khata of 1926 (exhibit 24), and if no fresh contract had been entered into, the claim would have been time-barred. But it is urged on behalf of the plaintiff that even assuming that the debt, which was the consideration of the khata in suit, exhibit 16, was time-barred when it was passed, yet it would be valid consideration under Section 25, Clause (3), of the Indian Contract Act. The relevant portion of that section says that an agreement made without consideration is void, unless it is a promise, made in writing and signed by the person to be charged therewith, 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 not disputed that the amount of Rs. 1,000 was due when exhibit 16 was passed, though the payment of that amount could not have been enforced owing to the bar of limitation. But Mr. Coyajee contends that the plaintiff cannot get the benefit of Section 25, Clause (3), as defendant NO. 1 did not know when he passed exhibit 16 that the debt for which he was passing it had become time barred, and, secondly, that the khata itself does not show that it was passed for a past debt. It is true that there is nothing in exhibit 16 to indicate that defendant No. 1 passed it with consciousness on his part that the debt was already time-barred. But there is nothing in the wording of Section 25, Clause (3), to show that it is necessary for the creditor to establish that at the time when the promise was made by the debtor he knew that the debt which he promised to pay wholly or in part was a debt of which the creditor could not enforce payment by reason of the law for the limitation of suits. A similar contention was urged in Bhowani Misser v. Peari Jha (1913) Cri.L.J. 329, and Mookerjee J. observed (p. 331):-
In our opinion, there is no foundation for this contention. To support the argument, it is necessary to read into the section words which are not to be found there. If the Legislature had intended Clause (3) to have the operation attributed to it by the respondent, the Legislature might well have used the phrase 'to pay wholly or in part a debt which, the debtor was aware, was such as the creditor could not enforce by reason of the law for the limitation of suits'. The words used by the Legislature cannot obviously be amplified in this manner.
12. The same view was taken in Bansidhar v. Bonerjee & Co. 40 C.W.N. 130 and Moil Sheikh v. Baikantha Nath (1913) Cri.L.J. 269. It is, therefore, obvious that Clause (3) of Section 25 does not require that the person to be charged with should know that the debt for which he was passing the writing was already time-barred.
13. It is true that the promise made in writing must be to pay a debt of which the creditor might have enforced payment but for the law for the limitation of suits. As already held, the consideration of the khata in suit, exhibit 16, was not cash but past debt, and even if that past debt was time-barred and, therefore, the plaintiff could not have enforced its payment, defendant No. 1 undertook to pay it by entering into a fresh contract. 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. As observed by Jenkins C.J. in Chandraprasad v. Varajlal : (1906)8BOMLR644 the conditions necessary to make it a promise within Section 25(3) of the Indian Contract Act are that it should be made in writing; be signed toy the persons to be charged therewith; and be a promise 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. He does not say that the writing itself must purport to pay such a debt, if in fact the writing was passed for the payment of such debt.
14. On the very day on which the khata, exhibit 21, was passed, defendant No. 1 had before him the previous khata of 1929, exhibit 25, and he made an entry on it in his own handwriting crediting the amount due under it. As already pointed out, this was not a cash repayment, but the payment was made by the execution of a fresh khata amounting to a new contract. This makes it evident that the consideration for the fresh contract was the debt due under the previous khata. As both the credit entry and the debit entry were made simultaneously by defendant No. 1 in his own handwriting, he knew that he was passing a new khata for the old debt. It is not clear whether he knew that the old debt was time-barred. But even assuming that he was not conscious that it was time-barred, yet the new contract can not be regarded as vitiated by the fact that the past debt was time-barred. Such debt must be deemed to be good consideration for the new contract under Clause (3) of Section 25. The contract is, therefore, valid and the plaintiff's suit based on it must be decreed.
15. I set aside the decree of the lower appellate Court and restore that of the trial Court, The respondents to pay the appellant's costs throughout.