B.A. Masodkar, J.
1. In the present appeal, the challenge is to the decree made against the appellant, who claims to be the Jagirdar, and in favour of the State Bank of Hyderabad, which sued for the recovery of the amount at the foot of the account, being cash credit account, which was, admittedly, opened by the appellant on or about 20th August, 1959, as is shown and not in dispute vide Ex. 77, Eventually, the claim was set up and a decree has been made in the sum of Rs. 3,70,907.78 p. in favour of the plaintiff-bank. The present appellant raised legal defences basing his submissions on the provisions of the Hyderabad Jagirdars Debts Settlement Act, 1952, to which we will make a reference while appreciating the submissions of the learned Counsel appearing for the appellant.
2. Shortly stated, the defence was that the account with the plaintiff bank, initially began in 1948 and as a result of the 1952 Act, the defendant-appellant being the Jagirdar, his debt stood extinguished under section 22(1) of the Act. In view of that Act, it was further contended that the Civil Court would have no jurisdiction. Both these defences were overruled and the trial Court has made the decree.
3. For the purposes of the present appeal, certain facts are not in dispute being that initially there was an account with the plaintiff-bank opened by the defendant sometime in 1948 and thereafter on or before 20th August, 1959 and 2nd December, 1959 as per Ex. 77, a cash credit account was opened transferring all the debts from the earlier account to the new account. As against this liability, 1694 shares having the face value of Rs. 23,500/- were delivered in pledge on 20th August, 1959 (Ex. 78) and a promissory note was executed by the defendant on 14th June 1960 for the then outstanding sum of Rs. 4,90,000/- (Ex. 79). On the same day, memorandum was executed for the purpose of deposit of title-deeds (Ex. 80) followed by a declaration (Ex. 81). That declaration was with regard to the failure to produce the original title-deeds. On 14th December, 1962, the defendant gave a declaration (Ex. 84) with regard to the revival, accepting the liability of the debt, and further acknowledged his liability in express terms by giving acknowledgment of 30th June, 1964 and 22nd July, 1964 (Exs. 85 and 86 respectively). A deed of guarantee was also executed on 17th January, 1964 (Ex. 87) so as to cover the liability and to secure the debt under the account.
4. It was the case of the plaintiff-bank that till the filing of the suit, the defendant had never come out with the position that he was a Jagirdar or was entitled to the protection of the Debt Relief Act. On the other hand, he was all the while showing himself as the mill-owner and Landlord. It was further the case of the plaintiff-bank that voluntarily all these transactions were entered into and the earlier debt was taken after clearing up the same of the new account as per Ex. 77. Thereafter, this account was continuously operated for over a period of many years and even a fresh advance of Rs. 60,000/- was taken by the defendant. Thus at the foot of the account, the defendant's liability was worked out.
5. The main plea, as we have observed above, was one of law and also of denial with regard to the voluntary revival of the debt.
6. As far as the latter aspect is concerned, Mr. Pranajape, the learned Counsel appearing in support of the appeal, did not seriously dispute that the record is voluminous to show that the cash-credit account was voluntarily opened and that the defendant was not coerced into any particular action by the plaintiff-bank. In fact, the record clearly goes to show that the opening of the cash-credit account and it is constitution by taking the earlier debt into that account was the voluntary act on the part of the defendant.
7. The evidence of the defendant, examined in support of his defence, goes to show that except denying this position, there is hardly any material to hold that it was the plaintiff-bank which insisted upon any particular course of conduct. On the other hand, defendant Raja Dhanrajgirji has stated on oath that he was not able to say how the overdraft account was closed and the new cash-credit account was opened with the plaintiff-bank. He did not know how the overdraft account was adjusted and closed. In cross-examination, he has admitted that at the time of the opening of the overdraft account with the plaintiff-bank, he had taken loans from the plaintiff-bank, that he used to operate the overdraft account through his employees, that he had received a notice dated 10th November, 1959, whereby he was called upon to regularise his overdraft account, that his interest on the Railway shares used to be adjusted in his overdraft account up to 1959 and further that it was possible that he might have described himself as mill-owner and landlord in his account opening form and further that the cash credit account was opened and the overdraft account was closed and that the entire correspondence was with regard to the cash credit account. With regard to the mortgage, he has admitted that the mortgage deed of 14th June, 1960 as far Rs. 4,40,000/- though, according to him, it was against Rs. 60,000/- which were paid as advance then. He has further admitted that the mortgage deed does contain an admission with regard to the outstanding amount of Rs. 4,30,000/- and the receipt of Rs. 60,000/-. He has, similarly, admitted the execution of the promissory note for Rs. 4,90,000/-. He has admitted the correspondence and the declarations. According to him, it was possible that he might have executed the guarantee of 17th January, 1964 with respect to the sale of the railway shares and that it was true that till the institution of the suit, he never informed the plaintiff-bank that he was a Jagirdar.
8. This evidence of the defendant clearly indicates that all the act of opening the cash-credit account by closing the earlier overdraft account was a voluntary one. That account has been operated over long period and debts and facilities thereunder secured by voluntary execution of the promissory note as well as the declarations and guarantees. The plea that it was done at the behest of the plaintiff bank or under some persuasion has no foundation either in record or in oral evidence.
9. Having held so, we proceed to appreciate the other submissions of the learned Counsel. Mr. Paranjape, in support of this appeal. The learned Counsel opened a two-pronged attack, though of little efficacy. Firstly, it was contended that as a result of the passing of the Hyderabad Jagirdars Debt Settlement Act, 1952 (hereinafter called 'the Act') and particularly under section 22(1), all debts prior to the notified date, namely, June 1953, stood extinguished as no proceedings under the Act were initiated by the plaintiff-bank which was the creditor. According to the learned Counsel's submission, the extinguished debt could not be reviewed by mere acknowledgments or by mere opening of a cash-credit account whereunder the earlier debt was carried forward. To that extent, the account will have to be slashed down or minused. Secondly and as a alternate submission it was said that assuming that the declarations were made, the promissory note was executed and the deed of guarantee was given, all these documents would be without consideration to the extent of the extinguished debt, there being no 'existing debt' that could form part of the consideration. At the most, the learned Counsel submitted that the only debt that could partake in the character of consideration was fresh advance of Rs. 60,000/- and the decree to that extent along could have been made.
10. Both these submissions, in our view, are without merit.
11. Firstly, the terms of the Act clearly show that section 3 thereof provided that the debt and liabilities of a debtor with regard to sums due to a scheduled bank were not governed by the provisions of the Act. The plaintiff-bank was the scheduled bank and prima facie therefore, the provisions of section 22 of the Act were not applicable to the debt due to the scheduled bank. These provisions of section 3 survived the challenge in the case of J.R. Kimtee v. Kishendas, where it was decided that the same were not unconstitutional nor did they violate Article 14 of the Constitution. Therefore, between the parties, it is obvious that till the time of 1959, when the cash-credit account was opened, section 3 operated as recognised to be a valid piece of law operating upon the rights and liabilities of the parties and no provision of the Act came to be benefit of the defendant.
12. However, at the hearing, Mr. Paranjape pointed out that the Supreme Court in the case of State of Rajasthan v. Mukan Chand, : 6SCR903 , referred to the decision of the Hyderabad High Court in J.R. Kimtee's case in para 10 and did not approve the ratio of that judgment.
13. It is, undoubtedly, true that in Mukan Chand's case, which arose out of the proceedings under the Rajasthan Jagirdars' Debt Reduction Act wherein the validity of a similar provision excluding certain debts due to creditors was bad because it violated Article 14 of the Constitution. In that view, the judgment of the Hyderabad High Court in J.R. Kimtee's case does not appear to have been approved. Thus judgment of the Supreme Court however, came as is evident, much after the parties in the present case opened the cash-credit account and had been transacting their affairs under it. On the date, when the cash-credit account was opened, the position of law was that the Act did not apply to the bank-debt and, as we have indicated, as a fact it was the defendant who voluntarily carried forward his liability which was not affected by any law. This position reinforces the earlier finding that the parties could not nor did avail of the so-called relief measures by which debts were either to be scaled down or extinguished. What they did was to continue their dealings and transactions unaffected by any consideration of law. Even if the law are to apply to the debt in question, it did not prohibit any such dealings based upon mutuality and in recognition of the right and liabilities arising thereunder.
14. As far as the pleadings are concerned with regard to want to consideration, Mr. Paranjape's difficulty is the same as was noticed by the Supreme Court in the decision of Balakrishandas v. State Bank of Hyderabad, : 3SCR157 . There also, the plea of want of consideration was neither taken in the trial Court not in the Court of appeal and the Supreme Court did not allow the plea to be raised, for the first time, in that Court. The position with regard to the present appeal too is entirely identical. In fact, the submissions raised without any basis in the pleading and it is conceded that the plea is not expressly taken in the written statement nor is it made the ground of attack in the memo of appeal. In our view, such a plea, in fact, raises a mixed question of law and fact (See Balakrishandas's case) (supra). The Rule is not one of mere technicality but of fairness so as to afford opportunity to the opponent. Whether a transaction is supported by any consideration or not is, no doubt, primarily a question of fact to be determined upon the proof thereof and whether such a consideration could be supported in law may raise a legal issue. But, nonetheless, for determining such a legal issue, there must be a foundation made, firstly, in the pleadings and then in the evidence.
15. However, as we have heard the learned Counsel on the legal aspects of the matter, we proceed to consider his submissions as they were presented to us as purely question arising out of the interpretation and application of the provisions of section 22 of the Act.
16. Let us, therefore, turn tot he crucial debate that centres around the relevant provisions of section 22 so as to find out whether, upon true interpretation and effect thereof, it is a declaratory measure as is contended, so as to wipe out the debt and render it non-existent. The provisions of that section read as under :---
'22(1) Every debt due from a debtor in respect of which no application had been made under section 11 within the period specified in the said section 11 or in respect of which no application for recording a settlement is made under section 15 within the period specified in the said section 15 or in respect of which an application made to the Board is withdrawn under section 19 and no fresh application is made under section 11 and every debt due from such debtor in respect of which a statement is not submitted to the Board by the creditor in compliance with the provisions of section 21 shall be extinguished.
(2) Nothing contained in sub-section (1) shall apply-
(a) to any debt in respect of which the debtor and creditor agree in writing before the Board that the said sub-section shall not apply thereto, or
(b) to any debt due from any person who has by his declaration act or omission intentionally caused or permitted his creditor to believe that he is not a debtor for the purposes of this Act or that no application under section 11 can be entertained in respect of any debt owed by such person to such creditor by reason of the provisions of section 18.'
17. These provisions of section 22 are to operate upon certain contingencies as are referred to in body of sub-section (1). Those provisions have a feed-back from earlier sections, like sections, 11, 15, 19 and 21. Though strictly not necessary, a reference to those provisions would show that section 11 enables a debtor-Jagirdar or his creditor to make an application to the Board in the manner provided by sub-section (2) of section 11. If no such application is made, section 12 requires every creditor and debtor to file a true and correct statement before the Board, if they war so required by the notice, as is contemplated by section 12(a) in case of creditor and by section 12(b) in case of debtor. Section 15 deals with applications for recording settlements before the Board and so also are the provisions of section 16. Certain settlements are declared void by section 17 and section 18 provides that the minimum debt due on the date of the application should not be less than Rs. 5,000/-. Thus, these provisions indicate that what is contemplated by section 11 is an application for settlement of the debt and any other settlement, which is not certified under section 15 or for which no a ward has been made under section 16, would be void. If no application is made under section 11 within the period specified in that section, section 22(1) gives the effect that such debt due from a debtor shall be extinguished. In other words, it operates upon the application being made within the period specified by section 11. As far as this contingency is concerned, section 11(1) permits the Government to notify the date before which the applications for settlements are to be made to the Board.
18. Thus, the review of these provisions clearly shows that section 22(1) is enacted to work out the relief dependent upon the lapse of period within which an application for settlement was to be made. It is not a declaration that ipso facto or by statutory force the liability then existing was to be effaced. On the other hand the provisions of section 11 read with section 22(1) indicate that a remedy is being provided both to the debtor-Jagirdar as well as to the creditor to file an application for settlements of the liability. Extinguishment of the debt arises if no such application is made by either. In other words, the operation resulting in the extinguishment of the debt by reason of the relief under section 22(1) depends upon the making of the application within the stipulated time. The relief, thus, arises after the lapse of time to file such an application. Upon true intent of these provisions, it is obvious that thy do not, in any manner, affect the debt as such so as to render it non-existent. Such provisions in our view, really lay down the Rule of limitation within which a party is enabled to act so as to achieve settlement of the debt, failing which the remedy provided is lost and the debt stands extinguished. It does not necessarily follow that parties agreeing to the other course, in that clearing off their liabilities or settling their claims by mutual agreements, are impliedly prohibited. The provisions being in the nature of a relief would not affect the initial liability and also initial entitlement to continue to recognise that liability in spite of the failure to make the application under section 11.
19. Not only this construction is implicit in the words of section 22(1) but that is clearly fortified by the provisions of sub-section (2) of section 22, which recognise the rights of the parties to agree, under Clause (a) that the provisions of sub-section (1) shall not apply to them, in the presence of the Board and under Clause (b) the debtor being estopped to apply those provisions if his creditor is made to believe by any declaration, act or omission by his debtor that he is not the debtor for the purpose of the Act. Contemplation of Clause (a) and Clause (b) clearly goes to indicate that even after the making of the application or even without making the application the parties can reach a position where the provisions of section 22(1) would not apply to their transactions. Thus, it is not a statutory declaration of extinction of the liability. It is, indeed, the result of action or omission on the part of the parties that follows under stipulated circumstances. The submission, therefore, that section 22(1) should be construed so as to efface the liability does not appeal to us.
20. Further, the scheme of section 22 to which we have made a reference, in the light of the earlier provisions clearly shows that it is intended to confer the benefit upon the debtor-Jagirdar, provided the conditions with regard to the liability are satisfied and it is, even then, expressly permissible for such a debtor-Jagirdar to give a declaration or act or omit to act in the manner which will lead his creditor to believe that he is not a debtor for the purpose of the Act or that no application under section 11 can be entertained with regard to the debt owed by him. In the context of the remedy provided by section 11 and the Rule of estoppel recognised by the provisions of section 22(2)(b), it is indeed, clear that the term 'extinguished' used by section 22(1) bars the remedy with regard to the liability, notwithstanding the rights of the parties to voluntarily act upon the basis that the liability subsists and continues.
21. As a matter of juridical principle, common law recognises that a person conferred with the benefit is entitled to renounce the same. From that principle follows the doctrine of waiver and consequent estoppel that operates upon the field of actions resulting from such renouncement of the benefit which was otherwise available. This principle of common law has statutory recognition when we refer to the provisions of the Limitation Act and the provisions like the one available in section 25(3) of the Contract Act. The time-barred debts stand on the same footing as the one where the liability cannot be pursued because of the lapse of time to file an application under section 11 of the present Act. The expression 'extinguished' employed by section 22(1) is intended to convey the benefit which was conferred upon the class of persons called Jagirdars, whose titles and estates came to be expropriated by reason of law. That benefit depended upon the omission to apply within the period of limitation under section 11. It is only upon the lapse of that period and at the end of that period the result was reached that the liability could not further be worked. Thus, what is relevant is that the benefit that was conferred arose out of the statute having reference to the period of limitation. It is, therefore, futile to contend that such period of limitation as contemplated by section 11(1) could not be treated as the period of limitation within the meaning of section 26(3) of the Contract Act. A reference to 'statute of limitation' in the Contract Act cannot, surely, be restricted to the Indian Limitation Act and it is of wider genus and any legislative provision laying down the rule of limitation for the purpose of recovery of the debts or liability could well be within its contemplation. It is well accepted that with regard to the debts and obligations arising thereunder, different period of limitation could be laid down by different enactments, though the general principles may be available in the provisions of the Limitation Act. The scheme of section 22(1) read with section 11(1) referred to hereinbefore clearly lays down the remedy as well as the limitation within which that remedy should be sought and the result that renders the remedy unavailable and thus, affects the parties' entitlement to the liability. The whole scheme, which is a gift or a benefit statutorily conferred upon a debtor, upon principles can well be renounced voluntarily and there is evidence in that regard clearly in the provisions of sub-section (2) of section 22 of the Act. Such liability by reason of section 25(3) of the Contract Act could form and would form a part of a voluntary acceptance by the debtor as consideration for future benefits.
22. The provisions of section 25(3) of the Contract Act have been enacted to further the basic concept of freedom of contract. In spite of the Law of Limitation, it recognises the entitlement of the parties to treat the time-barred debts as good consideration for the purpose of the contract. It is obvious that freedom conceives the liberty to submit and to give up or renounce the benefit. The capacity to renounce and recognise the liability, is in law concomitant of the freedom of contract. There is neither any antithesis nor any principle that would indicate otherwise when the matter is purely of debts and liabilities and their extinguishment by reason of adjective law like that of limitation. As we have observed, these principles are furthered by section 22(2) of the Act and particularly by Clauses (a) and (b) thereof, Clause (b) enacts statutory estoppel operative against the party which was led the other to believe that he was not a debtor for the purpose of the Act or that no application under section 11 could be entertained in respect of any debt owed by that party by reason of the provisions of section 18. The provisions are a statutory rule of estoppel and will have to be applied upon the given fact and circumstances. If the law intended nothing to survive after the period prescribed to make applications under section 11, then, in the very nature of things such an estoppel could not have been enacted nor would the parties have liberty to enter into an agreement before the Board, as is provided for by Clause (a) of section 22(2) of the Act. These provision, therefore, leave no manner of doubt that the debt for which no application is made under section 11 could form a part of a valid consideration.
23. The case of Tulsabai v. Narayan, : AIR1974Bom72 , does not bear analogy, for it was a case of a time-bared debt because of the C.P. and Berar Debt Conciliation Act, 1933 being made the consideration not by the debtor but by a third party. The decision in that case is a little assistance.
24. On the other hand, as far as this Court is concerned, as early as in 1873 in the case of Tilakchand Hindumal v. Jitamal Sudaram (1873)10 BHCR 206, it held that the time-barred debts could not only be revived by the parties but could form a part of the consideration. In Tilakchand Hindumal's case, this Court was observed :---
'The general rule of law is that a consideration merely moral is not valuable consideration, such as would support a promise. But these are instances of enforceable promises which formerly were referred to the now exploded principle of previous moral obligation, and which are still held to be binding, although that principle has been rejected. Amongst those instances is a promise after full age to pay a debt contracted during infancy, and a promise in renewal of a debt barred by the law of Limitation. The efficacy of such promise is now based upon the principle that where the consideration was originally beneficial to the party promising, and he be protected from liability by some provision of the Statute or Common Law meant for his advantage, he may renounce the benefit of that law, and if he promised to pay the debt, he is bound by the law to perform that promise.'
This decision was further followed and applied in the case of Pestonji v. Bai Meherbai A.I.R. 1928 Bom539. We are in agreement with the propositions of law stated in Tilakchand Hindumal's case to the effect that a debt barred by the Law of Limitation confers a benefit because of law and is capable of being renounced at the sweet will and behest of the beneficiary and that can form a part of valid and recognisable consideration in law.
25. The present case, thus, offers a clear instance where the debtor-Jagirdar has voluntarily accepted and carried forward the liability and, in that, has renounced, if at all there was any benefit that was conferred upon him by the provisions of section 11 read with section 22(1) of the Act. In fact, if his conduct were to be seen, the provisions of section 22(2)(b) would clearly stop him from now turning back and setting up the plea on the basis of section 22 (1) of the Act.
26. In the result, we find no merit in any of the submissions of the learned Counsel. The appeal, thus fails and is dismissed with costs.