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Abdul Rafiq Vs. Bhajan - Court Judgment

LegalCrystal Citation
SubjectCivil;Banking
CourtAllahabad
Decided On
Reported inAIR1932All199
AppellantAbdul Rafiq
RespondentBhajan
Excerpt:
- - i am not satisfied that the plaintiff has succeeded in proving that the defendant owed him rs. 4. i fail to understand what the learned judge meant in stating that 'his mere words cannot be accepted. 250. what a party himself admits to be true should be accepted to be so until the contrary is proved, a proposition so well established that no authority need be quoted in support of it. act, refers or the statement of a 'balance due on a mutual, open and current account' to which article 85 of the aforesaid act refers cannot be the foundation of a suit and that the only use which can be made of an acknowledgment like the one in question is to save limitation under section 19, lim. it is clearly an acknowledgment of the description given in article 1, section 1, stamp act, which.....niamatullah, j.1. this is an application for revision directed against the decree passed by the judge of the court of small causes at pilibhit dismissing the plaintiff-applicant's suit for recovery of rs. 250 principal and rs. 30 interest on what purports to be an acknowledgment of liability, but has been wrongly described by the court below as a promissory note. as considerable importance has come to be attached to its contents in course of the arguments before us,'-it is desirable to quote it in extenso. it runs as follows:a sum of rs. 250, half of which is rs. 125, has been found due by me to shaikh abdur rafiq...on settlement of account (fahmid hesab kitab) in respect of dealings between me and him (abdur rafiq) up to date. these presents are therefore executed to be of service in.....
Judgment:

Niamatullah, J.

1. This is an application for revision directed against the decree passed by the Judge of the Court of Small Causes at Pilibhit dismissing the plaintiff-applicant's suit for recovery of Rs. 250 principal and Rs. 30 interest on what purports to be an acknowledgment of liability, but has been wrongly described by the Court below as a promissory note. As considerable importance has come to be attached to its contents in course of the arguments before us,'-it is desirable to quote it in extenso. It runs as follows:

A sum of Rs. 250, half of which is Rs. 125, has been found due by me to Shaikh Abdur Rafiq...on settlement of account (fahmid hesab kitab) in respect of dealings between me and him (Abdur Rafiq) up to date. These presents are therefore executed to be of service in case cf need.

2. The plaintiff's case as set out in the plaint is that dealings hetween the parties were taken account of on 3rd May 1929 when the sum of Rs. 250 was found due to the plaintiff from the defendant who executed the acknowledgment already referred to and promised to execute a hypothecation bond later but did not do so. The defence was a total denial of everything alleged by the plaintiff and no positive case of any kind was set up. In particular it should be noticed that neither limitation nor want of consideration for the acknowledgment was pleaded in the alternative if the acknowledgment were found to have been made. The only issue set down for hearing was:

Whether the defendant owed Rs. 250 to plaintiff as alleged in the plaint.

3. The finding of the Judge is so brief that it may be quoted in its entirety:

I am not satisfied that the plaintiff has succeeded in proving that the defendant owed him Rs. 250 for which the acknowledgment was executed. The plaintiff ought to have submitted a statement of account. His more words cannot be accepted as true. The issue is decided against the plaintiff though I hold that the receipt relied on by the plaintiff was executed by the defendant.

4. I fail to understand what the learned Judge meant in stating that 'his mere words cannot be accepted.' If 'his' refers to the plaintiff, as I think it does, there-must have been some misapprehension in the mind of the learned Judge. The plaintiff does not rely upon his own words but those of the defendant who acknowledged his liability by executing the document, handed over to the plaintiff, and which established that the defendant was on its date indebted to the plaintiff to the extent of Rs. 250. What a party himself admits to be true should be accepted to be so until the contrary is proved, a proposition so well established that no authority need be quoted in support of it. The narrow issue which arose in the case-could only have been answered in the affirmative, and the indebtedness of the defendant having been thus found and no other defence having been raised a decree in favour of the plaintiff should have followed. The learned advocate for the respondent has argued before us that the acknowledgment in question not being account stated' to which Article 64, Lim. Act, refers or the statement of a 'balance due on a mutual, open and current account' to which Article 85 of the aforesaid act refers cannot be the foundation of a suit and that the only use which can be made of an acknowledgment like the one in question is to save limitation under Section 19, Lim. Act, provided it can be shown that all the items which had been brought into account were within limitation on the date of the acknowledgment. To my mind every one of these arguments assumes some fact or other and puts the plaintiff to proof of the contrary at a. stage when it is impossible for him to do so and when it is highly unjust to require him to substantiate it. I see no reason why we should assume that the transactions between the parties were not of a character that the balance acknowledged cannot be said to be account stated or that it was not the balance of a mutual open and current account. Such a plea should have been taken at the earliest stage to give the plaintiff notice of the ground on which his right of suit is-challenged. If the plea had been taken he might have produced his accounts to show that it was a case of the kind which, according to defendant's argument, entitles the plaintiff to sue on a mere acknowledgment. I am of opinion that the defendant is not entitled to take the plea involved in the argument addressed to us. Nor is it open to the plaintiff or to the defendant to ask us to treat the acknowledgment as one merely saving limitation in respect of advances made prior to the acknowledgment, as the plaintiff's suit is not based on the original debt which became merged in the acknowledgment. The only question is whether the plaintiff is entitled to sue basing his claim on the acknowledgment itself. Granting it is open to the defendant at this stage to ask us to assume that the acknowledgment has no reference to such transactions as would make it an account stated or that the balance therein acknowledged is not the balance of a mutual, open and current account, I am nevertheless of opinion that it could be the foundation of a suit. It is clearly an acknowledgment of the description given in Article 1, Section 1, Stamp Act, which provides a duty of one anna for Rs. 20 or more acknowledged therein. The language of the article is important and may be usefully quoted:

Acknowledgment of a debt exceeding Rs. 20 in amount or value, written or signed by, or on behalf of, a debtor in order to supply evidence of such debt in any book (other than a banker's pass book) or on a separate piece of paper when such book or paper is left in the creditor's possession : provided that such acknowledgment does not contain any promise to pay the debtor any stipulation to pay interest or to deliver any goods or other property.

5. The acknowledgment in question fulfils all the requirements of the article. It contains no express promise to pay or any stipulation as to interest. There can be no doubt that it was intended by the parties to supply evidence of the debt and was not executed merely to satisfy the curiosity of one of the parties nor was it brought into existence for information only of the debtor or the creditor. It is a formal document handed over by the debtor to the creditor and bears the requisite stamp duty. I entertain no doubt that it was intended by the parties to embody an agreement that the amount therein entered should be taken to be due as the result of settlement of account which took place immediately before its execution. It was clearly intended by the parties that their mutual rights and obligations arising out of past dealings should stand on the new footing then agreed on. The bahi khata account was taken as closed.

6. We have the high authority of their Lordships of the Privy Council that an unconditional acknowledgment always implies a promise to pay. Apart from any authority, the only rational inference, to be drawn from the conduct of the parties to an unconditional and formal acknowledgment, is that the debtor agreed to pay, otherwise he would not have gone the length of signing a duly stamped paper and handing it over to his creditor.

7. No other explanation is conceivable, and none has been suggested before us for the acknowledgment in suit. In no less than two cases their Lordships of the Privy Council have laid down the aforesaid rule : see Kalka Singh v. Paras Ram [1895] 22 Cal. 434 and Maniram Seth v. Seth Rupchand [1906] 33 Cal. 1047 from which relevant passages were quoted by me in Govind Singh v. Bijay Bahadur Singh : AIR1929All980 in which the same question arose before this Bench which, as I read the judgment of my learned brother, held that an acknowledgment clear and unconditional can be the foundation of a suit, there being an implied promise to pay. It was said in course of the arguments before us that the observations of their Lordships were in the nature of obiter dicta and should not therefore be treated as any authority for the proposition that an unconditional acknowledgment implies a promise to pay. It is not a mere casual or passing remark, but is part of a rule enunciated for the purposes of the case.

8. It has never been the practice to treat dicta of the Judicial Committee going beyond the requirements of the case in which they were pronounced as no authority, otherwise most of what has been laid down by their Lordships in the cases of Sahu Ram Chander v. Bhup Singh A.I.R. 1917 P.C. 61 and Brij Narain v. Mangala Prasad A.I.R. 1924 P.C. 50 in defining the rights of a Hindu father and other members of a joint Hindu family shall have to be disregarded. Their Lordships have quoted in the judgment in question English cases in which it was clearly laid down that an unconditional acknowledgment implies a promise to pay and such cases, at any rate, are quite good authority for the proposition. I would take the same view unaided by any case law. I may however refer to Ghuni Lal v. Laxman Govind A.I.R. 1922 Bom. 183 in which it was said that

If, then, the acknowledgment, which in this case was made before the limitation period expired, implies a promise to pay I can see no reason why it should not form the basis of a suit.

9. The Privy Council case already referred to was accepted as an authority for holding that an unconditional acknowledgment implies a promise to pay. That the debt acknowledged should not be a time-barred debt is made necessary not because it is treated as an acknowledgment under Section 19, Lim. Act, which certainly saves the bar duly if the acknowledgment was made before the debt had become barred, but because of Section 25, Contract Act, which provides, inter alia, 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 suit.

10. It follows that a time-barred debt is not a valid consideration unless there is an express promise made in writing and signed by the debtor. If therefore the promise is only inferable, and not expressly made, as in case of an acknowledgment it is open to the debtor to plead absence of consideration and to show that the debt had become barred by time on the date of the acknowledgment or to put the creditor to proof of the fact that the debt had not become barred by time, according as the onus is on one or the other (I leave alone the question of onus for the present). Acknowledgment being anew contract a simple plea of limitation will have a reference to the period commencing on its date. A suit brought within three years of its date to enforce the implied promise therein contained is not barred. That the original debt had become barred by time is not a plea of limitation in reference to the acknowledgment on which the suit is founded but is the background of the plea of want of consideration for the acknowledgment and should be taken in that form.

11. It may be said that an acknowledgment of this kind has no real value, as the necessity of proving that the original debt had not become barred by time exists in either case the only difference being that where there is such acknowledgment it goes to prove consideration and in in the other case it bears directly on the question of limitation. This objection is easily answered. Without acknowledgment the creditor has to prove his case item by item while if he has taken an acknowledgment after adjustment of past dealings the amount due is established by proof of it.

12. In the case before us, as already pointed out, the defendant did not take the plea of want of consideration or of limitation. He cannot at this stage call upon the plaintiff to establish that there was valid consideration by showing that the original debt had not become barred by time:

Where a contract is alleged in a pleading a, bare denial of the same by the opposite party shall be construed only as a denial in fact of the express contract alleged or of the matters of fact from which the same may be implied, and not as a denial of the legality or sufficiency in law of such contract. (Order 6, Rule 8, Civil P.C.)

13. Reference was made in this connexion to Anup Singh v. Fateh Siugh A.I.R. 1920 All. 92 which was a case of redemption of an ancient mortgage of which the date was not known and to prove his subsisting title, the plaintiff relied on an acknowledge ment, made within 60 years of the suit; in which the factum of mortgage had been admitted. The argument was that in admitting the mortgage the mortgagor should be deemed to have also admitted that on the date of the admission the mortgage subsisted, that is, it had been made less than 60 years before the admission. On the construction of the Wajibularz in which the admission was recorded the majority of the Full Bench held that the admission did not prove that the mortgage had been made less than 60 years before the date of the admission. Banerji, J., held that it did. In the first place, the acknowledgment in question in that case was one under Section 19, Lim. Act, which makes it essential that the party relying on an acknowledgment should prove, to start with, that at the date of the acknowledgment the claim acknowledged had not become barred by time. It was not a case where acknowledgment is a new contract in which limitation runs from its date. In the second place, there is nothing in that case to suggest that in no circumstances, how muchsoever clear the language may be, an, acknowledgment, can serve the dual purpose of saving limitation and of establishing that the original liability had been incurred at a time which was within the prescribed period counted backwards from the date of the acknowledgment.

14. In each case, it is a question of construction of the acknowledgment. I must however say that the acknowledgment in question before us does not expressly state that the original debt had not become barred by limitation before its date, but it is a legitimate inference that the defendant, who like all others is presumed to know the law of limitation applicable to his transactions, would not have deliberately accepted his liability, unless it existed and had not become barred by time. This could not be said in the reported case above referred to, as the occasion on which the acknowledgment was made was the inquiry into the origin of the defendants' possession which was admitted to be a mortgage transaction. The mortgage did not say, and there was no occasion for him to declare, that his position at the date of the acknowledgment continued to be that of a mortgagee liable to be redeemed. In this case the debtor admits that a certain sum was due by him on the day of acknowledgment. As already said, it is a matter of inference of one fact from another, and no hard and fast rule can be laid down. As Piggott, J., put it:

We are dealing with a question of circumstantial evidence, inferring one fact from another, applying the principles laid down in Section 114, Evidence Act.

15. The case of Gobind Das v. Sarju Das [1908] 30 All. 268 is authority only for the proposition that the promise in writing to pay a time-barred debt, as contemplated by Section 25, Contract Act, should be an express promise and that a promise implied in an acknowledgment of a time-barred debt is not enough. The result is that a time-barred debt is a valid consideration for a bond or a promissory note in which there is an express promise to pay but is no good consideration for an acknowledgment of the kind to which Article 1, Section 1, Stamp Act, relates, which cannot contain an express promise to pay, otherwise the stamp of one anna, provided for by the aforesaid article, will not be enough. The case referred to above is no authority for the proposition that an unconditional acknowledgment does not imply a promise to pay or that it cannot be the basis of a suit even though the parties intended that it should be evidence of the amount due on its date from one to the other. This case might have been applicable to the present case if it could be said that the acknowledgment, now in question, as made in respect of a time-barred debt and was therefore without valid consideration; but, as already said, such a plea has not been raised in this case, and it be entertained at this stage, sufficient opportunity should be afforded to the plaintiff to establish by evidence (which would include the recitals contained in the acknowledgment) that the debt was not barred by limitation and could form a valid consideration of the acknowledgment.

16. The only case which requires examination and which appears to be in conflict with the view I am disposed to take is Ganga Prasad v. Ram Dayal [1901] 23 All. 502. In that case

the defendant having examined his account acknowledged a balance of Rs. 549-11-0 to be due by him and affixed his signature to the plaintiff's account book. Allowing for sums since received and adding interest to the balance the plaintiff claimed Rs. 508-11-0 stating that the cause of action accrued on 21st July 1897.

17. No words were used and the acknowledgment was to be inferred merely from the act of signing the balance in the creditor's book. No stamp appears to have been affixed. It was held that the transaction did not amount to account stated. It was further held on the authority of certain cases that 'a mere acknowledgment did not create a new obligation.' In the cases referred to only the question of limitation arises and they dealt with oral acknowledgments or those to be inferred from the act of the debtor in signing the creditor's book. Such cases are therefore authority for the proposition that an oral acknowledgment of that species did not save limitation. Incidentally it was said that such acknowledgment did not imply a fresh contract. The learned Judges who decided the case of Ganga Prasad v. Ram Dayal [1901] 23 All. 502 proceed to observe:

No doubt, as pointed out in the Bombay case Shanker v, Mulsta [1898] 22 Bom. 513 in England an acknowledgment if unconditional is held to be sufficient evidence of a new contract which can be sued Upon but there no difficulty arises with reference to the law of limitation because an un conditional acknowledgment takes a case out of the statute of limitation whether it is made before or after the period of limitation expires. In India it is otherwise. An acknowledgment in writing signed by a debtor provides a fresh period of limitation only if it is made before the period of limitation expires. After the period expires nothing short of a fresh contract will revive the debt and provide a fresh period of limitation. If it were held that an acknowledgment of debt is evidence of a new contract which may be sued upon then Section 19 of that Act would be a dead letter.

18. I say with the utmost respect that the last sentence is based on a misapprehension of the scope of Section 19, Lim. Act, which contemplates a large variety of admissions which cannot amount to new contracts.

19. An acknowledgment under Section 19, Lim. Act may not be unconditional, need not be stamped, may be accompanied with a refusal to pay and may be addressed to any person. An acknowledgment of debt in the above circumstances will be useful as saving limitation but cannot be evidence of a new contract. It is difficult to see how Section 19 will be a dead letter if an unconditional acknowledgment of liability be taken to amount to a new contract. Moreover Section 19 is not confined to acknowledgments in respect of debts but applies to cases in which a plea of limitation is raised to bar a claim to moveable or immovable property. It also applies to acknowledgments saving the bar of limitation in cases of applications for execution of decrees.

20. In Maniram Seth v. Seth Rupohand [1906] 33 Cal. 1047 the rule of English law according to which an unconditional acknowledgment of liability implies a promise to pay was referred to and their Lordships saw

no reason for drawing any distinction in this respect between the English and the Indian law. The question is whether a given state of circumstances falls within the natural meaning of a word which is not a word of art but an ordinary word of the English language and this question is clear of any extraneous complications imposed by the statute law either of England or India.

21. The rule of English law on the subject is thus stated in Halsbury's Laws of England, Vol. 19, pp. 58-59:

A debt may be taken out of the operation of the Limitation Act, 1623 by an express unconditional promise to pay, or by an unconditional acknowledgment of the debt from which a promise to pay is implied or by a promise to pay on the fulfilling of a condition or on the expiration of a specified time or the happening of a certain event, if the condition is fulfilled, or the specified time has elapsed or the specified event has happened. Time begins to run afresh from the making of such an unconditional promise or acknowledgment or in the case of a conditional or contingent promise from the fulfilment of the condition or the lapse of the specified time or the happening of the specified event. The promise express or implied is a new contract the consideration for which is the old debt and such a promise constitutes a new cause of action.

22. This rule is based on a principle of universal application and common sense, and is not peculiar to any particular system of law. Where two persons examine their mutual dealings and one of them formally acknowledges his indebtedness to the other to a certain extent in a document which complies with all the formalities of the law for example, the Stamp Act, no other explanation than that he promised to pay the amount is conceivable. If in making the acknowledgment he has included time barred debts which he might have well repudiated it may still be open to him to plead failure of consideration to that ex-tent. The creditor places himself in a disadvantageous position in this respect by omitting to take a bond containing an express promise to pay which alone can successfully meet the plea of want oi consideration. I take this to be the effect of Section 25, Contract Act, as interpreted by this Court in Gobind Das v. Sarju Das [1908] 30 All. 268.

23. The case of Shanher v. Mukta [1898] 22 Bom. 513, relied on by the learned Judges who decided Ganga Prasad v. Ram Dayal [1901] 23 All. 502 has since been dissented from in a later case of the same Court Ghuni Lal v. Laxman Govind A.I.R. 1924 P.C. 50, following the Privy Council case of Muniram Seth v. Seth Rupchand [1906] 33 Cal. 1047.

24. The trend of later decisions in this Court has also been to the contrary. Muhammad Abid Ilusain Khan v. Bhagwan Das [1910] 5 I.C. 418 was a case in which a suit had been based on a 'sarkhat' which acknowledged receipt of a sum of money, including a time barred debt. It was held by a Division Bench that the transaction amounted to a new contract and not merely to an acknowledgment of a statute barred-debt. The 'sarkhat' contained no express promise to pay.

25. Kallu v. Bhagirath Lal [1917] 40 I.C. 58 is another case in which the same view was taken and which is irreconcilable with Ganga Prasad v. Ram Dayal [1901] 23 All. 502. The nature of the acknowledgment is not stated in detail in the judgment but the report of the facts clearly shows that it was not a case of 'account stated' in the technical sense.

26. The only case which supports the opposite view is that of Reoti Ram v. Lashhman Prasad : AIR1926All155 , in which a learned single Judge of this Court applied Ganga Prasad v. Ram Dayal [1901] 23 All. 502 to a case in which a 'sarkhat' containing an acknowledgment had been sued upon. The Privy Council case Maniram Seth v. Seth Bupchand [1906] 33 Cal. 1047, which had since been reported and the cases of this Court, to which reference has already been made were not brought to the notice of the learned Judge. As against it reference may be made to Govind Singh v. Bijay Bahadur Singh : AIR1929All980 , decided by this very Bench.

27. For the reasons explained above, I am of opinion on principle and authority, that an unconditional acknowledgment implies a promise to pay and affords a new cause of action to the obligee. Where the acknowledgment is not unconditional and is qualified by some recital or otherwise, different considerations may arise. In the absence of a plea by the defendant of want of consideration and of an alternative case by the plaintiff seeking a decree on the original debt I would have disposed of the case as it stands but I understand that my learned brother would like to remit certain issues which imply that the aforesaid pleas are now entertained. I do not object to this course being adopted and concur in the order he proposes to pass.

Sulaiman, Ag., C.J.

28. The facts of this case have been set forth in the judgment of my learned brother which I have had the advantage of perusing. As much turns on the remarks made by their Lordships of the Privy Council in Maniram Seth v. Seth Rupchand [1906] 33 Cal. 1047 which even if obiter dicta command our highest respect I would begin with a consideration of that case.

29. Before the expiry of the period of limitation for the recovery of the debt, the representatives of the debtor in a written statement referring to the creditor acknowledged that for the last five years he had open and current accounts with the deceased.' Their Lordships accepted this as a clear admission that there were open an 1 current accounts between the parties at the death of the debtor with the legal consequence of a right as against the other to an account which necessarily involved an acknowledgment of liability to pay the debt, if the balance should be ascertained to be against him. As observed by their Lordships at the foot of p. 1057 the only question was whether this was sufficient by the Indian law to take the case out of the statute. Their Lordships at the bottom of that page 3mphasized:

It has been already pointed out that the acknowledgment was made before the statutory period had run out.

30. Their Lordships remarked that that requisite of Section 19 was complied with and so was the necessity of signature. As it was not necessary that the acknowledgment should be addressed to the person entitled, the bare question that remained was

whether an acknowledgment of liability, if the balance on investigation should turn out to be against the person making the acknowledgment is sufficient.

31. It was with reference to this question that their Lordships immediately after stating the question remarked:

their Lordships can see no reason for drawing any distinction in this respect between the English and the Indian law.

32. Their Lordships then proceeded to state the English law as laid down by Mellish, L.J., in In re Rivers Steamer Go., Mitchell's claim [1871] 6 Ch. 822 that

an acknowledgment to take the case out of the statute of limitation, must be either one from which an absolute promise to pay can be inferred, or secondly, an unconditional 'promise to pay the specific debt, or thirdly, there must be a conditional promise to pay the specific debt and evidence that the condition has been performed.

33. This statement of the law was immediately followed by the remark;

An unconditional acknowledgment has always been held to imply a promise to pay, because that is a natural inference, if nothing is said to the contrary.

34. There is no doubt that the conditions laid down by Mellish, L.J., under which an acknowledgment would take the case out of the statute of limitation were conditions necessary in England and not conditions as are required by the Indian Limitation Act, under which an acknowledgment has to be made within the period of limitation. The remark of their Lordships that

an unconditional acknowledgment has always been held to imply a promise to pay

35. was obviously made with reference to the case law in England as the whole paragraph refers to the English law. This is further clear from the passage at the bottom of p. 1059:

An acknowledgment unconditional in the first the stance, from which in English law a promise to pay has always been inferred.

36. Their Lordships further observed:

The Limitation Act, Section 19, however says nothing about a promise to pay and requires only a definite admission of liability;

37. and then concluded that

there was no reason for departing from the English principle that an unqualified admission and an admission qualified by a condition, which is fulfilled, stand upon precisely the same footing.

38. As their Lordships had previously pointed out that in the case before them the acknowledgment had been made before the period had run out, and that requisite of Section 19 was complied with, the rule applied to a case where no question of limitation arises.

38. It is therefore clear to me that this case cannot be extended so as to be an authority for the proposition that in India every unconditional acknowledgment implies a promise to pay to such an extent, as to override the provisions of the Limitation Act, the Contract Act, the Stamp Act or the Evidence Act.

39. That if the context indicates the contrary an 'unqualified admission of a debt does not necessarily imply an unconditional promise to pay is shown by the decision of their Lordships of the Privy Council in Kalka Singh v. Paras Ram [1895] 22 Cal. 434.

40. It seems to me that it would not be correct to say that every acknowledgment of liability amounts to a new contract. There may be recitals in the written acknowledgment or there may be other direct or circumstantial evidence, which may show that the transaction in which the acknowledgment was made amounted in reality to a novation of the contract for a valid consideration. A new contract may well be entered into under which there is a fresh adjustment of rights and liabilities which would amount to a fresh, agreement. In the case of Gobind Singh v. Bijai Bahadur Singh : AIR1929All980 of 1929 A.L.J.) I pointed out that the contents of a receipt or other circumstances may point to the conclusion that there was a fresh promise to pay which, if for consideration, would be a new agreement. I held in that case that the previous debt had either been acknowledged afresh or had been substituted by a new contract including a fresh promise to pay. Similarly in Muham-fnad Abidllusain Khan v. Bhagwan Das [1910] 5 I.C. 418, the circumstances showed that the transaction by which a sarkhat was executed amounted to a new contract and; was not merely an acknowledgment of the barred debt. But in order to become a new contract it is necessary that the circumstances should show consideration other than a mere implied promise to pay a time-barred debt.

41. As their Lordships of the Privy Council remarked in Maniram Seth's case [1895] 22 Cal. 434 it is the natural inference from an unconditional acknowledgment that the person who acknowledges promises to pay the debt; that is what every honest man would mean to do. An acknowledgment would ordinarily imply a promise to pay. The whole object of acknowledging a debt would be an implied promise to pay or, at any rate to give a fresh start for purposes of limitation. But limitation only bars the remedy and does not extinguish the debt. A promise to pay a debt does not therefore necessarily imply an admission that the debt on the date of the acknowledgment had not become barred by time. Many a person would consider a plea of limitation to be a dishonest plea, and may unhesitatingly promise to pay a debt knowing that it is time barred and is not recoverable through a Court of law. In Fatimat-ul-nissa Begam v. Sundar Das [1900] 27 Cal. 1004, at p. 1012, their Lordships of the Privy Council pointed out that people may admit liability even though a statute has actually barred it; but such an admission is ineffectual in law by the express terms of the statute. As a person may promise to pay a debt which has become barred by time and also a debt which is not time barred, there can be no presumption that the promise to pay it necessarily implies an admission that the debt was not time barred at the time.

42. The Indian Legislature in order to protect debtors has considered it necessary to make acknowledgments ineffective, unless they have been made before the expiry of the period of limitation. Section 19, Lim. Act, undoubtedly shows that the legislature contemplated that there may be an acknowledgment of a time-barred debt, and enacted that such an acknowledgment would be of no avail. In order to enforce the law of limitation strictly, it has thought fit to throw on the creditor the burden of proving that the acknowledgment was made within time. Mere acknowledgment is not enough under Section 19 unless it is shown that it had been made before the expiration of the prescribed period. No doubt Section 19 is of a much wider application and covers cases other than those of mere acknowledgments of debts, but it cannot be denied that the acknowledgments of money debts are equally governed by the provisions of that section. It follows that it is not sufficient for the plaintiff to merely prove the acknowledgment of liability to pay a money debt and throw the burden of showing that the acknowledgment was made beyond time on the debtor by invoking the aid of a general principle of Common law that an acknowledgment necessarily implies a promise to pay it. The aid of any such principle cannot be sought to override the express provisions of the statute of limitation and be made the excuse for casting the onus of proof on the defendant. If such an indirect evasion of the law were permitted, it would have the effect of nullifying the express provisions of Section 19 so far at any rate as acknowledgments of money debts are concerned.

43. A second difficulty in the way of assuming that the Common law principle is of universal application in India arises under the provisious of the Contract Act. Even if an acknowledgment of a liability implies a promise to pay, such a promise has no binding effect unless it is for a fresh consideration so as to amount to a novation of the contract or is embodied in a duly signed written document. Under Section 25(3) an agreement to pay a time-barred debt, unless it is made in writing and signed by the person to be charged therewith or by his duly authorized agent, is one made without consideration and is void. Every one seems to be agreed that the implied promise to pay involved in a mere acknowledgment would not be sufficient under Section 25 of the Contract Act. To avoid such a result, recourse must be had to reading Section 25 as if the word 'express' were interpolated before the word 'promise' so as to exclude implied promise. The distinction between Section 25, Contract Act, and Section 19, Limitation Act, is obviously this that in the case of the former a duly written and signed promise to pay a debt is good, whether the promise was made before or after the expiry of the period of limitation. In the use covered by the latter section the acknowledgment is utterly useless unless it is made before the expiration of the prescribed period.

44. Once it is conceded that the supposed implied promise would not fulfil the requirements of Section 25, Contract Act then apart from any question of burden of proof which I shall consider later the assumption that there is such an implication is really of no avail. Let us leave aside the cases where a new contract has been made. An acknowledgment of liability may have been made either before the period of limitation or after its expiry. In the first case it is useless as an acknowledgment and it is equally ineffective as an implied promise to pay a time-barred debt. In the second case it is fully sufficient because a written acknowledgment of that kind gives a fresh start for limitation, and it is wholly unnecessary to treat it as a fresh promise to pay which can be independently enforced. An implied promise to pay a time-barred debt admittedly does not amount to a valid agreement or to a fresh binding contract, unless of course there be some other consideration for it.

45. In the interest of debtors the legislature has thrown the burden of proof on the creditor that the acknowledgment was made within the period of limitation. Apart from anything that there may be in the language of the acknowledgment itself, I see absolutely no justification for holding that a simple acknowledgment of a liability to pay a debt throws the burden of proof that the debt was barred on the person who has acknowledged it. Such a conclusion would, in my opinion, be directly opposed to the express intention of the legislature as shown by Section 19. There is no rule which allows of any Common law principle to circumvent a statute law. The burden of proof cannot be made to shift by supposing not only that there was an implied promise to pay, but further supposing that there was an admission that the debt had really not become barred by time and was still capable of being enforced in a Court of law. When Section 19, Lim. Act, requires proof that the period had not expired, it would be contrary to the provisions of Sections 101 to 104, Evidence Act, to require that the burden lies on the defendant who acknowledged the mobility.

45. (sic) seems to me that the opinion expressed by the majority of the Full Bench in Anup Singh v. Fateh Chand A.I.R. 1920 All. 92 is directly in support of this view, and so long as that decision is not overruled by a higher authority, I must loyally follow it. With regard to the acknowledgment of the mortgage which came up for consideration before the Full Bench, it was strenuously argued on behalf of the appellant that it was an acknowledgment of an existing liability, which, raised the presumption that it was made within time and therefore it was for the defendant to prove by positive evidence that the acknowledgment was beyond time. The majority repelled this contention. From the acknowledgment of the mortgage, Piggott, J., declined to infer ah admission that the mortgage was redeemable in law. He remarked:

In one sense it is possibly correct to say that a man does not ordinarily acknowledge a liability which he knows to have become statute barred; but the possibility of such an acknowledgment was clearly contemplated by the Legislature when drawing up the relevant clause of the Limitation Act. It required to be laid down that in order to save limitation an acknowledgment must be made before the period of limitation in respect of the liability so acknowledged had expired; and in so doing the legislature clearly contemplated the possibility of acknowledgments being made of statute barred debts. If the Courts are in a general way to act upon the sort of principle involved in the words which I have quoted from the judgment of Pearson, J., the result will be that an acknowledgment made within 60 years of the limitation period prescribed for the institution of any suit will have to be treated as ordinarily sufficient to save limitation unless and until the party bound by that acknowledgment is able to prove affirmatively that it was made boyond limitation. I do not think this is a sound principle, or was intended by the legislature.

46. Similarly Walsh, J., observed;

I agree with my brother piggott, that the express language of Section 19, Lim. Act, contemplates the possibility of an acknowledgment of liability given after the expiration of the statutory period and shows by its terms that a plaintiff before he can succeed upon an acknowledgment at all must establish that it was made before the expiration of the statutory period. In this case it is not suggested that he has established that fact by any direct evidence. In my opinion no inference can be drawn from the acknowledgment, however fully it may have admitted liability, so far as, the actual date of the original mortgage is concerned.

47. The question whether a mere acknowledgment or a simple receipt can be made the basis of a suit is one more of procedure than of substantive law. If the transaction has amounted to a new contract it can undoubtedly be made the basis of a suit. But if it is nothing more than a mere acknowledgment then, if made beyond the period of limitation, it cannot be the basis of a fresh suit which can succeed. If however the acknowledgment had been made within limitation, then the cause of action is kept alive and all that would be at most necessary would be an amendment of the plaint, if the original debt is not referred to therein. The learned Judges of the Bombay High Court in Chunni Lal v. Lakshman A.I.R. 1922 Bom. 183, although they expressed the opinion that the acknowledgment having been made before the limitation period had expired, implied an unconditional promise to pay and could be made the basis of the suit, also remarked at p. 28 that

in any event the only penalty which could fall on the plaintiff would be to have to amend his plaint so as to implead the previous transaction.

48. It is thus obvious that the question whether an acknowledgment can be made the basis of a suit is not of considerable importance provided it was made when the limitation had not expired. There is a preponderance of authority of this Court that a mere acknowledgment is not always evidence of a new contract which can be the basis of a suit' Ganga Prasad v. Ram Dayal [1901] 23 All. 502. As a single Judge I felt myself bound to follow this Division Bench ruling in Dharamshala of Lala Bewati Ram v. Lachohman Prasad : AIR1926All155 . I may also refer to the case of Gobind Das v. Sarju Das [1908] 30 All. 268. In an earlier case Shanliar v. Mukta [1898] 22 Bom. 513, the Bombay High Court considered that the suit could not be brought by treating an acknowledgment as a fresh contract

49. As indicated above, I consider this question as one of minor importance for the ultimate success or failure of the suit will depend on whether the acknowledgment had been made within or beyond the prescribed period of limitation.

50. Yet another difficulty would be created by the provisions of the Stamp Act, if the contrary view were to be upheld. Article 49, Stamp Act, prescribes a duty payable up to four annas for promissory notes payable on demand, while only one anna is required for an acknowledgment under Article 1 or a receipt under Article 53. If a mere acknowledgment or a receipt implies such a promise to pay as can be made the basis of a fresh suit a creditor can evade the stamp law and either not take a promissory note at all and evade payment of the necessary duty or even withhold an insufficiently stamped promissory note, and simply bring a suit on the basis of an acknowledgment or a receipt as the case may be. Can he be allowed to set at naught the requirement of the payment of the necessary duty under Article 49 and escape by paying only one anna it may also be pointed out that the definition of acknowledgment of a debt in Article 1 contains a proviso that such an acknowledgment does not contain any promise to pay the debt. To get over the difficulty created by this definition one would have to say that an acknowledgment contains an implied promise to pay, but the article requires an express promise.

51. The case of Kallu v. Bhagirath Lal [1917] 40 I.C. 58 did not lay down any new principle, but merely followed the case of Bhola Nath v. Net Ram [1906] 3 A.L.J. 800. The latter case was in mo way inconsistent with Gang a Prasad v. Ram Dayal [1901] 23 All. 502, which had been professedly distinguished. The learned Judge pointed out that in Gang a Prasad's case [1901] 23 All. 502 no evidence had been given regarding the acknowledgment of the balance due which was entered and sign in the plaintiff's account book. On the other hand in Bhola Nath's case [1906] 3 A.L.J. 800 the suit was for moneys lent and advanced. In addition to the written acknowledgment of the account books of the plaintiffs, there was oral evidence to prove the plaintiff's claim. That evidence established that the amount claimed was due. It was accordingly held that the acknowledgment was an acknowledgment of the accuracy of the details of the accounts as appearing in the plaintiff's books and that Gang a Prasad's case [1901] 23 All. 502 had no application and the suit could not fail.

52. In view of all the points stated above I am not able to depart from the course of decisions of this Court and hold that by invoking the Common law principle that an acknowledgment implies a promise to pay, we can either treat every acknowledgment of liability as a fresh binding contract for consideration or bring about the shifting of the onus of proof on the opposite party by its means.

53. I agree with my learned brother that the judgment of the Judge of the Small Cause Court is very unsatisfactory. Although he remarked that he was not satisfied that the plaintiff had succeeded in proving that the defendant owed him the debt for which the acknowledgment was executed, he also held that the receipt had been duly executed by the defendant. He has not at all considered the question whether the transaction in the course of which the receipt was executed amounted to a new contract between the parties. Nor has he applied his mind to the question whether the receipt executed by the defendant had been executed before the period of limitation for the original debt had expired.

54. I would accept the translation of the receipt as made by my learned brother with this exception that the original words 'Bad Fahmid Hisab Kitab' literally mean after understanding the accounts; and not necessarily a settlement or adjustment of account. The verb 'Fahmidan' means 'to understand.' I am not prepared to assume, in the absence of a clear finding, that there was necessarily a novation of the original contract. I would accordingly require findings on the two following issues:

(1) Did the transaction, in the course of which the receipt signed by the defendant was executed amount to a fresh contract between the parties for valid consideration, or whether the receipt was a mere acknowledgment of the amount due as shown by the account?

(2) If the receipt was nothing more than a mere acknowledgment of liability, was it executed before the expiration of the period of limitation during which the debt could be recovered?

(Sd) S.M.S.

55. The following issues are remitted to the lower Court for findings to be returned within two months. On receipt of the findings ten days shall be allowed for objections.

Issues.

1. Did the transaction, in the course of which the receipt signed by the defendant was executed amount to a fresh contract between the parties for valid consideration, or whether the receipt was a mere acknowledgment of the amount due as shown by the account:

2. If the receipt was nothing more than a mere acknowledgment of liability, was it executed before the expiration of the period of limitation during which the debt could be recovered?

56. Parties shall be at liberty to produce fresh evidence if so advised.


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