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Ganapathy Mudaly and ors. Vs. O. Munisawmy Mudaly - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Judge
Reported in5Ind.Cas.754a
AppellantGanapathy Mudaly and ors.
RespondentO. Munisawmy Mudaly
Cases Referred and Kumara v. Srinivasa
Excerpt:
contract act (ix of 1872), section 25 clause (3) - consideration--barred debt--no recital. - - the defendant's explanation that he got them by fraud and in collusion with varadaraja mudaliar is not supported by reliable evidence. there is clearly a reference to a debt contracted by receipt of cash, though it is not stated when it was received......of the contract act and, therefore, there is no consideration. there is clearly a reference to a debt contracted by receipt of cash, though it is not stated when it was received. it is, no doubt, true that in appa rao v. suryaprakasa rao 23 m. 94 the learned judges, while deciding that it is unnecessary that a document should refer to the fact that the debt is no longer recoverable owing to the law of limitation, say that the debt itself which is in fact barred must be referred to therein. but these observations were unnecessary for the decision.5. it has been decided by the madras high court and also by the other high courts that a party to a contract may prove that the actual consideration was something different to that recited in the document itself, and effect must be given to the.....
Judgment:

1. The suit is brought to recover the amount due, Rs. 582-0-0 on two promissory-notes executed by the defendant's father and in default of payment for the sale of certain properties, the title-deeds whereof were deposited with the plaintiffs as security by way of equitable mortgage. The execution of the promissory-notes is not denied and the finding of the City Civil Judge that the discharge alleged has not been proved, is not disputed before us. We agree with the City Civil Judge that the title-deeds were deposited with the plaintiff as security. They are produced by the plaintiff. The defendant's explanation that he got them by fraud and in collusion with Varadaraja Mudaliar is not supported by reliable evidence. No weight can be attached to the statement of Varadaraja Mudaliar that D. 1 and D. 2 were never given to him. ft was then argued before us that as Exhibit A, dated the 1st December 1904, is admitted to be a renewal of a prior promissory-note, dated the 1st January 1889, it is not enforceable as the debt had become barred before it was renewed and there is no reference in Exhibit A to a barred debt or no promise to pay the debt to bring it within the terms of Clause (3), Section 25 of the Contract Act.

2. Exhibit A runs thus: 'On demand I promise to pay to O. Munisamy Mudaliar or order the sum of rupees (325) three hundred and twenty-five only with interest at 12 per cent, per annum in cash.'

3. The City Civil Judge held that the debt was not barred as the whole interest due under the earlier promissory-note and a portion of the principal has been discharged at the time of Exhibit A. But there is no evidence that any amount at any time before the expiry of the period of limitation was paid for interest as such. Nor does the part-payment of the principal appear in the hand-writing of the debtor as required by Section 20 of the Limitation Act. We must, therefore, hold that the debt under the promissory-note of 18.99 was barred in 1904 at the time of Exhibit A.

4. It is then argued as there is no referenee in Exhibit A, to that debt there is no promise to pay a barred 'debt' under Clause (3), Section 25 of the Contract Act and, therefore, there is no consideration. There is clearly a reference to a debt contracted by receipt of cash, though it is not stated when it was received. It is, no doubt, true that in Appa Rao v. Suryaprakasa Rao 23 M. 94 the learned Judges, while deciding that it is unnecessary that a document should refer to the fact that the debt is no longer recoverable owing to the law of limitation, say that the debt itself which is in fact barred must be referred to therein. But these observations were unnecessary for the decision.

5. It has been decided by the Madras High Court and also by the other High Courts that a party to a contract may prove that the actual consideration was something different to that recited in the document itself, and effect must be given to the real consideration. Vasudeva Bhallu v. Narammnia 11 M.k 213 and Kumara v. Srinivasa 11 M.k 213.

6. These decisions proceed on the view that the recitals are not in themselves conclusive and do not, therefore, preclude the Courts from ascertaining and giving effect to the intention of the parties. Section 25 of the Contract Act provides that an agreement made without consideration is void unless it is a promise to pay a debt of which the creditor might have enforced payment but for the law of limitation.

7. The section indicates what must be deemed to take the place of consideration' in an ordinary contract. Full effect is given to the words of the section by taking it to mean that when a man promises to pay what in fact is proved to be a debt which is barred, that agreement will be enforced. This is consistent with the decisions that hold that consideration may be proved when not recited in the document or a different consideration may be proved from that recited therein. To hold otherwise would be to confine the parties to the recitals in the instrument in cases that are governed by Section 25. We see no warrant in that section for doing so. We hold accordingly that the agreement is a contract under Section 25, Clause (3) and dismiss the appeal with costs. The plaintiff's Vakil's fee not included in the decree of the lower Court, viz., Rs. 29-1-6 will be inserted in the decree. The memo, of objection is allowed without costs.


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