cause of action
harvinder
(Querist) 26 December 2010
This query is : Resolved
cause of action
please help!!
question is :
1. whether statement in one's income tax returns as to debt liability towards say "mr.x" is acknowledgement of debt to "x".
2.If Q1 is ANSWERED in affirmative; whether this mere acknowledgement in tax returns affords "x" cause of action to file suit for recovery or is the plaint liable to be rejected under order 7 rule 11 for not revealing cause of action.
If answers could be supported with rlevant authorities , prefreably sc, then even better .
Devajyoti Barman
(Expert) 26 December 2010
Yes it is due acknowledgement and creates cause of action. However keep in mind one thing that admission only may dispense with any evidence in this respect but does not ipso facto establish the case of the plaintiff or the defendant and the court may indeed ask for further proof in that direction.
This acknowledgement does disclose cause of action and hence the suit is not liable to be rejected. One should also keep in mind that in rejection of plain the court considers whether the plaint discloses any cause of action or not. Whether there is any cause of action or not is of no consideration.
niranjan
(Expert) 26 December 2010
Yes I agree.
malipeddi jaggarao
(Expert) 28 December 2010
Mr.Barman is right. Similarly Liability shown in the Balance sheet is construed as acknowledgement of debt.
harvinder
(Querist) 29 December 2010
'experts', thanks for replying. But sirs consider this:
1. various articles of limitation act provide different starting point from where limitation starts to run.
eg. for loan it is 3 years from date of loan
for money deposited it is 3 years from date of demand
if mere acknowledgement of debt were allowed to be made basis of suit without revealing original cause of action will it not render these provisions nugatory as even a time barred loan could be recoverd by basing suit on acknowledgement rather than on original cause of action,also u/s 18 limitation act r/w s103 of evidence act burden of proof is on plaintiff to prove that acknowledgement is within limitaion period where as if suit is allowed upon mere cause of action it would shift the burden of proof on the defendant to prove that debt is time barred there by putting him at disadvantage where as plaintiff would legally loose nothing if were to reveal the original cause of action. further a time barred debt is recoverable only in terms of s.25(3)of indian contract act and in present fact situation there is only admission of debt made in tax returns ,whereas s25(3)requires express written promise duly signed.also,it is only a proposal which ripens into a promise (see s2(a) & s2(b)indian contract act)and here there is no proposal or at any rate not in terms of s2(a).
and as far as revealing of cause of action is concerned, only that can be revealed which exists . I had used the word 'afford',if law does not afford him any cause of action based on mere acknowledgement what can he reveal? and if plaint does not reveal the coa same shall be rejected.
sir this is only a line of thought,i'll be in your debt of gratitude if you give this line of thought a serious consideration and accordingly advice me further.Also judgements ,if any, would be helpful and appreciated.
harvinder
(Querist) 29 December 2010
'experts', thanks for replying. But sirs consider this:
1. various articles of limitation act provide different starting point from where limitation starts to run.
eg. for loan it is 3 years from date of loan
for money deposited it is 3 years from date of demand
if mere acknowledgement of debt were allowed to be made basis of suit without revealing original cause of action will it not render these provisions nugatory as even a time barred loan could be recoverd by basing suit on acknowledgement rather than on original cause of action,also u/s 18 limitation act r/w s103 of evidence act burden of proof is on plaintiff to prove that acknowledgement is within limitaion period where as if suit is allowed upon mere cause of action it would shift the burden of proof on the defendant to prove that debt is time barred there by putting him at disadvantage where as plaintiff would legally loose nothing if were to reveal the original cause of action. further a time barred debt is recoverable only in terms of s.25(3)of indian contract act and in present fact situation there is only admission of debt made in tax returns ,whereas s25(3)requires express written promise duly signed.also,it is only a proposal which ripens into a promise (see s2(a) & s2(b)indian contract act)and here there is no proposal or at any rate not in terms of s2(a).
and as far as revealing of cause of action is concerned, only that can be revealed which exists . I had used the word 'afford',if law does not afford him any cause of action based on mere acknowledgement what can he reveal? and if plaint does not reveal the coa same shall be rejected.
sir this is only a line of thought,i'll be in your debt of gratitude if you give this line of thought a serious consideration and accordingly advice me further.Also judgements ,if any, would be helpful and appreciated.
