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swetha1983 (n/a)     29 July 2007

Contract Act

Hello everyone,

A borrowed money from B in the year 2002 and executed a promissory note in his favour. A did not pay any amount to B. B did not file any suit within 3 years from the date of execution of the promissory note. However A promises in writing in B in the year 2006 that he would pay B the said amount on account of the said debt. Whether A is liable to be pay on the said promise to B?


Learning

 8 Replies

manishyogi (n/a)     30 July 2007

Certainly. Please see section 25 of the Indian Contract Act. Under Clause 3, a promise to pay a time barred debt is enforceable.

bupesh (n/a)     14 September 2007

I think it is novation of contract

mmn (n/a)     21 September 2007

There is no denial to the general principle that a promise to pay a time barred debt is very much enforceable.But I am not in agreement with what Siddarth says. According to him it is a novation of contract. I don't think it is so.

When the debt becomes time barred the right is not lost because the right never dies. The subsequent promise only resuscitates the remedy to enforce payment by suit.

Adv. Murtaza Najmi, Mumbai.

CS KHATRI (COMPANY SECRETARY)     18 April 2008

Hi Shweta, The Indian Contract Act, 1872 ensures the Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law. I am reproducing here the entire texture of Section 25 for your perusal: "Agreement without consideration, void, uncles it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law.-An agreement made without consideration is void, unless- (1) it is expressed in writing and registered under the law for the time being in force for the registration of 1*[documents], and is made on account of natural love and affection between parties standing in a, near relation to each other ; or unless (2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do ; or unless (3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, 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. In any of these cases, such an agreement is a contract. Explanation 1.-Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made. Explanation 2.-An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inade- quate ; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given. Illustrations (a) A promises, for no consideration, to give to B Rs. 1,000. This is a void agreement. (b) A, for natural love and affection, promises to give his son, B, Rs. 1,000. A puts his promise to B into writing and registers it. This is a contract. (c) A finds B's purse and gives it to him. B promises to give A Rs. 50. This is a contract. (d) A supports B's infant son. B promises to pay A's expenses in so doing. This is a contract. (e) A owes B Rs. 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B Rs. 500 on account of the debt. This is a contract. (f) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A's consent to the agreement was freely given. The agreement is a contract notwithstanding the inadequacy of the consideration. (g) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A denies that his consent to the agreement was freely given. The inadequacy of the consideration is a fact which the Court should take into account in considering whether or not A's consent was freely given.

VIJAYA KUMAR (Lawyer)     27 April 2008

Yes he can enforce the early debt through court of law

SANJAY DIXIT (Advocate)     05 May 2008

Thanks for the info.

(Guest)
i agree with Mr Khatri

N.K.Assumi (Advocate)     28 May 2008

But in Tulsi Ram Vs Same singh AIR 1981 Delhi 165 the Court held that mere acknowledgement without promise to pay time barred debt can noot constitute a contract under Section 25(3) as it only amount to acknowledgment of existing pronote. This case was followed in Daulat Ram vs Som Nath AIR 981 Delhi 354. As such, unless the acknowledgment is a promise to pay time barred debt any acknowledgement after the period of limitation can not have remedy in the Court of Law, otherwise section 18 of the limitation act will become meaningless.What is your opinion?

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