Madras High Court
NATARAJAN
Kapaleeswarar Temple, Mylapore - Appellant
Versus
T.Tirunavukarasu - Respondent
Decided On : 05/02/1974
LIMITATION ACT - ACKNOWLEDGMENT OF LIABILITY - SECTION 18 - INDIAN CONTRACT ACT - SECTION 25 (3) - FRESH CONTRACT - ENFORCEABILITY.
Fact of the Case:
Plaintiff, a temple, sued the respondent for rent arrears from March 1960 to December 1968. The respondent claimed limitation and two payments of Rs. 30/- not credited. The plaintiff relied on a letter (Ex. P-1) executed by the respondent on 2-11-1968 acknowledging the debt and promising to pay in installments. The trial court and New Trial Bench held that Ex. P-1 could keep alive the rent claim only for three years prior to its execution, rejecting the claim for the period before October 1965 as barred by limitation.
Finding of the Court:
The court held that the lower courts erred in considering the case only under Section 18 of the Limitation Act and ignoring Section 25 (3) of the Indian Contract Act. The court found that Ex. P-1 formed the basis of a fresh contract between the parties, enforceable irrespective of whether any portion of the acknowledged sum was barred by limitation on the date of its execution.
Issues: 1. Whether the acknowledgment of liability under Section 18 of the Limitation Act is the sole basis for keeping a claim alive beyond the limitation period. 2. Whether a fresh contract entered into under Section 25 (3) of the Indian Contract Act can override the limitation period for an acknowledged debt.
Ratio Decidendi: 1. Section 18 of the Limitation Act deals with acknowledgments made within the limitation period, while Section 25 (3) of the Indian Contract Act creates a fresh contract enforceable irrespective of the limitation period of the acknowledged debt. 2. A debtor can renounce the benefit of the limitation period and enter into a fresh obligation to discharge a barred debt. Such a contractual obligation, if satisfying the conditions of Section 25 (3), amounts to a fresh contract enforceable by law.
Final Decision: The court set aside the orders of the lower courts and allowed the revision petition. The plaintiff was entitled to sustain his action for the total amount claimed in the plaint on the basis of Ex. P-1.
2. I am clearly of the opinion that the trial Judge as well as the New Trial Bench have committed a grievous error in their approach to the claim made by the plaintiff in the suit. Both the lower Courts have considered the case of the plaintiff only with reference to the provision contained in Section 18 of the Limitation Act and have totally failed to consider another equally important and salient provision of law which has got to be taken into consideration in deciding a controversy as the one on hand. Sec. 18 of the Limitation Act reads as follows :
"S. 18. (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
(2) ........................"
From this it is quite clear that if a debtor makes an acknowledgment of his liability and the subsistence of the claim before the expiration of the prescribed period, then a fresh period of limitation is made available to the creditor from the time when the acknowledgment is made. However, in this case, the contention of the plaintiff is that by the execution of Exhibit P-1 the respondent has obligated himself under a fresh contract and such obligation is enforceable by the plaintiff irrespective of the fact whether the debt or liability agreed to be discharged by the respondent as undertaken in Ex. P-1 is referable to a debt within time or a debt barred by limitation. To understand the case of the plaintiff in this behalf, it is necessary to make reference to the terms of Ex. P-1.
(Original in Tamil language, Transliterated in English - Ed.)
"2-11-1968
Thirumayilai Sri Kabaleeswarar Devasthanam Thiru Nirvaga Adhigari avargalukku merpadi devasthana anubogathil ulla ne, 74,
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