IN THE HIGH COURT OF MADRAS
Abdur Rahman, J.
Puliyath Govinda Nair
Versus
Parekalathil Achutan Nair
Decided On : 02.02.1940
Consideration - Agreement - Indian Contract Act, Section 25(3)
Fact of the Case:
The petitioner sued for the recovery of paddy price, based on an alleged verbal agreement with the respondent's brother. The lower court found in favor of the agreement but refused to enforce it due to lack of consideration.
Finding of the Court:
The court found that the agreement was not without consideration, as the plaintiff's agreement to release the defendant's brother from liability constituted good consideration for the new agreement. However, the agreement was unenforceable due to being barred by limitation and not reduced to writing as required by Section 25(3) of the Indian Contract Act.
Issues: The issues revolved around the enforceability of the agreement due to lack of consideration and compliance with Section 25(3) of the Indian Contract Act.
Ratio Decidendi: The court held that an agreement made without consideration is void unless it is a promise made in writing to pay a debt of which the creditor might have enforced payment but for the law for the limitation of suits. The court also clarified that an express promise to pay the debt is necessary for compliance with Section 25(3).
Final Decision: The revision failed, and the court dismissed the case, leaving the parties to bear their own costs throughout.
Abdur Rahman, J.
1. A suit was instituted by the petitioner for the recovery of Rs. 288 and odd, being the price of paddy alleged to have been due by the respondents brother and verbally agreed to be paid by the respondent. The lower Court found in favour of the agreement but refused to give effect to it as it was held to be without consideration. The plaintiff has consequently come up in, revision.
2. It may not be quite correct to say that the agreement between the parties to the suit was without any consideration. The agreement by the plaintiff to release the defendants brother from liability - if it was legally enforceable at the time when the agreement was said to have been reached - was quite a good consideration for the new agreement between the parties to the suit. But if "the plaintiffs claim against the defendants brother was barred by limitation on the date on which this agreement was arrived at and the contract was not reduced to writing as required by Section 25(3) of the Indian Contract Act, it would remain unenforceable. Mr. Govinda Menon contends, however, that this section has no application to an agreement which was entered into between the parties to the present suit but must be confined in its operation to the agreement arrived at between the original parties thereto, if attempted to be enforced by the original creditor against the original debtor. Section 25 of the Indian Contract Act, so far as it is relevant to the present case, reads as follows:
An agreement made without consideration is void unless it is a promise made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised on 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.
3. The words "by the person to be charged therewith" are wide enough to cover the case of a person who agrees to become liable for the payment of a debt due by another and need not be limited to the person who was indebted from the beginning. This difficulty seems to have been recognised on behalf of the plaintiff and a letter Exhibit C was produced by him at the trial. This was written by the defendant on the 20th May, 1933, to the plaintiff asking him to come and receive 50 paras of paddy "towards what was to be given to" him. A perusal of this letter shows that although it contained a definite request to receive 50 paras of paddy, yet there was nothing in it which could be said to disclose an express promise to deliver the remaining paddy; and in the absence of an express promise, this letter cannot be held to comply with the requirements of the section. The promise referred to in Section 25, Sub-clause 3 of the Indian Contract Act must be an express one and cannot be held to be sufficient if the intention to pay is unexpressed and has to be gathered from a number of circumstances. In other words there must be a distinct promise to pay before the document can be said to fall within the provisions of this section. See Ramaswami Pillai v. Kuppuswami Pillai (1910) M.W.N. 547, Gobind Das v. Sarju Das I.L.R.(1908) All. 268, Maniram Seth v. Seth Rupchand (1906) 16 M.L.J. 300 : L.R. 33 IndAp 165 : I.L.R. 33 Cal. 1047 and Mukhi Lal v. Gul Muhammad A.I.R. 1933 Lah. 209. Reliance was placed by the learned Counsel for the petitioner on Appa Rao v. Suryaprakasa Rao (1889) 9 M.L.J. 330 : I.L.R. 23 Mad. 94 and Maidens Hotel, Delhi v. Willnott A.I.R. 1935 Lah. 984, but they do not bear out his contention. It was Held in the first case that a document sufficiently complies with Section 25 of the Contract Act if an intention to pay a debt wholly or in part has been expressed therein in such a way as to constitute a promise and the debt is sufficiently identifiable although the amount promised to have been paid remained unstated. This is not the same thing as saying that the promise to pay the debt need not have been expressed or that an implied p
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