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1927 Supreme(Nagpur) 203
HIGH COURT OF NAGPUR
Prideaux
FADALILAL – Appellant
Versus
ROOCHAND AND ANR – Respondent
Decided on : 30-09-1927
The main legal point established in the judgment is the interpretation of acknowledgments as written promises to pay under Section 25(3) of the Contract Act and the determination of a new contract between the parties.
Headnote:
sarkhat - Contract Law - Section 25(3) of the Contract Act - The court discussed the implications of acknowledgments and their interpretation as written promises to pay under Section 25(3) of the Contract Act. The court found that an unconditional acknowledgment implies a promise to pay but is not considered a contract within the meaning of Section 25(3), Contract Act. The acknowledgment could not be interpreted as constituting a contract within the meaning of Section 25(3), Contract Act, and therefore could not form the basis of a suit.
Fact of the Case:
The plaintiffs sued for Rs. 876-7-0, claiming that the defendant owed them on old accounts. The defendant executed sarkhats but later disputed the agreement, claiming the debt was time-barred and not liable for higher interest.
Finding of the Court:
The trial court found in favor of the plaintiffs for a portion of the claim, but the appellate court held that there was a new contract between the parties, and the claim was in time, dismissing the appeal with costs.
Issues: Dispute over the validity of the sarkhats, agreement on interest, costs of the plaint, time-barred debt, and interpretation of acknowledgments as written promises to pay.
Ratio Decidendi: The court determined that the acknowledgments did not constitute a contract within the meaning of Section 25(3), Contract Act, and therefore could not form the basis of a suit. The appellate court held that there was a new contract between the parties, and the claim was in time.
Final Decision: The appellate court dismissed the appeal, holding that there was a new contract between the parties, and the claim was in time, and ordered the appellant to pay the respondents' costs.
Prideaux, A J C—The plaintiffs sue for Rs. 876-7-0. Their case is that on 23rd July 1923 Rs. 1,300 were due by the defendant to them on old accounts. The plaintiffs intended suing and got a plaint drafted, but the defendant then agreed to execute a sarkhat for Rs. 670 and to secure it by the pledge of gold ornaments already held by the plaintiffs on old pledges, and to execute another sarkhat for Rs. 630, pay all the expenses which the plaintiffs incurred in preparing their suit and to pay interest at 12 as. per cent, per mensem. The defendant therefore executed the sarkhats Exs. P-2 and P-3 on 23rd July 1923. He did not redeem the ornaments mentioned in Ex. P-2, and these were sold, fetching Rs. 668. The balance due on the two sarkhats with interest came no Rs. 876-7-0.
2. The defendant's story was that he executed the first sarkhat Ex. P-1 without understanding the accounts. This was for Rs. 1,025. He also executed the other two sarkhats, Exs. P-2 and P-3, at. the plaintiff's shop as the defendant's brother told him that he had made an account of his own debts with the plaintiffs and that to meet the plaintiffs' wishes the defendant should go and execute them. The defendant further contended that the claim was time barred and also that he is not liable to pay interest at higher rate than the rate of interest originally agreed upon between the parties.
3. These allegations were denied and the case went to trial on the following issues:
1. Did the defendant on 23rd July 1923 promise to pay Rs. 1,300 due on old accounts to plaintiffs and execute the sarkhats for Rs. 670 and Rs. 6,30?
2. Did he agree to pay interest at 12 as, per cent, per mensem?
3. Did he agree to pay the costs of any plaint as alleged?
4. If so, what are those costs?
5. Did the defendant execute the sarkhat for Rs. 1,025 without understanding the accounts?
6. Did he sign the sarkhats of Rs. 670 and Rs. 630 under any mistake?
7. Does any of these facts, If proved, entitle the defendant to go behind the settled accounts?
8. To what relief, if any, are the plaintiffs entitled?
4. The trial Court held that the defendant executed the two sarkhats, that he agreed to pay interest at 12 as. per cent, per mensem and agreed to pay the costs of the plaint which amounted to Rs. 20. As regards the sarkhat for Rs. 1,025, the first Court found that the defendant failed to prove that he executed them without understanding the accounts and that the other two sarkhats were signed under any mistake, Dealing with the amount due, the trial Court finds that the defendant did promise to pay Rs. 1,300, and that for this amount sarkhats for Rs. 670 and Rs. 630 were executed; but the agreement being oral could not help the plaintiffs under Section 25(3),. Contract Act, unless the acknowledgments (Ex. P-2 and Ex. P-3) could be interpreted to be those ''agreements in writing and signed'' by the defendant. The Court finds that an unconditional acknowledgment such as Exs. P-2 and P-3 has always been held to imply a promise to pay, but that as held in Ratan Lall v. Anwarkhan,1920 2 NLJ 216 such an implied promise to pay is not a contract within the meaning of Section 25(3), Contract Act. A portion of the claim evidenced by the first sarkhat for Rs. 1,025 was held time barred. The Judge writes:
If the acknowledgments Exs. P-2 and P-3 could be interpreted to mean ''an express promise to pay in writing,'' in other words if they could be interpreted to constitute a contract within the meaning of Section 25(3), Contract Act, I would be inclined to decree the plaintiff's claim, disregarding the fact that at least a portion of it consists of a time barred debt; (vide David Sutherland Clarke v. Bose Grimshaw,1923 AIR(Lah) 481. But as the fasts are, the acknowledgments cannot be interpreted to mean ''written promises to pay'' and, therefore, cannot form the basis of a suit: vide Beohar Raghubersingh v. Udechandm,1898 11 CPLR 65. The plaintiffs have not chosen to base their claim on accounts, in spite o
