2008 (4) TMI 810 - HC - Indian Laws

Summary

Issues Involved:
1. Acknowledgment of Debt u/s 25(3) of the Indian Contract Act.
2. Bar of Limitation u/s 18 of the Limitation Act.

Summary:

Acknowledgment of Debt u/s 25(3) of the Indian Contract Act:

The primary issue in the appeal was whether Exs.A.1 and A.3 constituted an acknowledgment of debt under Section 25(3) of the Indian Contract Act. The appellant contended that Ex.A.3 did not contain an unconditional acknowledgment or promise to pay the amount, thus making the suit barred by limitation. The respondent argued that Ex.A.3 was a valid acknowledgment. The court found that Ex.A.3 contained a conditional promise to pay the amount only after receiving funds from the Tamil Nadu Electricity Board, which does not satisfy the requirement of an unconditional promise under Section 25(3) of the Indian Contract Act. Therefore, Ex.A.3 could not be considered an acknowledgment of debt.

Bar of Limitation u/s 18 of the Limitation Act:

The court examined whether the suit was barred by limitation. Section 18 of the Limitation Act requires that an acknowledgment of liability must be made before the expiration of the prescribed period for instituting a suit. The court noted that Ex.A.1, dated 24.09.1999, was an acknowledgment by the appellant agreeing to pay the amount within three months, which was within three years from the date of the loan. However, the suit was filed in January 2003, beyond the three-year period from the date of Ex.A.1. Therefore, the suit was barred by limitation despite Ex.A.1 being an acknowledgment within the meaning of Section 18 of the Limitation Act.

Conclusion:

The court concluded that the first appellate court erred in granting the decree based on Exs.A.1 and A.3. The judgment and decree dated 23.03.2006 in A.S.No.46 of 2005 were set aside, and the judgment and decree dated 21.06.2005 in O.S.No.151 of 2003 were restored. The Second Appeal was allowed, and no order as to costs was made.