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Issues Involved:
The judgment involves determining whether certain documents are acknowledgments under Section 18 of the Limitation Act or independent contracts to pay time-barred debt under Section 25(3) of the Indian Contract Act. Additionally, it addresses the liability of a guarantor under Section 128 of the Indian Contract Act based on subsequent acknowledgments made by the borrowers. Details of the Judgment: Issue 1: Acknowledgment vs. Independent Contract The plaintiff filed a civil suit for recovery of a loan amount against the defendants. The trial court dismissed the suit as barred by limitation. The appellant argued that the documents in question were independent contracts under Section 25(3) of the Indian Contract Act, not mere acknowledgments under Section 18 of the Limitation Act. The contents of the documents satisfied the requirements of Section 25(3), as they referred to the loan amount, dues, and a promise to pay on the same terms as the original agreement. The court found that the trial court erred in treating the documents as acknowledgments and ruled in favor of the appellant. Issue 2: Liability of Guarantor The court considered whether subsequent acknowledgments made by the borrowers would bind the guarantor under Section 128 of the Indian Contract Act. The guarantor had promised to pay the time-barred debt on the same terms as the original agreement. Citing a Supreme Court case, the court held that the liability of the guarantor remains unaffected by the borrower's failure, and both are jointly and severally liable. As the guarantee was continuous, the acknowledgment of debt by the borrowers was deemed binding on the guarantor. Consequently, the suit was not barred by limitation against the guarantor. Conclusion: The appeal was allowed, setting aside the judgment and decree of the trial court. The plaintiff was granted a decree for the loan amount along with interest, and costs were to be borne by the respondents.
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