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Issues Involved:
1. Consideration for khatas 2. Bar of limitation 3. Validity of khatas as new contracts or acknowledgments 4. Applicability of Section 25(3) of the Indian Contract Act, 1872 Detailed Analysis: 1. Consideration for khatas: The primary issue revolved around whether the khatas in question were passed for cash consideration or for past debts. The trial court found that the defendant did not prove the absence of consideration for the khata of 1931, while the appellate court concluded there was no cash consideration for the khata of 1931, and it was passed for the balance due on previous khatas. The High Court acknowledged the common practice among money-lenders to describe consideration as 'ready money received,' even when it was not genuine. It upheld the appellate court's finding that no cash consideration was paid for the khatas in question. 2. Bar of limitation: The defense argued that the claim was time-barred, as the debt mentioned in the khata of 1926 had become time-barred by the time the next khata was passed in 1929. The appellate court agreed, stating that if any previous khata was passed beyond the limitation period, neither that khata nor any of its successors could save the limitation. However, the High Court clarified that if the khata of 1931 was regarded as creating a fresh contract, the limitation issue would be irrelevant. The suit was based on the contract contained in the khata of 1931, not on any acknowledgment of past debt. 3. Validity of khatas as new contracts or acknowledgments: The High Court examined whether the khata of 1931 was a mere acknowledgment or a fresh contract. It concluded that the wording of the khata indicated a new contract, as it stated that Rs. 1,000 were received in cash and were payable. The court emphasized that the khata did not refer to any existing debt, suggesting it was meant to be a new transaction. Therefore, the khata of 1931 constituted a fresh promise to pay, making the plaintiff's suit maintainable. 4. Applicability of Section 25(3) of the Indian Contract Act, 1872: The court addressed whether the khata of 1931, even if based on a time-barred debt, was valid under Section 25(3) of the Indian Contract Act, 1872. This section allows a promise to pay a time-barred debt to be enforceable if made in writing and signed by the debtor. The court rejected the contention that the debtor must be aware that the debt was time-barred when making the promise. It held that the khata of 1931 fulfilled the conditions of Section 25(3), as it was a written promise to pay a debt that could not be enforced due to the limitation period. The court concluded that the past debt constituted valid consideration for the new contract, making the khata of 1931 valid and enforceable. Conclusion: The High Court set aside the appellate court's decree and restored the trial court's decree, thereby ruling in favor of the plaintiff. The respondents were ordered to pay the appellant's costs throughout.
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