Orissa High Court
State Bank Of India vs Dilip Chandra Singh Deo on 26 February, 1998
Equivalent citations: AIR1998ORI129, AIR 1998 ORISSA 129, 1998 (2) ARBI LR 172, (1999) 3 CIVLJ 75, (1999) 2 CIVILCOURTC 486, (1998) 1 ORISSA LR 438, (1998) 2 ARBILR 172, (1999) 3 BANKLJ 60, (1999) 2 BANKCAS 205, (1999) 87 CUT LT 662
Author: P.K. Misra
Bench: P.K. Misra
JUDGMENT P.K. Misra, J.
1. Plaintiff is the appellant against the decision of the trial Court dismissing the suit for realisation of Rs. 28,176.78 paise.
2. It is not disputed that defendant's late mother had a Current Account with the plaintiffs Bank. The plaintiff claims that the defendant's mother had over-drawn an amount of Rs. 5,608,72 paise as per accounts given in Schedule A of the plaint. From time to time, the defendant's late mother had acknowledged the dues and promised to repay the same. After her death and death of her husband, the defendant paid a sum of Rs. 500/- towards the over-drawal account and undertook to clear up the dues by writing a letter on 29-12-1981. Even thereafter, the amount having remained unpaid, the suit was filed for realisation of Rs. 28,176.78 paise charging interest at the rate of 15.5% per annum with monthly rest from 1973 till and of February, 1978 and at the rate of 15 per cent per annum with monthly rest from 1-3-1978 to 30-6-1980 and at the rate of 16.15 percent per annum with monthly rest from 1-7-1980 to 1-3-1981 and at the rate of 19 per cent per annum with monthly rest from 3-3-1981 to 31-3-1983 and thereafter at the rate of 18 per cent per annum with monthly rest.
3. The defendant in his written statement generally denied about the over-drawals made by his mother. He also pleaded that on the insistence of the bank authorities, he had to pay Rs. 500/-and written a letter dated 29-12-1981. It was pleaded that since he had not inherited any property from his mother, he is not liable for the debts of his mother. The maintainability of the suit on account of non-joinder of other sons and daughter of the borrower was also pleaded.
4. The trial Court held that accepting the letters of acknowledgement (Exts. 6 and 6/a), the limitations period was over on 11-8-1980 and the subsequent letter (Ext. 9) given by the defendant being admittedly beyond the period of limitations, cannot operate as an acknowledgement of liability so as to save limitation. The trial Court further found that in the absence of necessary pleadings required to be made in a suit based on novation of contract, as envisaged in Section 25(3) of the Indian Contract Act, Ext. 9 cannot be taken to be a fresh contract between the defendant and the Bank so as to saddle the defendant with the liability. For the aforesaid conclusions, the trial Court relied upon the decision reported in (1971) 2 Cut WR 775 (Ramchandra Agarwalla v. Kantapalli Grama Panchayat). The trial Court also held that since other sons and daughter of the deceased borrower had not been impleaded, the suit was not maintainable being hit by the principles of non-joinder of necessary parties. The trial Court further held that since there was no material to come to a conclusion that the defendant had inherited any property from the deceased borrower, he was not liable to repay the amount.
5. In this appeal, the defendant-respondent has not entered appearance in spite of service of notice.
6. The learned counsel for the appellant submitted that the letter dated 29-12-1981 operated as fresh contract between the defendant and the Bank and the trial Court should have saddled the liability on the defendant on the basis of the said agreement. Law is well settled that an agreement to repay a time-barred debt is not hit by the principle of lack of consideration and such a contract can be enforced in law. In the present case, the question is whether there was a new contract by the defendant undertaking to pay the amount. The trial Court relying upon the decision reported in (1971) 2 Cut WR 775, has held that in the absence of necessary specific pleadings to the effect that the suit is one under Section 25(3) of the Contract Act, and in the absence of fulfilment of the requirements of the said section, Ext. 9 cannot be construed as a contract under Section 25(3) of the Contract Act.
7. Ext. 9 is in the following terms :--"To The Manager, S.B.I., Cuttack.
Sub :-- O/D of Late Smt. Durgesh Nandini Devi.
With reference to the above O/D of our Late mother Smt. Durgesh Nandini Devi we enclose a payment of Rs. 500/- by Cheque No. X36944 towards the first instalment.
We will undertake to clear the arrear over draft at Rs. 500/- or more or substantial amounts thereafter per month. Kindly acknowledge the payment and forward us a statement of accounts of the above account. As matters are being settled for regular receipts of funds, we will be in a position to make regular payments towards the above said arrear account.
Kindly bear with us till then.
Yours faithfully, (Sd) (Dilip Chandra Singh Deo) Tulsipur, Cuttack-8."
A perusal of the aforesaid document indicates that there is no definite undertaking on the part of the defendant in praesenti promising to pay any definite amount to the Bank towards the liability of his mother on account of over-drawal made by her. The expression "....will undertake to clear the arrear over draft at Rs. 500/- or more or substantial amounts thereafter per month" rather indicates that the defendant was contemplating something to be done in future. In the said letter, the defendant had requested for a statement of accounts of the O.D. account of his mother. The aforesaid letter can go to the extent that the defendant was contemplating to clear up the dues of his mother in future and had, in fact, paid a sum of Rs. 500/-, but it cannot be definitely said that he had already agreed to pay the entire dues. The use of the expression "We" at several places in Ext. 9 rather goes to show that as if the legal representatives of late Durgesh Nandini Devi wanted to clear up the dues. At any rate, from Ext. 9, it is not clear that the defendant had agreed to clear all the dues of his mother although it indicates his willingness to undertake in future to clear the arrear over draft dries. Since the terms were not definite and no clear undertaking in praesenti had been spelt out, I am unable to accept the contention of the learned counsel for the appellant that a new contract under Section 25(3) of the Contract Act had come into existence.
8. Even the frame of the suit was not in the manner contemplated in the decision reported in (1971) 2 Cut WR 775 (supra). A reading of the plaint indicates as if the plaintiff wanted to rely upon Ext. 9 as an acknowledgment of liability extending the period of limitation rather than the basis of a new contract sought to be enforced by the Bank.
9. Even though the appellant is not entitled to succeed in this appeal on the basis of the aforesaid contentions, the appeal is liable to succeed in part in view of the admission of the defendant who, while being examined as D.W. I has admitted his willingness to pay to the Bank, To be more specific, the defendant has stated in paragraph 3 of his deposition :--
"I am willing to pay the legal dues of my mother."
In paragraph-5, he has further stated :--
".........I have seen the statement of account filed in the court. I am only willing to pay the principal amount of Rs. 6,000/- but not willing to pay so much interest............."
In view of such admission of the defendant in deposition indicating his willingness to pay a sum of Rs. 6,000/-, the claim of the appellant-Bank can be accepted to the above extent even though the suit itself was barred by time. If the defendant could have extended the period of limitation by acknowledging his liability in accordance with Section 19 of the Limitation Act, or entered into a fresh contract in respect of a time-barred debt in accordance with Section 25 of the Contract Act, there is no reason why he cannot be found liable in a time-barred suit on the basis of admission made in the deposition in such suit.
10. Though the plaintiff has proved the various transactions showing that defendant's late mother had overdrawn certain amount, the Bank has not produced any documentary evidence to indicate about the rate of interest payable on such amount. The Bank has calculated interest at various rates and compounded the same on monthly basis for which there was no justification in the absence of the terms of the agreement or any other documentary evidence. However, as has been held by this Court in the decision reported in (1987) I Orissa LR 342 : (AIR 1988 Orissa 50) (State Bank of India v. Vathi Samba Murty) in such cases where no interest rate is prescribed or proved, reasonable amount can be paid by way of interest. Similar view has also been expressed in the decision reported in AIR 1967 SC 1058 (Chandradhar Goswami v. Gauhati Bank Ltd.) which has been followed by the Orissa High Court in the aforesaid decision. Keeping in view the aforesaid decisions, it is held that the amount of Rs. 6,000/- as admitted by the defendant would be realised by calculating simple interest at the rate of six per cent per annum from the date of such admission, that is to say from 24-1-1987, the date of deposition. Such liability evidently not being a personal liability can be enforced only to the extent of property of the original borrower inherited by the respondent.
11. In the result, for the reasons indicated above, the appeal is allowed in part to the extent indicated above. Since there is no appearance by the respondent in this appeal and the appeal is being allowed on the basis of his admission, there will be no order as to costs throughout.