Madras High Court
R.Madesh vs M.Rathinam on 11 February, 2015
Author: S.Vimala
Bench: S.Vimala
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 11.02.2015 CORAM THE HONOURABLE Mrs. JUSTICE. S.VIMALA Civil Suit No.250 of 2007 R.Madesh ... Plaintiff Vs. M.Rathinam, Prop. Sri Surya Movies, No.1, Velavan Street, West Kamakoti Nagar, Valasaravakkam, Madras 600 087 ... Defendant Civil Suit filed under Order VII Rule 1 of the Code of Civil Procedure, 1908, read with Order IV Rule 1 of the Original Side Rules, praying for judgment and decree in favour of the plaintiff and against the defendant as under: (a) directing the defendant to pay to the plaintiff a sum of Rs.25,50,000/- with further interest at 12% p.a. on the principal sum of Rs.25,00,000/- from the date of decree till the date of payment; and (b) to pay costs of the suit to plaintiff. For Plaintiff : Mr. R.Shanmugam For Defendant : M/s. Sampathkumar & Associates - - - J U D G M E N T
Whether the plaintiff is entitled to a decree based upon the admission made by the defendant in the pleadings or otherwise (written statement and Exs.P-4 and P-5) admitting his liability, based upon the provisions of Order XII Rule 6 of the Civil Procedure Code, providing for Judgment on admission?
1.1. When the acknowledgment of liability, though made after the period of limitation, satisfies the conditions laid down under Section 25(3) of the Indian Contract Act, would it amount to a fresh contract in the eye of law and whether it can be made the basis of an action for recovering the amount promised and acknowledged therein by the debtor?
1.2. These are the main issues to be answered in this suit.
2. This suit has been filed by the plaintiff seeking recovery of a sum of Rs.25,50,000/- with future interest at 12% p.a. on the principal sum of Rs.25 lakhs from the date of decree till the date of payment.
3. The plaintiff, who is an Income-Tax Assessee, is also a leading Tamil Producer/Distributor-cum-Director.
3.1. The defendant is also one among the leading producers in the film industry.
3.2. For a Mega Production Venture, the defendant borrowed a sum of Rs.25 lakhs from the plaintiff, in the year 2000, through three cheques. The cheques were duly encashed by the defendant through the Tamil Nadu Mercantile Bank. Having realized the encashed money and having been a borrowed money, it is the duty of the defendant to repay the same. But, as promised, the defendant did not repay the amount.
3.3. The defendant gave a letter to the plaintiff on 02.01.2007 admitting his liability to the tune of Rs.25 lakhs. But, even thereafter the suit amount was not paid. That compelled the plaintiff to file the suit.
4. The defendant filed a written statement raising the following averments:
1. Suit is liable to be rejected as provided under Order VII Rule 11(d) of the Code of Civil Procedure.
2. The claim of the plaintiff is barred by limitation
3. The defendant never acknowledged his liability and hence the suit is barred by limitation.
4. Even assuming that there was an acknowledgment of liability, still as it was not made within the period of limitation, still the suit claim is barred.
5. The plaintiff must prove his entitlement to a sum of Rs.25 lakhs.
6. The defendant had paid a sum of Rs.15 lakhs in full quit and the plaintiff, who promised to report the settlement to the Court, did not do so and hence there is no liability to pay.
5. On behalf of the plaintiff, the Accountant of the plaintiff has been examined as P.W.1 and Exs.P1 to P8 have been marked.
5.1. On the side of the defendant, no oral or documentary evidence has been produced.
6. Out of the eight documents marked, on the side of the plaintiff, the document (letter), dated 29.09.2008, said to have been written by the defendant in favour of the plaintiff, is claimed to be a document of admission of the suit claim. Based upon the said letter, the learned counsel for the plaintiff filed an application under Order XII Rule VI of the CPC., praying the Court to give a judgment on admission. This Court, by order, dated 12.01.2011, did not allow the application, but directed the parties to face the trial.
7. Thereafter, the following issues have been framed by this Court on 21.06.2011:-
i. When the defendant acknowledged his liability to the suit claim by way of his letter dated 29.09.2008 addressed to the plaintiff, is it open to the defendant now to dispute the suit claim on the question of limitation?
ii. When the defendant after accepting his liability to pay the suit claim and after effecting part-payment towards the suit during the pendency of the suit, is there any defence for the defendant denying or disputing to pay the balance of the suit claim?
iii. When the defendant admitted his liability to the suit claim and issued three cheques each for Rs.5,00,000/- totalling Rs.15,00,000/- and got them bounced for insufficiency of funds, is it now open to the defendant to deny or dispute the suit claim on the question of limitation?
iv. Is not the defendant liable to pay the entire suit claim with interest and costs, less the amount already paid as prayed for?
v. To what relief are the parties entitled to?
8. The plaintiff has filed the suit for recovery of money. The case of the defendant is that the suit claim is barred by limitation. The plaintiff contends that the suit claim is not barred by limitation as there is an acknowledgment of liability. But the defendant contends that there is no acknowledgment of liability and that even assuming that, it is there, the acknowledgment of liability was not made within the period of limitation and therefore, it is not valid.
9. The learned counsel for the defendant pointed out that the amount borrowed by the defendant by way of three cheques (issued by the plaintiff) remains proved, when documents have been filed to show that the defendant has encashed those cheques on 31.01.2000, 01.02.2000 and on 02.02.2000, for Rs.8,00,000/-, Rs.8,00,000/- and Rs.9,00,000/-, respectively. Therefore, when the plaintiff has proved the payment of loan to the defendant, it is for the repudiating defendant to prove his case.
9.1. The case of the defendant stands on three footings: (i) the defendant never made any acknowledgment of liability and therefore, he is not liable; (ii) even assuming that there was such an acknowledgment as it was not made within the period of limitation, the acknowledgment will not have the effect of extending the limitation; (iii) in full quit, a sum of Rs.15 lakhs have been paid towards discharge of entire suit claim and therefore, the defendant has no liability.
9.2. The acknowledgment of liability is stated to have been made under Ex.P-4-letter, dated 02.01.2007, admitting the liability to the tune of Rs.25,00,000/-. Ex.P-5-letter, dated 29.09.2008, said to have been given by the defendant to the plaintiff, during the course of trial, has been filed to substantiate that the defendant has acknowledged his liability once again to make the payment.
Limitation:
10. It is the contention of the learned counsel for the defendant that: (a) the suit for recovery of money ought to have been filed in the year 2004, i.e., on the expiry of three years period from the date of lending; (b) the acknowledgment of liability has not been made before 2004; (c) the so called acknowledgment made in the year 2007/2008 cannot give a fresh starting point of limitation and therefore, the suit is liable to be dismissed.
10.1. In order to support the contention that that the acknowledgment must be made before the expiry of the period of limitation, the learned counsel for the defendant relied upon the following decisions:-
(i) 2012-2-L.W. 256 (K.Krishnamoorthy v. Investment Trust of India Limited & ors.):-
40. .... As per Section 18 of Limitation Act, essentials of a valid acknowledgment are (i) an admission of acknowledgment; (ii) that such acknowledgment must be in respect of a liability in respect of a property or right; (iii) that it must be made before the expiry of the period of limitation; (iv) that it should be in writing and signed by the party against whom such property or right is claimed. ....
(ii) 2008-3-L.W. 259 (K.Jeyaraman v. M/s.Sundaram Industries Ltd.,) :-
A plain reading of Section 18 of the Limitation Act shows that the acknowledgment of liability should be made before the expiry of the prescribed period for instituting a suit on the basis of the original cause of action.
(iii) AIR 1961 SC 1236 (PC) (V 48 C 221) (S.F.Mazda v. Durga Prosad Chamaria and Others):-
(5) Section 19(1) says, inter alia, that where before the expiration of the period prescribed for a suit in respect of any right, an acknowledgment of liability in respect of such right has been made in writing signed by the party against whom such right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. It would be noticed that some of the relevant essential requirements of a valid acknowledgment are that it must be made before the relevant-period of limitation has expired, it must be in regard to the liability in respect of the right in question and it must be made in writing and must be signed by the party against whom such right is claimed.
(iv) AIR 1999 Mad 371 (Kalpana Trading Co. v. Executive Officer, Town Panchayat, Tiruchirappali):-
....To constitute acknowledgment of liability, there must be acknowledgment of liability made in writing signed by the party and that too must be before the expiry of the prescribed period and only if there is acknowledgment of liability signed by the party against whom such property or right is claimed, a fresh period of limitation starts from the time of acknowledgment of liability....
(v) 1996 (II) CTC 396 (Sri Vijayalakshmi Art Productions, Rep. By its Partners, v. Vijaya Productions Pvt. Ltd.,):-
21. The fact that the respondent has acknowledged liability on January 24, 1994, for a sum of Rs. 19,03,500 and paid the same in September, 1994, does not extend the period of limitation for the remaining part of the petitioner's claim. This acknowledgment as also the payment was after the expiry of a period of three years from April 2, 1990 - date of the acknowledgment relied on by the petitioners.
(vi) 1999 (I) CTC 511 (Sampuran Singh v. Niranjan Kaur):-
Acknowledgment of Liability should be made before expiration of prescribed period for filing suit. Limitation would not get revived under section if acknowledgment was made after expiry of period of limitation. 10.2. There cannot be any dispute over the proposition that the acknowledgement of liability should have been made only before the expiry of the period of limitation. But the question is whether the acknowledgment of liability said to have been made in this case was within the period of limitation or beyond the period of limitation is to be considered. Apart from that, a distinction has been made between a mere acknowledgment of liability and an acknowledgment of liability which will have the effect of creating a new cause of action, providing a fresh start of limitation, i.e., from the point of promise, new limitation period will begin to run. In other words, whether it would be a promise as contemplated under Section 25 (3) of The Contract Act, which can be made after the period of limitation, providing fresh start of limitation. This aspect would be discussed in the subsequent paragraphs.
Duty of the Court:-
11. The learned counsel for the plaintiff contended that it is not open to the defendant to raise the plea of limitation when the defendant has not chosen to examine himself and therefore, in the absence of evidence on limitation, the case of the defendant must be thrown out.
11.1. In reply to that, the learned counsel for the defendant pointed out that even without the plea of limitation being raised by the defendant, it is the duty of the Court to look into the point of limitation and to decide the case. In order to support the proposition, the decision reported in (1995) 2 MLJ 84 (C.Selvaraj (died) and others v. The Corporation of Madras, Rep. By its Commissioner and Others) is relied upon:-
Sec. 3 of the Limitation Act provides that it is the duty of the Court to dismiss any suit instituted, appeal preferred or application made after the prescribed period although the limitation has not been set up as a defence. 11.2. The proposition laid down in the above case cannot be disputed. It is settled proposition of law that the acknowledgment of liability should be made before the expiry of the period of limitation and that if it is beyond the period of limitation, it is of no use to the plaintiff. Apart from that, it is also the duty of the Court to find out whether the suit claim is barred by limitation or not, de hors the plea being raised by the other side. Doubtlessly, it is the duty of the Court to look into the aspect of limitation and to reject the plaint, if the claim is barred by limitation.
Promise to pay time-barred debt novates agreement.
12. The issue to be decided, at this stage, is whether the suit claim is barred by limitation in the light of Exs.P4 and P5 documents.
13. During the pendency of the proceedings the defendant is stated to have given a letter, dated 29.09.2008 (Ex.P-5) to the plaintiff in which there is an express promise to repay the sum of Rs.25,00,000/-. The relevant recital in Ex.P-5 reads as under:-
.... We hereby extend the limitation and agree and undertake to repay the sum of rupees twenty five lakhs only payable by us to you as above in the following manner:-
1. Rupees 5,00,000 (Rupees five lakhs only) M/s. Raj TV Network Ltd., have agreed to pay directly to you during this week on our account. And for the balance amount of Rs.20,00,000 (Rupees twenty lakhs only) we have issued the following cheques as per the decision arrived at the discussion.
2. Cheque no.072677 dated 30/12/2008 drawn on Andra Bank, Saligramam Branch, for Rs.5,00,000/- (Rupees five lakhs only)
3. Cheque no.072678 dated 30/03/2009 drawn on Andra Bank, Saligramam Branch, for Rs.5,00,000/- (Rupees five lakhs only)
4. Cheque no.072679 dated 30/06/2009 drawn on Andra Bank, Saligramam Branch, for Rs.5,00,000/- (Rupees five lakhs only)
5. Cheque no.072680 dated 30/09/2009 drawn on Andra Bank, Saligramam Branch, for Rs.5,00,000/- (Rupees five lakhs only) Further, we hereby irrevocably agree and undertake to honor the above cheques on presentation for collection on the due dates without fail.
14. Whether the letter, dated 29.09.2008, would amount to a mere acknowledgment of liability made after the expiry of period of limitation (which is not valid) or it is a promise as contemplated under Section 25 (3) of The Contract Act, which can be made after the period of limitation, providing fresh start of limitation is the issue to be considered?
14.1. In order to satisfy the stipulations of Section 25 (3) of The Contract Act, the following essentials must be present:-
(i) there must be a promise to pay a debt;
(ii) there must be a debt of which the creditor might have enforced payment but for the law for the limitation of the suits;
(iii) the promise must be made in writing; and
(iv) the writing must be signed by the person to be charged therewith or by his agent generally or specifically authorized on his behalf.
14.2. The debtor while acknowledging his liability to pay a time-barred debt must make an express promise to make, if the claim is to be sustained under Section 25 (3) of the Contract Act. The language used must indicate that it is something more than an acknowledgment of a debt.
14.3. So far as this case is concerned, the debtor has done so. Towards his promise to pay to the creditor, the debtor has also issued cheques, which have been dishonored, which is contrary to the promise made under Ex.P5.
14.4. It would be relevant to quote the decision reported in the case of Kapaleeswarar Temple v. T.Tirunavukarasu, AIR 1975 Mad 164, wherein it has been held as follows:-
6. It is thus clear that there are a catena of decisions and plethora of authority for holding that though a debt might have become time-barred on the date a debtor entered into a fresh obligation with the creditor to Day the liability, the said obligation, if it satisfies the conditions laid down in Section 25(3) of the Indian Contract Act, will amount to a fresh contract in the eye of law and can certainly be made the basis of an action for recovering the amount promised and acknowledged therein by the debtor. While Section 18 of the Limitation Act (Section 19 of the old Act) deals with an acknowledgment made by a debtor within the period of limitation, the contractual obligation which a debtor enters into under the terms of Section 25(3) has no reference whatsoever to the acknowledged debt being within time or not. 14.5. So far as this case is concerned, Ex.P-5 satisfies the requirement under Section 25 (3) of the Contract Act and therefore the defendant is liable to pay the admitted liability under Ex.P-5.
Judgment on Admission:-
15. Yet another contention is that the plaintiff can be given a decree based upon the admission made by the defendant in the written statement. The further submission is that Court should also draw adverse inference in respect of failure of the defendant in entering the witness box.
15.1. The learned counsel for the plaintiff relying upon a decision reported in (2010) 10 SCC 512 (Man Kaur (Dead) by L.Rs. v. Hartar Singh Sangha) submitted that Court must draw the inference that the case of the defendant cannot be true as he failed to enter into the witness box. The following is the relevant observation:-
Adverse presumption. Reiterated, where a party to the suit does not appear in witness box and state his own case on oath and does not offer himself to be cross-examined by the other side, a presumption would arise that case set up by him is not correct. 15.2. Based on this proposition, it is specifically contended that the truth of Exs.P-4 and P-5 has not been challenged by the defendant by examining himself and therefore, there must be a decree based on admissions made by the defendant in Ex.P-5. It is also pointed out that the admission made in the written statement would also be the strong basis for the grant of decree in favour of the plaintiff. This contention is well founded.
15.3. It would be relevant to consider the relevant order providing for judgment on admission, i.e., Order XII Rule 6 CPC, which reads thus:-
Judgment on admissions - (1) Where admissions of fact have been made either in the pleading or otherwise, whether orally or in writing, the Court may at any stage of the suit, either on the application of any party or of its own motion and without waiting for the determination of any other question between the parties, make such order or give such judgment as it may think fit having regard to such admissions."
Admission made in the written statement
16. In the written statement, the defendant has stated that he paid a sum of Rs.15,00,000/- in full quit and this settlement was not reported to the Court as promised by the plaintiff. But, no proof has been filed to show that the defendant had paid a sum of Rs.15,00,000/- to the plaintiff.
16.1. It is not the case of the defendant that he did not borrow any amount from the plaintiff. The fact that the defendant has encashed the cheques obtained from the plaintiff has been proved before the Court. The defendant has also stated in the written statement that if books of accounts are produced, it will show that no amount is due from the defendant, meaning thereby that he has discharged the entire amount due to the plaintiff.
16.2. So far as the plea of discharge is concerned, it is the duty of the defendant to prove the same. The defendant has not proved the plea of discharge. When the defendant has stated that he has paid a sum of Rs.15,00,000/- in full quit, and in the absence of proof, the conclusion is that the defendant has admitted his liability to the extent of Rs.15,00,000/-.
17. Under Section 21 of The Indian Evidence Act, proof of admission against the persons who made the statement are relevant and admissible, though not in favour of them (except under limited circumstances).
17.1. Admissions, being declarations against the interest of the maker, are considered as good evidence against the maker. But it is always open to the maker of the admission to show that those statements were either mistaken or untrue. Thus admissions are not conclusive proof of facts admitted, but it may be explained or shown to be incorrect.
17.2. The value of admission depends upon the circumstances in which it is made and to whom it is made (Rakesh Wadhawan v. J.I.Corpn., AIR 2002 SC 2004 (2008) : 2002 AIR SCW 2004 : (2002) 5 SCC 440 : 2002 (2) Cur CC 156).
17.3. It is settled law that express admission of a party to the suit or admission implied from his conduct are strong evidence against him. As pointed out earlier, the admissions made under Exs.P-4 and P-5 remains unexplained or undisputed.
17.4. An admission in a Court of law carries great weight, but it is not conclusive unless it operates as an estoppel (Bai Devmani v. Ravishankar, (1929) 31 BOMLR 109 : A 1929 B 147). But so far as this case is concerned, there are no circumstances to indicate that the admission made are inconclusive.
17.5. Therefore, it is clear that the defendant is liable to pay the suit claim to the plaintiff based upon Ex.P-5, an express promise to pay the time barred debt and also based upon the admission made by him in the written statement.
18. Under Ex.P-5 four cheques have been issued. But proof has been placed to show that only three cheques have been dishonored (Exs.P-6 to P-8). When this was pointed out the learned counsel for the plaintiff submitted that the defendant has paid a sum of Rs.10,00,000/- and the balance due is only Rs.15,00,000/-. Therefore, the suit has to be decreed for a sum of Rs.15,00,000/-, even though as per Ex.P5 the liability is Rs.25,00,000/-.
19. In the result, the suit is partly decreed granting a decree, in favour of the plaintiff, for a sum of Rs.15,00,000/- (Rupees fifteen lakhs only) payable with interest at 6% per annum from the date of decree till the date of payment. No costs.
11.02.2015 Index : Yes / No Web : Yes / No srk S.VIMALA, J., srk Civil Suit No.250 of 2007 11.02.2015