Partly allowed

State of Kerala v. Mathew J.Kattikaran

Kerala HC14 Nov 2014AS/89/2000

Case brief

AI extract

What is this about?

The court held that reply letters from the defendants acknowledging delay in settling claims did not constitute a promise to pay a time-barred debt under the Indian Contract Act. Consequently, the appeal was allowed in part, granting a decree solely for the unbarred bill dated 10.11.1995 along with interest.

What did the court decide?

Decree granted for 7,770/- with 12% interest from 10.11.1995 till realisation and proportionate costs.

State of Kerala Vs Mathew J.Kattikaran — Cheque Dishonour | Kerala HC (2014)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE K.T.SANKARAN & THE HONOURABLE MR. JUSTICE P.D.RAJAN

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FRIDAY, THE 14TH DAY OF NOVEMBER 2014/23RD KARTHIKA, 1936

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AS.No. 89 of 2000 (E)

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AGAINST THE ORDER/JUDGMENT IN OS 44/1997 of II ADDL.SUB COURT,ERNAKULAM DATED 29-06-1999

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APPELLANT(S)/DEFENDANTS:

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1. STATE OF KERALA

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2. DIRECTOR OF PUBLIC INSTRUCTIONS, TRIVANDRUM.

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3. THE TEXT BOOK OFFICER, PADMAVILAS, FORT TRIVANDRUM.

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4. THE OFFICER IN-CHARGE (THE TEXT BOOK OFFICER) CENTRAL TEXT BOOK STORE, KALOOR.

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BY ADV. GOVERNMENT PLEADER

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RESPONDENT(S)/PLAINTIFF:

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MATHEW J. KATTICARAN, KATTICARAN HOUSE, CEMETRY JUNCTION, ERNAKULAM.

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R,RESPDT. BY ADV. SRI.M.V.JOHN R, BY ADV. SRI.RENJU JOHN R, BY ADV. SRI.K.M.VARGHESE

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THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 14-11-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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acd

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'C.R.'

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K.T. SANKARAN & P.D. RAJAN, JJ.

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A.S.No.89 of 2000

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Dated this the 14^th day of November, 2014

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JUDGMENT

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K.T. SANKARAN,J.

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The only question that arises for consideration in this

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appeal is whether Exts.A11 and A13 letters sent by the 3^rd

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defendant to the plaintiff would attract Section 25(3) of the

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Indian Contract Act?

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The defendants are the appellants. The plaintiff instituted the suit for realisation of sum of 2,44,959.28₹

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payable to him as per the bills of 1988, 1989, 1991, 1992 and

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The suit was filed on 7.1.1997. The plaintiff, a clearing, forwarding and transporting Contractor, carried out

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the work of clearing, loading, unloading and transporting of

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paper from various places to various other destinations as

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directed by the 3^rd defendant on the basis of the contract

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awarded to the plaintiff. The bills were submitted by the plaintiff and part payments were effected to him from time to time. However, according to the plaintiff, all the bills were not settled. Registered letters were sent by the plaintiff to the defendants. On 11.4.1996, the 3^rd defendant sent a reply (Ext.A11) to the plaintiff, which reads as follows:

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“Please refer to the letter cited. The connected records referred to in your letters on transportation, loading and unloading charges are seized by the Vigilance Department in connection with a vigilance enquiry. The claims can therefore be examined and settled only after the receipt of the records from the Vigilance Department. I am trying to get back the records from the department at the earliest.”

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Even after six months, there was no response or payment

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to the plaintiff. The plaintiff sent another notice

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demanding the bill amounts with interest, to which Ext.A13

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reply dated 13.11.1996 was sent by the 3^rd defendant.

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Ext.A13 reads as follows:

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“Please refer to the letter and the notice. The correctness of the claims of your client noted in the letter can be confirmed only on the basis of the original records. The original records relating to the claims have been seized by the Vigilance Department in connection with a case now pending with the Court of Enquiry Commissions and Special Judge, Thiruvananthapuram. The Vigilance Department has intimated that the investigation in the case has not been completed. The fact was intimated to your client as per this office letter No.B4/5703/95 dated 11.4.'96.

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In the light of the suit notice I have again contacted the Vigilance Department. Details on the final settlement of the claim will be intimated shortly.”

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The cause of action for the suit as shown in the

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plaint arose on 13.9.1988, 29.7.1989, 24.2.1991, 2.5.1991, 19.8.1991, 3.11.1991, 25.6.1992 and 10.11.1995 when the plaintiff carried out the contract works and bills were presented. The dates of Exhibits A11 and 13 were also

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shown as the dates on which the cause of action arose.

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The Court below held that there was no

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acknowledgment of liability before the expiration of the prescribed period under the Limitation Act (presumably under Section 18 of the Limitation Act). However, the Court below held that Exts.A11 and A13 letters issued by the 3^rd defendant would amount to an agreement coming

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within the purview of Section 25(3) of the Indian Contract

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Act. Accordingly, the suit was decreed for realisation of

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the amount claimed with 12% interest from the dates of

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the respective bills till realisation.

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The learned senior Government Pleader

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submitted that Section 25(3) of the Indian Contract Act

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would not be attracted to the case, since there was no

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promise to pay wholly or in part a debt. It is also

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submitted that Exts.A11 and A13 would not constitute such

a promise.

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Section 25(3) of the Indian Contract Act

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provides that “an agreement made without consideration, is

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void, unless it is a promise, made in writing, and signed by

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the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of

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suits.”

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In order to attract Section 25(3) of the Indian

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Contract Act, the following ingredients must be satisfied:

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i) There must be a promise.

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ii) It must be made in writing.

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iii) It must be signed by the person to be charged

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therewith, or by his agent generally or specially authorized in that behalf.

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iv) The promise must be to pay wholly or in part a

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debt.

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v) The debt must be one which the creditor might

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have enforced payment but for the law for the limitation

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of suits.

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Unless there is a promise to pay wholly or in part a debt, Section 25(3) of the Indian Contract Act has no application. The expression used in Ext.A11 is that “the claims can therefore be examined and settled only after the receipt of the records from the Vigilance Department.” The promise was to examine and settle the claims. It was not a promise to pay a debt. A debt must be a specified sum of money. There is no agreement in Ext.A11 to pay any specified sum of money. Nor did the 3^rd defendant agree that the claim of the plaintiff as per the bills was payable. When the 3^rd defendant promised to

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examine the claim and settle them, after receipt of the records, it would only amount to a promise to look into the matter and it does not amount to a promise to pay the specified claims. Unless there is a promise to pay a debt, which means an ascertained sum of money and of which the liability is admitted by the defendants, it would not constitute a promise to pay within the meaning of Section 25(3) of the Indian Contract Act. Ext.A13 makes the position further clear, since the 3^rd defendant stated therein that the correctness of the claims can be confirmed only on the basis of the original records. Ext.A13 refers to Ext.A11 also. Exts.A11 and A13 are to be read together and on such a reading, it is clear that the 3^rd defendant only promised to consider the claims and he did not promise to pay the claims. Nor did he acknowledge the liability and promise to pay that liability. Therefore,

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we are of the view that Section 25(3) of the Indian

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Contract Act is not attracted at all in the case on hand.

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We are fortified in taking the above view in the

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light of the decisions of the Full Bench of the Madras High

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Court in Doraisami Padayachi and another v. Vaithilinga Padayachi and others [AIR 1918 Madras 1145], a Division Bench of the Patna High Court in Sheobachan Pandey and another v. Madho Saran Choubey and others [AIR 1952 Patna 73], and a Single Bench of the Delhi High court in Daulat Ram v. Som Nath and others [AIR 1981 Delhi 354]. In Doraisami Padayachi's case (supra), the plaintiffs and defendants were partners, which came to an end in 1905. Dispute arose between the parties, which was referred for arbitration. The defendant gave letter to the Arbitrator, which was in the following terms:

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“As my sons Govindan and Ponnan are not in the village to settle the accounts relating to the trade

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carried on by me and Sinan, I shall bring and deliver the said two persons at Vilandidasamudram before tomorrow 10 'O' clock, and I shall settle the said amounts. In default I shall pay the amount due as per account together with interest thereon at the rate of 3 pies per rupee per day.”

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It was contended that the above said letter created a new

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contract under Section 25 of the Indian Contract Act, 1872. The question referred to the Full Bench was whether the clause in the alleged agreement that “I shall

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pay the amount due as per account” is a promise to pay a debt satisfying the requirement of Section 25 of the Indian Contract Act. The Full Bench negatived that contention and gave an opinion as follows;

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“ Opinion .- Assuming, as stated in the Order of Reference, that the meaning of the letter was that the writer promised to pay the amount which might be found due by the arbitrator on taking the accounts of the partnership, we are clearly of opinion that this was not a promise to pay a debt within the meaning of S.25 Contract Act. We think that the word “debt” used in this context must be taken to have been used in its ordinary meaning of a sum payable in respect of a money demand recoverable by action. See the

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observations of Subramania Ayyar, J., in Sabju Sahib v. Noordin Sahib: (1899) 22 Madras 139. We accordingly answer the question is the negative.”

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In Sheobachan Pandey's case (supra), the Division Bench of

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the Patna High Court held that a promise to pay an unascertained sum is not a promise to pay a “debt” within the meaning of S.25(3) of the Indian Contract Act. The decision of the Full Bench in Doraisami Padayachi's case (supra), was followed by the Patna High Court.

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In Daulat Ram's case (supra), the landlords

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demanded rents with effect from 6^th February 1965. In

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the reply notice, the tenants intimated the landlords as

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follows:

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“ xxx xxx xxx

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“(2) As regards payment of rent, the same can be paid to your clients in cash against receipt or by 'good for payment' cheque or by draft as your think fit.

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(3) There is no objection if your clients care to receive arrears of rent from any or more or all the followings:

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xx xx xx

This payment and future payments of rent can, of course, be made and accepted without prejudice to either of the parties' rights, as regards tenancy or sub-tenancy.”

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Thereafter, the tenants remitted some amount by two money orders, which were refused by the landlords. Subsequently, the tenants deposited the rent in court. The money order as well as the deposit in Court were with respect to the rent, recovery of which was not time barred. Construing the terms of the reply, the Delhi High Court held that the reply and the subsequent conduct of the tenants only meant that they never agreed to pay the time barred rent and it did not amount to an agreement to pay time barred rent within the meaning of Section 25(3) of the Indian Contract Act.

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For the aforesaid reasons, we hold that the

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Court below was not right in holding that Exts.A11 and A13

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letters issued by the defendant constituted an agreement

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under Section 25(3) of the Indian Contract Act.

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The only claim which is not barred as on the date of suit is the claim for 7,770/- as per the bill dated₹ 10.11.1995. The plaintiff would be entitled to get a decree only for a sum of 7,770/- together with interest.₹

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Accordingly, the appeal is allowed in part and in substitution of the decree passed by the Court below, a decree is granted in favour of the plaintiff (respondent) for a sum of 7,770/- together with interest at 12% per₹

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annum from 10.11.1995 till realisation with proportionate

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costs.

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K.T. SANKARAN, JUDGE.

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P.D. RAJAN, JUDGE.

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acd

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