H. B. L. Versus SHAMIM QURESHI

1. SAJJAD ALI SHAH, J.‑‑ On 14‑3‑1988 after hearing Mr. Saleem Iqbal, Advocate for the appellant only as respondent was not present although notice was sent to him, vide a short order, for reasons to be recorded later, we had set aside impugned judgment and consequential decree dismissing the suit by allowing the appeal and remanding the case to the Trial Court for disposal according to law. Reasons follow now.

2. Briefly stated the relevant facts giving rise to this appeal are that Habib Bank Limited, appellant before us filed a suit for recovery of Rs.2,50,508.41 in the Special Court of Sind at Karachi against Shamim Qureshi, who had accounts in three branches. At the request of defendant in the suit credit facility was extended to him to the extent of Rs.65,786.50, Rs.48,000 and Rs.65,722.50 for which he executed three Demand Promissory Notes dated 12‑7‑1969, 15‑4‑1970 and 22‑6‑1971. Defendant in the suit failed to repay the loans and after adjustment of sale proceeds of certain shares and securities pledged by him, there remained dues of Rs.70,569.47, Rs.56,269 and Rs.1,23,669.94 in the branches which were payable. Defendant in the suit acknowledged his liability and undertook to liquidate liabilities mentioned above by 31‑5‑1978 by his letter dated 28‑2‑1978, copy of which has been annexed with plaint as marked 'C'. Other documents were also produced alongwith plaint.

3. Defendant in the suit filed application under Order 37, Rule 3 read with section 151, C . P . C . in which he prayed for grant of unconditional leave to defend the suit. In affidavit in support of application main objection was taken that suit was barred by limitation, This application was contested by the parties and ultimately leave was granted vide order dated 19‑7‑1981 after which written statement was filed in which several objections were taken including one to the effect that suit was barred by limitation. Issues were framed. After that parties did not produce evidence. Trial Court proceeded further and decided first issue whether the suit was barred by limitation in the light of pleadings of the parties and documents produced in support thereof. Three promissory notes produced by the plaintiff in the suit are (1) dated 12‑7‑1969 for Rs.48,000, (2) dated 15‑4‑1970 for Rs.38,000 mistakenly shown in the impugned judgment in the paper book as Rs.48,000 and (3) dated 15‑4‑1970 for Rs.13,000. It has been held by the trial Court that since suit on the promissory note is to be filed within three years of the execution thereof (12‑7‑1969 and 15‑4‑1970) and in the instant case suit was filed on 17‑5‑1979, hence it was time‑barred. For letter dated 28‑2‑1978 of defendant in the suit in which liability is acknowledged, it is observed by the learned trial Judge that even this was done after expiry of limitation of three years, as such this would not help in extending period of limitation under section 19 of the Limitation Act. It is further held in the impugned judgment that plaintiff in the suit had failed to establish that the admission of the defendant dated 28‑2‑1978 amounted to fresh agreement under section 25(3) of the Contract Act and the suit has been dismissed as clearly time‑barred.

4. The short question which came up for discussion before us in the disposal of this appeal is that there is no dispute about the fact that under the Limitation Act three years time is allowed to file suit for recovery of money under summary procedure on the basis of Promissory Note. Point requiring consideration is whether three years time would start running from the date of acknowledgement of the liability or not. Mr. Saleem lqbal has submitted before us that in the instant case although the Promissory Notes were executed in years 1969 and 1970 but subsequently vide letter dated 28‑2‑1978 defendant has acknowledged his liability and made a fresh promise with undertaking to liquidate the aforesaid liabilities by 31st May, 1978 as such three years time will start running from the date of acknowledgement which is 28‑2‑1978 as contemplated under section 25(3) of the Contract Act. Section 25(3) of the Contract Act provides that an agreement without consideration is void unless there is a promise to pay a debt, barred by limitation law. On this basis it is submitted that letter of acknowledgement dated 28‑2‑1978 in itself constitutes a new contract as such limitation of three years would start running from the date of new contract. In support of the proposition mentioned above reliance has been placed on the cases of Riasatullah v. Tripura Modern Bank Ltd. P L D 1968 Dacca 260 and United Bank Ltd. v. K.S.Kamal P L D 1977 Kar. 521. In the first reported case from Dacca it is held that requirement of section 25(3) of the Contract Act is not that promise itself must be in express terms but that such promise should be deducible from the written and signed document. The attending circumstances can be used to construe the meaning of the words themselves. In the second reported case from Karachi it is held that although suit was factually barred by time yet it was within time on the basis of promise made by son of deceased debtor, who acknowledged death of his father and made promise to pay the same. We fully agree with the legal position enunciated in the rulings mentioned above and reiterate that time will run from the date of fresh promise as contemplated under section 25(3) of the Contract Act. In the instant case the same legal position will apply provided there is conclusive evidence before the Court on the basis of which the Court can give finding that letter dated 28‑2‑1978 is written by defendant in ,the suit himself or not.

5. Now it is for the parties to produce evidence in proof or disproof of this letter. In the instant case evidence was not recorded for the reason that according to the trial Court parties did not appear and did not produce the evidence. Record of the trial Court shows that on 20‑8‑1983 none was present for the parties and final date was given for evidence of plaintiffs. Case was put off to 15‑9‑1983. On 15‑9‑1983 none was present for the parties and evidence was not produced hence it was put off to 11‑10‑1983 for orders. Now it appears that on one date nobody appeared and on the next date evidence was shut out and the case was adjourned for final orders. Record further shows that before 20‑8‑1983 the hearing was fixed on 8‑6‑1983 and the case diary of that date shows that the Court was lying vacant and the new Presiding Officer had not taken over the charge. That is why a long date after two months was given. In. such circumstances when the Court remained vacant for quite some time and if the parties had not appeared on one date or two dates, notices should have been issued to the parties.

6. For the facts and reasons stated above we set aside impugned judgment and decree and allow the appeal and in consequence remand the case to the trial Court with direction that notices be issued to the parties and they should be given fair opportunity of producing the evidence and thereafter further steps be taken according to law to conclude the proceedings.

7. SALEEM AKHTAR, J.‑‑ I agree with the Judgment of my Learned brother Sajjad Ali Shah, J. and wish to add that section 25 of the Contract Act is an exception to the rule that an agreement made without consideration is void. It enumerates three situations to which an agreement without consideration will be enforceable. the presort case only section 25(3) is relevant. To fulfil the agreements of section 25(3) a promise should be made in writing by the person charged with liability or his authorised agent to pay a time‑barred debt. Such promise will become an agreement. Any promise made by a, third party to pay the time‑barred debt of any other person will not fall within the ambit of section 25(3). A mere acknowledgement of debt does not amount to promise to pay. There should be a promise to pay in writing in express terms or in such manner that a clear and absolute promise to pay can be spelt out. Mere implied promise such as bare acknowledgement of liability of entry in the account books which not attract section 25(3). Reference can be made to Ma l Lal Chand,.v. Gul Muhammad A I R 1933 Lah. 209; Baru Mal Daulat Ram .are and another A I R 1936 Lah.

164. Writing words 1 'amount paid by' or 'to be paid' have been held to constitute a promise to pay a debt. See Fateh Muhammad v. Surja A I R 1! Lah. 486

8. There is basic difference between section 25(3) of the Court Act and section 19 of the Limitation Act. Under the former the should be a promise in writing to pay a time‑barred debt. But under section 19 a mere acknowledgement in writing within the period limitation extends the time. Promise as contemplated by section 25 gives a fresh cause of action. It applies when the debt is barred time.

9. A.A /H-95/K Case Remanded