Santhi owes Rs. 5,000 to Nandhini, but the debt is barred by the Limitation Act. Santhi gives another written promise to pay Rs. 5,000 for the time-barred debt. Is this agreement enforceable?
TheSayeed Answered question March 15, 2024
Facts of the Case:
- Santhi owes Rs. 5,000 to Nandhini, but the debt is time-barred under the Limitation Act.
- Despite the debt being time-barred, Santhi provides a written promise to pay the Rs. 5,000 debt.
Issue in the Case:
- Is the agreement, where Santhi promises to pay the time-barred debt, legally enforceable?
Principle:
- Section 25(3) of the Indian Contract Act states that an agreement without consideration is void unless it is a promise to pay a debt barred by the law of limitation.
- The promise must be in writing and signed by the debtor or their authorized agent.
Judgment:
- The agreement is enforceable by Nandhini against Santhi.
- Section 25(3) of the Indian Contract Act allows for the enforcement of agreements to pay time-barred debts, provided they are made in writing and signed by the debtor or their authorized agent.
- Santhi’s written promise to pay the Rs. 5,000 for the time-barred debt falls under Section 25(3) and is therefore legally binding.
- This ruling aligns with the decision in Debi Prasad vs. Bhagwati Prasad, AIR 1943 All 63, where the court held that agreements acknowledging a debt with an undertaking to pay interest are covered under Section 25(3) and are enforceable.
TheSayeed Answered question March 15, 2024