JUDGMENT
Badar Durrez Ahmed, J.
1. This is an application seeking leave to defendant. One of the points raised by the learned Counsel for the defendant is that the suit itself is barred by time. It was contended by the learned Counsel that the disbursement of the loan by the plaintiff to the defendant No. 1 was completed on 20.06.1997. It is an admitted position that the last payment made by the defendant No. 1 to the plaintiff by way of repayment of the loan was made on 25.01.2001. Consequently, the period of limitation starts from 25.01.2001. Three years taken from that date would end on 25.01.2004. The present suit has been filed on 04.04.2005. Consequently, it is contended that the suit is beyond the period of three years and is, therefore, barred. In response, the learned Counsel for the plaintiff submitted that on 15.04.2004, a letter was written by the defendants to the plaintiff wherein they have acknowledged the liability under the loan and they have agreed to repay the principal amount of loan, subject to certain conditions which they indicated in the said letter. The material portion of the letter reads as under:
After looking into this current scenario, we concluded & still we are determined to repay the loan component provided following relaxations are granted to us by RMK:
Accrued interest & penal interest must be waived.
Deferment period be extended at least for 3 years with quarterly Installments.
De-list from the defaulter list & the funding agencies be informed in order to ensure normal funding so that financial health of the organisation be regained & boost up the capacity to repay the RMK loan easily.
If above relaxations are granted by RMK generously, INRECA Sansthan assuring repayment of over-dues without fail. Not only the over-due would be settled by doing so; glorious past of this NGO would be restored where 100 odds dependents be survived & blessed.
2. In response to this letter, the plaintiff replied by a letter dated 06.05.2004 which was to the following effect:
RMK/GUJ/04/3922 06/05/04 The President INRECA (International Rural Educational & Cultural Association) Inreca Complex Rajpipla Road Dediapada-393 040 Dist.:Narmada, Gujarat Sub: Submission of acknowledged statement of loan account. Sir,
We have received your letter No. IN / RMK/ Overdue/04/145 dated 15th April, 2004 requested for extending relief in interest, penal interest etc. as the state was affected by flood, cyclone, earth quake & riots etc. at different periods. In this regard, we have to inform you that Rashtriya Mahila Kosh does not have any provision for giving concession in interest or penal interest as per the terms of sanction. However, your proposal for rephasement of loan can be put up to appropriate authority only after getting related documents from State Government / Central Government regarding floods / cyclones / earth quake and other communal riots as declared by them in different years. You are also requested to submit all the statement of accounts submitted to you by RMK at different times which should be properly acknowledged by Chief Functionary of the organisation with seal and signature.
Hope the documents / information mentioned above should be submitted by your organisation as quick as possible to take further action on the matter.
Yours faithfully,
–sd–
(C.R. Mishra )
Deputy Director
3. Thereafter, there is no further correspondence on this issue, apart from the demand notice issued by the plaintiff on 31.08.2004, which preceded the filing of the suit on 04.04.2005. Even if it is assumed that the letter dated 15.04.2004 is an acknowledgment of a debt, it would be of no assistance to the plaintiff because the acknowledgment came beyond the three year period prescribed under the Limitation Act, 1963. Section 18 of the Limitation Act, 1963 cannot be invoked because the acknowledgment is not within the period of limitation. The learned Counsel for the plaintiff then pointed to the provisions of Section 25 (3) of the Indian Contract Act, 1872 (hereinafter referred to as ‘the said Act’) to submit that the letter amounted to a promise and, therefore, was a contract in itself. He submitted that there is a distinction between an acknowledgment under Section 18 of the Limitation Act, 1963 and a contract under Section 25 (3) of the said Act. He placed reliance on the following decisions:
i) Tulsi Ram v. Same Singh ;
ii) In Re: Business Forms Ltd. and Ashoka Agencies ;
iii) N. Ethirajulu Naidu v. K.R. Chinnikrishnan Chettiar .
4. After examining the arguments advanced by the counsel for the parties, I am of the view that although the plaintiff has made out a prima facie case for a suit based on a contract under Section 25 (3) of the said Act, it has also to be considered as to whether the same can be conclusively held to be a contract under Section 25 (3) of the said Act. This is so because the learned Counsel for the defendant had pointed out that the letter dated 15.04.2004 was not an unconditional promise, but was a conditional offer / proposal extended by the defendants. The conditions were not accepted by the plaintiff and, therefore, it cannot be said that there was a resultant promise. He made the submissions in the context of the provisions of Section 2 of the said Act which defines the expressions “proposal” and “promise”.
5. Considering the arguments advanced by the counsel for both the parties, the issue is debatable. This being the case, in view of the decisions of the Supreme Court and, particularly in the case of Uma Shankar Kamal Narain and Anr. v. M.D. Overseas Ltd. , the defendant is entitled to unconditional leave to defend.
This application is, therefore, allowed.