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 that time barred debt. Is the agreement enforceable?
The agreement is enforceable by Nandhini against Santhi.
Sec. 25 of the Indian Contract Act reads – an agreement without consideration is void unless it is a promise to pay a debt barred by limitation law. The promise must be in writing and signed by the debtor or his authorised agent to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.
In the above case, Santhi has given a written promise to pay Rs. 5,000/- for the time barred debt which is covered under Sec. 25(3) of the Indian Contract Act and hence an enforceable contract by Nandhini against Santhi.
The facts of the case resemble Debi Prasad Vs. Bhagwati Prasad, AIR 1943 All 63, wherein the Court held that if an acknowledgment of a debt was with an undertaking to pay interest, then it was an agreement with a promise to pay the debt and hence covered under section 25 (3).