Yes, you should be in a position to force him to repay the said loan by going to court, even though the said loan is time-barred due to limitation. This is in view of the provisions of Section 25(3) of the Contracts Act, 1872, which is reproduced below:
“25. Agreement without consideration void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law.—An agreement made without consideration is void, unless—
(1) it is expressed in writing and registered under the law for the time being in force for registration of 1[documents], and is made on account of natural love and affection between parties standing in a near relation to each other; or unless
(2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless
(3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised 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 suits.
In any of these cases, such an agreement is a contract.
Explanation 1.—Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.
Explanation 2.—An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent to the promisor was freely given.”
Illustrations
(a) A promises, for no consideration, to give to B Rs. 1,000. This is a void agreement.
(b) A, for natural love and affection, promises to give his son, B, Rs. 1,000. A puts his promise to B into writing and registers it. This is a contract.
(c) A finds B’s purse and gives it to him. B promises to give A Rs. 50. This is a contract.
(d) A supports B’s infant son. B promises to pay A’s expenses in so doing. This is a contract.
(e) A owes B Rs. 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B Rs. 500 on account of the debt. This is a contract.
(f) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A’s consent to the agreement was freely given. The agreement is a contract notwithstanding the inadequacy of the consideration.
(g) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A denies that his consent to the agreement was freely given.
The inadequacy of the consideration is a fact which the Court should take into account in considering whether or not A’s consent was freely given.”
As per this provision of Section 25(3), if a promise is made in writing and signed by the person to pay a debt of which the creditor might have enforced payment but for the law for the limitation of suits, then it is a valid agreement and a valid contract.
However, it should be kept in mind that it should not merely be an acknowledgement of the time-barred debt, but it should be a specific promise in writing to pay the time-barred debt.
In your case, you have mentioned that the debtor has promised to you in writing (and I hope it is signed by him also) to repay the amount of loan which was otherwise time-barred due to the limitation of 3 years. In these circumstances, it should be possible for you to approach the court to force him to fulfil the promise of repaying the above loan.
Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.
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