MANU/MH/0252/2007

Equivalent/Neutral Citation: 2007(4)ALLMR718, 2007(3)BomC R772, 2007 (4) C C C 131 , 2007(4)C TC 257, 2007(4)MhLj517

IN THE HIGH COURT OF BOMBAY

Summons for Judgment No. 1117 of 2003 in Summary Suit No. 1551 of 2003 and
Summons for Judgment No. 10 of 1994 in Summary Suit No. 2402 of 1993, Summons
For Judgment No. 11 of 1994 in Summary Suit No. 2403 of 1993, Summons For
Judgment No. 12 of 1994 in Summary Suit No. 2404 of 1993, Summons For Judgment
No. 90 of 1995 in Summary Suit No. 4549 of 1994, Summons For Judgment No. 347 of
1998 in Summary Suit No. 978 of 1997, Summons For Judgment No. 968 of 2003 in
Summary Suit No. 1482 of 2003, Summons For Judgment No. 999 of 2003 in Summary
Suit No. 2074 of 2003, Summons For Judgment No. 1002 of 2003 in Summary Suit No.
1779 of 2003, Summons For Judgment No. 1021 of 2003 in Summary Suit No. 3040 of
2003, Summons For Judgment No. 685 of 2002 in Summary Suit No. 2123 of 2002,
Summons For Judgment No. 999 of 2003 in Summary Suit No. 2074 of 2003, Summary
Suit No. 185 of 2005, Summons For Judgment No. 140 of 2004 in Summary Suit No.
2387 of 2003, Summons For Judgment No. 189 of 2004 in Summary Suit No. 145 of
2004, Summons For Judgment No. 351 of 2004 in Summary Suit No. 586 of 2004,
Summons For Judgment No. 352 of 2004 in Summary Suit No. 607 of 2004, Summons
For Judgment No. 430 of 2004 in Summary Suit No. 1007 of 2004, Summons For
Judgment No. 435 of 2004 in Summary Suit No. 1119 of 2004, Summons For Judgment
No. 436 of 2004 in Summary Suit No. 3470 of 2003, Summons For Judgment No. 464
of 2004 in Summary Suit No. 1461 of 2002, Summons For Judgment No. 570 of 2004 in
Summary Suit No. 1643 of 2004, Summons For Judgment No. 571 of 2004 in Summary
Suit No. 1732 of 2004, Summons For Judgment No. 600 of 2004 in Summary Suit No.
1976 of 2004, Summons For Judgment No. 601 of 2004 in Summary Suit No. 1962 of
2004, Summons For Judgment No. 602 of 2004 in Summary Suit No. 1975 of 2004,
Summons For Judgment No. 606 of 2004 in Summary Suit No. 1987 of 2004, Summons
For Judgment No. 625 of 2004 in Summary Suit No. 1709 of 2004, Summons For
Judgment No. 626 of 2004 in Summary Suit No. 1885 of 2004, Summons For Judgment
No. 644 of 2004 in Summary Suit No. 2065 of 2004, Summons For Judgment No. 656
of 2004 in Summary Suit No. 1044 of 2004, Summons For Judgment No. 657 of 2004 in
Summary Suit No. 1379 of 2004, Summons For Judgment No. 658 of 2004 in Summary
Suit No. 995 of 2004, Summons For Judgment No. 697 of 2004 in Summary Suit No.
1672 of 2004, Summons For Judgment No. 720 of 2004 in Summary Suit No. 2155 of
2004, Summons For Judgment No. 730 of 2004 in Summary Suit No. 2358 of 2004,
Summons For Judgment No. 731 of 2004 in Summary Suit No. 2394 of 2004, Summons
For Judgment No. 732 of 2004 in Summary Suit No. 2336 of 2004, Summons For
Judgment No. 733 of 2004 in Summary Suit No. 2357 of 2004, Summons For Judgment
No. 735 of 2004 in Summary Suit No. 1964 of 2004, Summons For Judgment No. 738
of 2004 in Summary Suit No. 2224 of 2004, Summons For Judgment No. 740 of 2004 in
Summary Suit No. 1965 of 2004, Summons For Judgment No. 762 of 2004 in Summary
Suit No. 1138 of 2004, Summons For Judgment No. 778 of 2004 in Summary Suit No.
2353 of 2004, Summons For Judgment No. 779 of 2004 in Summary Suit No. 2354 of
2004, Summons For Judgment No. 780 of 2004 in Summary Suit No. 2426 of 2004, (In
S.J. Nos. 778 of 2004, 779 and 780 of 2004) Summons For Judgment No. 797 of 2004
in Summary Suit No. 2402 of 2004, Summons For Judgment No. 810 of 2004 in
Summary Suit No. 2588 of 2003, Summons For Judgment No. 831 of 2004 in Summary
Suit No. 2183 of 2004, Summons For Judgment No. 832 of 2004 in Summary Suit No.
2049 of 2004, Summons For Judgment No. 833 of 2004 in Summary Suit No. 2184 of
2004, Summons For Judgment No. 920 of 2004 ub in Summary Suit No. 2688 of
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 2004Summons For Judgment No. 941 of 2004 in Summary Suit No. 2876 of 2004
Summons For Judgment No. 44 of 2005 in Summary Suit No. 1174 of 2004, Summons
For Judgment No. 275 of 2005 in Summary Suit No. 3486 of 2002, Summons For
Judgment No. 355 of 2005 in Summary Suit No. 459 Of 2005, Summons For Judgment
No. 356 of 2005 in Summary Suit No. 257 of 2005, Summons For Judgment No. 357 of
2005 in Summary Suit No. 586 of 2005, Summons For Judgment No. 358 of 2005 in
Summary Suit No. 414 of 2005, Summons For Judgment No. 359 of 2005 in Summary
Suit No. 409 of 2005, Summons For Judgment No. 360 of 2005 in Summary Suit No.
259 of 2005, Summons For Judgment No. 361 of 2005 in Summary Suit No. 413 of
2005, Summons For Judgment No. 362 of 2005 in Summary Suit No. 260 of 2005,
Summons For Judgment No. 363 of 2005 in Summary Suit No. 406 of 2005, Summons
For Judgment No. 364 of 2005 in Summary Suit No. 259 of 2005, Summons For
Judgment No. 365 of 2005 in Summary Suit No. 438 of 2005, Summons For Judgment
No. 366 of 2005 in Summary Suit No. 544 of 2005, Summons For Judgment No. 367 of
2005 in Summary Suit No. 258 of 2005, Summons For Judgment No. 368 of 2005 in
Summary Suit No. 410 of 2005, Summons For Judgment No. 369 of 2005 in Summary
Suit No. 438 of 2005, Summons For Judgment No. 370 of 2005 in Summary Suit No.
411 of 2005, Summons For Judgment No. 371 of 2005 in Summary Suit No. 407 of
2005, Summons For Judgment No. 372 of 2005 in Summary Suit No. 255 of 2005,
Summons For Judgment No. 373 of 2005 in Summary Suit No. 448 of 2005, Summons
For Judgment No. 396 of 2005 in Summary Suit No. 1301 of 2005, Summons For
Judgment No. 397 of 2005 in Summary Suit No. 1271 of 2005, Summons For Judgment
No. 398 of 2005 in Summary Suit No. 1165 of 2005, Summons For Judgment No. 399
of 2005 in Summary Suit No. 1091 of 2005, Summons For Judgment No. 400 of 2005 in
Summary Suit No. 1154 of 2005, Summons For Judgment No. 401 of 2005 in Summary
Suit No. 1153 of 2005, Summons For Judgment No. 402 of 2005 in Summary Suit No.
1270 of 2005, Summons For Judgment No. 449 of 2005 in Summary Suit No. 1273 of
2005, Summons For Judgment No. 452 of 2005 in Summary Suit No. 1272 of 2005,
Summons For Judgment No. 522 of 2005 in Summary Suit No. 3714 of 2004, Summons
For Judgment No. 524 of 2005 in Summary Suit No. 1126 of 2005, Summons For
Judgment No. 546 of 2005 in Summary Suit No. 2015 of 2005, Summons For Judgment
No. 549 of 2005 in Summary Suit No. 1691 of 2005, Summons For Judgment No. 568
of 2005 in Summary Suit No. 1261 of 2005, Summons For Judgment No. 570 of 2005 in
Summary Suit No. 606 of 2004, Summons For Judgment No. 571 of 2005 in Summary
Suit No. 438 of 2004, Summons For Judgment No. 600 of 2005 in Summary Suit No.
1744 of 2005 and Summons For Judgment No. 605 of 2005 in Summary Suit No. 1579
of 2005
Decided On: 26.04.2007
Jyotsna K. Valia and Ors. Vs. T.S. Parekh and Co. and Ors.
Hon'ble Judges/Coram:
F.I. Rebello, V.K. Tahilramani and Abhay Shreeniwas Oka, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: A.R. Gyani and Vatsal Verma, Advs., i/b., Halwasia, &
Co. Summons, for Judgment No. 1117 of 2003 in Summary Suit No. 1551 of 2003,
Ketan Parekh and Somya Srikrishna, Advs.,i/b., Kanga & Co. In S.J. Nos. 10 of 1994, 11
of 1994 and 12 of 1994, N.C. Parekh, Adv., Mansukhlal Hiralali/b., & Co. Summons, for
Judgment No. 90 of 1995 In Summary Suit No. 4549 OF 1994,Suchi Halvasia, Adv.,i/b.,
Halvasia and Co. Summons for Judgment No. 347 of 1998 in Summary Suit No. 978 of
1997, H. Toor and Sohaib Khan, Advs., P.J. Rangai/b., & Co. in Summons for Judgment
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No. 968 of 2003 in Summary Suit No. 1482 of 2003, Sachin Satpute, Adv.,i/b., S.
Ashwinkumar, & Co. in Summons, For Judgment No. 140 of 2004 in Summary Suit No.
2387 of 2003 M.G. Mimani, Adv.in Summons For Judgment No. 189 of 2004 in Summary
Suit No. 145 of 2004, H.V. Chande, Adv. in S.J. Nos. 351 and 352 of 2004, S.C. Naidu,
Adv., C.R. Naidui/b.,& Co. in S.J. Nos. 656, 657 and 658 of Preeti Shah, Adv. in
Summons for Judgment No. 762 of 2004 in Summary Suit No. 1138 of 2004, L.H.
Rambhai, Adv. in S.J. Nos. 778, 779 and 780 of 2004, Preeti Shah, Adv. in Summons
For Judgment No. 275 of 2005 in Summary Suit No. 3486 of 2002, Y.R. John and Ajay
K.J. Panicker, Advs. in S.J. Nos. 355 to 373 of 2004, L.H. Rambhia, Adv. in Summons
for Judgment No. 402 of 2005 in Summary Suit No. 1270 of 2005, Virag Tulzapurkar,
Sr. Counsel, Somya Srikrishna, Adv., Little & Co. in Summons For Judgment No. 524 of
2005 in Summary Suit No. 1126 of 2005, i/b., Naushad Engineer, Adv., Desai and
Diwanji,i/b., in Summons For Judgment No. 549 of 2005 in Summary Suit No. 1691 of
2005
For Respondents/Defendant: P.K. Vora., Pramodkumar, i/b., & Co. for Defendant No. 1
in Summons For Judgment No. 968 of 2003 in Summary Suit No. 1482 of 2003,
Birendra Saraf, Adv., Nankani,i/b., and Associaes in Summons for Judgment No. 1021 of
2003 in Summary Suit No. 3040 of 2003, R.J. Majra, Adv.,i/b. , M.g. Gawde, Adv. in
Summons For Judgment No. 140 of 2004 in Summary Suit No. 2387 of 2003,B. Dalal,
Adv., i/b., Dalal T.N. Tripathi, Adv. in S.J. Nos. 656, 657 and 658 of 2004, Dipti Das,
Adv.,i/b., Dunmorr Sett, Adv. in Summons for Judgment No. 697 of 2004 in Summary
Suit No. 1672 of 2004, Tushar Bhavasar, Adv.,i/b., Manoj Bhatt, Adv. for Defendant
Nos. 1 and 3 in Summons for Judgment No. 810 of 2004 in Summary Suit No. 2588 of
2003, Arif Bookwala, Sr. Counsel, i/b., Ranjit & Co. for Defendants in Sr. Nos. 56, 57,
61 and 69 in S.J. Nos. 355 to 373 of 2004, H.V. Chande, Adv. for Defendant Nos. 1 and
5 in Summons for Judgment No. 452 of 2005 in Summary Suit No. 1272 of 2005,
Shyam Mehta, Adv.,i/b., Kanga & Co. in Summons for Judgment No. 524 of 2005 in
Summary Suit No. 1126 of 2005, Anoop Sharma, Adv. in Summons for Judgment No.
549 of 2005 in Summary Suit No. 1691 of 2005, C.S. Balsara and P.S. Colabawala,
Advs.,i/b., Ramesh Makhija& Co. in Summons for Judgment No. 568 of 2005 in
Summary Suit No. 1261 of 2005
Case Note:
Civil - Maintainability of Summary Suit - Order 37, Rule 2 of Code of Civil
Procedure, 1908 - Hon'ble Chief Justice placed present Reference, pursuant to
conflicting views of Single Judges and Division Benches - "Whether Summary
Suit under Order 37, Rule 2 lies on (i) a settled account duly confirmed by
Defendants; (ii) On a settled account which is not confirmed by Defendants;
(iii) On an acknowledgment of liability; (iv) On honoured cheque; and (v) On
a mere writing or a receipt - Held, summary suit would not lie on 'a settled
account', which is not confirmed by Defendant and "on honoured cheque" -
Summary suit lies where concluded contract exist in writing containing
express or implied promise to pay - Written contract as contemplated in Order
37 need not be signed by both parties but then writing between parties must
be such that certain agreement has been brought into existence and that
claim made under such agreement to be indisputable - Where document is not
duly stamped and defect is curable, summary suit will be maintainable - To
imply a term, in contract as implied term, test laid down by Kim Lewison in
'Interpretation of Contract" is relevant, however, Court must take note that
general presumption is, against implying of terms into written contract -
Issue of implied promise to pay, necessarily depend on facts of each case -
Summary suit lie on 'Settled accounts duly confirmed by Defendants in view
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of observations of Apex Court in Hiralal and Ors. v. Badkulal and Ors - Not
possible to lay down any precise test as to when Summary Suit would lie on
an acknowledgement, writing or receipt, which depend firstly on document
itself, practice, usage and customs of trade as also facts of each case - By so
holding it is not as if Defendant is denuded of his defences when he applies
for leave to defend in view of judgments of Apex Court in Machalec
Engineering and Manufacturers v. Basic Equipment Corporation and Sunil
Enterprises v. S.B.I. Commercial and International Bank Ltd - Reference
answered
JUDGMENT
F.I. Rebello, J.
1. A learned Single Judge noticing apparent inconsistencies or conflicts in judgments of
learned Single Judges and of the Division Benches, as to whether a suit based on a
writing or a receipt or an acknowledgement of liability, or honoured cheque or a settled
account is maintainable as a summary suit, referred the matter to the Hon'ble the Chief
Justice, who has placed the matter for consideration before the Full Bench. The issues
which arise for our consideration and as referred to us, arise under Order XXXVII, Rule
2 (Summary Suit), in cases where the suit is based : i) On a settled account duly
confirmed by the Defendants;
ii) On a settled account which is not confirmed by the Defendants;
iii) On an acknowledgment of liability;
iv) On honoured cheque; and
v) On a mere writing or a receipt;
2. Before we proceed to answer the reference, we may consider the legislative history
of the relevant rule of Order XXXVII. Order XXXVII Rule 2, the relevant rule, as
originally enacted read as under:
All suits upon bills of exchange, hundies and promissory notes, may, in case
the Plaintiff desires to proceed hereunder, be instituted by presenting the plaint
in the form prescribed, but the summons shall be in Form No. 4 in Appendix B
or in such other form as may be from time to time prescribed.
3. This High Court amended Order XXXVII Rule 2(2) by a notification on 29.9.1936. The
rule read as under:
(1) All suits upon bills of exchange, hundies or promissory notes and all suits
in which the plaintiff seeks only to recover a debt or liquidated demand in
money payable by the defendant with or without interest, arising on a contract
express or implied, or on an enactment where the sum sought to be recovered
is a fixed sum of money or in the nature of debt other than a penalty, or on a
guarantee, where the claim against the principal is in respect of a debt or a
liquidated demand only, or in suits in which the landlord seeks to recover
possession of immovable property, with or without a claim for the rent or
mesne profits against a tenant whose term has expired or has been duly
determined by notice to quite, or as become liable to forfeiture for non-
payment of rent or against persons claiming under such tenant may in case the

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 plaintiff desires to proceed hereunder, be instituted by presenting a plaint in the
form prescribed, but the summons shall be in Form No. 4 in Appendix B or in
such other form as may be from time to time prescribed.
4. By a further amendment dated 1st November, 1966 by this Court, the provisions of
Order XXXVII Rule 2 of the Code of Civil Procedure was substituted as under:
2. Institution of Summary suits upon bills of exchange, etc.-- (1) All suits upon
bills of exchange, hundies or promissory notes, and all suits in which the
plaintiff seeks only to recover a debt or liquidated demand in money payable by
the defendant with or without interest, arising on a written contract or on an
enactment, where the sum sought to be recovered is a fixed sum of money or in
the nature of a debt other than a penalty, or on a guarantee, where the claim
against the principal is in respect of a debt or a liquidated demand only, may,
in case the plaintiff desires to proceed hereunder, be instituted by presenting a
plaint with a specific averment therein that the suit is filed under this Order,
and that no relief not falling within the ambit of this rule has been claimed, and
with the inscription within brackets "(Under Order XXXVII of the Code of Civil
Procedure, 1908)" just below the number of the suit in the title of the suit, but
the summons shall be in Form No. 4, in Appendix B or in such other form as
may be from time to time prescribed.
5. The Code of Civil Procedure, 1908, subsequently came to be amended by amendment
of the Code of Civil Procedure in 1976. The relevant amended provision of Order XXXVII
rule (1)(2) reads as under:
(2) Subject to the provisions of Sub-rule (1), the Order applies to the following
classes of suits, namely:
(a) suits upon bills of exchange, hundies and promissory notes;
(b) suits in which the plaintiff seeks only to recover a debt or
liquidated demand in money payable by the defendant, with or without
interest, arising,
(i) on a written contract; or
(ii) on an enactment, where the sum sought to be recovered is
a fixed sum of money or in the nature of a debt other than a
penalty; or
(iii) on a guarantee, where the claim against the principal is in
respect of a debt or liquidated demand only.
6 . Various counsel have been heard in the matter and they have also submitted their
written submissions. A preliminary submission was made on behalf of the Plaintiffs that
the very question, whether a Summary Suit will be maintainable in respect of the
documents mentioned earlier is not appropriate and the exercise of laying down, as a
matter of law whether Summary Suit lies on the types of documents described, ought
not to be gone into. It is submitted that there is no standard format for the four
documents in respect of which the present reference has been made. They are not well-
defined legal terms. Whether a particular document is a receipt of acknowledgment of
liability on which a Summary Suit would lie, would depend on the contents and
language of the document and not on the nomenclature thereof.

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It is next submitted that no useful purpose will be served to lay down, as a matter of
law, whether a Summary Suit will or will not lie on a document solely based on a
particular type of document. This kind of compartmentalization will not solve future
controversy on the issue, on the contrary it is likely to create further controversy on the
question whether a particular document falls within the category of 'receipt' or 'accounts
stated' or 'acknowledgment of liability', etc. In all these matters, it is submitted, what is
required to be seen is the substance of the document and not the nomenclature. A
document may be titled as a receipt but, in fact, may not be a receipt. Similarly, a
document may not be titled 'receipt' or may be titled with some other word, but may
actually be a receipt. Hence, the Court ought not to lay down rules based on the title of
the document. The only test should be the one which is laid down in Order XXXVII, viz.
whether the claim made arises on the written contract in question, or not. The test laid
down in Order XXXVII is sufficient.
7 . Considering the arguments advanced by the counsel for the parties and as
considerable doubt has been expressed, in our opinion, and, as the matter has been
referred to us, we shall have to answer the issues referred for our consideration. The
issue whether the reference has to be answered, in its entirety or in some aspects will
be considered with reference to the provisions of Order XXXVII, the statement of
objects and reasons, the law declared by the Hon'ble Supreme Court, precedents of this
Court, the opinions of other High Courts and the various commentaries which would
shed light on the subject, to which our attention was invited.
8. The notes on clauses in so far as Order XXXVII, reads as under:
Clause 87-Sub-clause (i). Order XXXVII provides for a summary procedure in
respect of certain suits. The essence of the summary suit is that the defendant
is not, as in any ordinary suit, entitled as of right to defend the suit. He must
apply for leave to defend within ten days from the date of the service of the
summons upon him and such leave will be granted only if the affidavit filed by
the defendant discloses such facts as will make it incumbent upon the plaintiff
to prove consideration or such other facts as the Court may deem sufficient for
granting leave to the defendant to appear and defend the suit. If no leave to
defend is granted, the plaintiff is entitled to a decree. The object underlying the
summary procedure is to prevent unreasonable obstruction by a defendant who
has no defence. The Order is, however, confined to suits of negotiable
instruments and is confined to the superior Courts. Rule 1 is being substituted
to provide for extending the summary procedure to the trial of the specific
classes of suits by all Courts.
9 . The terminology used in the Bombay amendment and the 1976 amendment to the
Code of Civil Procedure, is similar. In answering the reference we shall consider the
predicates of Order XXXVII under the Bombay amendment. The said rule itself provides
that the debt or liquidated demand in money payable by the defendant, with or without
interest, must arise on a written contract.
The rule before the 1966 Bombay amendment and the 1976 Central amendment to the
Civil Procedure Code used the expression "arising on a contract express or implied" and
this was substituted by the words "arising on a written contract". There can be therefore
no dispute that after the 1966 Bombay amendment and the 1976 amendment to the
Civil Procedure Code, the summary suit can only be filed if there be on a written
contract. In other words, no Summary Suit can lie on an implied contract. There seems
however some confusion as to the expression an implied contract and "implied terms in

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a written contract". The expression "implied term in a written contract" in law is distinct
and different from an implied contract. We will consider this aspect of the matter whilst
construing the legislative changes.
1 0 . In this interpretive process, this Court must consider the effect of deletion of
words. Gainful reference may be made to paragraphs 89 to 93, In Bombay Dyeing &
Manufacturing Company Ltd. v. Bombay Environmental Action Group and Ors.
MANU/SC/1197/2006 : AIR2006SC1489 :
8 9 . In Venkata Subamma v. Ramayya, it is stated that an Act should be
interpreted having regard to its history and the meaning given to a word cannot
be read in a different way than what was interpreted in the earlier repealed
section.
9 0 . It is also a fundamental proposition of construction that the effect of
deletion of words must receive serious consideration while interpreting a
statute as this has been repeatedly affirmed by this Court in a series of
judgments. (See CIT v. Bhogila Laherchand, Mangalore Electric Supply Co. Ltd.
v. CIT, Kesavananda Bharati v. State of Kerala and Onkarlal Nandlal v. State of
Rajasthan.)
9 1 . It is furthermore well known that when the statute makes a distinction
between two phrases and one of the two is expressly deleted, it is contrary to
the cardinal principle of statutory construction to hold that what is deleted is
brought back into the statute and finds place in words which were already there
in the first place.
9 2 . In Charles Bradlaugh v. Henry Lewis Clarke, Lord Watson as regards
conscious omission from the statute stated the law, thus:
I see no reason to suppose that all these omissions were accidental,
and as little reason to suppose that the enactments with regard to
personal disabilities were intentionally left out, whilst the express
mention made of common informers was omitted through accident or
inadvertence.
93. It is also a well-settled principle of law that common-sense construction
rule should be taken recourse to in certain cases as has been adumbrated in
Halsburys Laws of England, (4th Edn.), Vol. 44(1) (Reissue). We would refer to
the said principle in some detail later.
11. On behalf of the Plaintiffs, it has been submitted, that a perusal of Order XXXVII
would reveal, that the requirements of the order are satisfied if a suit is filed on a claim
arising on a written contract. Order XXXVII, does not require that there should be a
written promise to pay. This it is submitted is an obvious distinction between the two.
Order XXXVII, requires no promise to pay at all - whether express or implied. If so
held, it would amount to adding words to the statute. If the legislature intended that a
Summary Suit be maintainable only on an express written promise to pay, words to that
effect would and could have been easily incorporated in Order XXXVII. This it is
submitted, is evident from a reading of the provision of Section 25 of the Indian
Contract Act. Section 25 requires a written promise to pay a debt. Thus, the legislature
was conscious of the difference and has not used the same language that is found in
Section 25. Dealing with Sections 18 of the Limitation Act and 25 of the Contract Act
and reliance placed on the judgments, it is argued that the ratio that emerges from all
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those cases is that Section 25 of the Contract Act requires a promise in writing to pay,
and hence, a mere acknowledgement under Section 18 of the Limitation Act, does not
comply with the requirements of Section 25 of the Contract Act, as it does not contain a
promise in writing to pay. The Plaintiffs', do not dispute the proposition. It is next
submitted that a Summary Suit is maintainable on written contract with implied promise
to pay. Reference is made to judgments which have also been referred to earlier.
Relying on Chitty on the Law of Contracts, it is pointed out that an implied term is a
matter of law for the court to decide and that in most cases it has nothing to do with
the intention of the parties. In many cases, the terms to be implied are well settled. In
these circumstances, as far as acknowledgment, receipt or accounts stated are
concerned, it is now settled that they contain an implied promise to pay. This position
does not require any evidence. It is an implication which the law draws from the terms
of such a document. From this it is submitted that when a Defendant executes an
acknowledgment, receipt or account stated, a term is implied, whereby the Defendant
promises to pay the amount inserted in the document. When the defendants send the
document to the Plaintiff, and when the Plaintiff accepts the same, the Plaintiff accepts
the contents of the said document with all the legal implication contained therein. Thus,
the implied promise to pay, which accompanies that document is accepted by the
Plaintiff, giving rise to a contract. It is submitted that it is not correct to look at a
document ignoring the legal implication thereof. The contract is in writing inasmuch as
the implied promise arises directly from the written document and does not stand alone
or de-hors the written document. In a contract to pay money, the ingredients required
are (i) the amount that is agreed to be paid (ii) the time when it is agreed to be paid;
(iii) interest, if any, payable on the amount; and (iv) the obligation to pay. The first
three ingredients out of the above four are contained in the written document of
acknowledgement, receipt or accounts stated. It is only the fourth ingredient of
obligation to pay which is implied by law. The consideration for such a written contract
is what flows to the Defendant prior to his executing the receipt, acknowledgement or
accounts stated. The money that the Defendant acknowledges to be due is for some
consideration that he received before the execution of the document, say, for example,
goods sold by the Plaintiff to him, or money advanced by the Plaintiff to him. That is the
consideration, for which the Defendant executes the receipt, acknowledgement or
accounts stated. Hence, such a written contract is supported by valid and adequate
consideration.
Dealing with the subject of Accounts Stated, it is pointed out that Accounts Stated
stands on a different footing from an acknowledgement or a promissory note. Accounts
Stated gives rise to a new contract between the parties and gives rise to a fresh cause
of action. As far as the 'Accounts Stated' in a document accepted by both parties
constitutes a written contract by which both the parties have agreed that the amount
mentioned at the foot thereof is the only amount that is due and payable by the debtor
to the creditor. A summary suit is maintainable.
On the aspect of the document being properly stamped, it is submitted that considering
Sections 33 and 37 of the Bombay Stamp Act, in respect of the documents not
sufficiently stamped, on paying the penalty, the documents can be admitted in evidence.
However, considering Section 35 of the Indian Stamp Act, if a promissory note or a bill
of exchange is not stamped or not sufficiently stamped, then, it is not possible to pay
the stamp duty and penalty in the court to make them admissible in evidence.
12. On behalf of the Defendants their Counsel contend, that the primary question the
Court must answer is whether the different documents which are the subject matter of
reference constitute written contracts.
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The submissions are as under : The documents in question do not constitute contracts
at all, at best they are admissions of liability. Once it established that the documents in
question do not constitute contracts at all it follows that they also do not constitute
written contracts. As a result summary suit cannot be filed on the basis of these
documents. The judgment in Hiralal and Ors. v. Badkulal and Ors. MANU/SC/0042/1993
: AIR1993SC225 , it is submitted, has no applicability to the present case, as the
Supreme Court therein was considering whether an ordinary suit is maintainable on an
account stated and not a summary suit. There is no issue as to whether the document in
question was a written contract or not. The Supreme Court in fact observed that the suit
therein was not merely based on acknowledgement of liability, but was based on mutual
dealings and the account stated between the parties and was therefore maintainable.
Whilst holding that an unconditional acknowledgement implied a promise to pay the
Supreme Court did not say that each and every such unconditional acknowledgement
carried with it an implied promise to pay. In that case it was concealed by the
Defendant that some amount was payable and it only question was with regard to the
quantum. It is submitted that it is a settled position that every acknowledgement of
liability does not carry an implied promise to pay.
An implied promise is not a written contract and, therefore, the implied promise to pay
is not a written contract. This becomes clearer on considering the provisions of Section
9 of the Contract Act which reads as under:
9. Promises, express and implied : In so far as the proposal or acceptance of
any promise is made in words, the promise is said to be express. In so far as
such proposal or acceptance is made otherwise than in words, the promise is
said to be implied.
Section 9 makes it clear that there are basically two types of contract, express and
implied. Express contracts can be further divided into written and oral contracts. Since
implied contracts are not express contracts, they are neither written nor oral contracts.
Reference is made to various judgments which will be referred to the extent necessary.
It is, therefore, submitted that phrases like "balance due", "balance to be paid", baki
deva", "baki dena rahe", "I remain liable", "I admit my liability", "amount due", etc.,
were mere acknowledgements of liability carrying an implied promise to pay and did not
amount to express promises/promises in writing.
An implied term in a written contract is also not a written contract. Every term in
contract including an implied term is as much a promise as the whole of the contract
itself. In fact by definition "every promise and every set of promises, forming the
consideration for each other, is an Agreement"; See Section 2(e) of the Contract Act.
The reasoning, therefore, in respect of an implied promise to pay/implied contract
applies equally and squarely to an implied term in a contract as if it were an implied
contract. If a summary suit is filed on the basis of an implied promise in a written
contract, it presupposes that there is no express promise to pay in the written contract.
In other words, there is no promise to pay in writing. Accordingly a summary suit,
purely based on an implied promise to pay in a written contract is really no different
and is in fact the same as a summary suit based on an implied promise to pay arising
from a document which does not amount to a written contract. If in the later kind
summary suit is not maintainable then even the former is not. Referring to the
arguments advanced on behalf of the petitioners on the words "arising on a written
contract" it is submitted that the words used are "arising on" and not "arising out of" or
"arising in respect of" or "arising in connection with" which are words of wide import. It
becomes clear that by using the word "on" it was intended that the class of suits that
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could be filed as summary suits should be restricted to only those which were directly
based on the written contract.
A Summary Suit is also not maintainable on the basis of an implied promise to pay.
Several consequences would follow if it is held that a summary suit is maintainable on
an implied promise to pay. If the expression "written contract" in Order 37 Rule 2 is
construed to cover implied contracts, it must follow the summary suit can be filed on an
implied promise to pay whether it arises out of a document or on an oral contract or
otherwise as there will be no justification for excluding any particular kind of implied
contract and all the various kinds of implied contracts will also be covered. These are
the consequences that will follow if it is held that summary suit is maintainable as an
implied promise to pay.
Dealing with the issue of the effect of a document not being duly stamped, it is
submitted that the document which is not duly stamped is inadmissible in evidence. A
document may in certain circumstances be admitted in evidence after payment of stamp
duty and penalty. However, bills of exchange and promissory notes, if not duly
stamped, cannot at all be admitted in evidence, as the defect is incurable. (See Section
34 of the Bombay Stamp Act, 1958 and Section 35 of the Indian Stamp Act, 1899).
Consequently no summary suit would be maintainable on the Bill of Exchange or
promissory note not duly stamped. In so far as other documents are concerned, if a
document is not properly stamped by following the procedure it would be admitted in
evidence. If the document is not duly stamped and the defect is curable a summary suit
will be maintainable. However, if the defect is incurable on account of not being duly
stamped, the summary suit will not be maintainable.
13. The learned Single Judge referred to various judgments. In Appeal No. 902 of 1990
in Summons for Judgment No. 205 of 1990 in Summary Suit No. 551 of 1990
(Racharaman Motilal Ladiwal v. Rajesh Enterprises) dated 28.8.1990, the suit was based
on the receipt of Rs. 37,000/- as a loan. There were two acknowledgments. The Court
there held that neither the receipt nor the acknowledgment made for an agreement in
writing. The Court also observed that Order XXXVII is a drastic provision. The learned
single Judge, placing reliance on this judgment, was pleased to observe that the
judgment would indicate that a suit on a receipt for a loan or an acknowledgment of a
loan would not fall within the purview and scope of Order 37 Rule 2. In our opinion, it
is not possible to draw the ratio decidendi of the judgment in that context. On the facts,
there the Court had come to the conclusion that the documents produced would make
not amount to an agreement in writing.
1 4 . Let us now consider the other judgments of the Appellate Benches which were
considered by the learned Single Judge.
Reliance was placed on an unreported judgment in Appeal No. 186 of 1994 in Summons
for Judgment No. 718 of 1991 in Summary Suit No. 2372 of 1991, decided on
3.13.1994. This judgment was a judgment on confirmation of accounts. On the facts the
Court found that the only document in connection with the claims, is form "C", being a
form of declaration under Central Sales Tax Act. On facts, the Court held that it would
not constitute a contract between the parties.
The next judgment which was considered by the learned Judge was in Appeal No. 178
of 2000 dated 1.3.2000 in respect of an honoured cheque. Considering the facts there,
the Court noted that the suit was based on Section 70 of the Contract Act. The Court
recorded a finding, that the nature of transaction was strictly not of contract but refers

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to general quasi contract. The Court held so far as the procedural aspect is concerned,
the plaint cannot be treated as a Summary Suit.
The third judgment considered by the Division Bench was in Special Civil Application
No. 938 of 1967 decided on 28.9.1967. On the facts there, the learned Division Bench
found that the intention of the Plaintiff was to sue for recovery of the loan and not to
sue for the moneys due on the dishonoured cheques. The Court further noted that it was
common ground that there is no written contract between the parties. In the light of
that the Court held that the Summary Suit was not maintainable.
The fourth judgment was in Appeal No. 865 of 1994 in Summons for Judgment No. 411
of 1992 in Summary Suit No. 1742 of 1997 decided on 31.8.1995. The contention urged
was that a letter saying that a sum of Rs. 6,00,000/- was sent as a deposit to be kept
by the Appellants towards the purchase of grey cloth from time to time for the
quantities, specifications and other details as may be finalised by the Sales Department
by itself does not bring the suit within the scope of Order XXXVII CPC. On behalf of the
Respondents, it was contended, that on a proper interpretation, Order XXXVI has to
embrace all sorts of business transactions which may sometime arise only out of
correspondence acknowledgements or merely receipts. Again, on facts, the Court while
answering the issue in paragraph 15, was pleased to observe as under:
We agree with Mr.Kadam, learned Counsel for the respondents that the written
contract as contemplated in Order XXXVII need not be signed by both the
parties but then the writing between the parties must be such that certain
agreement has been brought into existence and that the claim made under such
an agreement out to be indisputable. We will certainly apply the principle when
we come to the pleadings in the suit a little later after viewing some authorities
cited across the bar by Mr. Kadam.
A perusal of the findings would indicate that the issue was as to what constitutes an
agreement in writing.
15. Based on a reading of these judgements, the learned Judge was pleased to hold
that there was a direct conflict as to whether a suit on a writing or a receipt or a settled
account would be maintainable as a Summary Suit. The learned Judge thereafter
recorded his findings as under:
(1) Neither of the aforesaid judgments were arising under Order 37 Rule 2 of
the Civil Procedure Code nor an issue came up before the Apex Court pertaining
to the scope and meaning of Order 37 Rule
(2) The judgment of the Apex Court was considering whether a suit on account
can be filed without going back to the original transaction as contained in the
said set of accounts.
(3) The Supreme Court has merely held in the aforesaid two judgments that a
category exists under the regular law in which a suit on account can be filed
because it contains an implied promise to pay.
(4) The judgment of the Apex Court in the case of Gordon Woodroffe and Co. v.
Shaik M.A. Majid and Co. (supra) in fact holds that suit on account can be filed
even if it is not confirmed by the opposite party or even if it is not in writing.
Thus if the aforesaid judgements of the Supreme Court are held to be
applicable to the provisions of Order 37 Rule 2 of Civil Procedure Code then a
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 further issue will arise whether such a suit on an unwritten account or an
unconfirmed account also could be held to be maintainable under Order 37 Rule
2 if the view of the Apex Court is held to apply to the provisions of Order 37
Rule 2 of the Civil Procedure Code.
After so saying, the learned Judge was pleased to hold, that considering the change in
the legislative history the expression "contract" either on express or implied promise
has been substituted by the words "written contract". The learned Judge then purported
to consider some ancillary issues by referring to some other judgments. In our opinion,
it is not required to go into those aspects considering the issue referred.
1 6 . To answer the questions raised certain provisions and expressions need to be
considered. Let us first understand the expression 'Contract in Writing' Section 10 of the
Indian Contract Act, 1872 as reproduced below sets out, what agreements are contracts:
10. What agreements are contracts. All agreements are contracts if they are
made by the free consent of parties competent to contract, for a lawful
consideration and with a lawful object, and are not hereby expressly declared to
be void. Nothing herein contained shall affect any law in force in 1[India] and
not hereby expressly repealed, by which any contract is required to be made in
writing 2 or in the presence of witnesses, or any law relating to the registration
of documents.
Contract has been defined under Section 2(1) as "an agreement enforceable by
law". Agreement has been defined in Section 2(e) as "every promise or every
set of promises forming the consideration of each other is an agreement.
Written contract" in Black's Law Dictionary (8th Ed.) means as under:
"written contract" - A contract whose terms has been reduced in
writing.
A written contract or a contract in writing need not always be a contract signed by both
the parties and may consist of exchange of correspondence of a letter or letters written
by one and assented to by the promisor without signature or even of a memorandum or
printed document not signed by either party. In T.A. Ruf and Company Ltd. v. Pauwels
(1919) 1 K.B. 660, Duke, L.J. observed as under:
As to the suggestion which was made that the words "contract in writing"
import a contract made by means of a writing or writings signed by both
parties, I do not think the words necessarily have that meaning. A document
purporting to be an agreement may be an agreement in writing sufficient to
satisfy the requirements of an Act of Parliament though it is only verified by the
signature of one of the parties: In Re Jones (1895) 2 Ch. 719. Here the
question is one of a bargain for the sale of goods. I doubt whether the
objection which is here set up to avoid a business transaction would have been
sufficient to support a special demurrer before the passing of the Common Law
Procedure Acts,
Relying on these observations, the Madras High Court in Lucky Electrical Stores, by
Partner Mahendra Kumar Shah and Anr. v. Ramesh Steel House, by Partner Babulal 1988
M L R 187 in a case where the invoice of the bill was not signed by the other party to
the contract, however, as a result of the acceptance of the goods delivered in pursuance
of the invoice, on the demand for the price of goods admittedly received by the
purchaser on the basis of the invoice, observed that it must be held, to arise on a
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"written contract".
A written contract therefore need not be evidenced in a single document written by the
parties since the written document can be by exchange of documents in writing between
the parties. On the other hand an implied contract would arise by the acts of parties to
indicate an implied contract. A written contract, contemplated under Order XXXVII need
not be necessarily signed by both the parties. However, the writing must be such to
arrive at a conclusion that an agreement certainly has been brought into existence and
that the claim made under such an agreement ought to be indisputable. In Jugal Kishore
Rameshwardas v. Mrs. Goolbai Hormusji MANU/SC/0006/1955 : [1955]2SCR857 , while
construing Section 2(a) of the Arbitration Act, 1940, the Supreme Court observed that it
is well settled law that to constitute an arbitration agreement in writing it is not
necessary that it should be signed by the parties and it is sufficient if the terms are
reduced to writing and the agreement of the parties is established. In the Arbitration Act
of 1966, Section 7 specifically provides that the arbitration agreement shall be in
writing.
A learned Single Judge in an unreported judgment in Jaishree Chemicals v. Esskay
Dyeing and Printing Works Summons for Judgment No. 23/1976 In Suit No. 1405 of
1975, decided on 19th April, 1976, considering the expression "written contract", under
the amended provision, held that it must be given an extended meaning and if it is
possible to spell out an agreement enforceable at law to do something to be found in
the writing, which binds the parties, it is possible to hold that such an agreement is a
contract in writing.
These are some indicators of understanding the expression "a contract in writing".
17. We may now consider the expression "implied term of a contract". Whether or not a
term is implied is usually said to depend upon the intention of the parties as collected
from the words of the agreement and the surrounding circumstances. In many classes
of contract, however, implied terms have become standardised, and it is somewhat
artificial to attribute such terms to the unexpressed intention of the parties. Courts in
fact in such cases have laid down a general rule of law that in all contracts of a defined
type-for example, sale of goods, landlord and tenant, employment, the carriage of
goods by land or sea, certain terms will be implied, unless the implication of such a
terms would be contrary to the express words of the agreement. (Johnstone v.
Bloomsbury H.A. (1992) Q.B., 333.
A term ought not to be implied unless it is, in all the circumstances equitable and
reasonable. But this does not mean that a term will be implied merely because in all the
circumstances it would be reasonable to do so or because it would improve the contract
or make its carrying out more convenient. "The touchstone is always necessity and not
merely unreasonableness.
(See Liverpool City Council v. Irwin) 1977 A.C.239.
Similarly, a term will not be implied if it would be inconsistent with the express wording
of the contract.
18. Lord Wright in Luxor (Eastbourne) Ltd. v. Cooper 1941 A.C 108 said:
The expression 'implied term' is used in different senses. Sometimes it denotes
some term which does not depend on the actual intention of the parties but on
a rule of law such as the terms, warranties or conditions which, if not expressly
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 excluded, the law imports, as for instance under the Sale of Goods Act and the
Marine Insurance Act. But a case like the present is different because what it is
sought to imply is based on an intention imputed to the parties from their
actual circumstances.
Professor Glanville Williams in "Language and the Law" (1945) 61 L.Q.R., 71 observes:
(i) terms that the parties probably had in mind but did not trouble to express;
(ii) terms that the parties, whether or not they actually had them in mind,
would probably have expressed if the question had been brought to their
attention; and
(iii) terms that, whether or not the parties they had them in mind or would have
expressed them if they had foreseen the difficulty, are implied by the court
because of the court's view of fairness or policy or in consequence of rules of
law.
He further points out that "these three kinds of implied term,
(i) is an effort to arrive at actual intention; (ii) is an effort to arrive at
hypothetical or conditional intention-the intention that the parties would have
had if they had foreseen the difficulty; (iii) is not concerned with the intention
of the parties except to the extent that the term implied by the court may be
excluded by an expression of positive intention to the contrary.
We may note a distinction between the two types of 'implied term' in the speech of Lord
Cross of Chelsea in House of Lords in Liverpool City Council v. Irvin (1977) A.C., 239,
as under:
When it implies a term in a contract the court is sometimes laying down a
general rule that in all contracts of a certain type-sale of goods, master and
servant, landlord and tenant, and so on-some provision is to be implied unless
the parties have expressly excluded it. In deciding whether or not to lay down
such a prima facie rule the court will naturally ask itself whether in the general
run of such cases the term in question would be one which it would be
reasonable to insert. Sometimes, however, there is no question of laying down
any prima facie rule applicable to all cases of a defined type but what the court
is being in effect asked to do is to rectify a particular-often a very detailed-
contract by inserting in it a term which the parties have not expressed. Here it
is not enough for the court to say that the suggested term is one the presence
of which would make the contract a better or fairer one; it must be able to say
that the insertion of the term is necessary to give-as it is put-business efficacy
to the contract and that if its absence had been pointed out at the time both
parties-assuming them to have been reasonable men-would have agreed
without hesitation to its insertion.
In Mosvolds Rederi A/S v. Ford Corporation of India [1986] 2 L R 68, Steyn, J. spoke of
three categories of implied term. He said:
Sometimes it is said that a term is implied into the contract when in truth a
positive rule of law of contract is applied because of the category in which a
particular contract falls. Another type of implied term is a term in order to give
business efficacy to the contract. The basis of such an implication is that the

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 contract is unworkable without it. There is, however, another form of
implication. It is not permissible to imply a term simply because the court
considers it to be reasonable. On the other hand, it is possible to imply a term,
if the court or arbitrator, as the case may be, is satisfied that reasonable men
faced with the suggested term which ex hypothesis was not expressed in the
contract, would without hesitation say: 'yes, of course that is so obvious that it
goes without saying.'
1 9 . In "The Interpretation of Contracts" by Kim Lewison, Q.C., there is extensive
discussion on "implied terms". At paragraph 6.03 it is set out that in order for a term to
be implied, the following conditions must be fulfilled:
(1) it must be reasonable and equitable;
(2) it must be necessary to give business efficacy to the contract so that no
term will be implied if the contract is effective without it;
(3) it must be so obvious that it goes without saying;
(4) it must be capable of clear expression;
(5) it must not contradict any express term of the contract. These conditions
may overlap. It is not clear whether conditions (2) and (3) are alternative or
cumulative.
Pollock and Mulla, Indian Contract And Specific Relief Acts 236, Vo.I, points out:
The necessity for implying a term into the contract may arise because the
parties have not expressly stated them, out of forgetfulness, or because of bad
drafting, or because they may have thought the obligation so 'obvious' that it
'went without saying'. They may be content to state expressly only the most
important terms agreed between them, leaving the others to be understood.
They may have had the terms in their mind but did not express them or would
probably have expressed them if the question had been brought to their
attention. Otherwise, they may have understood the obligations according to
the practices already established between them, or arising out of custom or
trade usage applicable to their business. Later disputes will show that they did
not provide for some contingencies in their contract. It may then become
necessary to find out whether terms can be implied to provide for the
contingency. Courts are required to imply a term to give efficacy to the contract
to prevent 'the enjoyment of the rights conferred by the contract (being)
rendered nugatory, worthless, or, perhaps,...seriously undermined'. (Nullagine
Investments Pty Ltd. v. Western Australia Club Inc. (1993) 177 CLR 635
2 0 . The general presumption is however against implying of terms into a written
contract. If the agreement apparently is to complete the contract, the stronger the
presumption.
The presumption against adding terms is stronger where the contract is a
written contract which represents an apparently complete bargain between the
parties. Where, however, the bargain is obviously not complete, the court is
less reluctant to supply the missing terms.
In Aspdin v. Austin (1844) 5 Q.B., 671, Lord Denman, C.J. said:

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 Where parties have entered into written engagements with express stipulations,
it is manifestly not desirable to extend them by any implication; the
presumption is that having expressed some, they have expressed all the
conditions by which they intend to be bound under that instrument.
In Churchward v. R., Cockburn (1865) L.R. 1 Q.B. 173, Cockburn C.J. said:
...where a contract is silent, the court or jury who are called upon to imply an
obligation on the other side which does not appear in the terms of the contract,
must take great care that they do not make the contract speak where it was
intentionally silent; and above all that they do not make it speak entirely
contrary to what, as may be gathered from the whole terms and tenor of the
contract was the intention of the parties.
Lord Wright in Luxor (Eastbourne) Ltd. v. Cooper [1941] A.C. 108, said:
It is agreed on all sides that the presumption is against the adding to contracts
of terms which the parties have not expressed. The general presumption is that
the parties have expressed every material term which they intended should
govern their agreement, whether oral or in writing.
From the discussion there are sufficient guidelines to hold as to what would be an
'implied term' of the contract. From the above discussion if follows, that these will be
some of the tests to be applied whilst considering whether from the written contract it
can be held that there is an implied term to pay.
2 1 . The next expression requiring consideration is the word "Debt". Black's Law
Dictionary (8th Ed.) defines "Debt" as under:
A sum of money due by certain and express agreement. A specified sum of
money owning to the person from another, including not only obligations of
debtor to pay but right of creditor to receive and enforce payment". (State v.
Ducey) 25 Dhio App. 2d 50, 266 N.E. 2d. 233, 235....
A fixed and certain obligation to pay money or some other valuable thing or
things, either in the present or in the future. In a still more general sense, that
which is due from one person to another, whether money, goods or services.
The essential requirement of a debt are:
(1) an ascertained or readily calculable amount;
(2) an absolute unqualified and present liability in regard to the amount with
the obligation to pay forthwith or in future within a time certain;
(3) the obligation must have accrued and be subsisting and should not be that
which is merely accruing. A contingent liability or a contingency debt is,
therefore, neither a liability nor a debt. A debt is a 'debitum in present
solvendum in future.' We therefore hold that the amount covered by the suit is
an ascertained amount payable liability. The obligation has accrued and
subsists. It is a debt accruing under a written contract.
See Commissioner of Wealth Tax v. Pierce Leslie & Co. Ltd. AIR 1963 Med. referred in
Webb v. Stention 1883 (3) Q.B.D. 518.

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In J. Jermons v. Aliammal and Ors. MANU/SC/0477/1999 : AIR1999SC3041 , the
Supreme Court was considering the ordinary meaning of the word "debt". While
answering the issue, the Court held as under:
Ordinarily, "debt" means none that is owned; an existing obligation to pa a
certain amount; a sum of mone due from one person to another. Debts can be
classified having regard to the criteria for payment, into three categories:
(i) debt which has become due and is payable at present (debitum in
present )e.e. in monthly tenancy rent becomes due after the expiry of
each month like rent for the month of January becoming due and
payable on February 1;
(ii) debt which has; become due but is payable at a future date
(debitum in praesenti solvendum in futuro) in the above example if
under an agreement of tenancy rent is payable on the 15th of the
following month, the rent for January becomes due on February 1, but
is payable on February 15; and
(iii) contingent debt which becomes payable on the happening of a
certain event which may or may not occur; in the above instance the
rent for the month of January will not be a debt in the preceding month
of December for the tenant may or may not reside in the next month.
2 2 . The expression, "acknowledgment" may now be considered. In Black's Law
Dictionary, Eighth Edition, "acknowledgment" has been described as under:
acknowledgment. 1. A recognition of something as being factual. 2. An
acceptance of responsibility. 3. The act of making it known that one has
received...something...acknowledgment of debt. Recognition by a debtor of the
existence of a debt.
In P. Ramanatha Aiyar's, The Law Lexicon, Reprint, 2001, "acknowledgment" has been
stated thus:
Acknowledgment, is a proceeding whereby a person who has executed an
instrument may, by declaring it to be his act and deed, entitle it to be received
in evidence without further proof of execution, or Oath
The action of acknowledging : a thing done or given in recognition of
something received
Acknowledgment of debt. An admission in writing that a debt is due or that
some claim or liability is still in existence
Acknowledgment of debt or liability means an admission in writing that a debt
is due or that some claim or liability is still in existence.
In Devi Prasad v. Bhagwanti Prasad and Anr. MANU/UP/0023/1942 : AIR1943All63 ,
considering the provisions of Section 25(3) of the Contract Act, the Court noted that the
Section requires an express promise to pay and not merely an implied promise. The
Court held ;
An acknowledgment of a debt is a unilateral act of the debtor; it is not an
agreement or a contract; it merely states that a debt is due and it contains no
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 express promise to pay the debt acknowledged and, indeed, under Article 1,
Schedule 1, Stamp Act, such a promise is excluded from the scope of an
acknowledgment.
The Court also noted that
There is a clear distinction between an acknowledgment of a debt simpliciter
and an acknowledgment coupled with a statement that the debt acknowledged
shall in future carry a certain rate of interest. In the former case there is no
promise to pay the debt and the promise to pay the debt can only be implied;
in the latter case the statement that the debt shall bear interest means and can
only mean that the interest shall be paid and therefore exhibits a promise to
pay the interest in express terms, and if there is a promise to pay interest there
exists clearly an agreement to pay principal. Taking this view, it is now
generally held that when an acknowledgment of debt also contains a statement
that the acknowledged debt will bear future interest at a certain rate it ceases to
be a mere acknowledgment and becomes an agreement within the meaning of
the Stamp Act
23. A learned Division Bench of this Court in Balkrishna Mansukhram v. Jayshankar
Narayan AIR 1938, Bombay 460 was considering the distinction between mere
acknowledgment under Section 19 of the Limitation Act and a promise under Section
25(3) of the Contract Act. The Court observed:
We think for the purpose of Section 25(3), Contract Act, there must be an
express promise as opposed to an unconditional acknowledgment involving an
implied promise to pay. There seems to be practically a consensus of judicial
opinion on the point that a mere implied promise to pay, which may be
conveyed by an unconditional acknowledgment, would not be sufficient for the
purposes of Section 25(3),
In Hiralal and Ors. v. Badkulal and Ors. MANU/SC/0004/1953 : [1953]4SCR758 , the
suit, was filed as a regular suit. One of the issues however was whether an unqualified
acknowledgment contained in the entry and the statement of accounts under which the
entry was made were sufficient to furnish a cause of action to the plaintiff for
maintaining the suit. Considering Section 19 and Article 64 of the Limitation Act, 1908,
while considering the judgment of the Judicial Commissioner, which was appealed
before it, the Supreme Court observed as under:
The Judicial Commissioner took the view that an unqualified acknowledgment
like the one in the suit, and the statement of the account under which the entry
had been made, were sufficient to furnish a cause of action to the plaintiffs for
maintaining the present suit. We are satisfied that no exception can be taken to
this conclusion. It was held by the Privy Council in Maniram v. Seth Rupchand
33 I. A. 165 (C) that an unconditional acknowledgment implies a promise to
pay because that is the natural inference if nothing is said to the contrary. It is
what every honest man would mean to do. In Fateh Mohomed v. Ganga Singh
MANU/LA/0050/1929 : A.I.R. 1929 Lah. 264, the same view was taken. It was
held that a suit on the basis of a balance was competent. In Kahanchand
Dularam v. Dayaram Amritlal MANU/LA/0033/1928 : A.I.R. 1929, Lah. 263, the
same view was expressed and it was observed that the three expressions
"balance due," "account adjusted" and "balance struck" must mean that the
parties had been through the account.

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In Shapoor Fredoom Mazda v. Durga Prasad Chamaria and Ors. MANU/SC/0254/1961 :
[1962]1SCR140 the issue again was of maintainability of a suit on acknowledgment
considering Section 19 of the Limitation Act, 1908. While answering the issue, the
Supreme Court in paragraph 7 observed as under:
(7) It is often said that in deciding the question as to whether any particular
writing amounts to an acknowledgment as in constructing wills, for instance it
is not very useful to refer to judicial decisions on the point. The effect of the
words used in a particular document must inevitably depend upon the context
in which the words are used and would always be conditioned by the tenor of
the said document, and so unless words used in a given document are identical
with words used in a document judicially considered it would not serve any
useful purpose to refer to judicial precedents in the matter.
The Court then posed to itself a question as to what is an acknowledgment and referring
to English authorities, held as under:
(8) The question as to what is an acknowledgment has been answered by Fry,
L.J. as early as 1884 A.D. in Green v. Humphreys 1884 26 Ch D 474. This
answer is often quoted with approval. "What is an acknowledgment... he
proceeded, "in my view an acknowledgment is an admission by the writer that
there is a debt owing by him, either to the receiver of the letter or to some
other person on whose behalf the letter is received but it is not enough that he
refers to a debt as being due from somebody. In order to take the case out of
the statute there must upon the fair construction of the letter, read by the light
of the surrounding circumstances, be an admission that the writer owes the
debt." With respect, it may be added, that this statement succinctly and tersely
gives the substance of the provisions contained in Section 19 of the Limitation
Act.
2 4 . A learned Single Judge of this Court -K.K. Deasi in Manekchand Mohanlal
Poonawala v. Shah Bhimji Kundanmal & Co. and Ors. 1968 Vol.LXX1, 370 was
considering whether "Khata Pete Receipt" constitutes not only an acknowledgment for
receipt of money but to contain an implied promise that money has been received. The
Court was considering the provisions of Order XXXVII Rule 2 as amended by the
Bombay Amendment Act, 1966. (The learned referring Judge erroneously proceeded on
the footing that this judgment was delivered before the amendment to Order XXXVII
Rule 2). After considering the various contentions consequent upon the Summary Suit
having to be filed on a written contract, the learned Judge after referring to several
judgments held:
The ratio of the decisions in those cases was that mere accounts stated or mere
writings of acknowledgments which did not contain express promise for making
payments were insufficient to complete a cause of action for a suit on the basis
of the provisions of Sub-section (3) of Section 25. Apparently, the ratio of
these decisions is that a promise to revive a time-barred debt must be an
express promise in writing for payment of the same. That was the condition
required to be fulfilled having regard to the provisions of Sub-section (3) of
Section 25. Some observations in these cases are relied upon by Mr. Karanee in
connection with the true construction to be given to the writing annexed to the
plaint. It is not necessary to refer to facts of these cases in that connection.
Now, the writing relied upon on behalf of the plaintiffs, in my view, is what is
ordinarily known as a "Khata Pete receipt". This kind of writing has been known

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 and understood to constitute not only an acknowledgement for receipt of the
money but to contain an implied promise that the money having been received
"Khata Pte" i.e. "on account" would be repaid by the debtor signing the writing.
The learned Judge thereafter while considering 'implied obligation' and the effect of
Rule 2, held as under:
It is quite clear that previously a written contract was not a necessary condition
for institution of a summary suit to recover debt or liquidated demand in
money. Where express or implied obligation to pay debt or liquidated demand
in money arose, even on an oral contract, a summary suit could be instituted.
Under the amended Rule, summary suits cannot be instituted when such debt or
demand in money arises on oral contracts. Mr. Karanee, however, is not right in
his submission that the deletion of the phrase "express or implied" from
amended Rule 2 indicates that when implied obligation to pay debt or liquidated
demand in money arises on a written contract, a summary suit cannot be filed.
Obligations arising on a written contract can in some parts be express and in
other parts be implied by law or otherwise. Such implied obligations, if they
create a liability to pay debt or liquidated demand in money, can be enforced by
instituting a summary suit having regard to the language of the amended Rule
2. In my view, it is not correct that implied obligations to pay debt or liquidated
demand in money when they arise on a written contract cannot be good causes
of action for institution of summary suits.
Therefore expressions understated in mercantile trade or practice based on usages and
customs can be relied upon to consider whether the written contract contains an implied
term to pay.
25. With that, let us consider what constitutes a "settled account" or "account stated".
Before further discussing the issue, it would be relevant to refer to some judgments
which, in our opinion, shed light on the issue and can be said to have conclusively
decided that aspect of the matter. In Tulsiram Shrikisan Marwadi v. Zaboo Bhima
Shankar MANU/NA/0041/1947, learned Division Bench was considering as to what
would be an account stated. After relying on various judgments, the Court observed as
under:
that a real account stated is a very different thing from an acknowledgment. In
a real account stated there is consideration in the shape of an agreement that
items on one side of the account be taken as paid by items on the other side. In
an account stated it does not matter if some of the items are time-barred. It
would be different thing if all the items are time-barred, and we see no reason
to depart from the view expressed on this point in Ganesh prasad v. Rambati
Bai I.L.R. (1942) Nag.369 : MANU/NA/0022/1941 .
The Privy Council had an occasion to deal with the issue in the case of (Elvira
Rodrigues) Siqueira v. (Godnicalo Hypolito Construction) Noronha MANU/PR/0132/1934
: A.I.R. 1934 P C 144. The Privy Council was considering Section 25(3) of the Contract
Act, 1872 and Article 64 of the Limitation Act, 1908 whether - a suit could be
maintained on a settled account. It is in that context, that Lord Atkin, speaking for the
Privy Council, held as under:
Their Lordships think that what has been forgotten is that there are two forms
of account stated. An account stated may only take the form of a mere
acknowledgment of a debt, and in those circumstances, though it is quite true it
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 amounts to a promise and the existence of a debt may be inferred, that can be
rebutted, and it may very well turn out that there is no real debt at all, and in
those circumstances there would be no consideration and no binding promise.
But on the other hand, there is another form of account stated which is a very
usual form as between merchants in business in which the account stated is an
account which contains entries on both sides, and in which the parties who
have stated the account between them have agreed that the items on one side
should be set against the items upon the other side and the balance only should
be paid; the items on the smaller side are set off and deemed to be paid by the
items on the larger side, and there is a promise for good consideration to pay
the balance arising from the fact that the items have been so set off and paid in
the way described.
This judgment was considered by the Supreme Court, in Gordon Woodroffe & Co.
(Madras) Ltd. v. Shaikh M.A. Majid & Co. A.I.R. 1976 Sup Cou 181. The second
question in issue before the Supreme Court was whether there was a settled account
between the parties and whether it was open for the Plaintiff to reopen it. It was an
admitted fact that to the statement of accounts, no objections were raised by the
Plaintiff any time nor was a single document produced to show that the Plaintiff ever
wrote to the Defendant raising an objection to the statements of account. At one stage,
the Plaintiff sent a memorandum to the Defendant, accepting the accuracy of the
accounts. It is in that context that the Court was considering the concept of "account
settled" or "stated" We may gainfully refer to a portion of paragraph 14:
(14) The legal position is that the accounts are settled or stated if they are
submitted and accepted as correct by the other side to whom the accounts have
been rendered. Such a statement of accounts need not be in writing, nor is it
necessary that before the accounts are settled, they should be gone into by the
parties and scrutinised and supported by vouchers. It is sufficient if the
accounts are accepted and such acceptance may be inferred by conduct of the
parties. As observed in Daniell's Chancery Practice, eighth edition, Vol. I, p.
419:
The mere delivery of an account will not constitute a stated account
without some evidence of acquiescence which may afford sufficient
legal presumption of a settlement.
There is also the following passage in Bullenn and Leake's Precedents of Pleadings ninth
edition, p. 584:
It is not enough for the accounting party merely to deliver his account; there
must be some evidence that the other party has accepted it as correct. But such
acceptance need not be express, contemporaneous or subsequent conduct may
amount to a sufficient acquiescence.
After so observing, considering the contention of the Defendants that there has been a
stated or settled account, the Court in paragraph 15 held as under:
In this connection it is necessary to state that the expression "account stated"
has more than one meaning. It sometimes means a claim to payment made by
one party and admitted by the other to be correct. An account stated in this
sense is no more than an admission of a debt out of Court: while it is no doubt
cogent evidence against the admitting party, and throws upon him the burden
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 of proving that the debt is not due, it may, like any other admission, be shown
to have been made in error. Where the transaction is of this character, it makes
no difference whether the account is said to be "stated" or to be "stated and
agreed": the so-called agreement is without consideration and amounts to no
more than an admission. There is, however, a second kind of account stated
where the account contains items both of credit and debit, and the figures on
both sides are adjusted between the parties and a balance stuck.
Accounts stated which contains entries on both sides and parties who have stated the
account between them have agreed that the items on one side should be set off against
the items on the other side and the balance amount should be paid, would amount to a
written contract for good consideration arising from the fact that the items have been so
set off. Such an account stated gives cause to a contract in writing on a fresh cause of
action, with an implied promise to pay.
26. Reference may now be made to a judgment on honoured cheque, in the case of
Purnima Jaitly v. Ravi Bansi Jaisingh MANU/MH/0690/2003 : AIR2003Bom494 . In that
case, it was contended that a suit for recovery of loan which was advanced by a Plaintiff
by a cheque, would be a suit based on a bill of exchange. Negating the said contention,
the Court held that ; "It is true that a cheque is a bill of exchange, a special type of bill
of exchange which is drawn on a bank. However, a suit upon a cheque (bill of
exchange) means a suit to recover money due on a cheque (bill of exchange) drawn by
the defendant, which is dishonoured."
In such a case, the suit must be for recovery of money on a cheque drawn in favour of
or endorsed to the plaintiff. A suit, however for recovery of a loan which was advanced
by the plaintiff by a cheque is not a suit upon a cheque or a bill of exchange and as
such is not maintainable as a summary suit. The contention of the Plaintiff that the suit
is upon a bill of exchange was rejected.
Reference may also be made to to the judgment in the case of The Central Railway
Employees Co-operative Credit Society v. Bank of Baroda MANU/MH/0065/1996 :
AIR1996Bom386 . In that case, the Plaintiff had issued crossed cheques for Rs.
1,75,000/- for short term deposit by the bank. The bank encashed the cheque but the
amount of cheque was siphoned by the bank officials. A learned Single Judge whilst
holding that a Summary Suit was maintainable, held that the Plaintiff society seeks to
recover a debt payable by the Defendants bank with interest, arising on a written
contract. The Court held that to hold otherwise, would be to cause loss of faith and
confidence of the business community and the ordinary citizens in the banking system.
This however was not a case of honoured cheque.
27. From the above discussion it is clear that a summary suit would not lie on a settled
account which is not confirmed by the Defendant and "on honoured cheque". Items (II)
and (IV) of para 2 are answered accordingly.
28. The issues which remain to be answered would be (a) on settled accounts which
are confirmed by the Defendants (b) on acknowledgement of liability, on a mere writing
or receipt. We have classified these under two heads as acknowledgement of liabilities
or mere writing or a receipt, many a time have to be read together.
Before answering the issue we must note that there must be the following requirements
before a summary suit would lie:
(1) There must be a concluded contract;
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 (2) The contract must be in writing;
(3) The contract must contain an express or implied promise to pay.
There is no dispute in respect of the first two predicates. The only issue is in respect of
the third predicate. As we have noted earlier, we are not concerned here with an implied
contract, but an implied term in a written contract. The Defendants would be right to
contend that an implied contract is not a written contract. Is a summary suit
maintainable on an implied term in a written contract with an implied term to pay. In
our discussion we have noted that the expression "implied" term is used in different
senses. In some contract it would not depend on actual intention of the parties, but on
a rule of law, such as the terms, warranties or conditions, which if not expressly
excluded the law imports, as for instance under the Sale of Goods Act, Marine Insurance
Act, Master and Servant and Landlord and Tenant. To imply a term in the contract as
implied term in our opinion the test laid down by Kim Lewison in 'Interpretation of
Contract" would be relevant. At the same time the Court would have to note that the
general presumption is, however, against the implying of terms into a written contract.
It is, therefore, again not possible to lay down a general Rule as to when an implied
term in a contract can be the subject matter of a summary suit. The issue before us is
limited to an implied promise to pay. That would necessarily depend on the facts of
each case. The two issues as formulated may now be answered.
29. In so far as the 'settled account is concerned,' it is no doubt true as noticed by the
learned single Judge, that the various judgments adverted to, for holding that the
summary suit would lie on a settled account, either of the Privy Council or of the
Supreme Court did not arise from suits filed as summary suits. However, after the
judgment of the Privy Council (Elvira L. Rodrigues) Sequeira (supra) which has been
considered by the Supreme Court in Hiralal & Ors. (supra), a summary suit on a settled
account, duly confirmed by the Defendant is maintainable as it is an acknowledgement
by the Defendant in the ledger in which mutual accounts have been entered and the
accounts settled between them. Such settling of accounts gives rise to a written contract
on a fresh cause of action, with an implied promise to pay the amount settled. A
summary suit would therefore lie on 'Settled accounts duly confirmed by the
defendants. Issue (1) is answered accordingly.
30. In so far as acknowledgements writing or receipt are concerned, considering the
various judgments adverted to earlier on behalf of the plaintiffs and Defendants and the
discussion, it is not possible to lay down any precise test as to when a Summary Suit
would lie on an acknowledgement writing or receipt. That would depend firstly on the
document itself, the practice, usage and customs of the trade as also the facts of each
case.
31. By so holding it is not as if the Defendant is denuded of his defences when he
applies for leave to defend. The Supreme Court in Machalec Engineering and
Manufacturers v. Basic Equipment Corporation MANU/SC/0043/1976 : [1977]1SCR1060
has laid down the tests, which thereafter have been reiterated by the Supreme Court in
Sunil Enterprises v. S.B.I. Commercial and International Bank Ltd. MANU/SC/0334/1998
: AIR1998SC2317 . The tests laid down are as under:
(a) If the defendant satisfies the Court that he has a good defence to the claim
on merits, the defendant is entitled to unconditional leave to defend.
(b) If the defendant raises a triable issue indicating that he has a fair or bona
fide or reasonable defence, although not a possibly good defence, the
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 defendant is entitled to unconditional leave to defend.
(c) If the defendant discloses such facts may be sufficient to entitle him to
defend, that is, if the affidavit discloses that at the trial he may be able to
establish a defence to the plaintiffs claim the Court may impose conditions at
the time of granting leave to defend the conditions being as to time of trial or
mode of trial but not as to payment in to Court or furnishing security.
(d) If the defendant has no defence, or if the defence is sham or illusory or
practically moon-shine, the defendant is not entitled to leave to defend.
(e) If the defendant has no defence or the defence is illusory or sham or
practically moon-shine, the Court may show mercy to the defendant by enabling
him to try to prove a defence but at the same time protect the plaintiff imposing
the condition that the amount claimed should be paid into Court or otherwise
secured.
32. For all the aforesaid reasons the issues referred to us are accordingly answered.
The Registry to place the matters before the Learned Bench assigned to hear the
matters.
33. In the circumstances of the case there shall be no orders as to costs.
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