Bhuvika borrowed - 4,75,000/- from her relative Madan on 5 th April, 2020 on interest @1% per month for 5 year for running her Cosmetics store. She…

CA Foundation · Business Laws · PYQS · January 2026
Bhuvika borrowed - 4,75,000/- from her relative Madan on 5 th April, 2020 on interest @1% per month for 5 year for running her Cosmetics store. She was paying continuously instalment and interest every month. But due to sudden introduction of nature care products her products became obsolete. As a result, she was unable to pay monthly instalment and interest from May, 2021 onwards. The debt got time barred by limitation Act. However, on account of continuous persuasions of her relatives, Bhuvika promised in writing to pay the outstanding amount shortly within a few months. Whether Madan can legally recover the debts from Bhuvika when the loan has already been time barred? Explain with reference to provisions of the Indian Contract Act, 1872.

Suggested Answer and Working Notes:

Promise to pay Time Barred Debt: Where a promise in writing signed by the person making it or by his authorized agent, is made to pay a debt barred by limitation, it is valid without consideration [Section 25 (3) of the Indian Contract Act,1872]. Thus, in terms of the provisions of Section 25 (3) of the Act, Madan can legally recover the debts with interest from Bhuvika since she had promised in writing to pay the outstanding amount shortly within a few months even though the loan has already been time barred.

Topics: The Indian Contract Act, 1872

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic