The State of Bihar v. Ram Ballabh Das Jalan and Anr.

The State of Bihar v. Ram Ballabh Das Jalan and Anr.

AIR 1960 Pat 400

Also See Morris v. Baron 

(Novation=Substitution)

FACTS:

Defendant had a debt of certain amount due to plaintiff along with certain credit due from latter. Plaintiff, by its letter acknowledged the credit and made claim for remaining debt due. Defendant acknowledged the said letter and offered plaintiff to recover the debt outstanding from the Bank of Bihar and Food Supply Officer, notwithstanding any debt still left to be paid by him. Plaintiff was able to recover some portion of debt from both sources mentioned above and filed a claim for the remaining debt on the original contract. Defendant denied any obligation to pay on original contract alleging that by accepting Bank of Bihar and Food Supply Officer as debtors, plaintiff consented to substitution of original contract u/s 62.

ISSUE: Whether there was novation resulting in substitution of original agreement, such that plaintiff could not sue on it?

HELD:

There was nothing on record to show that Bank of Bihar and Food Supply Officer contracted new debts with plaintiff in substitution of the old debts due to it from the defendants and bound themselves for the payment of the same so as to entitle the plaintiff to enforce its realization from them. In other words, they neither accepted any liability nor expressed any intention to be bound by the debt originally due from defendant so as to extinguish old debt due against defendant and create new debt, now due against them.

Author: Vishrut Kansal (National University of Juridical Sciences, Kolkata)