Hiralal v. Badkulal — Unqualified Acknowledgment & Suit on Stated Accounts

Rule in one line: If a debtor clearly signs that a balance is correct, the law treats it as a promise to pay. That entry—made against the backdrop of regular business—can itself support a suit. Crying “we signed without knowing” will not help if you keep your own books and still don’t produce them.

1. Did the signed entry amount to an unqualified acknowledgment creating a fresh cause of action?
2. Can a suit be maintained on such an acknowledgment with prior mutual dealings?
3. Was the acknowledgment vitiated by coercion, misrepresentation, or fraud?
4. Could defendants dispute the balance without producing their own account books?

• An unqualified acknowledgment of a debt implies a promise to pay and creates a fresh cause of action.
• A signed ledger entry in the course of mutual dealings = an account stated, which can be sued upon.
• Allegations of coercion/fraud must be specifically pleaded and proved.
• A trader who keeps books but doesn’t produce them cannot expect the court to accept a bare denial of the balance.

Held: The signed, unconditional acknowledgment implied a promise to pay and gave a fresh cause of action. Given prior dealings, the entry was an account stated and could be sued upon. Coercion/misrepresentation was not proved. Defendants, being businessmen, did not produce their own books; their denial failed. Appeal dismissed; decree confirmed.

• Unqualified acknowledgment = implied promise to pay = fresh cause.
• Account stated from mutual dealings is a valid basis for a suit.
• Burden to prove vitiating factors lies on the alleging party.
• Non-production of the debtor’s own books undermines the defence.

Businesses can rely on settled accounts. Signed balances are not empty formalities—they can be enforced. It also discourages afterthought defences without records.

• Draft acknowledgments clearly; avoid conditions if you intend to dispute later.
• Keep and produce your own books—courts expect it.
• “Acknowledgment = fresh cause,” not just limitation magic.

Mnemonic: “SIGN → PROMISE → SUE.”

1. Sign: Unqualified acknowledgment of balance.
2. Promise: Law implies duty to pay.
3. Sue: Account stated supports the claim.

Acknowledgment

A debtor’s admission that a stated balance is correct; if unconditional, it implies a promise to pay.

Account Stated

A balance struck after mutual dealings; parties agree (expressly or impliedly) on the amount due.

Vitiating Factors

Coercion, fraud, misrepresentation—must be precisely pleaded and proved by the party alleging them.