2004 (10) TMI 613 - SC - Indian Laws

Recovery of excess payment made by the Food Corporation of India to the Assam Cooperative Marketing and Consumer Federation Limited - limitation centers around two letters - effect of acknowledgment of liability on the limitation period - whether the two letters have been proved - HELD THAT - Both the letters Exhibits 8 and 9 are written on the letter pad of the Federation. Both bear despatch numbers. The letter dated 29 th March, 1977 has been written in response to plaintiffs dated 14/03/1977. The letter dated 30 th July, 1977 (Exhibit-9) has been written in response to Plaintiff's dated 16/07/1977. In both the letters, the Federation has disputed its liability to pay the amount in view of certain disputes relating to settlement of accounts. The fact remains that both the letters acknowledge an amount of ₹ 2 crores having been received by the Federation from the plaintiff. It is true that the letters Exhibits 8 and 9 were not written in the presence of P.W.1. He has also not deposed to any such facts as would amount to proof of execution of document. The fact remains that both these letters formed part of the official record of the plaintiff and are placed as pieces or links found in the chain of long correspondence entered into between the parties. The documents having been tendered in evidence without any demur by the defendants, the same coming from proper custody and forming part of official record of the appellant-Corporation and being part of the chain of correspondence can be said to have been proved by P.W.1 more so when his deposition to the effect that the two letters were received from the Federation was not disputed by the defendant-Federation either by directing any cross-examination on that part of the statement or by making any suggestion to the contrary indicating the defendant's case as regards the said two letters. In our opinion, the documents were proved and their contents can be read in evidence. Needless to say, there is no rebuttal of the letters on the part of the defendants by way of evidence adduced in the case. Once it is held that the two letters are proved then the next question which arises is as to their effect on limitation. The two letters dated 29/03/1977 and 30/07/1977(Exhibits 8 and 9) clearly acknowledge the amount of ₹ 2 crores having been received by the Federation from the Food corporation of India whether by way of advance or by way of deposit. The letters also indicate that the amount of two crores was by way of advance or deposit against paddy procurement. This is admission of jural relationship of buyer and seller which stood converted into relationship of creditor and debtor on the failure of the principal transaction. However, the acknowledged liability is sought to be disowned by submitting that on an account being taken nothing would be found due and payable by the plaintiff to the Federation. Disputing the liability to repay the amount acknowledged to have been received does not dilute the fact of acknowledgement in so far as Section 18 of the Limitation Act is concerned. The two letters have the effect of extending the period of limitation prescribed for filing the suit and calculated from the date of the latter of the two letters i.e. 30/07/1977, the suit filed on 30/05/1980 was well within the period of limitation. Thus, we cannot countenance the view taken by the trial court and the High Court that the suit filed by the appellant was barred by limitation. The appeal is allowed. The judgments and decrees of the trial court and the High Court are set aside.

Summary

Issues Involved:
The issues involved in the judgment are the recovery of excess payment made by the Food Corporation of India to the Assam Cooperative Marketing and Consumer Federation Limited, the applicability of the period of limitation for filing the suit, and the effect of acknowledgment of liability on the limitation period.

Recovery of Excess Payment:
The Food Corporation of India filed a suit for recovery of excess payment made to the Federation. The plaintiff paid &8377; 2 crores as advance instead of &8377; 1.8 crores. The price of paddy supplied was fixed at &8377; 1,60,63,190, resulting in an excess payment of &8377; 39,36,810. The plaintiff also claimed an additional amount for quality cut, which was not upheld by the trial court.

Applicability of Limitation:
The main defense raised by the defendants was that the suit was barred by limitation as the cause of action arose on 20/09/1976, and the suit was filed beyond three years from that date. The plaintiff argued that two letters dated 29/03/1977 and 30/07/1977 from the Federation acknowledged the liability, thus extending the limitation period. The trial court and the High Court initially held the suit as time-barred.

Effect of Acknowledgment of Liability:
The letters dated 29/03/1977 and 30/07/1977 acknowledged the receipt of &8377; 2 crores by the Federation from the plaintiff. These letters indicated a jural relationship of buyer and seller, converting into a creditor-debtor relationship. The acknowledgment of liability extended the limitation period, and the suit filed on 30/05/1980 was within the prescribed time.

Conclusion:
The Supreme Court allowed the appeal, setting aside the judgments of the trial court and the High Court. The suit was decreed in favor of the plaintiff for the recovery of &8377; 39,36,810 with interest at 6 percent per annum. The acknowledgment of liability in the letters proved crucial in establishing the extension of the limitation period and the entitlement to recover the excess payment made.