2010 (2) TMI 1258 - HC - Indian Laws

Summary

Issues Involved:
1. Bar of Limitation
2. Mutual, Open, and Current Account
3. Acknowledgment of Liability

Summary:

1. Bar of Limitation:
The appellant contended that the suit was barred by limitation u/s 3 of the Limitation Act, 1963. The respondent's claim was based on an amount due as of 28.05.1988, and the suit was filed on 27.05.1991. The court emphasized that if a suit is time-barred, it must be dismissed regardless of whether the limitation defense is raised.

2. Mutual, Open, and Current Account:
The appellant argued that Article 1 of the Limitation Act, which pertains to mutual, open, and current accounts, was inapplicable. The court agreed, stating that the respondent failed to prove the existence of a mutual account. Citing precedents, the court clarified that mutual accounts require reciprocal demands creating independent obligations on both sides, which was not the case here.

3. Acknowledgment of Liability:
The appellant challenged the trial court's reliance on 'C' Forms as acknowledgments of liability u/s 19 of the Limitation Act. The court held that 'C' Forms, which acknowledged the receipt of goods, did not constitute an acknowledgment of debt. The court emphasized that for a document to extend the limitation period, it must explicitly acknowledge a subsisting liability, which the 'C' Forms did not. The court cited several precedents to support this interpretation and concluded that the 'C' Forms could not be construed as acknowledgments of liability.

Conclusion:
The court found that the suit was barred by limitation and that the 'C' Forms did not extend the limitation period. Consequently, the impugned judgment and decree dated 6th December 1996 were set aside, and the appeal was disposed of accordingly.