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Issues Involved:
1. Limitation 2. Acknowledgment of Liability in Balance-Sheets 3. Authority of Managing Agents to Acknowledge Debt 4. Validity of Balance-Sheets Without Directors' Signatures 5. Ratification by Company Detailed Analysis: 1. Limitation: The primary defense raised by the defendant was the bar of limitation. The suit was for the recovery of Rs. 2,77,010/10/7 pies, being the balance due on November 30, 1936. By Article 57 of the Indian Limitation Act, the period of limitation is three years from the date when the loan was made. The suit was instituted on December 19, 1939. The plaintiff relied on the acknowledgments of liability contained in the balance-sheets of the defendant company for the years ending from 1930 to 1936 to save the suit from the bar of limitation. 2. Acknowledgment of Liability in Balance-Sheets: The balance-sheets for the years 1930 to 1936 were signed by the auditors and the managing agents, Hashim Ariff Brothers and Co. Each balance-sheet showed the amount owed by the defendant company to Golam Hossain Cassim Ariff as at the end of the previous year. The exact admission made in the balance-sheet for the year ended November 30, 1936, was under the heading "liabilities," stating "debts owing by the company -- to Mr. Golam Hossain Kassim Ariff -- Rs. 2,77,010-10-7 pies." 3. Authority of Managing Agents to Acknowledge Debt: One of the points in issue was whether the managing agents could acknowledge a debt in favor of one of their partners. The managing agents had authority to borrow money from G.H.C. Ariff for and on behalf of the defendant company. Sections 131 and 132 of the Indian Companies Act, 1913, required that the balance-sheet of a limited company must contain a summary of its properties, assets, capital, and liabilities. The articles of association of the defendant company required the managing agents to lay before the company the yearly balance-sheet containing a summary of its properties and liabilities. 4. Validity of Balance-Sheets Without Directors' Signatures: Prior to 1938, the defendant company had no directors, and the relevant balance-sheets were not signed by any director but by the managing agents. The trial court repelled the contention that the balance-sheets were invalid or defective for not being signed by directors. The balance-sheets were signed by the managing agents in accordance with the power conferred on them by the articles of association of the company and were adopted and passed by the company at its annual general meetings. 5. Ratification by Company: The trial court found that all the relevant balance-sheets were duly passed at the general meetings of the company. This finding was supported by the oral evidence of Mohammed Ali Ariff and Ismail Golam Hossain. The company did not repudiate the acknowledgment made by the managing agents; instead, it passed the balance-sheets at the annual general meetings. This ratification by the company meant that the acknowledgment had the same effect as if it had been made with the express authority of the company. Conclusion: The balance-sheets in question were found to be sufficient acknowledgments within the meaning of Section 19 of the Indian Limitation Act. Consequently, the claim of the plaintiff was not barred by the law of limitation. The appeal was dismissed, and the appellant was ordered to pay the costs of and incidental to the appeal and the remand.
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