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Issues:
Petition seeking winding up of respondent company due to unpaid debt of Rs. 20,025, dispute over balance as on 31st March 1996, time limitation for filing petition. Analysis: The petitioner filed a petition seeking winding up of the respondent company, claiming an unpaid debt of Rs. 20,025. The transactions leading to this debt were detailed in the petition, with a balance of Rs. 20,025 shown. The respondent company had acknowledged a liability of Rs. 20,840 in its balance sheet as of 31st March 1996. However, a dispute arose regarding the actual balance as of that date, with the petitioner claiming Rs. 25,125 was due. The critical issue addressed by the court was the time limitation for filing the petition. The last payment was made on 17th April 1996, while the petition was filed on 26th November 1999, beyond the three-year limitation period prescribed by the Limitation Act. The petitioner argued that the auditor's report dated 27th November 1996 should be considered as an acknowledgment of the debt, extending the limitation period. However, the court disagreed, citing the Supreme Court's ruling that a mere admission of past liability is not sufficient for acknowledgment under Section 18 of the Limitation Act. The court emphasized that the auditor's report for the year 1995-96 did not constitute an acknowledgment of the debt existing on 27th November 1996. The report reflected the state of affairs as of 31st March 1996 and could not be relied upon to extend the limitation period. The court clarified that the auditor's report was not an acknowledgment of the debt; rather, it was the balance sheet of 31st March 1996 that could be considered for this purpose. The court highlighted that the auditor's report affirmed the state of affairs as of 31st March 1996 and could not be treated as reflecting the position on the date of the report, i.e., 27th November 1996. Therefore, the court dismissed the petition as time-barred, based on the limitation period prescribed by the law. In conclusion, the court dismissed the petition seeking winding up of the respondent company due to an unpaid debt, ruling that the petition was time-barred. The dispute over the balance as of 31st March 1996 and the attempt to extend the limitation period based on the auditor's report were thoroughly analyzed, with the court emphasizing the legal requirements for acknowledgment of debt under the Limitation Act. The judgment highlighted the importance of the balance sheet date for determining liabilities and reiterated that the auditor's report did not constitute an acknowledgment of the debt beyond the prescribed limitation period.
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