2018 (9) TMI 1958 - HC - Companies Law

Time Limitation - Suit for recovery along with interest - decree on admission under Order 13A Rule 3 of the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act - HELD THAT - The acknowledgement of the debt in the balance sheet extends the period of limitation. The acknowledgement is as on 31.3.2015. This suit is filed in 2017. The suit is clearly within limitation The present application is allowed.

Summary

Issues:
1. Application seeking a decree on admission under Order 13A Rule 3 of the Commercial Courts Act.
2. Suit filed for recovery of a specific amount along with interest.
3. Whether an entry in the balance sheet of a company amounts to an acknowledgment of debt extending the period of limitation.
4. Submission raised by defendant No. 1 that the suit is barred by limitation.
5. Passing of a decree in favor of the plaintiff against defendant No. 1.
6. Allegations against defendant No. 2 and continuation of the suit against them.

Analysis:
1. The application was filed seeking a decree on admission under Order 13A Rule 3 of the Commercial Courts Act for a specific sum. The suit itself aimed at recovering a substantial amount along with interest.

2. The plaintiff's counsel argued that the balance sheet of defendant No. 1 contained an admission of a specific amount payable to the plaintiff. Citing relevant judgments, it was contended that such an acknowledgment in the balance sheet extends the period of limitation.

3. The only submission raised by defendant No. 1 was that the suit was time-barred. However, the legal position, as per previous judgments, established that an acknowledgment of debt in the balance sheet extends the limitation period.

4. Referring to previous case law, the court held that an entry in the company's balance sheet constitutes an acknowledgment of debt, extending the limitation period. As the suit was filed within the extended limitation period, it was deemed to be within limitation, and the application seeking a decree on admission was allowed.

5. Consequently, a decree was passed in favor of the plaintiff against defendant No. 1 for the specific sum mentioned in the acknowledgment. The plaintiff was also entitled to simple interest from the date of institution of the suit till the decree, as well as post-decree interest and costs.

6. Regarding defendant No. 2, who was a director of defendant No. 1, serious allegations were made, and the plaintiff sought to continue the suit against them. The court scheduled a hearing for framing of issues related to defendant No. 2 on a specific date.