TMI Blog2004 (7) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned here that even the seller in Germany had written in one of the letters that if the commission is not paid to the petitioner by the buyer, seller may have to pay the same to the agent. It is not known as to what happened between the seller and its agent, i.e. , the petitioner in this behalf because of which the petitioner took an unduly long period in filing the present petition. This petition is, therefore, time barred and is liable to be dismissed on this ground. The respondent-company has stated that it had a gross profit before tax in excess of Rs. 86 crores ; reserves to the tune of Rs. 578.52 crores ; annual turnover of Rs. 6224.00 crores and was on going solvent company with a number of work force. In a petition filed u/s 433(e) of the Act, not only is it required to be proved that there must be a debt, but one has also to come to a finding that the respondent-company must be unable to pay the said debt. Even if these two conditions are satisfied, still it is not necessary that the winding up order has to be passed as an order under clause (e) of section 433 is discretionary. The respondent-company disputed its liability to pay the debt on the ground that it was paya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is mentioned that the agency commission would be DM 18,760, i.e. , at the rate of 0.5 per cent, of C F value. 4. The purchase order was duly executed with the petitioner-company providing agency services in India, representing the principals. The consignee, namely, HPCL had opened the letter of credit (LoC) for a total value of DM 37,52,000 through State Bank of India, Commercial Branch, Bombay. It has come on record that after the first consignment, the respondent-company wrote letter dated July 13, 1990, to the manager, State Bank of India authorising the said bank to arrange remittance of agency commission to the petitioner-company in Indian rupees equivalent to DM 4,678.09 (0.5 per cent, of the gross invoice value of that shipment being DM 935617.48). It was also stated that this agency commission as well as charges of the bank would be debited to the account of HPCL, Bombay, and a copy of this letter was marked to the petitioner-company. When subsequent instalments of shipments were dispatched, similar letters dated November 9, 1990, and April 19, 1991, were written asking the bank to remit the petitioner-company its agency commission. All these letters are identically worded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s letter dated August 27, 1992, to the respondent-company as well while reminding the respondent-company to make their payment of commission. 6. It appears that although the respondent-company was acknowledging the payment to be made to the petitioner on this count, it wanted this payment to be made by HPCL. It may be because of the reason that goods were imported on behalf of HPCL and even the payment which was made to the principals LoC was opened by HPCL. The respondent-company, therefore, did not intend to assume the liability to pay this agency commission and was insisting HPCL to make this payment. However, HPCL was not willing to pay up this commission apprehending that by doing so it would be violating some Government's guidelines as per which payment of such commissions to Indian agents was prohibited. This becomes obvious from letter dated July 18, 1994, written by the respondent-company to HPCL copy of which was marked to the petitioner-company. 7. However, the requests of the respondent-company could not yield any positive response from HPCL and the consequence was that the petitioner-company remained unpaid. It kept on writing letters even thereafter which were pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3.96 lakhs. 9. In view of the stand taken by the respondent-company fastening the liability, if any, with HPCL, the court deemed it proper to issue notice to HPCL. HPCL appeared pursuant to said notice and has filed its reply. A perusal of this reply would show that apart from raising a preliminary objection about the maintainability of such petition ; claim being time barred ; no liability to pay any such commission as LOC was opened in favour of the principals deleting agency commission ; no liability was ever admitted by HPCL for payment for any such commission, it is also stated that there is no privity of contract between HPCL and the petitioner and HPCL never dealt with the petitioner. 10. From the aforesaid pleadings, it is clear that following two issues need to be determined as preliminary issues: ( i ) Whether the claim of the petitioner is time barred ? ( ii ) Whether winding up petition is maintainable or the appropriate course for the petitioner was to file suit for recovery of the amount ? (iii) Whether the claim of the petitioner is time barred ? 11. The respondent-company as well as HPCL have taken the plea that the claim is time barred on the ground that purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter provided the necessary letter of authority for payment of this agency commission. You are quite aware the value of the material was inclusive of the commission, however, it seems that HPCL has restricted the amount to be remitted against the letter of credit to the net value of the material. M/s. Hansa Industries Ltd., the agents for M/s. Thyssen Stahlunion GmbH have been constantly in correspondence with us reminding us about the payment of the agency commission. We have also been reminding HPCL about the release/payment of the amount of the agency commission in equivalent Indian rupees to this firm. We have been receiving notices of demand from the advocate of Hansa Industries Ltd. advising us to payment of the commission and interest thereon at 20 per cent, per annum. I would, therefore, request to consider the entire matter once again and go through the records and arrange to make the payment of the Indian agent's commission so as to avoid any legal proceedings by them against MMTC and/or HPCL. I shall be grateful for an early reply in the matter. 13. A perusal of the aforesaid letter brings out the following admissions : ( a ) Transaction in question whereby the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such right is claimed. In paras. 6 to 8 of the said judgment law on acknowledgment was formulated in the following words (page 1238) : Para. 6 : It is thus clear that acknowledgment as prescribed by section 19 merely renews debt ; it does not create a new right of action. It is a mere acknowledgment of the liability in respect of the right in question ; it need not be accompanied by a promise to pay either expressly or even by implication. The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, read by the light of the surrounding circumstances, be an admission that the writer owes the debt'. With respect, it may be added, that this statement succinctly and tersely gives the substance of the provisions contained in section 19 of the Limitation Act. 16. Interpretation of this provision came up before the Supreme Court again in Tilak Ram v. Nathu, AIR 1967 SC 935 and after taking note of a number of decisions of various High Courts relied upon by either of the parties, the court opined that it was not necessary to go into the details of the said decisions or decide as to which of the two views expressed in those decisions were correct as the law was succinctly stated in Shapoor Freedom Mazda's case, AIR 1961 SC 1236. Explaining as to what the said decision laid down, the court applied the principle in the case in hand wherein action for redemption of mortgages was brought before the court. In order to bring action within limitation the petitioners had relied on certain statements in some documents alleging that they constitute acknowledgments by the predecessor in title of the defendants and which gave them a fresh start of limitation saving their suit from being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the acknowledgment indicate the circumstances of jural relationship between the parties such as that of debtor and creditors. ( d ) It must appear that statement is made with the intention to admit such jural relationship. ( e ) Such intention can be implied and need not be expressed in words. In construing the words used in the statement, surrounding circumstances can be considered although oral evidence is excluded. ( f ) Although liberal construction is to be given to such statement but where a statement was made without intending to admit the existence of jural relationship, the court cannot fasten such intention on the maker by an involved or far-fetched process of reasoning. ( g ) In deciding the question in a particular case, it is not useful to refer to judicial decision and one has to inevitably depend upon the context in which words are used. 20. In the light of the aforesaid provision we may now come back to the language of letter dated July 18, 1994, written by the respondent-company to the petitioner. No doubt, there are many admissions in the said letter as pointed out in para. 13 above. However, it falls short of acknowledging the debt in so far as the maker o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said letter as pointed in para. 13 and give a finding to the effect that stand of the respondent-company denying its liability was not legally tenable and therefore the letter constitutes acknowledgment. Such an exercise would involve a far-fetched process of reasoning which is not permissible as to what we read from the letter in question is that the statement was made by the respondent-company clearly without intending to admit its liability. If one was adjudicating upon the claim of the petitioner on the merits in a civil suit and not the issue of limitation, one would have definitely gone into the issue as to whether the attempt on the part of the respondent-company to avoid its liability is legally permissible or not. However, that is not the scope of enquiry under section 19 of the Limitation Act when what is to be examined is a pure simple question as to whether the writer of the letter is acknowledging its debt. 22. The facts narrated above would show that the transaction in question is of the year 1990. The order was placed on January 11, 1990, and was also executed in part in 1990 and in early 1991. The three letters by which agency commission was demanded are dated Jul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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