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TMI Blog2006 (3) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... wledged its liability in the sum of Rs. 6,61,540.27. By a letter dated 22-11-2001 the company assured the petitioner that it would make payment at the earliest and expressed its gratitude for the co-operation extended by the petitioner. By a letter dated 19-4-2002 the company assured the petitioner that it would initiate action shortly to clear all her dues and regretted the inconvenience caused to the petitioner. ( b ) These letters however do not save the bar of limitation for the petition was filed on 9-8-2005, i.e., more than three years after the last acknowled-gement dated 19-4-2002. 5. ( a ) The petitioner served a statutory notice by her Advocate s letter dated 29-4-2005. In reply to the statutory notice, the Company s Advocate addressed a letter dated 9-6-2005. ( b ) The reply contained bare denials. The company has gone to the extent of denying that it had assured the petitioner that it would make payment of the outstanding amounts. In view of the letters of the company, referred to above, it is clear that the denials are ex facie false. The affidavit in reply filed on behalf of the company is, with good reason, guarded. The denials in the affidavit have not g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titutes an acknowledgement of liability so as to save the bar of limitation in view of section 18 of the Limitation Act, is the first question that falls for consideration. I have come to the conclusion that the execution or issuance of a Form "C" by itself does not save the bar of limitation under section 18. Section 18 of the Limitation Act reads as under : "18. Effect of acknowledgement in writing. (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed. (2) Where the writing containing the acknowledgement is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation. For the purpose of this section, ( a )an acknowledgement may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces can always be considered. Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or far-fetched process of reasoning. Broadly stated that is the effect of the relevant provisions contained in section 19, and there is really no substantial difference between the parties as to the true legal position in this matter." [Emphasis supplied] (p. 1238) In Tilak Ram v. Nathu AIR 1967 SC 935, the Supreme Court held as under: "(9) It is not, however, necessary to go into the details of these decisions or to decide which of the two views is correct as this Court in Shapur Fredoom Mazda v. Durga Prosad AIR 1961 SC 1236, has examined the contents and the scope of section 19. After first stating the ingredients of the section, this Court stated that an acknowledgement may be sufficient by reason of Explanation 1 even if it omits to specify the exact nature of the right. Nevertheless, the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved or a far-fetched process of reasoning." [Emphasis supplied] (p. 939) 10. While considering the nature of a Form C , it is necessary first to note the provisions of section 8 of the Central Sales Tax Act, which read as under : "8. Rates of tax on sales in the course in inter-State trade or commerce. (1) Every dealer, who in the course of inter-State trade or commerce ( a )sells to the Government any goods; or ( b )sells to a registered dealer other than the Government goods of the description referred to in sub-section (3); shall be liable to pay tax under this Act, which shall be four per cent of his turnover. (2) and (3)****** (4) The provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner ( a )a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or ( b )if the goods are sold to the Government, not being a registered dealer, a certificate in the prescribed form duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seller to the purchaser and the price at which the goods were sold and delivered. In substance, therefore, the form would evidence the fact/existence of an agreement to sell as well as the price at which the goods were agreed to be sold. 15. However, neither section 8 nor rule 12 or even Form "C" for that matter, require the purchaser to declare expressly that he has paid the price of the goods in respect of which Form "C" is issued. Thus, it is not possible to infer that the execution and issuance of Form "C" by a purchaser impliedly reflects on the question of payment by the purchaser to the seller in respect of the transactions referred to therein. 16. Form "C" does not contain expressly or even by implication, the acknowledgement of liability in praesenti in respect of the transactions referred to therein. The execution and issuance of Form "C" does not, to use the words in Shapoor Fredoom Mazda s case ( supra ) relate to a present subsisting liability. Nor does the execution and issuance of Form "C" indicate that the statements therein were made with an intention to admit a subsisting liability. In other words, though, a Form C certainly indicates the existence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 19-4-2002 by which the company informed the petitioner that it would initiate action shortly to clear her outstanding dues. 23. However, to my mind, the letter dated 9-6-2005 and in particular, paragraphs 3 and 5 thereof, constituted a promise albeit an implied promise by the company to pay the petitioner the amounts, if any, that may be found due upon the account being reconciled. It is crucial to note that the company did not really deny its liability totally. It denied that it was liable in the sum of Rs. 7,67,646.21 demanded by the petitioner. The company however did not stop there. The Company then expressly stated that the account in respect of the transactions during the relevant period "is required to be reconciled". The letter goes a step further and calls upon the petitioner "to convene a meeting for reconciliation of the said accounts by independent expert." And further still did it go stating that the company reserved "their right to give detailed and suitable reply to the said notice after reconciliation of the said accounts." 24. The question that first comes to mind is - Why did the Company call upon the petitioner to reconcile the accounts ? The obvious an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of an affidavit filed by the respondent, Rupchand, in proceedings for the probate of Motiram s Will. The respondent was one of the trustees named under the Will who had applied for probate. The application was opposed by the other trustees inter alia on the ground that Rupchand was indebted to Motiram. In reply to this objection, Rupchand stated in a reply dated 20-9-1899 as follows : "The applicant Rupchand Nanabhai is a big Mahajan of Burhanpur paying Rs. 106 as income-tax. For the last five years he had open and current accounts with the deceased. The alleged indebtedness does not affect his right to apply for probate." The Privy Council held that the above document saved the bar of limitation under section 19 of the Indian Limitation Act, 1877 (section 18 of 1963 Act) as it was executed during the period of limitation. The findings of the Privy Council during the course of the judgment support the conclusion I have arrived at. It was held as under : "There is, therefore, a clear admission that there were open and current accounts between the parties at the death of Motiram. The legal consequence would be that at that date either of them had a right as against the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be paid when the condition is performed by the ascertainment of a balance in favour of the claimant. It is a case of the third proposition of Mellish L.J., a conditional promise to pay and the condition performed. There was therefore on 28-9-1899, a sufficient acknowledgement to give a new period of limitation from the date of the acknowledgement, viz., 28-9-1899, and the present suit having been commenced on 5-9-1901, is within any period of limitation that can be applicable. The only reason given is that it would require a considerable stretch of the imagination to place upon it the meaning that there was a right to have the account taken, thereby implying a promise to pay. It has not, however, been argued that there was a promise to pay in any event, and the learned Judge does not seem to have considered the meaning, which appears to their Lordships to be the natural one, that the words import an admission of liability if the balance should prove to be against the respondent coupled with the fulfilment of that condition a state of things which in all reason and sound sense places the acknowledgement upon the same footing as an acknowledgement unconditional in the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f upon reconciliation, any were found due. The letter dated 9-6-2005 saves the bar of limitation, if any. If any, I say as, the letter constitutes a promise to pay a time-barred debt which under section 25 of the Indian Contract Act, does not require to be supported by consideration and a fresh period of limitation would start from that date. 30. The ratio and not the conclusion in the case of River Steamer Co., Mitchell s Claim, In re LR 6 Ch. Ap. 822 is important for the letter relied upon as saving the bar of limitation was in material respects, different from the letter dated 9-6-2005. Though it was not contended otherwise before me, I may only mention that the letter there expressly stated that on an account being taken, the balance would considerably be in the defendant s favour and, called upon the plaintiff to refer the matter to arbitration. It was further stated in the letter there that the defendant had long since named their arbitrator but could not get the plaintiff to appoint their arbitrator and the reference was never therefore proceeded with. Lastly, the letter was also without prejudice. In the letter dated 9-6-2005, there is no assertion that on an accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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