9911796707
TMI Blog2007 (7) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... dged the liability to the petitioner in its successive balance-sheets and relies on the last of such balance-sheets for the year ended March 31, 2002, which was signed on the company's behalf on July 6, 2002. The petitioner is unable to establish the exact nature of the transaction, however, as the company acknowledges receipt of such sum on account of advance against property. 3. In December, 2003 the petitioner demanded refund of the money it had allegedly made available to the company by way of loan. The company responded to the demand contained in the statutory nonce. By its writing of February 5, 2004. It is the nature of the company's defence found in its. response to the statutory notice that is the key issue in these proceeding as it is the defence found in such response which has been repeated and amplified in the company's affidavit : "We object to your letter dated December 5, 2003, received by us on January 24, 2004. You have no authority to represent the company or issue any notice. As you are aware M/s. Carboxy Chemicals (P.) Ltd., belongs to Sri Vinod Kumar Jain, one of our directors. You have fraudulently purported to show his removal as a director together with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, the company's defence is the same. 6. The company also suggests that even if the acknowledgment in its balance-sheet signed on July 6, 2002, is taken into account, by the time these proceedings were instituted in July, 2006, the claim was barred by the laws of limitation. The company submits that the petitioner has been unable to show anything by way of acknowledgment of liability on the company's part at any time after July 6, 2002, that could keep its claim alive till the time this petition was filed. The company refers to the inordinate delay between the issuance of the statutory notice and the institution of these proceedings and submits that the petition and the provisional liquidator's application were filed with oblique purpose to dodge the caveat that had been lodged by the company apprehending the institution of a civil suit in furtherance of the petitioner's mala fide claim. 7. The company's response to the statutory notice, according to it, is no acknowledgment of liability within the meaning of section 18 of the Limitation Act, 1963. The company urges that for a writing to be deemed to be an acknowledgment of liability, there must be intention on the debtor's part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cal. 170 and places the following passage therefrom (page 171) : "2. . . . The petitioner had relied on the alleged acknowledgment made in the balance-sheet for the year 1968 which was signed on July 20, 1970. The previous balance-sheet for the year 1967 had been signed on June 3,1968. The balance-sheet which was signed by the directors on July 20, 1970, contained an acknowledgment as required under section 18 of the Limitation Act, 1963, which is in similar terms with section 19 of the Indian Limitation Act, 1908. Therefore, it is necessary to determine whether the statement contained in the balance-sheet for the year 1968 signed on the July 20, 1970, amounts to an acknowledgment of liability under section 18 of the present Limitation Act. In the case of Bengal Silk Mills Co. v. Ismail Golam Hossain Ariff, AIR 1962, Cal. 115, there was a balance-sheet which showed the amount claimed in that suit as 'debt owing by the company to the plaintiff' under the liabilities of the company and it was relied upon by the plaintiff in that suit as acknowledgment. It was contended that it was not a sufficient acknowledgment within section 19 of the Limitation Act of 1908 because it had been pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shareholders as directors' report should be read together and if so whether reading these two statements together these amount to an acknowledgment as contemplated under section 18 of the Limitation Act, 1963, or section 19 of the Limitation Act, 1908. In my opinion, both these statements have to be read together. The balance-sheet is meant to be presented and passed by the shareholders and is generally accompanied by the directors' report to the shareholders. Therefore, in understanding the balance-sheets and in explaining the statements in the balance-sheets, the balance-sheets together with the directors' report must be taken together to find out the true meaning and purport of the statements." 10. According to the company, such decision was based on an earlier reading of the Supreme Court of the same provisions in the judgment in Tilak Ram v. Nathu, AIR 1967 SC 935. The company asserts that as to whether there was acknowledgment of liability with intent to acknowledge, had to be gathered from the document itself as no evidence as to intent can be received. The company relies on the following paragraphs from the Supreme Court judgment (pages 937, 938 and 939) : "(4) The pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period prescribed for a suit or application in respect of any property or right, an acknowledgment 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 some person through whom he derives title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.' Explanation 1 to the section, inter alia, provides that- 'For the purposes of this section an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right . . . or is addressed to a person other than the person entitled to the property or right' (7) The section requires (i) an admission or acknowledgment; (ii) that such acknowledgment must be in respect of a liability in respect of a property or right; (iii) that it must be made before the expiry of the period of limitation; and (iv) that it should be in writing and signed by the party against whom such property or right is claimed. Under the Explanation such an acknowledgment need not specify the exact nature of the property or the right claimed. It is manifest that the statement relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of section 18. It is possible that an absurd reason may be attributed for the alleged debtor disowning liability and it is only in such case that the absurd reason may be looked into. In short, the reason proffered for not paying, has to be demurrable for the document to be accepted as an acknowledgment of liability within the meaning of section 18. 14. Clause (a ) of the Explanation to section 18 makes it clear that the refusal to pay would not affect the claim. In this case, the company accepts that it received payment but merely asserts that the money stood forfeited. There is acknowledgment of receipt of payment and the denial of liability on some ground. The denial is the justification for non-payment and mere denial, in the face of Explanation ( a) to the section, will not take much sheen off a document that can otherwise be read as an acknowledgment of liability. 15. In the Pandam Tea Co. Ltd., In re, AIR 1974 Cal. 170, there was a dear disclaimer by the directors who did not confirm the liability, the recording whereof in the balance-sheet was being sought to be used as an acknowledgment of liability. In the Tilak Ram v. Nathu, AIR 1967 SC 935, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
