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TMI Blog1970 (10) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicated upon except that from and after the date of the award the aforesaid concerns were brought under the management and control of one or the other of the said two groups. The corporation came under the control and management of the Singhania group. 2. Clause 9 of the award provided as follows : The above award or directions in respect of Laxmi Ratan Cotton Mills Company Ltd., Aluminium Corporation of India Ltd., J.K. Ltd., Beharilal Kailashpat India Supplies, Northern India Trading Company and Northern Brush Manufacturing Company do not cover the advances which either party or their separate firms may have made to all or any of them or their moneys which may be in deposit with them and they shall be payable and paid in their usual course. 3. According to the appellants, there existed in their trading books accounts in respect of amounts advanced or spent by them for the corporation in respect of which Clause (9) of the award specifically made provision for and also for interest due thereon. After the award was made the appellant-company sent a statement of account to the corporation, but this was objected to on the ground that the appellant-company, during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant-company as the claim allowed in its favour was for a reduced amount. As framed by the High Court, the question common to all the three appeals was whether the said letter (Ex. 1) amounted to an acknowledgement extending the period of limitation. The High Court, on consideration of the correspondence between the parties and the other evidence, reached the conclusion that the letter (Ex. 1) was merely explanatory and was nor meant to bind the corporation, that even if it did amount to some kind of acknowledgement , its author, the said Subramanayam, had no authority to acknowledge any debt or liability on behalf of the corporation. In this view the High Court held the two suits barred by limitation and allowed the corporation's appeals. It rejected the appellant-company's appeal and dismissed the two suits. Hence these three appeals under certificates granted by the High Court. 6. It was never disputed that, except for the letter (Ex. 1) relied on by the appellant-company, provided it amounted to an acknowledgement binding on the corporation, the claims of the appellants would be barred by limitation. Consequently, the questions for determination in these appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to mean such an acknowledgement by the corporation itself. 8. The question, therefore, that really arises for our determination is whether the said letter contains an acknowledgement, which its writer, Subramanyam, had the authority, express or implied, to make. Even that question gets reduced in extent and scope as it was never the case of the appellant-company at any stage that the corporation had clothed its Secretary with such authority expressly. Such a case Mr. Gupte did not make out even before us and proceeded in fact to argue that the evidence on record showed that he had such authority given to him impliedly. 9. Section 19(1) of the Limitation Act, 1908 provides that where, before the expiration of the period prescribed for a suit 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, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed. The expression signed here means not only signed personally by such a party, but also by an agent duly authorised in that behalf. Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also a person duly authorised by him to make the admission. In Khan Bahadur Shapoor Fredoom Mazda's case [1962]1SCR140 . the Court accepted a statement in a letter by a mortgagor to a second mortgagee to save the mortgaged property from being sold away at a cheap price at the instance of the prior mortgagee by himself purchasing it as one amounting to an admission of the jural relationship of a mortgagor and mortgagee, and therefore, to an acknowledgement within Section 19. Also, an agreement of reference to arbitration containing an unqualified admission that whoever on account should be proved to be the debtor would pay to the other has been held to amount to an acknowledgement. Such an admission is not subject to the condition that before the agreement should operate as an acknowledgement, the liability must be ascertained by the arbitrator. The acknowledgement operates whether the arbitrator acts or not. (see Tejpal Saraogi v. Lallanjee Jain C.A. No. 766 of 1962, decided, on Feb. 8, 1965, approving Abdul Rahim Oosman Company v. Ojamshee Prushottamdas Company (1928) I.L.R. 56 Cal. 639. 11. The letter (Ex. 1) relied on as an acknowledgement was written to the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, could not be held to be one intended as an admission of liability on the part of the corporation, and that, in any event, Subramanayam, who wrote it, had no authority to acknowledge any such liability on behalf of the corporation. 13. Before we proceed to inquire into the correctness or otherwise of the High Court's view in regard to the letter (Ex. 1). it would be necessary to examine the correspondence which previously ensued between the parties and the surrounding circumstances which led to that letter. 14. As already stated, under Clause (9) of the award by which the concerns, once jointly controlled, were separated, moneys advanced by either of the parties or their firms or standing in deposit with them were to be payable by one to the other. The award also directed the Gupta group to hand over to the Singhanias account books and other papers and files relating to the corporation. Accordingly, the Guptas handed them over to the corporation on February 1, 1944. The complaint of the corporation was that these books had not been properly posted up and contained discrepancies and that the corporation consequently required the help of the Guptas to finalise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable by it as per A.C.I. Ltd. Books , that is to say, as shown by the books of account maintained by the corporation. The reply of the appellant-company, dated December 6, 1945, to the (Shelat J.) of the appellant-company, dated December 6, 1945, to the afore-aforesaid letter of September 17, 1945 and the statement enclosed thereto shows that the said Arora on behalf of the appellant-company and the said Subramanayam on behalf of the corporation met and tried to reconcile the accounts. The appellant-company by this reply also sent particulars of certain items apparently called for by Subramanayam at that meeting and in its turn asked for particulars of certain items debited to it in the said reconciliation statement. On December 21, 1945, Subramanayam replied to the appellant-company's letter of December 6, 1945. By that letter he conveyed two things, (1) that in respect of certain items claimed by the appellant-company and which were disputed, those items were either passed or disallowed, and (2) that since the appellant-company had combined in its statement of claim accounts of other allied concerns also, he too had combined those accounts while preparing the statement of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to dispute the correctness of the amount claimed by the appellant-company by challenging certain items for which the appellant-company claimed credit and by making certain counter claims of its own. As against the statement of account sent by the appellant-company, the corporation sent its own statement which it called the 'reconciliation account'. (c) During the process of adjustment and reconciliation of the several items claimed by the appellant-company some were allowed and some were rejected, and the corporation sought to debit certain items claimed by it against the appellant-company. (d) According to the reconciliation statement sent by the corporation on September 17, 1945 only ₹ 98,000 and odd was due to the appellant-company as against its claim for ₹ 2,94,000 and odd. Later, this figure was raised from time to time as some of the items claimed by the appellant-company were allowed (Shelat J.) with the result that in the statement sent along with the letter (Ex. 1) the balance due to the appellant-company was shown at ₹ 1,07,447. (e) The statements of accounts, (Exs. 43 and 44) and the one enclosed with the letter, (Ex. 1) in clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondition has been performed. The statement relied on in Maniram's case L.R. 33 1A. 165. as an acknowledgement was by the respondent in a written statement filed by him in an earlier probate proceeding in which it was averred that the applicant Rupchand Nanabhai (the respondent) had for the last five years open and current accounts with the deceased (the testator) and that the alleged indebtedness did not affect his right to apply for probate , as one of the executors. It was held that the statement was sufficient to constitute an acknowledgement. An unconditional acknowledgement , said their Lordships, has always been held to imply a promise to pay, because that is the natural inference if nothing is said to the contrary. It is what every honest man would mean to do There can be no reason for giving a different meaning to an acknowledgement that there is a right to have the accounts settled, and no qualification of the natural inference that whoever is the creditor shall 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 proportion of Mellish, L.J., a conditional promise to pay and the condition perf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and represent the corporation in litigation. None of these three positions held by him would by itself or cumulatively make him a person duly authorised to make an acknowledgement binding on the corporation. Also, the fact that he carried on correspondence for the corporation would not make him a person authorised to make an acknowledgement binding on the corporation. [see Uma Shankar v. Gobind Narain I.L.R. 46 All. 892. Put such a description of the functions and duties performed by him would not be complete. If the correspondence together with the statements of accounts enclosed therewith is closely examined it becomes clear that he was authorised to scrutinise the claim made by the appellant-company, the various items for which the appellant-company claimed credit and to reject some, and what is important, to allow the others. That he had such an authority is clear from the fact that in respect of such of the items which he allowed credit was given to the appellant-company and necessary entries to the credit of the appellant-company were posted in the account maintained by the corporation in its books of account. Thus, in the reconciliation statement (Ex. 43) sent along with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. He did not say that he had no authority to settle the differences or that he settled them subject to the approval of the directors. It is clear that he could not have settled the various points of difference between the parties and suitable entries in the books consequent upon such settlement could not have been posted unless he was authorised by the directors to finalise the accounts and make final adjustment with the appellant-company. He tried, of course, to make out that he had no authority except as a secretary to carry on correspondence for clarifying the position of the corporation. He even denied that entries were made in the books of the corporation after he had settled the said items. The denial is futile because the statements of account sent by him to the appellant company from time to time clearly show that such entries were made. The effect of all this evidence is that besides his functions as the secretary-cum-chief accountant, he was authorised to finalise the accounts between the parties, 'to settle differences between them and to arrive at the final figure payable by the corporation. It was in pursuance of such authority that he dealt with Arora, passed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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