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TMI Blog1980 (12) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... due from defendant firm to the plaintiff in the sum of ₹ 5,34,786, as on 31-7-1965. According to the plaintiffs, thereafter also, further transactions took place between the parties. On 16-9-1965, the balance due as on 31-7-1965 was confirmed by the defendants. On the 17th September 1965, another letter was written by the defendant firm, which, according to the plaintiff, served as an acknowledgment. The present suit is filed, therefore, to recover an amount of ₹ 5,34,786 due till 31-3-1965, as made upon 31-7-1965, after deducting therefrom the share of Durgaprasad Shreeram, and for the balance amount due with interest from 1-4-1965 on that account. 3. Adding therefore the amount of ₹ 87714/- by way of interest to the balance amount of ₹ 2,62,086/- the claim of ₹ 3,50,000/- is made. It is stated that the claim of plaintiff was within time on account of the acknowledgment made by the defendants by their letter dated 17-9-1965 and also presumably on account of the acknowledgment in the balance sheet of the debt due till 31-3-1965, as on 31-7-1965, on the 8th August 1965. 4. To this suit, though Durgaprasad Shreeram was a partner of defendant No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility, as contemplated by section 18 of the Limitation Act, 1963. So far as defendant No. 4 was concerned, she denied that there was any subsisting liability as a guarantor as far she was concerned. According to her the liability as a guarantor was discharged and she was no more liable to the plaintiff firm as a guarantor for the dues due to the plaintiff from defendant No. 1 firm. 7. This defence of the defendants succeeded. The learned Judge held that defendant No. 4 was not liable as a guarantor. So far as defendants 1 to 3 were concerned, the learned Judge held that the suit was barred by time. In coming to this conclusion that the suit was barred by time, the learned Judge held firstly that the statement in the balance sheet as on 31-7-1965 made on 8-6-1965 did not amount as acknowledgment, and even if it were to amount to an acknowledgment, according to him that was no acknowledgment for a debt due upto 31-3-1965. It was not an acknowledgment of a present liability so as to save the period of limitation so far as the present suit was concerned. With regard to the letter dated 16-9-1965, by which the balance was confirmed, on behalf of defendant No. 1 firm as drawn on 31-3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion was raised on behalf of the defendants and it was not permissible for the learned Judge to embark upon an enquiry, without giving an opportunity to the party claiming a relief to show as to how they were not so barred. It was pointed out that in the case of a running account between the parties, any payment made in an open account towards the dues, which are due at the feet of the account or in respect of every transaction, get a further acknowledgment or a further period of limitation by reason of the payment itself. Any such payment would enure to the benefit of the creditor and would extend the period of limitation further under section 19 of the present Limitation Act and under section 20 of the former Limitation Act. Such payments which are shown in Ex. 88, would, therefore, save further limitation, and it is the last date of payment from which limitation could be counted as starting to run. We find from Ex. 88 at page 72 that on 10-4-1964 an amount of ₹ 100 is shown as credited in the account to the credit of the account of defendant No. 1 firm in the plaintiff's account books. That payment of ₹ 100 will, therefore, start fresh period of limitation from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1965 amounts to an acknowledgment of a liability which had been incurred and earlier acknowledged, as the plaintiff contends, on the 8th August 1965 subsequently by letter dated 16th September 1965. 13. There is no difficulty in the present case in holding that so far as the confirmation of the balance due from defendant firm to plaintiff by letter dated 16-9-1965 amounts to an acknowledgment. It in clear terms says that defendant No. I firm confirms the balance due to plaintiff firm as on 31-7-1965 at ₹ 5,34,786-42. There could be no difficulty in coming to a conclusion that this letter of confirmation in terms of section 18 of Limitation Act, serves as an acknowledgment. If the suit of the plaintiffs had been brought on 16-9-1968 or any date prior to that date, then there would have been no difficulty in holding that the suit was well within limitation, notwithstanding what has been observed by the learned judge. We shall presently come to that aspect of the matter. But we do not think that there could be any semblance of doubt in coming to a conclusion that letter dated 16-9-1965 Ex. 85 does serve the purpose of an acknowledgment and that it can further extend the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et also bears an endorsement under the signature of the accountant, who has been examined in this case, of defendant No. 1 firm, Dhepe D.W 1 (Ex. 97). That endorsement says that the balance sheet has been delivered to the plaintiff firm together with endorsements and remarks made therein. It may be pointed out that it was the contention raised on behalf of the defendants that the endorsements made on the balance sheet were subsequently made and that they were interpolated. Further it was the contention of defendants that defendant No. 2 had no authority to make such endorsements on the balance sheets or that the balance sheet truly represented a state of affairs stated therein and was not a correct balance sheet. Neither defendant No. 2 nor defendant No. 3 were able to step in the witness box in support of these contentions. Further in view of the endorsement of the accountant, we do not think that there is any truth or substance in this contention which was raised in the written statement. 16. The only question then is whether a statement in the balance sheet serves as an acknowledgment of the liability mentioned therein in favour of the creditor. In the present case, the balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is sentence is preceded by three dates, totalling a sum of ₹ 10,400 which had been received from the plaintiff firm by the defendants on the various dates mentioned therein. This letter was construed as acknowledging the payments made subsequent to 31-3-1965 and not referring to payments of amount found due prior to 31-3-1965 or on 31-3-1965 at the feet of the accounts. The learned judge, it seems, did not pay enough attention to the last sentence upon which reliance was placed which by itself would serve the purpose of an acknowledgment and extending the period of limitation. 18. It is true that all that the letter says and acknowledges or states is the existence of an account between the plaintiff and defendant firm. It does not say, that on the date on which this letter was sent, namely, 17-9-1965, any particular amount was due from the defendant to the plaintiff or that a sum of ₹ 5,34,786.42 was due as on 31-3-1965 and interest thereafter and in addition to this an amount of ₹ 10,400 was due. It does not say or acknowledge any specific amount as due from the defendant to the plaintiff. In fact it does not say that any amount is due from defendant to plaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or right which is claimed is to recover an amount of ₹ 5,34,786.42. It does not, as Ex. 83 clearly omits to refer to any amount as such, specify the right nor does it exactly speak of its nature. But for the purpose of section 18 and in order to extent the period of limitation, even such an acknowledgment which omits to specify the exact nature of the right would be sufficient, provided it does acknowledge such a right. If Mr. Dhabe's contention is right, in that the existence of an account has the effect of spelling out such a right, then the letter Ex. 83 will have to be treated as an acknowledgment. 22. Mr. Salve for the respondents entered appearance to-day (3-12-1960) on behalf of the respondents. Mr. Salve's contention is that Ex. 83 does not assist the plaintiff and further that even if it refers to the existence of an account, that does not amount to an admission. Secondly, Mr. Salve contended that there may be more than one accounts between the parties. What it refers is to the account in which the amounts mentioned in that letter, items 1 to 3, were to be entered. It does not follow therefrom that it necessarily refers or means the account in which the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which we shall presently make a reference. 24. The first decision to which we may refer is reported in S.F Mazda v. Durgaprasad . AIR 1961 SC 1236. and the relevant portion from the Head Note, which we extract is as follows:- 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 jura 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. 25. Therefore, it is clear from the aforesaid decision that the liability need not be specifically admitted in so many words. All that is necessary to admit is the existence of a jural relationship and that jural relationship need not also be expressly admitted, but could even be admitted by implication. If the statement is clear, then, the Court held that that jural relationship may be implied from it . It was also pointed out that where the words which fall for interpretation constituted an acknow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quoted with approval was that an unconditional acknowledgment has always been held to be an implied promise to pay, because that is the natural inference, if nothing is said to the contrary. 27. We will now refer to Maniram's case (supra). In that case the acknowledgment which was relied upon came by way of a reply in answer to the objections taken to the debtor being appointed as a person or trustee entitled to administer the estate, to which the letters of admission or probate was sought on account of the will left by Motiram, a money lender. The admission which was made by the debtor was to the effect 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 probate application was not granted. But subsequently a receiver came to be appointed of the estate of deceased Motiram who sued the applicant who had applied for probate to recover the sum which was claimed to be due to the estate of Motiram. In both the Courts below these statements were held to be not amounting to an acknowledgment. The Privy Council held that these words spelt out therefore- a clear admission tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would pay the balance. Therefore, where the existence of a right to account between the parties is admitted, which follows from the admission or acknowledgment it is an acknowledgment of liability to pay in case any balance is found to be due. 31. In the present case the right to account is admitted. That means that a right to having an account between the parties upon the fact of an existence of an account between them, is admitted. If that is so, in the case of an honest man, which every person is presumed to be, the further obligation to pay on the ascertainment of a balance at the feet of that account must be deemed to have been admitted and acknowledged. 32. Since English decisions would be applicable and have been used, and as has been observed by Lord Mellish that the English law relating to acknowledgments and the Indian law which is a statute law not being different, it would be useful to refer similar cases, where words of similar import have been interpreted in the case reported in Quinsey v. Sharpe . 1876 1 Ch. P 72.. Sharpe had written a letter to Quinsey saying I shall be obliged to you to send in your account, made upto Christmas last . This was followed by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of a condition, like in the case of an existence of an account, of ascertaining the balance, would also mean that the liability to pay whatever may be found due is similarly acknowledged. 35. Applying the principles which are laid down, as we pointed out, Ex. 83 is clearly as admission of the existence of an account and, therefore, the relationship and right to have an account between plaintiff and defendant No. 1 firm is also borne out. The consequence of that right to account, if the account between them is ascertained, then is that whosoever is discovered to be a debtor is liable to pay the amount found to be due under the account and at its feet, to the other. In the present case it is not disputed that there is an account in existence between the plaintiff and defendant No. 1 firm, which is a debtor. The letter dated 17-9-1965, therefore, clearly works as an acknowledgment. If it is held that the letter amounts to an acknowledgment, the present suit must be held to be in time. That leaves only one question, which we do not think need have even been gone into or dealt with by the learned Judge. In paragraphs 21, 22 and 23, the learned Judge made an account of what was fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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