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TMI Blog2005 (2) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent company had acknowledged the liability towards the petitioner while replying to the Registrar of Companies. However, it appears that while discussing the case, the learned Judge only went by the fact that the petition was based on running account and did not at all deal with the question as to what would be the effect of acknowledging the liability in reply to the Registrar of Companies. Therefore, this case cannot be treated as laying down the proposition that even if the liability is acknowledged by the respondent company in respect of a debt which the respondent company owes to the petitioner, still such a petition would not be maintainable. It is not a case where balance sheet is not passed by the shareholders or there is any note by the Directors questioning the entry in the balance sheet on any plea, like time-barred, etc. Had the respondent company produced the list of creditors, one would have known the exact liability which is admitted by the respondent company qua the petitioner. For not producing this document in spite of Court orders, adverse inference can be drawn. Be as it may, once there is an admission of liability, the petition can be admitted. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of invoices and in this manner further sum of ₹ 3,20,683/- as interest is added for the period up to 15th August, 1998, thus making a total sum of ₹ 6,73,154/-. The petitioner sent statutory notice dated 28th July, 1998 which, according to the petitioner, was received by the respondent company on 3rd August, 1998 and in support of this plea, acknowledgement card purported to have signed on behalf of the respondent company is annexed with the petition. The case of the petitioner is that in spite of this notice, the dues of the petitioner were not paid and, Therefore, it be deemed that the respondent company is unable to pay the debt. It is also stated in the petition that the respondent company had borrowed loan from other companies including PICUP and even that is outstanding. The debt is also due to one M/s. Mahesh Ramdas Kanani of Mumbai for an amount of approximately ₹ 18 lacs and the said party has also filed a suit against the respondent company in the Bombay High Court being Suit No. 463/1996. 3. The respondent company has contested the petition by filing reply in which maintainability of this petition is challenged, inter alia, on the ground that the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the respondent company did not press the plea regarding limitation or service of statutory notice or that the petitioner firm is an unregistered firm. Even otherwise, there is no denial to the averment that part payment was made on 15th September, 1995 and the present petition was filed on 9th September, 1998, i.e. within three years of this payment. Therefore, the purported claim cannot be treated as time-barred. Insofar as service of statutory notice is concerned, the petitioner has enclosed with the petition the postal receipt as well as the AD card. Address of the respondent company indicated on the said AD card is also correctly mentioned. The petitioner has also stated in the rejoinder that it is a registered partnership firm and copy of the registration of the petitioner firm is produced which is not challenged by the respondent company even though the respondent company has filed a supplementary reply. 8. It may be mentioned at this stage that the respondent company was directed to file the list of creditors as per the records of the respondent company. This list is not filed in spite of statement made on 8th July, 2004 by the learned Counsel for the respondent company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hareholders. The Court observed that such a balance sheet, before it could be relied upon, must be duly passed by the shareholders at the appropriate meeting and must be accompanied by a report, if any, made by the Directors for its validation. The principle of law laid down was that statement in the balance sheet indicating liability is to be read along with the Directors' report to see whether both so read would amount to an acknowledgement. There is no dispute about this proposition of law. However, in that case, the Court refused to accept entry in the balance sheet as acknowledgement of debt because of two reasons: (a) The balance sheet was not passed by the shareholders at the appropriate meeting. (b) The Directors' report, in the balance sheet, contained the following statement: Your Directors are of the opinion that the liabilities shown in Schedules 'A' and 'B' of the balance sheet excepting those of United Bank of India, M/s. Goenka and Co. Private Ltd. and Caritt, Moran and Co. Pvt. Ltd. are barred by limitations, hence these liabilities are not confirmed by your Directors. 11. These were the two considerations which led the Court to conclude that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ened on the person making the statement by an involved and far-fetched reasoning. In order to find out the intention of the document by which acknowledgement was to be construed the document as a whole must be read and the intention of the parties must be found out from the total effect of the document read as a whole. 13. In the present case, it would be seen that the admission of liability in the list of creditors maintained by the respondent company or in the balance sheet is without any conditions or any strings attached. Such an admission would clearly amount to an acknowledgement [State Bank of India v. Hegde and Golay Ltd.; New Era Mfg. Co. Ltd., Re (1967) 37 Comp.Cas. 796 (Ker.). Jones v. Bellegrove Properties Ltd. (1949) 2 KB 700 and Gee and Co. (Woolwich) Ltd. Re (1975) 1 Ch. 52; Lahore Enamelling and Stamping Co. Ltd. v. A.K. Bhalla (1958) 28 Comp.Cas 216 (P H). Thus it is only when there is a bona fide dispute by the respondent company regarding the entries in its account books, on which reliance is placed by the petitioner creditor, such an acknowledgement may not be of much assistance. 14. Therefore, judgment of the Calcutta High Court, as cited by learned Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffidavit Sh. Rishi Pal Gupta, petitioner, has reiterated what has been stated in the petition. So far as the official of the Registrar of Companies is concerned, he proved on record the reply filed by Shri Subhash Sahni, director of the respondent company. Photocopy of the same has been exhibited as Ex.-1. The petitioner is in fact relying on this document and states that an amount of ₹ 6,89,870.76 is due. It is petitioner's own admission that this petition is based on the running account maintained between the parties. That every year the accounts were sent to the respondent. The respondent company had been making the payment and these were also adjusted against the running account. Section 34 of the Evidence Act stipulates that mere entries in the books of account will not be sufficient to fix liability on any person and that each entry in the books of account shall have to be proved. In this regard, reliance can be placed on the decision of Supreme Court in the case of Chandradhar Goswami and Ors. v. Gauhati Bank Ltd. [1967]1SCR898a . Admittedly, the respondent has not put in appearance nor has raised any dispute nor any reply has been filed. But as per the petitioner& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the acknowledgement of debt by the respondent company which is in the nature of admission of the debt. No doubt the entries in the running account are to be proved. However, whether any proof is necessary when there is an admission? Obviously what is required to be proved by a person is the fact which is disputed by the other side. One is not to prove those facts which are admitted. This is a clear mandate of Section 58 of the Evidence Act. Take for example, in a given case, the petitioner who is maintaining running account sends the same to the respondent company for verification and the respondent company after going through the same not only verifies but confirms the balance outstanding payable by the respondent company to the petitioner. Can it be said, even in such a case, that the petition is not maintainable as it is based on running account? The obvious answer would be in the negative. Therefore according to me, judgment of this Court in the case of Rishi Pal Gupta (supra) is to be read only when the petition is based on running account implicate without any confirmation by the respondent company or without any acknowledgement of debt by the respondent company. No doubt in ..... 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