9911796707
TMI Blog2017 (8) TMI 1634X X X X Extracts X X X X X X X X Extracts X X X X ..... ff is also a director of the defendant which is a company registered under the Companies Act, 1956. 3. The defendant contended that the amount was paid back to the plaintiff during the year 1995-96 and the same is reflected in Ext. B11 balance sheet and the profit and loss account for the period ending 31.3.1996. The defendant added that the suit filed on 3.1.2000 for realization of the amount allegedly due on 31.3.1995 is hopelessly barred by the law of limitation. The defendant pointed out that Ext. A1 balance sheet and the profit and loss account does not operate as an acknowledgment and that the same can at best relate to the period ending 31.3.1995. 4. The court below decreed the suit awarding interest at the rate of 12% per annum on the principal sum of Rs. 2,65,000/- against which the defendant has come up in appeal urging several grounds. The defendant reiterated that directors cannot acknowledge the liability to themselves and the period of limitation is not extended by signing Ext. A1 balance sheet and the profit and loss account. The defendant also contended that there is no reason as to why the same sanctity should not be attached to Ext. B11 balance sheet and the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance sheets as acknowledgment of liability contemplated in S. 18 of the Limitation Act, 1963. Under S. 18 an acknowledgment of liability signed by the party against whom the right is claimed gives rise to a fresh period of limitation. Under Explanation (b) to the Section the word 'signed' means signed either personally or by an agent duly authorised. A company being a corporate body acts through its representatives, the Managing Director and the Board of Directors. Under S. 210 of the Companies Act it is the statutory duty of the Board of Directors to lay before the Company at every annual general body meeting a balance sheet and a profit and loss account for the preceding financial year. S. 211 directs that the form and contents of the balance sheet should be as set out in Part I of Schedule VI. The said form stipulates for the details of the loans and advances and also of sundry creditors. The balance sheet should be approved by the Board of Directors, and thereafter authenticated by the Manager or the Secretary if any and not less than two directors one of whom should be the Managing Director. (See S. 215). The Act also provides for supply of copies of the balance she ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the date of the signing of the balance sheet and the end of the previous year. The balance sheet contain no admission of the amount due on the date of the signature. That amount may be and often is different from the amount shown as due at the end of the previous year, but that fact alone does not take the amount out of the purview of Section 19." (emphasis supplied) To the same effect are the decisions in Vijaya Kumar Machinery v. Alaparthi Lakshmikanthamma [(1969) 74 ITR 224] and State Bank of India v. Hegde and Golay Ltd. [(1987) 62 Company Cases 239]. 8. The basic decision followed by the Indian Courts as above is Jones v. Bellgrove Properties Ltd. [(1949) 2 All E.R. 198] which however was distinguished in Consolidated Agencies Ltd. v. Bertram Ltd. [(1964) 3 All E.R. 282]. Later the current of the English authority was clarified in Re Gee & Co. (Woolwich) Ltd. [(1974) 1 All E.R. 1149] wherein it was inter alia observed as follows: "I shall accordingly decide this case on the footing that a balance sheet, if duly signed by the directors, is capable of being an effective acknowledgment of the state of indebtedness as at the date of the balance sheet, and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding 31.3.1996. Ext. A1 balance sheet and the profit and loss account is admitted by all parties whereas Ext. B11 balance sheet and the profit and loss account is disputed by the plaintiff. The plaintiff had objected to Ext. B11 balance sheet and the profit and loss account when the same was deliberated upon as is borne out by Ext. B7 minutes of the meeting of the board of directors. There was no taboo for the plaintiff to have participated in the deliberation as money allegedly due does not fall within Section 300 of the Companies Act, 1956. The defendant has relied on Exts. B1 and B2 ledgers, Ext. B3 day book and Exts. B4 to B6 accounts books in support of the plea of discharge of the liability during 1995-96. The person who made the entries has not been examined and the discrepancies noticed by the court below have not been attempted to be explained by the defendant. 11. It is apposite in this context to notice the observations in Petlad Turkey Red Dye Works Co. Ltd. v. Dyes and Chemical Workers' Union and others [AIR 1960 SC 1006] as follows: "It has to be borne in mind that in many cases the Directors of the Companies may feel inclined to make incorrect statements ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
