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Ajab Enterprises Versus Jayant Vegoiles and Chemicals Pvt. Ltd.

1990 (2) TMI 311 - BOMBAY HIGH COURT

Suit No. 3443 of 1986 - Dated:- 13-2-1990 - MR. I.G. Shah, J. For Appellant/Petitioner/Plaintiff: M.C. Shah, Adv. For Respondents/Defendant: Virag V. Tulzapurkar and Nihar Moddy, Advs., i/by M/s. Wadia Ghandy & Co. JUDGMENT I.G. Shah, J. 1. The plaintiffs have filed this suit for recovery of ₹ 1,04,948.65 p. with interest at the rate of 20% per annum or such other rate as may be awarded on the sum of ₹ 61,135.65 p. from the date of filing of the suit till realisation from the def .....

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spect of the said invoices were due on expiry of the period of one month of the date on which the goods were sold and the defendants were liable to pay to the plaintiffs interest at the rate of 20% per annum on the amount outstanding as mutually agreed. The plaintiffs also claim that the defendants made part payments of ₹ 50,000/- on 4-3-1983 and ₹ 1,00,000/- on 15-3-1983 leaving balance of ₹ 61,135.65 p. due and payable by the defendants to the plaintiffs being the price of th .....

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p of the defendants Company on the ground that the defendants Company was unable to pay its debts by non-compliance of the notice under Section 434 of the Companies Act within the period prescribed. The plaintiffs also claim that in the Appeal which was carried by the defendants against the order passed by Parekh, J., the consent terms were submitted and on the basis of the said consent terms, consent order came to be passed on 10-10-1986 and the said consent order was acted upon by the defendan .....

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nd the said order was confirmed by the Appeal Court on 10-10-1986 by passing a consent order and, therefore, on admission of the petition, even if conditional, the said debt relates back to the date of the filing of the petition, viz. 4-9-1985, when the said debt was within the period of limitation. The plaintiffs further claim that the present suit is filed by the plaintiffs in terms of the machinery provided by the said orders dated 30-7-1986 and 10-10-1986 and the filing of the suit does not .....

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he basis of the facts stated in the plaint itself, the entire claim of the plaintiffs is barred by limitation and, therefore, the issue in respect of limitation should be tried as a preliminary issue. The said request has already been granted by this Court and, therefore, the parties were allowed to make their submissions on the point of limitation. In view of this, the issue that arises for determination as preliminary issue is : Whether the entire claim of the plaintiffs in the suit is barred .....

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Company Petition was admitted though condition and he invited my attention to the order passed in the said petition by Parekh, J. The order passed is as under:- "P.C. : In the event of the Company depositing in Court the sum of ₹ 20,000/-within a week from today, the Petition to stand dismissed. If such deposit is made then; (a) The Company's advocate to forthwith intimate to the Prothonotary and Senior Master and the Petitioner Advocate the fact of such deposit; (b) The Petition .....

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, the Company to be at liberty to withdraw the amount so deposited in the Court. In the event of the Company failing to deposit the said amount within the said period, the petition to stand admitted and be advertised in the Maharashtra Government Gazette, Indian Express and the Bombay Samachar. The petition to come up for hearing four weeks after the date of the first advertisement. Affidavit in rejoinder dated 30-7-1986 taken on file." It is also contended further that against the said ord .....

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ded by two weeks from the date of the order and 10 weeks respectively. It is on the premises of these facts, Mr. Shah, the learned counsel appearing on behalf of the plaintiffs further contended that by the said consent terms the defendants had also acknowledged the debts and in view of Section 18 of the Limitation Act, the limitation stood extended. He also tried to very strenuously contend that there was also waiver of limitation and the defendants were also estopped from raising the point of .....

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. Shah also tried to rely on Section 15(3) of the Limitation Act and he tried to contend very strenuously that he would be also entitled to the exclusion of the period according to the said Section. The said Section runs as under:- "15(3). In computing the period of limitation for any suit or application for execution of a decree by any receiver or interim receiver appointed in proceedings for the adjudication of a person as an insolvent or by any liquidator or provisional liquidator appoin .....

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the exclusion of the period as laid down in the said provision. As against this, on behalf of the defendants it is contended that there is no question of waiver of limitation or estoppel against limitation. It is also contended on behalf of the defendants that the consent terms or the order passed on consent terms cannot be considered as an acknowledgement under Section 18 of the Limitation Act. It is also contended that Section 15(3) has no application at all. Now for the convenience, it would .....

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r provisional liquidator appointed in proceeding for the winding up of the Company. In view of this, the defendants are on stronger ground when it is contended on their behalf that the said provision of Section 15(3) has no application at all. Even plain reading of the Section itself is sufficient to discard the contention tried to be raised on behalf of the plaintiffs in this respect. 6. As far as the question of acknowledgement is concerned, the plaintiffs rely on the order passed by consent i .....

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7; 20,000/- within 8 weeks and in the event of their depositing the said amount of ₹ 20,000/-, the petition was to stand dismissed. The order further made it clear that if such deposit was made, then the Company's Advocate was to forthwith intimate to the Prothonotary and Senior Master and the Petitioner's Advocate of the said fact of lodging of the deposit. The said order further made it clear that in that event, the petitioner, i.e. the plaintiffs, were at liberty to file a suit .....

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em in the Court. Now, therefore, we have to find out as to whether the said consent terms on the basis of which the consent order came to be passed by the Appeal Court confirming the order passed by the Original Court could be considered as an acknowledgement of a debt in terms of Section 18 of the Limitation Act. Section 18 of the Limitation Act speaks about acknowledgement in writing and the effect of the same. It runs as under:- "18(1). Where, before the expiration of the prescribed peri .....

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he purposes of the suit. Now, therefore, Section 18(1) definitely provides that the acknowledgement has to be before the expiration of the prescribed period of limitation for a suit or application in respect of any property or right and it must be an acknowledgement of liability in respect of such property or right and that it shall be made in writing signed by the party against whom such property or right is claimed. Merely because by consent before the Appeal Court the order which was passed b .....

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; 50,000/ -on 4-3-1983 and 1,00,000/- on 15-3-1983, suit to recover the amounts due ordinarily would become barred by limitation. Even after taking into consideration the facts stated in para 4 of the Plaint that the amounts under the invoices were due on expiry of a period of one month, the amounts due under the invoices dated 22-2-1983, 4-3-1983, 12-3-1983, 13-3-1983 and 24-3-1983 would ordinarily become time barred on 21-3-1986, 3-4-1986, 11-4-1986, 12-4-1986, and 23-4-1986. The present suit .....

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e consent order in the Appeal Court, in my view, cannot be considered to be the acknowledgement of liability by the defendants in the present case. At the most, what could be said is that when a petition for winding up of the defendants Company was filed by the plaintiffs, the Court passed a conditional order directing the defendants to deposit ₹ 20,000/- and in the event of their depositing the amount in the Court, the petition would stand dismissed and the plaintiffs were to file the sui .....

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today respectively. (3) No order as to costs." These consent terms by no stretch of imagination could be considered as acknowledgement of the debts by the defendants. It is also clear that ultimately as per the said consent order' the amount of ₹ 20,000/- was deposited by the defendants and the plaintiffs also accordingly filed a suit as per the consent order which was confirmed in the Appeal Court. Now mere fact of depositing the amount of ₹ 20,000/ - as per the direction .....

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n tried to be raised on behalf of the plaintiffs based on Section 18 of the Limitation Act and the acknowledgement must be considered as without any substance. 7. The next question that arises for determination is about the waiver of limitation by the defendants and estoppel. As a matter of fact, the plaintiffs have to again fall back only on the consent terms. On behalf of the plaintiffs, Mr. Shah very strenuously tried to contend that the plaintiffs have averred in the Plaint that there is a w .....

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y the defendants to the claim of the plaintiffs on the ground of limitation have been given up or are deemed to be given up by the defendants at the time when the said consent terms where filed in the said Appeal and when the defendants submitted to the said consent order dated 10-10-1986 in the said Appeal No. 838 of 1986. The plaintiffs further say that the said consent order dated 10-10-1986 has been further acted upon by the defendants by depositing the sum of ₹ 20,000/- in this Hon .....

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mitting to a consent order in the said Appeal whereby time to file the suit by the plaintiffs pursuant to the order dated 30-7-1986 was extended by a period of 10 weeks from 10-10-1986." Reading the said contention raised in para 13 of the Plaint, it is clear that the said plea of waiver is based on the consent terms dated 10-10-1986 on the basis of which the consent order confirming the Original Court's order came to be passed. I have already reproduced the consent terms earlier and by .....

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ntiffs could be said to have been barred by limitation. Apart from this, there is catena of decisions on the basis of which it could be said that there can be no waiver of ground of limitation even if it is assumed that in fact the said consent terms could he considered as waiver. Under Section 3 of the Limitation Act it is the duty of the Court to also consider as to whether the suit is barred by limitation or not even if no such defence is taken by the defendants in a suit. Therefore, there ca .....

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of the Limitation Act. 8. As far as the contention raised on behalf of the plaintiffs that the consent order must relate back to the date of filing of the petition under the Companies Act is concerned, it must be said that the said contention has no substance at all. I have already held above that the said consent terms cannot be termed as acknowledgement of the debts and, therefore, once they are not the acknowledgement they cannot help the plaintiffs even if they relate back to the date of the .....

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ime-barred and, therefore, when the matter went in Appeal and the defendants felt that the said debts were time-barred, they probably tried to raise that contention before the Appeal Court. 10. It was tried to be contended that the Appeal Court normally would not have confirmed the order if the debts were prima facie barred by limitation. That contention cannot have merits at all. Merely because the Appeal Court confirmed the order passed by the Original Court in respect of the Company Petition, .....

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, the plaintiffs cannot get any advantage on the said basis. It is also tried to be contended that by consent order the Appeal Court granted further time to the plaintiffs to file the suit and, therefore, in the extended period granted by the Court the suit cannot be held to be barred by limitation. Now extension of time to file the suit has in fact no relevance. Court cannot extend period of limitation by granting any extension of time. Apart from this, it is clear in the present case that it w .....

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e amount deposited. The order further provides that if the suit is filed by the plaintiffs within 8 weeks, then the amount deposited would remain deposited till the decision of the suit. Hence as the time given to file the suit had expired due to filing of the Appeal, it was required to be extended further. It cannot mean that the Court intended to extend the time of limitation. In fact the Court has no power to extend the time in this manner at all. 11. Though the plaintiffs in terms have not c .....

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while replying to query made by the Court, trying to explain during the course of the arguments contended that even Section 14(1) of the Limitation Act would not be applicable to the present case. Now, therefore, one must proceed on the premises that the plaintiffs in their Plaint do not make out a case of exclusion of the period which was utilised in prosecuting the Company Petition under Section 14(I) of the Limitation Act and all the facts necessary for founding such a contention also do not .....

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laint, he would be able to invite this Court to give the benefit of Section 14 of the Limitation Act and exclude the entire period which was lost in prosecuting the said proceeding before the Court in Company Petition. Now in fact all the facts that are necessary for submissions required to be made in respect of the provisions of Section 14 of the Limitation Act definitely do not appear to have been made out in para 13 of the Plaint. However, even if some benefit is to be given to the plaintiffs .....

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or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding whether in a court of first instance or of appeal or revision, against th .....

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t the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature." Now as far as Section 14(2) of the Limitation Act is concerned, it is nobody's case that it is applicable. For application of Section 14(2) one more condition is required to be satisfied that in the proceeding which were taken earlier the same relief must have been claimed and, therefore, Section 14(2) obviously does not apply. Now the only Section 14(1), therefore, would .....

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could be said that ultimately if the winding up of the Company was ordered, some pro rata amount due to the plaintiffs could have been recovered in the said proceedings it does not necessarily mean that the matter in issue in the Company Petition was the same as in the present suit. It was also contended that the Court should be unable to entertain the proceeding and if the Court was able to entertain the proceeding then also Section 14(1) will have no application. Now there is substance in the .....

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insolvency proceedings the decree-holder may be able to realize his debt wholly or in part, but this is a mere consequence or result. Not only is the relief of a different nature claimed in the two proceedings but the procedure is also widely divergent. The said observations would also squarely apply to the present facts of the case. In the present case, in the Company Petition the plaintiffs had asked for winding up of the Company and, therefore, the observations made in the said decision by th .....

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entertain a suit means not inability to grant relief to the plaintiff but inability to give him a trial at all. When a suit is dismissed not because the Court had no jurisdiction to entertain it, or for any other cause of a like nature, but because it was misconceived or because the proceeding or the suit was not one recognised by law as legal in its initiation, then clearly Section 14 of the Limitation Act is not attracted to such a suit. Where the suit was dismissed because the proceedings acc .....

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reported in: AIR 1930 Bom 505 wherein it is held that even if it was assumed that an application for revision to the High Court was covered by the words "civil proceeding in a Court of appeal" within the meaning of Section 14 of the Limitation Act, the further question for decision was whether the High Court was not able to entertain the application from defect of jurisdiction or other cause of like nature. It clearly appears from the said decision that the High Court refused to inter .....

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ot be granted for some reason or the other and the plaintiffs were directed to file a suit for recovery of the debts, it would not mean that the case would be covered by the provisions of Section 14 of the Limitation Act. Apart from this, as stated earlier, even if other conditions of Section 14(1) are satisfied, for giving benefit of the said Section 14(1) the Court must not have been able to entertain the proceeding for the reason of defect in jurisdiction or cause of a like nature. Supreme Co .....

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