TMI Blog2017 (8) TMI 1634X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant time. But no explanation is forthcoming as to why the directors who made the entries were not examined or any voucher or receipt produced to prove discharge. The onus of proof is heavy on the defendant and we notice that neither parties have adduced any oral evidence in the case except marking the documents on consent. The defendant sought one more opportunity to adduce oral and documentary evidence to substantiate its contentions which we are inclined to grant in the peculiar circumstances of the case. The suit remanded to consider only the plea of discharge of liability put forth by the defendant and all other findings by the court below are confirmed - Appeal suit is allowed. - A.S. No. 444 of 2002 (E) - - - Dated:- 18-8-2017 - V. Chitambaresh And Sathish Ninan, JJ. For the Appellant : T. Sethumadhavan, Sr. Adv., N. Deepa, K. Jayesh Mohankumar and Pushparajan Kodoth, Advs. For the Respondent : S. Ramesh Babu, Sr. Adv. and Krishna Prasad N., Adv. JUDGMENT V. Chitambaresh, J. 1. It is often said that an 'acknowledgment' merely extends the period of limitation and does not create a new right of action. How far the balance sheet and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.-For the purposes of this section,- (a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right; (b) the word signed means signed either personally or by an agent duly authorised in this behalf; and (c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right. (emph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the balance sheet merely discharge a statutory duty and may not have intended to make an acknowledgment. (emphasis supplied) It is a fact well conceded that Ext. A1 balance sheet and the profit and loss account of the defendant for the period ending 31.3.1995 reflects the monetary liability due to the plaintiff at ₹ 2,65,000/-. Nobody has a case that Ext. A1 balance sheet and the profit and loss account though signed belatedly by the directors on 26.3.1997 was not maintained as per the Companies Act, 1956. The very entry in Ext. A1 balance sheet and the profit and loss account of the defendant absolves the plaintiff of the necessity to prove the existence of debt of ₹ 2,65,000/-. 7. The complex question is as to whether Ext. A1 balance sheet and the profit and loss account is an acknowledgment of liability for the period ending 31.3.1995 to which it relates or on 26.3.1997 when it was signed. This assumes significance since the suit for money was filed on 3.1.2000 which is well beyond three years from 31.3.1995 though within three years from 26.3.1997. The period of limitation for filing a suit of the nature is three years from the acknowledgment and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and loss account at best be an acknowledgment made by a director of a debt due to himself is the further question posed by the defendant. Reliance is placed on P.S. Thirumalai Iyengar v. Official Liquidator [AIR 1962 Madras 253 (DB)] and A.C.K. Krishnaswami v. M/s. Stressed Concrete Constructions Pvt. Ltd. [AIR 1964 Madras 191]. But the precise question has been answered in Re Gee Co.'s case (supra) as follows: It seems to me plain that an acknowledgment signed by the directors in relation to their own debt would be fully effective if sanctioned by every member of the company............ The general meeting of the company at which the accounts were adopted and the state of the Eccles account confirmed was in fact a meeting attended by, or by the representative of, every member of the company............ In these circumstances, it seems to me plain that all the corporators must be taken to have agreed to the directors' written acknowledgment of the debt. Nobody has a case that Ext. A1 balance sheet and the profit and loss account was not placed in the annual general body meeting of the defendant and got approved by the board of directors as mandated by the Company Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y which may appear in the books of account either by production of receipts and vouchers or other clinching evidence. 12. We would like to caution that the Commercial Documents Evidence Act, 1939 has not been extended to Part B States and therefore no presumption as to genuineness of documents or accuracy therein arises. The plaintiff contended that Ext. B11 balance sheet and the profit and loss account was filed two years after its due date and hence not kept in the regular course of business. The defendant contended that it could ill-afford to employ a Manager or Secretary and that the accounts were finalized by its directors themselves during the relevant time. But no explanation is forthcoming as to why the directors who made the entries were not examined or any voucher or receipt produced to prove discharge. The onus of proof is heavy on the defendant and we notice that neither parties have adduced any oral evidence in the case except marking the documents on consent. The defendant sought one more opportunity to adduce oral and documentary evidence to substantiate its contentions which we are inclined to grant in the peculiar circumstances of the case. 13. The impugned j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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