KASHINATH SANKARAPPA WANI versus NEW AKOT COTTON GINNING & PRESSING CO. LTD.

I would allow the appeal and the petition with costs.

BY COURT: The appeal and the petition are dismissed. There will be no order as to costs.

Appeal and Petition di.imissed.

KASHINATH SANKARAPPA WANI

NEW AKOT COTTON GINNING & PRESSING CO., LTD.

(BHAGWkTI, J. L. KAPUR and GAJENoRAGADKAR JJ.)

Limitation-Suit on deposit receipt-Acknowledgment of iiability-EUidence-Balance sheet obtained from Registrar of Companies-Admissibility-Presumption. of awthenticitu andi corr.ectness-Commercial Documents Evidence Act (XXX of 1939), s. 3(b).

The appellant advanced various sums of money to the res-pondent, in lieu of which the respondent passed deposit receipt for 12 months from August 1, 1939 to July 31, 1940. On June 16, 1944 the appellant filed suit to recover the amount with in-terest on the allegation that the amount became due on May 17, 1941 when the demand for the amount was made and limita-tion for the suit expired on May 17. 1944 and the suit was filed on the reopening day of the Court thE>reafter. The appellant also relied upon the acknowledgments of his debt by the i:es-pondent in the resolution passed by the Board of Directors on May 20, 1941 and in the balance sheet of the respondent for the year 1940-41 dated October 10, 1941:

Held, that the suit was barred by limitation as the monies due under the deposit receipt became payable on July :n, 1941 and as no 'agreement had been proved th<it the monies due under the deposit receipt were re-payable on demand.

Held further, that limitation was not saved by tile alleged. acknowledgments.

The resolution Qf the Board of Directors merely· proposed ·a settlement of claim of the appellant, which, if accepted by the appe}lant, was to be placed before general meeting of the share-holders. The resolution onfy referred to past liability of the respondent to the appellant and it could not be construed

19ii8 K. IS. Srinii-a.san v. U·iii011. of India Bu•e J,

1958 February 18.

1958 KaahinatA Sanl:arappa Wani v. New Akol Collon Ginning &: PresMng Oo., Ltd.

as an acknowledgment of the liability of tlte respondent unde~ the deposit recelipt in question.

copy of the balance sheet of 1940-41 obtained, from the Registrar of Companies which was tiled in the case was wrongly rejected by the High Court as inadmissible on the ground that no evidence was adduced to prove it. This copy was admissible under s. 3(b) of the Commercial "Documents Ev:iden0e Ao!. Under that section the Court could nlso raise presumption as regards the balance sheet having been duly made by or under the appropriate authority or in regard to the statements con-tained therein. The presumption was not compulsory, but was discretionary with the Court. In the circumstances of this case. where there were facVions in the Company and the regularity of the meeting at which the balance sheet was passed was in dispute. the High Court would have been perfectly justified in not raising the presumption. Consequently, the acknowlerl11-meni in the balance sheet was of no avail to the appellant.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 77 of 1954.

BluI/Jwati J.

Appeal from the judgment and decree dated August 25, 1949, of the former Nagpur High Court in First Appeal No. 91 of 1945 arising out of the judgment and decree dated July 31. 1945, of the Court of Second Additional District Judge, Akola in Civil Suit No. 7-B of 1944.

C. B. Agarwa/a and Ratnaparkhi A. G. for the appellant.

Veda Vyasa and Ganpat Rai, for the respondent.

1958. February 18. The following Judgment of the Court was delivered by

BHAGWATI, J.-This appeal with certificate under

s. 109(a) read with s. 1 IO of the Code of Civil Procedure (Act V of 1908) is directed against the judgment and decree passed by the Nagpur High Court dismissing the appeal of the appellant and confirming the dismissal of his suit by the learned Second Additional District Judge, Akola.

The appellant, who was the plaintiff in the trial court filed in the Court of the First Additional District Judge, Akola, Civil Suit No. ;:: of 1944 against the respondent limited company incorporated under the Indian Companies Act of 1882, which owned Ginning and Pressing Factory

and carried on business of ginning and pressing cotton a.t Akot in District Akola.

1958 ·KCUJhi'IUlf;h Sanlcarappa W a.ni New A~':,;1 Cotton 1 Ginning cf: Pres1i1111 00·• Ltd. Blwfl'i'<lti •[[1]]·

The appellant alleged that he was one of the creditors New A~':,;1 Cotton ·of the company which used to borrow money from him for Ginning cf: Pres1i1111 00about 35 years past. He claimed to have acted as Banker of ·• Ltd. the company and· the sums borrowed from him were entered Blwfl'i'<lti •[[1]]· in the account books of the company in two khatas, one known as current account or "chalu khata" and the other described as "fixed deposit khata". An account used. to be made up at the end of every year and the a.mount found due at the foot of the account was entered in the balance-sheet of the company which was adopted at the Annual General Meeting of the company. Deposit receipts also used to be passed for the amounts standing in the fixed dep0sit khata from time to time and at the end of the year ending July· 1939, sum of Rs. 79,519-12-9 was found due by the com-pany to him on both these accounts. On January 15, .1940, the company passed deposit receipt in his favour for this amount which he demanded from the company by his letters dated May 10, 1941 and May 17, 1941. The company failed and neglected to pay the said amount with the resu~t that he filed on June 16, 1944, suit against the company for re-covery of sum of ~s. 1,03,988 made up of Rs. 79,519-12-9 for principal and Rs. 24,468 as interest from August l, 1939, to January 15, 1944.

The claim as laid in the plaint was that all these amounts which bad been borrowed by the company from him were payable on demand to be made by him as creditor and they were deposits with the company, but in order that the company may not be compelled to pa,y big sum on demand, items in the current account· were being transferred to the fixed deposit account from time to time. The amounts of these deposits being thus payable on demand the cause of action accrued to him on May 17, 1941, and limitation for the suit expired on May 17, 1944. But, as the courts were closed on tha.t day, the suit was filed on the first

19/iS Kai:;hin'l·lh Sa.nkarappa lVaui •. New Akot CottO'fl, Cinning &t Presainu Co., Ltd. Blia[Jwati J.

opening day i.e:, June 16, l\144, and limitation was therefore saved by s. 4 of the Limitation Act. He also relied upon the acknowledgments of his debt made by the company in (a) the resolution passed by the Board of Directors on May 20, 1941, (bl the balance-sheet of the company for the year 1940-41 dated October 10, 1941, and for the years 1941-42 and J 942-43, and (c) the entry in the khata of the plaintiff in the books of the company made on or about July 31, 1941, and signed by the Chairman of the company. He further relied upon an application made under s. 162 of the Companies Act to liquidate the company on June 16, 1941, which a.ppli-cation was however dismissed by the court on June 16, 1944, stating that as he was bona fide prosecuting this application for the same relief as claimed in the suit and as the court was unable to entertain the appli~ation because the debt was disputed by the company, he was entitled to deduct from the period of limitatiorl, the time spent by him under s. 14 of the Limitation Act.This claim of the appellant was contested by the res-pondent mainly on the ground that the suit was barred by the law of limitation. Both the courts below negatived his claim. The trial court dismissed his suit and the High Court, oh appeal, dismissed his appeal and confirmed the dismissal of his suit by the trial court; hence this appeal.

The only question which arises for our consideration in this appeal is .whether the. appellant's suit was barred by limitation. The appellant, in the first instance, relied upon the deposit receipt which was passed by the company in his favour on January 15, 1940. This receipt (Ex. P-1) evidenced deposit of Rs. 79,519-12-9 for 12 months from August 1, 1939, to July 31, 1940, and the amount at the foot thereof became due and payable by the respondent to him on July 31, 1940. The appellant, however, sought to extend the com-mencement of the period of limitation to May 17, 1941, on the ground that the monies, the subject-matter of that deposit receipt, were payable to him on demand, that such demand was made by him on May 17, 1941, and that therefore that

SUPRE111E COURT :REPORTS

was the dale for the commencement of the period of limita-tion. No !!A.press agreement in this behalf could be proved by him nor could an agreement be implied from the course -~"of dealings between him and "the company for the period of 2 5 years · unng w h' 1c t et! mgs contmue )" · etween t parties. As matter of fact. such an agreement. either express or implied, was negatived by the very terms of the deposit receipt which. apart from mentioning that the monies were received by the company as deposit for 12 months from August I, 1939, to July 31. 1940, contained on the reverse note that interest would cease on due date. This was suffi-cient to establish that the amount due at the foot of the deposit receipt became due and payable on the due date mentioned therein and that there was no question of the amount being payable at any time thereafter on demand being made in this behalf by the creditor. The course of dealings between the parties also negatived any such agree-ment because it appears from the record tha.t such deposit receipts were passed by the company in his favour from time to time, each of such receipts being for fixed period in the same terms as the deposit receipt in question and the receipts containing similar notes on the reverse that interest would cease on due date. Both the courts below were therefore right in coming to the conclusion that there was no agree-ment of the kind put forward by the appellant that the monies due at the foot of the deposit receipt in question were re-payable on demand and that monies due at the foot there-of became due and payable by the company to him on July 31, 1940.

/!JSR

Ka,,Jd11<11/1 11 l-n"'Pt'.' Wm•; °!'."111• .Hot Cullu11 Uh11ti n!J :f: Prt~1Jiu9 1[.,,., ][!H. ]JJ/tflfjll'llf i ,) ,

The next question to consider is whether the bar of limitation which set in on July JI, 1943, was saved by reason of the circumst<111ces set out in the plaint for a.void-ance of the same. Out of the three acknowledgments of debt pleaded by the appellant the third was abandoned by him in the course of the hearing and the only two acknowledg- . ments which were pressed were (a) the resolution passed by tlte Board of Directors on May 20, 1941, and (b) the balance-sheet of the company for the year 1940-41 dated October 10,

1941. Jt may be nokd that he made no auempt at all to prove the balance-sheets of the company for the years 1941-

KM1'i>weh Sanknrappa Trani· 42 and l942-43.

l\T evi kut Coffm1 Ginning &; Prcssi11fJ

·in regard to the resolution passed by the Board of Directors on May 20, 1941, the position is that at that meet· ing one Pandurang Narsaji Hadole, who was one of the Directors of the company, made reference to proposed settlement of the claim of the appellant for sum of Rs. 67,939 as found due at the end of July 1936, which had been resolved upon by the Board of Directors on December 22, 1936, but had not been accepted by the appellant. The resolution then requested the appellant to inform the com-pany again if even then he was prepared to abide by the terms of that proposed settlement which would be plnced before the general meeting of all the share-holders of the company if reply was received from him in the affirmative.

Co., Ltd.

Bl1ll{l11mti .I.

This resolution of the Board of Directors was alleged by the appellant to be an acknowledgment of subsisting liability in regard to the debt due by the company to him at the foot of the deposit receipt in question. We do not see how it could ever be spelt out as such acknowledgment. The contents of the resolution only referred to past liability of the company to the appellant and there was nothing therein which could be a.ny stretch he construed as referring to the liability of the company, to him at the foot of the deposit receipt dated January 15, 1940. Our attention was drawn to the deposit receipts which had been passed by the company in favour of the appellant on May 30. 1935, October 18. 1936, and November 30, 1938, each of which was for a. sum of Rs. 47,500. No connection was. however. established bet-ween the sum of Rs. 47,500 the subject-matter of these receipts, and the sum of Rs. 79,519-12-9, the subject-matter of the deposit receipt in question and in the absence of any such connection having been established the appellant could not avail himself of the alleged acknowledgment of liability contained in the resolution of the Board of Directors dated May 20. 1941, even if it could perchance be construed as

an acknowledgment of subsisting liability. This resolution 1958 of the Board of Directors dated May 20, 1941, could not, Kaakinatk therefore,. avail the appellant as an acknowledgment of his Sankara~~ Wani debt. New Akot Cotton

New Akot Cotton Ginning cb Pressing Co., Ltd. Bhagwat.i J.

In reg:rd to the balance-sheet of the company for the ye1r 194041 dated October 10, 1941. it is to be noted that, even though the appellant app ied before the trial court for filing the balance-sh<:et of 1940-41 on April 28, 1945, he expressly stated that he did not want to adduce any oral evidence to prove .it. He was, however, aliowed to file the same. But it was. realised later that the balance-sheet did not prove itse'f and he therefore made another application on July l l, t 945, for permission to file copy from the Regis-trar 9f Companies and contended that this proved itselt This document was, howev(:r, rejected by the trial court as file:i too late. When the appeal came up for hearing before the High Court, it was contended on behalf of the appellant that· the copy which was adduced from the. office of the Registrar was admissible in evidence but that evidence was rejected by the High Court on consideration of ss. 65 and 74(2) of the Evidence Act. The attention of the High Court was evidently not drawn to the Commercial Documents Evi-dence Act (XXX of 1939) which has amended the Law of Evidence with resp;:ct to certain commercial documents. Section 3 of that Act enacts that "for the purposes of the Indian Evidence Act, 1872, and notwithstanding anything contained therein, Court:

(a) .................................................................... .

(b) may presume, within the meaning of that Act, in re-lat10n to documents included in Pt. II of the Sche-dule: -

• That any document purporting to be document in-cluded in Part I or Part II of the Schedule, as the case may be, and to have been duly made by or under the appropriate · authority, was so made and that the statements contained therein are accurate."

Item No. 21 in Pt. II of the Schedule menti.ons:-

L/S4SCI-10

1958 "Copy, certified by the Registrar of Companies of the KaskinaJh Balance Sheet, Profit and Loss Account, and audit report of Bankarappa Wani company, filed with the said Registrar under the Indian v. NewAko!Cotl"" Companies Act, 1913 and the rules made thereunder." Ginning ~ Prusing Go., Ltd, If the attention of the High Court had been drawn to Bhagwati J. we

If the attention of the High Court had been drawn to this provision of law. we are sure, it would not have rejected the copy of the balance-sheet obtained by the appel:ant from the office of the Registrar of Companies. We are of the opinion that the copy should have been admitted in evidence and we do hereby admit the same.

The appellant contends that that balance-sheet which was signed by the Directors contained an acknowledgment of the debt due by the company to the appellant for the sum of Rs. 67,939 as and by way of fixed deposit and that was sufficient to save the bar of limitation. The question therefore arises whether any nresumption can be raised as regards the balance-sheet having been duly made by or under the appropriate authority or in regard to the accuracy of the statement contained therein under s. 3(b) of the Com-mercial Documents Evidence Act (XXX of 1939).

It is to be noted that this presumption is not compul-sory as in the case of s. 3(a) of the Act; it is discretionary with the court. The difficulty in the way of the appellant here is however insuperable because we find that there were factions in the company at or about the relevant time. Directors' meeting was held on April 27, 1941, and the resignation of the appellant as the Chairman was accepted and another person was appointed in his place. second meeting was called for May 17, 1941, but it had to be ad-journed for want of quorum. The adjourned meeting was held on May 20, 1941, but no balance-sh.eel was passed at that meeting. There is nothing on the record to show that there was another meeting of the Board of Directors for passing the balance-sheet of the company for the year 1940-41. general meeting of the Shareholders was called for November 16, 1941, to pass the balance-sheet. This also had to be adjourned to the following day for want of quorum.

S.C.R. SUPRK\lE COURT HRPOHTS

At the adjourned meeting the shareholder~ then present 1[9].;r;, refused lo pass the accounts and it was not till some five g,,,,J.inof/i weeks later, namely on Dec.:.nhcr 30. 1941. that the rival So;•k•11"'l'P" lfn;,; faction met and passed. the. accounts. But ~his m~eting only Sei,, _-i1.'.;;1 1 Oottnn purpo~ted to be cont111uat1on of the meetmg which had to Oinninff .c-Prc~"i••rt be adjourned for want of quorum and that dearly was Co. Ltd. irregular because the adjourned meeting had to -be called within twentyfour hours. It did not purport to be fresh meeting convened after due notice. etc. Under the circum-stances, it could not be urged that the balance-sheet was duly passed.

Sei,, _-i1.'.;;1 1 Oottnn .c-Prc~"i••rt Co. Ltd.

Even if the attention of the Hi!zh Court had been drawn to the provision's of s. 3 <b) of the Commerci;tl Documents Evidern:e Act. \XXX of I 939l it would have been perfectly justified in not raising the presumption in regard to the balance-sheet having been duly made by or under the appro-priate authority and in regard to the accuracy of the state-ment contained therein. We are, therefore, of the opinion that this alleged acknowledgment also is of no avail to the appellant.

In regard to s. 14 of the Indian Limitation Act which was sought to be relied upon by the appellant, it may be shortly stated that the liquidation proceedings had not been filed in the courts be~ow and there is nothing to show that the requirements of s. 14 were at all satisfied. No cogent argument has been advanced before us on behalf of the ap-pellant which would induce us to hold that the conclusion reached by the High Court in this behalf was incorrect in any manner whatever.

On all the above grounds we have come to the conclu-

sion that the appellant's claim was clearly time-barred and the dismissal of his suit by the trial court as well as the dis-missal of his appeal by the High Court were in order.

This appeal will therefore stand dismissed with costs.

Appeal dismissed.