LAKSHMIRATAN COTTON MILLS CO. LTD. versus ALUMINIUM CORPORATION OF INDIA LTD.

LAKSHMI~TAN COTTON MILLS CO .. LTD.

ALUMINIUM CORPORATION OF INDIA LTD. October 16, 1970

[J. M. SHELAT AND C. A. VAIDIALINGAM, JI.]

Limitation Act. 1908, s. 19(1)-Acknowledgment of liability-What· amounts to--AuthoriFy to make •cknow/edgment 011 behalf of corporation, when can be implied.

Prior to January )8, 1944 six companies including M/s. Lakshmifataa.. Cotton Mills Co. Ltd. (the appellant-company) and the Aluminium Cor·· poration of India Ltd. (respondent corporation) were jointly managed by two groups known as the Singhania and Gupta groups. As result of disputes. between the two groups there was reference to arbitratien. After January 18, 1944, the date of the award, the aforesaid six· concerns. were brought under the management and control of one or the other of the two groupg. The C<irporation came under the control and manage· ment of the Singhania group. In cl. 9 of the award it was said that the award 'did not cover the advances which either party or their separate. firms may have made to all or any of them or their moneys which may be in deposit with them and that they would be payable and paid in their usual course. After the award the appellant-Company sent statement ·of account in respect of advances made to the respondent corporation. and expenditure incurred on its behalf. The statement was objected to on the ground that the appellant company had not properly maintained its accounts during the period of .joint management. Efforts at recon-.E ciliation of accounts having failed the appellants filed two suits claiming Rs. 3.56,207 .9 .6 and Rs. 72,595 .4 .6 from the Corporation, being suits Nos. 63 and 65 of 1949. In suit No. 63 of 1949 it was claimed that the suit was within time as after adjustment of •everal items in 1946 and 1947 sum,of Rs. 2,96,110.11.6 was found due to the appellant-company ~nd that in any event. the suit was saved from bein~ barred by limitation by letter (Ex .. 1) dated April 16, 1946 addressed by S the Secretary-F cum.Chief Accountant of the C-0rporation, thereby acknowledging the· liability of the Corpdration to pay the amount which would be found due· and payable under the said accounts. Similar averments were made in Suit No. 65 of 1949. The written statements filed on behalf of the Cor·· poration inter alia pleaded that the said claim was . barred by limitation, that the said lettef, did not amount to an acknowledgement within the· meaning of s. 19 of the Limitation Act, 1908 which was then applicable to tho suits, and lastly, that even. if the said letter did amount to an• acknowledgement, it was not binding on the Corporation. The trial court. decreed the suits but the High Court dismissed them as being time-barred. In_ appeals to this Court the questions tliat fell for consideration were : <!) whether t.he letter in queslit>n amounted to an acknowledgment; (!!) whether 1t was an acknawled~ment by the corpomion, and if not (1u) whether the Secretary-cum-Chief Accountant had authority express or implied, to acknowledge liability on behalf of the Corporation so as. to bind that corporation. Allowing the appeals, ·

HELD: (!)(a) From the provisions of s. 19(1) Of the Limilation• Act, 1908 it is clear that the statement on which the plea of acknowledge-meat is founded must relate to subsisting liability as the section requires.

.that it must be made before the expiration of the period prescribed by the Act. It need not, however, amount to promise to pay, for' an acknowledge-ment does not create new right of action but merely exten<l§ the pe'ciod of limitation. Tl:ie statement need not indicate ·the exact nature or the specific character. of the liability. The words used in the statement in question, how-ever, must relate to present subsisting liability and indicate the existence . .of jural relationship between the partes such as, for instance, that of .debtor at1d ·;r· cteditor-fttld-the intention to admit such jural relationshjp. Such an intention need not be in. express terms and can be inferred by im-plication or th epature of the admission and the surrounding circumstances .. Generally speaking liberal construction of the statement in question should be given. That of oourse does not mean that where staiement is made without intending to admit the existence of particular jural relationship, such an intention should be fastened on the person making the statement by an involved or far fetc~eil reasoning; [629 C-E]

Khan B•hadur Shapoor Fredoom Mazda v. Durga Prosad Chamaria, [1962] l S.C.R. 140, Tilak Ram v. Natlru, A.LR. 1967 S.C. 935, 938, 939, Green v. Humphreva, [1884] 26 Ch. D. 474, .481, Tajpal Saraogi v. Lallanjee Jain, C.A. No. 766/62 dt. 8-2-1965 and Abdul Rahim Oosman & <:;o. v. Ojamshee Prushottamdas & Co., [1928] I.LR. 56 Cal. 639, referred to.

(b) FroQl the correspondence between the parties and the surround-ing circumstances it must follow that there was subsisting account in the name of the appellannt company in the books of the Corporation in . which interest on the balance sho~ therein from time to time was being credited and in which amounts· in respect of items passed during the course of ;econciliation were also iluly credited. The statement in the letter Ex. l that "after all the above adjustments the position will be as per statement attached", that is t~ say, that there was balance of Rs. 107447/13/11 due and payable to the appellant company must ~!early amount to acknowledgement within the meaning of s. 19(1)~ If the letter be looked at in the background of the controversy between the parties which controversy was limited to the question as to the correct-ness of the amount churned by the appellant company as also the cor-respondence which ensued in regard to it, it would be impossible to say that the 'letter and"the statement of account enclosed therewith were merely explanatory and did not amount to an admission of the jural re-ship of debtor and creditor and of the liability to pay the amount found due at the foot of the account on finalisation. [635 D-F]

The mere fact that letter called tor confirmation of the amount of the balance mentioned therein and the fact that the appellant company failed to confirm it, could not lead to conclusion that the .. admission of liability· was conditional and therefore could not operate as an acknqw-ledgement. The confirmat~on sought in the. l~tter was not condi~i~ .to the admission as to the exIStence of subsIStmg account and the habihty to pay when accounts we_re finalised but to the specific amou.nt which ''"";ording to the corporatton would be the .a.mount payable bl'. 1t accord-irtg1.to its calculation. There was no cond11on sub1ect to v.·h1_ch the ad-mission was to be made which remained unperformed. [635 G; 636 F-G; 637 BJ

Mmziram v. Rupchand. LR. 33 I.A. 165, Raja Kayali Arunachella Row Balzadur v. Sri Rajah Rangialz Appa Row Balzad11r, [1906] I.LR. 29 1'fE;d. 519 and Bal/apragada Ran1anurrthy v. Tha111n1ana Gopv.yya, [19!7] I.LR. 40 Mad. 701, distinguished.

In re River Steamer Co. v. Mitchell, L.R. 6 Ch. App. 822, 828, referred to.

(ii) The plea that the letter Ex. 1 should be regarded as an acknow-ledgement by the corporation itself was not included among the issues formulated before the courts below. It cQuld not be_allowed to be raised for the first time in this Court. [628 BJ

(iii) If the correspondence between the parties together with the statements of accounts enclosed therewith was closely examined it became clear that S was authorised to scrutinise the claim made by the appellant company, the vatious items for which the appellant company claimed credit and to reject the same and, what is important, to allow others . . That he had such an authority was clear from the fact that in respect of such of the items which he allowed, credit was given to the appellant and necessary entries to the cred.it of the appellant company were posted in the account maintained by the Corporation in its books of account. It was impossible to ·say that in the course of finalising the accounts, S accorded his assent to various items claimed lly the appellant company «without having been authorised so to do. Nor was it possible to say that on his pa.sing those items necessary entries were made in the books of accounts of the corporation without his having so authorised. Further, he c<?itld not have,;.'1".'!\ .. l,Q. ~e. appellant coJlm&nY statements o1 account showing the balance due fo It Aas per the. ledger" \Jnless he WaS authorised to finalik the accounts and arrive at the amount due and payable to"' the company. [637 E-F; 638 B-C]

Uma Shankar v. Govind Narain, I.L.R. 46 All. 982, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 116, 117.and 119 of 1967 .

-Appeals from"the judgment and decrees dated May 19,. 1966 of the Allahabad High Court in First Appeals Nos. 441 of 1950, 198 of 1952 and 442-0f 1950 respectively.

S. V. Gupte, S. T. Desai, I. P. Goyal and G. N. Wantoo, for

the appellants (in all the appeals). r

Sidhartha Ray, A. K. Sen, Rameshwar Nath, Krishna Serr and!

Swaranjit Sodhi, for the respondent (in all the appeals).

The Judgment of the Court was delivered by

Shelat, J, Prior to Jan?ary 18, · 1944-M/s.-Lakshmirat~ Cotton Mills Co. Ltd. (hereinafter ref.erred to as the appellant-company), Aluminium Corporation o~ I.ndia Ltd. (here~r re-ferred to as the corporation, J .K. Lunrted, . Beharillll Kailashp~t India Supplies, Northern India Trading <;o:, and Northern India Brush Manufacturing Co .. Ltd. were all 1omtly .mana&ed tiy twO' groups, who may .conv7m.en~Y"tie ~aUed fhe Smgharua and the Gupta groups. · D1spu~ havmg ansen between them, they were-referred. to arbitrati~ by. deed of. reference, .~~t¢-Deeember 9', 1943. It is not necessary to.go intO the ~tails of the a~, dated January 18, 1944, by which these disputes were ad1ud1-

cated upon except that from and after the date of the award the aforesaid concerns were brought unde~ the management and control of one or the other of the said two groups. The cor-poration came under the control and management of the Singh-ania group.

Cl. 9 of the award provided as follows :

"The above award or directions in respect of Laxr.1i Ratan Cotton Mils Co. Ltd., Aluminium Corporation of India Ltd., J. K. Ltd., Beharilal Kailashpat India Supplies, Northern India Trading Co. and Northern Brush Manufacturing Co. do not cover the advances which either party or their separate firms may have made to all or any of them or their moneys which may be in deposit with them and they shall be payable and paid in their usual course." According to the appellants, there existed in their trading books accounts in respect of amounts advanced or spent by them fort the corporation in respect of which cl. (9) of the .award speci-fically made provision for and also for interest due thereon. After the award was made the appellant-company sent state-ment of account to the corporation, but this· was objected to on the ground that the appellant-company, during the coun;e of the previous joint management of the cmporation, had not pro-perly maintained the accounts and that several items were either not properly accoun~ed for or entered into. Correspondence thereafter ensued between the parties. The parties also appointed their respective officers to meet and reconcile their respective accounts the corporation being represented by its Secretary-cum-Chief Accountant, one Subramanayam, and the appellant-com-pany sometimes by one Arora and at other times by one Newatia. Since no settlement could be arrived at, the appellants filed two suits claiming Rs. 3,56,207-9-6 and Rs. 72,595-4-6 from the corporation, being Suit Nos. 63 and 65 of 1949.

In para 14 of the plaint in Suit No. 63 of 1949, it was claimed that the suit was within time as after adjustment of several items in 1946 and 1947. sum of Rs. 2,96,110-11-6 was found due to the appellant-company and that in any event the suit was saved from being barred by limitation by letter dated Aprii 16, 1946 addressed by the said Subramanayam, there-by acknowledging the liability of the corporation to pay the amount which would be found due and pay.able under the said accounts. Similar. averments were abo made in the ulaint in Suit No. 65 of 1949. The written statements tiled by the corporation .inter alia pleaded rhat the said clnims were harred by limitation,

LAKSHMIRATAN COTTON MILLS V. ALUMINIUM CORP. (Sire/at, J.)

that the said letter did not amount to an acknowledgement within the meaning of s. 19 of the Limitation Act, 1908 which was then applicable to the suits, and lastly, that even if the said letter did amount to an acknowledgment, it was not binding on the corporation as the said Subramanayam had no authority to make any such acknowledgement for and on behalf of and binding on the corporation. On the question of limitation, the Trial Court raised three questions for its determination; (1) whether the letter (Ex. 1) was binding on the corporation, (2) whether it amounted to an acknowledgement, and ( 3) if so, whether it would extend the period of limitation so as to save the claims made by the appellants from being barred. On consideration of the evidence, both orar and daeumentary, the Trial Court held in favour of the appellants on all the three questions and passed decrees )n both the suits.Three appeals were filed in the High Court against those decrees, two by the corporation and the third by the appellant-company as the claim allowed in its favour was for reduced amount. As framed by the High Court; the question common to all the three appeals was whether the said letter (Ex. r) amouni-ed to an acknowledgement extending the period of limitation. The High Court, on consideration of the correspondence bet-ween the parties and the other evidence, reached the conclusion that the letter (Ex. 1) was "merely explanatory" and was not· meant to bind the corporation, that even if it did amount to "some kind of acknowledgement", its author, the said . Subra-rilanayam, had no authority to acknowledge (lny debt or liability on behalf of the corporation. In this view the High Court held the two suits barred by limitation and allowed the· corporation's appeals. It rejected the appellant-company's appeal .and dismiss-ed the two suits. Hence these three appeals under certificates granted by the High Court.

It was never disputed that, except for the letter (Ex. 1) relied on by the appellant-company, provided it amounted to an acknowledgement binding on the corporation, the claims of the appellants would be barred by limitation. Consequently, .the questions for determination in these appeals are the same as the ones before the High Court. These questions were canvassed llefore us in their three l)Spects; firstly, whether the letter (Ex. 1) amounted to an acknowledgement, secondly, if it did. whether it was an acknowledgement by the corporation, and thirdly, if not, ~hether the said Subramanyam, who addressed if, had the autho-nty, exp~ess or impli~, to acknowledge liability on behalf of the . corporallon so as to blnd that corporation.

Counsel for ·the appellant-company sought to argue that in-asmuch as the letter, (Ex ... n was written .by t.he corporation's

Secretary, who also combined the position of the Chief Account-ant, and furthermore, addressed that Jetter for and on behalf of the corporation, the letter was of and by the corporation. Therefore, if the Jetter amounts to an acknowledgement, such. acknowledgement wuuld be by the corporation itself and no en-quiry would then be necessary to ascertain whether the said Subramanayam had the authority to acknowledge the liability so as to bind the corporation. No such plea, however, is to be found in the plant which merely stated that "there are several letters constituting acknowledgement of the unsettled account. The: plaintiff files one of such letters which is dated 16th April, 1946." The written statement denied that the corporation ever made any acknowledgement or that the letter of April 16, 1946 was any such acknowledgement. It further denied that Subra-manayam, who wrote it, hadk any authority to ac' '1.owledge any debt. Such comprehensive denial notwithsta1,~mg, no issue was raised covering the argument now urged that the said l~tter was and must be treated as one of or by the corporation, and that therefore, there was no question of Subramanayam having or not having the authority to make an acknowledgement on behalf of the corporation. No such argument ai>o appears to have been made either in the Trial Court or the High Court where the controversy was centered around the question whether the said letter contained an acknowledgement and whether its writer, addressing it on behalf of the corporation, had the authority to make such an acknowledgement binding on the corporation. In our view Mr. Gupte could not, at such belated stage, raise for the first time the plea that it was the corporation which through the said letter made the acknowledgement and that we should understand that Jetter to mean such an acknowledgement by the corporation itself.The questim1, therefore, that really arises for our determina-tion is whether the said letter contains an acknowledgement, which its writer, Subramanyam, had the authority, express or implied, to make. Even that question gets reduced in extent and scope as it was never the case of the appellant-company at any stage that the corporation had clothed its Secretary with such authority expressly. Such case Mr. Gupte did not make out even before us and proceeded in fact to argue that the ,,vidence on record showed that he had such authority given to him impliedly.

Sec. 19(1) of the Limitation Act, 1908 provides that where, before the expiration of the period prescribed for suit in res-pect of any property or right, · an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claim-ed, fresh period of limitation shall be computed from the time

when the acknowledgement was so signed. The expression 'signect·· here means not only signed personally by such party, but also by an agent duly authorised in that behalf. Explanation 1 to the section then provides that an acknowledgement would be sufficient though it omits to specify the exact nature of the pro-perty or right, or avers that the time for payment has not yet come, or is accompanied by refusal to pay or is coupled with claim to set-off, or is addressed to person other than the person entitled to the property or right. The new Act of 1963 contains in s. 18 substantially similar provisions.

It is clear that the statement on which the plea oi acknow-ledgement is founded must relate to subsisting liability as the section requires that it must be made before the expiration of the period prescribed under the Act. It need not, however, amount to promise to pay, for, an acknowledgement does not create new right to action but merely extends the period of limitation. The statement need not indicate the exact nature or the specific character of the liability. The words used in the statement in question, however, must relat<' to present sub-sisting liability and indicate the existence of jura! relationship between the parties, such as, for instance, that of debtor and creditor, and the intention to admit such jural relationship. Such an intention need not be in express tem1s and can be in-ferred by implication from the nature of the admission and the surrounding circumstances. Generally speaking, liberal con-struction of the statement in question should be given. That of-course does not mean that where statement is made with-out intending to admit the existence of jural relationship, such intention should be fastened on the person making the statement by an involved and far-fetched reasoning. (see Khan Bahadw· 'iihapoor Fredoom Mazda v. Durga Prosad Chamaria(') and Ti/ak Ram v. Nathu(2). As Fry, L.J., in Green v. Humphreys(") said "an acknowledgement is an admission by the writer that there is debt owing by him either to the receiver of the letter or to some other person on whose behalf the letter is received but it is •not enough that he refers to debt as being due from somebody. In order to take the case out of the statute there mu~t upon the fair construction of the letter, read in the light of the surrounding circumstances, be an admission that the writer owes the debt." As already stated, the person making the acknowledgement can be both the debtor himself as also person duly authorised by him to make the admission. In Khan Ba/wdur

(I) (1962) 1 S. C.R. 140.

(21 A.LR. 1967 S. C. 935. at 938. 9)9

(3) (1884) 26 Ch. D. 474 at 481. 13-L436 Sup l/71

Sliapoor Fredoom Mazda's case( [1]) the Court accepted state-ment in Jetter by bortgago.11 to second mortgagee to save the mortgaged property from being sold away at cheap price at the instance of the prior mortgagee by himself purchasing it as one amounting to an admission of the jural relationship of mortgagor and mortgagee, and therefore, to an acknowledge-ment within s. 19. Also, an agreement of reference to arbitra-tion containing an unqualified admission that whoever on account sheuld be proved to be the debtor would pay ta the other has been held to amount to an acknowledgement. Such an admission is not subject to the condition that before the agreement should operate as an acknowledgement, the liability must be ascertained by the arbitrator. · The acknowledgement operates whether the arbitrator acts or not. (see Tejpa/ Saraogi v. Lallanjee Jain(~, approving Abdul Rahim Gosman & Co. v. Ojamshee Prushottam-das & Co.([3]).

The letter (Ex. 1) relied on as an acknowledgement was written to the appellant-company by Subramanayam signing it "for Aluminium Corporation of India Ltd." It consists of several paragraphs dealing with diverse items relating ·to different amounts claimed by the appellant-company in statement of claim pre-viously sent by it to the corporation, some of which are refuted by the writer, while the others are accepted. The penultimate ·paragraph, which is said to contain the admission, reads as follows:

"After all the above adjustments, the position will be as per stlitement attached. ·Interest has been pro-vided on some balances and on others it has not been provided. We request you to confirm the balance of Rs. 1,07,477-13-11, so that we may proceed with the calculation of interest and settle your claim once and for all immediately.

Kindly acknowledge this letter and favour us with an immediate reply."

The Jetter speaks in the last sentence of copy of it to be sent to Lala Purshottam Dasji Singhania "for information" The copy -of the letter, as is clear from the other evidence· as also the words "for information" was not sent for approval and was obviously not intended to be subject to such approval by Pnm-shottam Singhania. The. statement enclosed with the letter is 1'eaded "Account of M/s. Lakshmiratan Cotton Mills Co. Ltd." .and first sets out tl!e balance of Rs. 1,00,760-0-7 in favour of

(I) (1962) I. S. C. R. 140.

(1) C.A. No. 766 of 1962, decided. on Feb. 8, 1965.

(3) (1928) I. L R. 56 Cal. 639.

LAKSHMIRATAN COTTON MILLS v. ALUMINIUM CORP, 631

(Shelot, 1.)

the appellant-company "as per our ledger", meaning the ledger of the corporation, ;ind the first foot-note ·thereto states that that amount included interest .. of Rs. 26,490-11-10 calculated up_to March 31, 1943. Several amounts due to other concerns pay-able to or by the appellant-company are then adjusted and final-ly the balance is _struck at Rs.· 1,07,447-13-11 (which is the one mentioned in the letter (Ex. 1) which if confirmed by the appellant-company, the corporation would "settle your clainI once and for all imniediately."

The High Co.urt, as .aforesaid; :held, contrary to the view of the Trial Court, .. that thise letter was only "explanatory" and was nelot r attons p !ntenhi~eqbe· to tween 'tie· a.uth parties adnii~si<in as odf tor an ere liabilitdy or d~f 1tor. thee jural1 . ounse for the corporation . $o argued ~ ·support of the High Court's view that t,he letter was· written in the 'process of adjustment and reconciliation of the statement of claim addressed by the ap~llJlt-cam.pany. and -a counter-statement to it by the corpo-ration, and. therefore, could riot be held to be one intended as · an adn)ission' of liability on the part of the coqiorati&n, and that, in any .event, Sµbramanayam, who wrote\it, had no authority to acknowledge any such liability on behalf of the corporation.

Before . we proceed to inquire into the correctness or other-wise of the High Court's view in regard to ·the letter (Ex. 1),. it would be . necessary to examine _ the correspondence which previously ensqed between the parties and the surrounding cir-cumstances which led to that letter.

As already stated, under -cl. (9) of the award by which the CO!!Cems, once jointly controlled, were separated, moneys ad-Wll1:e!i · 1:iy either of the parties or their firms or standing in I! de~ with them were to be payable by one to the other. ~ ~ also directed the Gupta group to hand over to the Sillgltlilias account books and other papers and files relating to the corporation. Accordingly, the Guptas h~ded them over to the corporation on February 1, 1944. The complaint of the corporation was that these books had not been properly posted • . up and contained discrepencies and that the corporation conse-quent!.)' required the help of the Guptas to finalise them. Early in March 1945, the appellant-company had' also · sent state-ment of account in respect of the amounts due and payable to ·it by the corporation. On April 20, 1945, one Col. Naidu, director. of the corporation, wrote to the appellant-company pointing out · from the said statement of account certain items which the corporation disputed. On 11th/12th September, 1945, the appellant-company sent statement of account claiming Rs. 2,94;000 and odd as payable to it. On December 17, 1945,

reply thereto was given by letter sent'.~y Laks~pat Singhania, the director-incharge, of the corporat10n, menl!orung various items disputed by. the corporation and the efforts made by it to reconcile those items and enclosed with that reply reconciliation statement showing the true position according to the corporation. Among other things, the reply stated as fol\!Jws :

"You will find from the above that we have tried our level best to see that these accounts are settled as early as possible as we have been very anxious for finali-sing but unfortunately, there has been absolutely no res-ponse from your side.

From the reconciliation statement you will find that according to our books amount due to the Laxmi Ratan Cotton Mills Co. Ltd., is Rs. 98,101-3-1 which includes interest calculated and credited to your account up· to 31st March, 1943. The interest from that date till the date of settlement is further to be cal-culated when this account is properly reconciled and confirmed by you."

The reply pointed out that as against the said amount of Rs. 98,101-3-1 the corporation claimed Rs. 38,490-2-2 and Rs. 8,256-13-6 which, acceltding to it, had. to be adjusted. Lastly, the reply threatened that unless the accounts were fin~!ised with• in month "we will not be paying you any interest on any of your dues beyond 30th September, 1945-". The position, a& stated in the statement enclosed with the reply, was as follows :

"Reconciliation of Accounts of M/s. Lakshmiratan Cotton Mills Co. Ltd.

Balance as per A.CJ. Ltd. Bpoks Rs. 98,101-3-1 Balance as per statement Rs. 2,94,658-0-S> Difference Rs. 1,96,556-13-8"

Then followed detailed items claimed by the corporation total-ling Rs. 1,96,556-13-8. The statement referred to above was the one under . which the appellant-company claimed Rs. 2,94,658:0-9 and· )l!hich was sent earlier in March 1945 by Ram Ratan Gupta' to Purushottam Singhania.. The corporation took objection to it by claiming various amoi,mts and against which, according to the corporation, only sum of Rs. 98,101-3-1 was payable by it "as per AC.I. Ltd. Books", that is to say, as shown by the books of account maintained by the corporation. The reply of the appellant-company, dated December 6, 1945, to the

(She/at, J.)

of the appellant-company, dated December 6, 1945, to the afore-aforesaid Jetter of September 17, 1945 and the statement enclosed thereto shows that the said Arora on behalf of the appellant-company and the said Subramanayam on behalf of the corpora-tion met and tried to reconcile the accounts. The appellant-company by this reply also sent particulars of certain items ap-B parently called for by Subramanayam at that meeting and in its tum asked for particulars of certain items debited to it in the said reconciliation statement. On December 21, 1945, Subra-manayam replied to the appellant-company's letter of December 6, 1945. By that letter he conveyed two thing~, (1) that in respect of certain items claimed by the appellant-company and which were disputed, those items were either passed or disallowed, and (2) that since the appellant-company had combined in its statement of claim accounts of other allied concerns also, he too had combined those accounts while preparing the statement of accounts he was sending along with his letter. The letter con-cluded by stating : "we herewith enclose consolidated state-ment after merging all these accounts." The consolidated state-D ment, (Ex. 44) enclosed JY Subramanayam with liis reply, reads as follows:

"Accounts of Messrs Lakshmiratan Cotton Mills Co. Ltd. 1945

December 1. By balance as per our ledger

Rs. I ,00,304-7-7"

Then follow accounts of other concerns whose accounts were brought in in what Subramanayam called the consolidated state-F ment of account. This statement reflected the position of the appellant-company in the corporation's books of account•; as on December 1, 1945. It will be noticed that the amount admitted in the st~itc­ment by the corporation as due to the appellant-company wsc from Rs. 98,000 and odd (as per the earlier statement. dated September 17, 1945) to Rs. 1,00,304-7-7. This increase was due to the fact that, while adjusting the disputed ile111;. Subra-manayam had allowed and ''passed" some o[ them bct11ccn Sep-tember and December 1945 when the disputed items 11erc di>-cussed and adjusted, anJ ~ntrics relating to tho~c \\ hii.:h ''~:\.' passed were posted to the credit of th.~ appcllanh:nmpany in 1he books of the corporation.

. The letter of December 21. I '-J.+.; \\as replied tn by tile ctppe,-tant-company nn l'cbructry :~. ! 9.i6 hy u'king pe1nin11'ir' :;1

respect of item claimed by Subramanayani in his said letter. It

was in answer to this letter that Subramanayam wrote the letter· (Ex. 1) in controversy and with which he sent the statement show-ing Rs. 1,07,447-13-11 as "Balance carried down".

Correspondence continued thereafter between the parties, the appe!lant company maintaining that much larger amount was due to it than the sum of Rs. 1,07,447-13-11. Except that, .the later correspondence would not throw any light on the question as to acknowledgement, and therefore, we need now detain our-selves on it.

Leaving aside for. the tiinei being the question as to Subra·

manayam's authority, the following facts emerge from the corres-pondence ·and the statements of accounts accompanying some of the letters sent on behalf of the corporation :

(a) In pursuance of cl. ( 9) of the ·said award, the appellant-company sent to the corporation · in the beginning of March 1945 stateme.nt qf account claiming Rs. 2,94,000 and odd as due to it.

(b) At no time .during the Jengtny correspondenct which ensued between the parties, the corpora-tion denied its liability to pay; what it did waE to dispute the correctness of the amount claim-ed by the appellant-company by challenging certain items for which the appellant-company claimed credit and by making certain counter claims of its own. · As against the statement of account sent by the appellant-conipany, the cor-poration sent its own statement which . it called the 'reconciliatfon account'.

( c) During the process of adjustment and reconci-liation of the several items claimed by the appellllillt -company some were allowed and some were rejected, and the corporation sought to debit certain items claimed by it against the appellant-company.

(d) According to the f!lCOnciliation statement sent . by the corporation on September 17, 1945 only Rs. 98,000 and odd was due to the appel-lant-company as against its claim for Rs. 2,94,000 and odd. Later, this · figure was raised from time to tiine as some of . the -items claimed by the appellant-company were allowed

wnn the result that in the statement sent along with the letter (Ex. 1) the balance due to the appellant-company was shown at Rs. 1,07,447.

(e) The statements of accounts, (Exs. 43 and 44) and the one enclosed with the letter, (Ex. 1) in clear terms stated that the--balances s~n therein were as shown in the ledger maintain-ed by the corporation. The letters equally clearly stated that interest on such balances was being credited up to certain dates and for the further period would be credited when the accounts were finalised.

It must follow from these facts that there was subsisting account in the name of the appellant·company in the books of the corporation in which interest on the balance shown therein from time to time was being credited and in which amounts in respect of items passed during the course of reconciliation were also being credited. The statement in the letter (Ex. 1) that "after all the above adjustments the position will be as per state· ment attached", that is to say, that there was balance of Rs. 1,07,447·13·11 due and payable to the appel!ant-company, must clearly amount to an a~knowiedgement within the meaning of', -s. 19(1). In our view if the letter (Ex. 1) were to be looked at in the background of the controversy between the parties, which controversy was, as aforesaid, limited to the question as to the correctness of the amount claimed by the appellant-company as also the correspondence which ensued in regard to it, it would be impossible to say that the letter (Ex. 1) and the statement of account enclosed therewith were merely explanatory and dicl not amount to an admission' of the jural relationship of debtor and creditor and of the liability to pay the amount found due at the foot of the account on finalisation.

But the argument was that since the letter (Ex. 1) called for confirmation of tile amount of Rs. 1,07,447 as being the balance due to the appellant-company and as the appellant com· paoy failed to confirm it, the admission of -liability was condi· tional, and :herefore, cannot operate as an acknowledgement. In this connection the decision in Maniram v. Rupchllnd([1]) was relied on and in particular the famous dictum of Mellish, L.I., in bl, re_ River Steamer Co. v. Mltc.he/1([9 ]) ·approvingly cited therein. The dictum was thai an acknowledgement to take the case out cf the statute of limitation must be either one from which· an absolute promise to pay can be inferred, or secondly, an (I) LR. 33 I. A. 16S. (2) L. R. 6 Ch. App. ~22, •t 828.

unconditional promise to pay the specific debt, or thirdly, that there must be conditional promise to pay the debt and evidence that the condition has been performed. The statement rflied on in Maniram's case( [1]) as an acknowledgement was by the res-pondent in written statement filed by him in an earlier pro-bate proceeding in which it was averred that the applicant Rup-chand Nanabhai (the respondent) "had for the last five years open and current accounts with the deceased (the testator) and1 that the alleged indebtedness did not affect .his right to apply for probate", as one of the executors. It was held that the state-ment was sufficient to constitute an acknowledgement. "An unconditional acknowledgement", said their Lordships, ''has always been held to imply promise to pay, because that is the natural inference if nothing is said to the contrary. It is what every hone3t man would mean to do There can be no reason for giving different meaning to an acknowledgement that there is right to have the accounts settled, and no quali-fication of the natural inference that whoever is the creditor shall be paid when the condition is performed by the ascertain-D ment of balance in favour of the claimant. It is case of the third proportion of Mellish. L.J ., conditional promise to pay and the condition performed." We do not see how this decision can support the corporation since in the present case also there was an admission of subsisting account on the finalisation of which the corporation was prepared to pay the balan~e found due at the foot thereof. The only dispute was what would be such as balance. Rs. 1,07,447, according to the corporation, and larger sum according to the appellant-company. The con-firmation sought for in the letter (Ex. 1) was not condition to the admission as to the existence of subsisting account and the liability to pay when accounts were finalised, but to the specific amount which, according to the corporation, would be the amount payable by it according to its calculation. The decision in Raja Kavali Arunachella Row Bahadur v. Sri Rajalt Rang/ah App Row Bahadur(") does not apply· as the condition subject to which the settlement there was made was not perform-ed, and therefore. the document was held to be one which could not be spelt out as an acknowledgement. In Ral/apragada Ru11111-G m11rthy v. ,Thammana Gopay,va(")' also, the letter relied on as an acknowledgement stated that if certain arbitrators should de-cide that the defendant should pay any amount he "otild immediately pay but if the arbitrators failed to decide the plain-tiff mipht .su.; and the defendant in that case would not ;ikad limitation. The arbitrators failed to decide. It was held that · the letter being conditional and the condition not having been II

rl) L. R. J3 IA. 165. I'.!) [1906] T. L. R. '.!9 Mad. 51'1. 13/ [1917] T. L. R 40 Mad. 701.

(She/at, J.)

performed did not operate as an acknowledgement. This deci-sion too has no bearing on the facts of the present case. Unlike the cases relied on by Mr. Sen, the present case is one of an admission of subsisting account and the jural relationship and the liability to pay whatever amount would be found due on finalisation of accounts. There is no condition subject to which the admission was made which remained unperformed. Ordinarily, the functions of · Subramainym as the secretary of the corporation would be ministerial and administrative. As secretary only, he would have no authority to bind the corpo-ration by entering into contracts or other commitments on 'its behalf. As the chief accountant and holder oi power of attorney, his functions in regard to the former would be to supervise over maintenance of proper accounts, and in regard to the latter to look after and represent the corporation in litigation. None of these three positions held by him would by itself or cumulatively make him person duly authorised to mak.e an acknowledge-ment binding on the corporation. Also, the fact that he carried on correspondence for the corporation would not make him a· person authorised to make an acknowledgement binding on the corporation. [see Uma Shankar v. Gobind Narain(1)]. jlut such description of the functions and duties performed by him would not be compleie. If the correspondence together with the state-ments of accounts encolsed therewith is closely examined it be- · comes clear that he was authorised to scrutinise the claim made by the appellant-company, the various items for which the appel-lant-company claimed credit aind to reject some, and what is important, to allow the others. That he had such an authority is clear from the fact that in respect of such of the items which he allowed credit was given to the appellant-company and neces-F sary entries to the credit of the appellant-company were posted in the account maintained by the corporation in its books of account. Thus, in the reconciliation statement (Ex. 43) sent along with the corporation's letter of September 17, 1945. Rs. 98,101 were shown to be the balance due to the appellant-company. The words used in that statement were "balance as per AC.I. Ltd. Books". These words clearly indicate that there was subsisting account in the name of the appellant-company in th~ books of the corporation and that at the foot of that account the sum of Rs: 98,101 was due to it. Ex. 44. another statement of account sent to the appellant-company, stated Rs. 1,00,304-7-7 as being the "Balance as per ledger" as on December 1, 1945. As explained earlier, the increase in the balance from Rs. 98,101 to Rs._ 100,304 was due to certain items aggregating Rs3203~4-6 ~~~~n_g b:en passed by Subramanayam, and entries (!)I. L. R. 46 All. 892.-·

having thereupon been posted in the ledger. Thereafter, further items were passc~ by him totalling Rs. 465-10-0 which when added raised the balance to Rs. 1,00,760-1-7, as at tlie end of December 1945. This was the balance "as per our ledger" stated in the statement sent along with the letter (Ex. 1).

It is impossible to think that in the course of finalising the accounts Subramanay\lm accorded his assent to . var/ous items claimed by the appelfant-company without having peen autho-rised so to do. Nor is it possible to say that on his passing those items necessary entries were made in the books of accounts of the corporation without his having so authorised. Further, he could not have sent to the appellant-company statements of accounts showing the balance due to it "as per the ledger" unless he was authorised 'lo finalise the accounts and arrive ··:at the amount due .and payable to the appe!lant compaµy.

In his evidence Subramanayam testifi~ that Lakshmipat Singhania, the director-in-charge of the cow_oration, knew 1 that _ he was dealing with Arora, the representative of the apNPant---company, in the matter of accounts between the parties. also said that he was to find out the difference between tile two and 'that as result many points were resolved an he con-firmed by letters to the appellant company th0se points which were so resolved. Re then stated that the directors of the cor-poration were aware of the settlement of the said points- by him but they neither ratified nor repudiated them.- "This'\i.ias because, as conceded by him, be never placed those settled points before the directors for their ratification. He did not say that he had _no authority to settle the differences or that he settled them sub-ject to the approval of the directors. It is clear that he could. not have settled the various points of difference between the parties and suitable entries in the books consequent upon such settle-ment could not have been posted unless he was authorised by the directors to finalise the account& and make final adjustment with the appellant-company. He tried, of course, to make out that he had no authority except as secretary to carry on cor-respondence for clarifying the position of the corporation. He even denied that entries were made in the books of the corpora-tion after he had settled the said items. The denial is futile because. the statements of accoµnt sent by him to the appellan-company from time to time clearly show that such entries were made. The effect of all this .evidence is that. besides his functions as the secretary-cum-chief accountant, he _was authorised to finalise the. accounts between the p_arties, to settle differences between them and to arrive at the final figure payable by the corporation. It was in pursuance of such authority that he dealt with Arora, passed some of the items for which the

appellant-company claimed credit, had those entries posted in the books of the corporation, sent statements of accounts from time to time and finally addressed the letter, (Ex. I); stafing there-in that according to the books of the corporation the sum of Rs. 1,07,447 was the balance payable to the appellant-company. He could not possibly have asked the appellant-company to con-B firm that balance unless he had the authority on behalf of the corporation to acknowledge on its behalf that that was the balance payabLe by it. Therefore, the conclusion is inescapable that he had the implied authority to niake the acknowledgement and wrote the letter (Ex. I) with the intention of doing so.

Accordingly, the suits were not liable to be dismissed on the ground of their being barred by limitation, and the High Court was in error in allowing the appeals by the corporation and dismissing the suits.

The result is that the appeals are allowed, and the judgment and order passed by the High Court are set aside. The ~ase will have to be remanded to the High Court for deciding the rest of the questions arising in the suits and ascertaining the amounts due to the appellants (the original plaintiffs) as the High Court has not gone into those questions as it dismissed the suits on the point of limitation.· In view of the very long period having elapsed due .to prolonged adjournments of the appeals while they were pendmg .bef~re the High Court, we ea~e~tly hope that the High Court w!ll dispose of the cases as expediitously as possible. The corporation will pay to the appellants costs of these appeals, such costs to be in one set of costs.