M. Thanikachalam, J.@mdashThe defendant in O.S. No. 2770 of 1984 on the file of the City Civil Court, Chennai, who suffered a decree for payment of money concurrently, is the appellant. The respondent in this L.P.A. as plaintiff had filed a suit for recovery of a sum of Rs. 1 lakh with interest thereon at 24% per annum from the date of the plaint, till the date of realisation, contending that as per the terms of the contract, the defendant/appellant has not repaid a sum of Rs. 51,750.21, being the balance of 5% payment and also the security deposit of Rs. 49,161.50, aggregating to a sum of Rs. 1,00,911.71 and that despite the repeated demands and notice, the defendant failed to pay the same and therefore, restricting the claim to Rs. 1 lakh, they are entitled to the suit claim with interest thereon at 24% per annum.
2. The appellant/defendant repudiated the claim of the plaintiff stating, that the plaintiff is not entitled to recover a sum of Rs. 51,750.21 and Rs. 49,161.50 even as per the agreement, whereas the plaintiff alone is liable to pay the defendant the cost of 46 Air Tickets, which the defendant had incurred on behalf of the plaintiff viz., Rs. 2,95,200/- that the interest claimed is also excessive, that after deducting or adjusting the suit claim, the plaintiff has to pay a sum of Rs. 1,95,000/- and that the claim in any event is barred by limitation.
3. The learned XII Assistant Judge, the City Civil Court, while evaluating the materials placed before him, came to the conclusion, that even in the absence of any specific agreement, for the payment of return Air Tickets, the defendant is liable to pay the charges of the Air tickets, to the employees of the plaintiff, that the defendant is not entitled to adjust or set off the cost of the Air Tickets, for the suit claim, that the suit is not barred by limitation and that the plaintiff is entitled to a decree, as prayed for. In this way, concluding so, a decree has been granted on 27.2.1987, which was in challenge before this Court in A.S. No. 1061/87.
4. The learned Judge, considering the rival contentions of the parties, as well as considering the effect of agreement entered between the parties, took the view, that the plaintiff is entitled to a sum of Rs. 1,00,911.71, which is restricted to Rs. 1 lakh, that since there had been correspondences between the parties, time would start running, for the purpose of limitation, only at the final denial of the claim and in this view, the suit is not barred by limitation. The learned judge unable to take different view, on the basis of the available materials, dismissed the appeal with costs throughout, confirmed the decree and judgment passed by the trial Court in O.S. No. 2770 of 1984 on the file of the City Civil Court, Chennai, which is under challenge in this appeal.
5. Heard the learned counsel for the appellant, Mr. K. Muni and the learned counsel for the respondent, Mrs. Anitha Thomas.
6. The learned counsel for the appellant stressed the only point of limitation to non suit the plaintiff, though many defences had been raised, in the written statement, which is opposed by the learned counsel for the respondent/plaintiff, contending, that there was a clear acknowledgment of the debt, from which date, within three years, the suit has been filed and therefore, as held by the courts below, there is no bar for maintaining the suit on the basis of limitation. It is the further submission of the learned counsel for the plaintiff, that the plaintiff/respondent is entitled to claim interest at 24% per annum which is not challenged in the appeal. From the submission made by either counsel, the only point that arises for consideration in this Letters Patent Appeal is,
Whether the suit is barred by limitation?
Point:
7. Based on the tender issued by BHEL, Trichy, for providing service for erection, testing and commissioning of 1 x 65 mw Boiler, an agreement was entered dated 12.12.1978 between the parties, which is exhibited as Ex.A3. In this case, we are not going into the merits of the case viz., the payments said to have been made and the nature of works carried out etc. The main dispute appears to be, who is to arrange for the onward Air Tickets for the plaintiffs personnel, to go to Tripoli and downward Air Tickets also. As per the terms of the contract, when the bill was received from the plaintiff company, the defendant withheld certain amounts and they are also liable to return the security deposit. The amounts claimed by the plaintiff includes 5% amount withheld by the defendant and an amount of Rs. 49,161.50, being the security amount to be returned, since it is the security deposit made by the plaintiff, for carrying out contract; are not in dispute and the total amount comes to Rs. 1,00,911.71; but in the suit, the claim is restricted to Rs. 1 lakh. As per the findings rendered by the courts below and even as admitted by the appellant, there is no dispute at present, that the appellant/defendant has to pay a sum of Rs. 1,00,917.71, to the plaintiff When this amount was demanded, as evidenced by Ex.B5 dated 5.12.1980, the appellant/defendant, repudiated the claim i.e. refused to pay the amount, on the grounds that they had provided to the workmen of the plaintiff company, numbering 48 Air Tickets, for returning to India, in the month of July 79, which costed Rs. 2,95,200/- lakhs equivalent to 9,840 Libyan Dinars. Thus, the appellant/defendant claiming, that the plaintiff company has to pay a sum of Rs. 2,95,200/-, adjusted the suit amount, then requested the plaintiff company to pay the balance of Rs. 1,95,000/-. Thereafter, to settle the claim, there was some correspondence and finally under Ex.A9 on 5.8.1981, the appellant company informed the Managing Director of the plaintiff/respondent company requesting them to make arrangement to pay a sum of Rs. 1,95,200/- by means of cheque, thereby giving cause of action for the plaintiff to lay the claim, as hereinbefore mentioned.
8. As seen from the written statement, the appellant/defendant has not claimed set off, paying necessary court-fees, as contemplated under law. If set off, which is legally called adjustment, had been claimed, by paying court fees, then only the court is bound to adjudicate that claim, as a plaint in a cross suit, so as to enable the court to pronounce a final judgment, in respect of both the original claim and of the set off, as contemplated under Order VIII Rule 6(2) C.P.C. Unfortunately, in our considered opinion, though the defendant had not claimed set off as insisted under Order VIII Rule 6 C.P.C., the trial Court as well as the learned Judge, had decided the adjustment, or set off claimed by the appellant, on the basis of Ex.A3 agreement, wherein we find a clause regarding the arrangement for the Air Tickets. Clause 3 of Ex.A3 reads:
BHEL, Tiruchi would arrange for the onward air ticket for the DOWEL ERECTORS personnel to go to Tripoli. Expenses incurred towards this would be deducted from the Contractors'' running bills for the erection progressive payments, in the first two installments on pro-data basis.
9. From the above clause, it is seen the appellant had agreed to arrange for onward Air Tickets alone for the Dowell Erectors'' Personnel to go to Tripolli, but subject to adjustment of the same in the contractors'' running bills in the first two installments on pro rata basis. No other agreement is available to say empathetically, that the BHEL had agreed to provide onward Air Tickets, as well as down ward Air Tickets, for the personnel of the plaintiff, to go to Tripoli and return on their own. The position being so, without any claim for set-off, by payment of court fee, the trial Court as well as the first appellate Court, ought not to have decided the claim made by the appellant, such as whether they are entitled to provide Air Tickets for the onward journey, as well as downward journey, then entitled to claim adjustment of the amount etc. Under the above facts and circumstances of the case, we are constrained to set aside the findings of the courts below, regarding the, finding arrived by both the courts below, for the payment of Air Tickets, since it has nothing to do in the adjudication of the suit claim, which ought to have been decided independently, that too, on the admitted fact viz., that there is no denial of the amount, claimed by the plaintiff in the suit. Therefore, the only question that survives for consideration in this appeal is the limitation, as decided by us hereinbefore.
10. As per the agreement dated 12.12.1978, the last 5% shall be paid after the completion of erection and commissioning, against bank guarantee to be furnished by the plaintiff, for a guarantee period of 12 months from the date of completion of the erection work. It seems before 1980, the erection work has been completed and as on 4.7.1980 the period of bank guarantee from the date of completion of erection work was over. Ex.P.24 is the letter dated 4.7.1980 which has given cause of action for the plaintiff to lay the suit, But, within three years i.e. on or before 4.7.1983, the suit was not filed, whereas the suit was filed on 31.3.1984 i.e. beyond the period of three years.
11. Order VII Rule 6 directs the plaintiff, where the suit is instituted after the expiration of the period prescribed by law of limitation, to show the ground upon which exemption from such law is claimed. Here as seen from the plaint, no exemption is claimed, whereas as a matter of right, it is claimed by the plaintiff, that the suit is within time from the date of acknowledgment of liability by the defendant viz., 5.12.1980, 29.1.1981 and 5.8.1981. The alleged acknowledgments dated 5.2.80 and 29.1.1981 also may save the limitation, since the suit was not filed within three years from the said dales and if at all, there was an acknowledgment on 5.8.1981, by the defendant, that alone could save the limitation. Therefore, it should be seen, in this case, whether the letter dated 5.8.1991 could be treated as an acknowledgment of liability by the defendant, so as to bring the suit claim within the time, since the suit has been filed on 31.3.1984.
12. The letter dated 5.8.1981 is exhibited as Ex.A9. For better appreciation, we would reproduce the contents of the document, deleting the reference, in order to find out, whether is there any acknowledgment of liability as contemplated under law. The relevant portion in Ex.A9 reads:
Kindly refer to the correspondence resting with the above regarding the cost of air tickets for the 48 workmen of your concern from Tripoli West, which will have to reimbursed by you.
We have not been favoured either with the cheque amounting to Rs. 1,95,2000/- or any letter explaining the reason for the delay. You are requested to kindly arrange to pay the said sum by means of a cheque, very early.
In this letter, letters dated 20.12.1980 i.e. Ex.P6 and letter dated 3.1.1981 as well as the letter dated 29.1.1981 (Ex.B7) were referred under heading ''Ref:''.
13. It seems, the appellant had addressed a letter to the plaintiff company, on 5.12.1980, as seen from Ex.A6, that the plaintiff is liable to pay a sum of Rs. 2,95,200/-, from which the claims made by the respondent/plaintiff for Rs. 51,750.21 being 5% of the contract price and Rs. 49,161.50 towards the refund of security deposit, being adjusted against Rs. 2,95,200/-, thereby making a demand of Rs. 1,95,000/-. For this letter, by letter dated 20.12.1980, Ex.B6, the plaintiff requested to pay the suit amount and informed that even for onward journey to Tripoli, BHEL had not purchased the tickets and as far as the return Air Fare Tickets, they would be submitting their claim in due course. Thus, it is seen there was dispute between the parties, who is to bear the cost of Air Tickets and finally, the appellant/defendant informed the plaintiff under Ex.A8, as well as Ex.A9, that the plaintiff has to pay a sum of Rs. 1,95,200/-. In the letter addressed by the defendant/appellant, i.e. Ex.A9, as quoted above, we are unable to see any admission, regarding the jural relationship of debtor and creditor or any acknowledgment of the liability or any intention on the part of the defendant/appellant company, to continue that relationship, thereby acknowledging the debt already in existence. This being the position, we are unable to persuade ourselves to construe Ex.A9 as the acknowledgment of liability, as contemplated u/s 18 of the Limitation Act.
14. The learned counsel for the plaintiff/respondent submitted, that since the defendant had claimed originally a sum of Rs. 2,95,200/-, whereas subsequently they have claimed only a sum of Rs. 1,95,200/-, under Ex.A9 on 5.8.1981, that would amount to acknowledgment of the non payment of Rs. 1 lakh impliedly, being the amount payable by the defendant admittedly. In other words, it is the submission of the learned counsel for the respondent/plaintiff, that if the appellant/defendant had claimed a sum of Rs. 2,95,200/- under Ex.A9, then only it may not amount to acknowledgment, whereas they have claimed, deducting the amount payable to the plaintiff viz., a sum of Rs. 1,95,200/-, which should be taken, as the implied acknowledgment of the debt.
15. In support of the above contention, the learned counsel also relied on a decision of Patna High Court in
16. Section 18(1) of the Limitation Act reads:
Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment 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 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.
From the above Section, it is clear that the essential conditions for a valid acknowledgment are: (1) must be of a liability, (2) The liability must relate to some existing debt or other obligation regarding the right on the date of acknowledgment, and (3) It must be in writing and signed by the person against whom the acknowledgment is claimed and the acknowledgment must be before the expiry of the period prescribed for a suit or application in respect of such claim. Mere sending of letter by the company claiming certain amounts due to them, without any reference to the adjustment or any existing liability, as well as the relationship of debtor and creditor in respect of the disputed claim, certainly will not come within the meaning of acknowledgment as contemplated u/s 18.
17. In Sarangdhar Singh''s case, cited above, a division Bench of Patna High Court has held as follows:
Any written admission by a debtor of the existence of an unsettled account with a promise to pay the balance, if any due, is sufficient acknowledgment within the meaning of S. 19 of the Limitation Act.
In the case involved in the above decision, it seems a letter has been written by the defendant, to the plaintiff acknowledging the liability for payment of wages, but claiming set off and a refusal to pay, unless the Manager rendered accounts, with regard to his acts of mismanagement etc. From the letter, it was made clear, the liability was admitted, attached with certain conditions. Therefore, the Division Bench has held that would amount to acknowledgment, within the meaning of Section 19 (old) of the Limitation Act, which is not available in this case as seen from Ex.A9, which we have extracted supra.
18. In S.F. Mazda''s case, cited above, the Supreme Court has categorically ruled as follows:
The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship.
(emphasis supplied)
It is the further observation of the Apex Court, that
Courts lean in favour of a liberal construction of such statements, though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or far-fetched process of reasoning.
19. In
20. A Division Bench of this in
An acknowledgment need not contain a promise to pay either in express terms or even in an implied way; what is necessary is that there should be an admission of the subsisting liability. Even if such admission is accompanied by a refusal to pay, its character as an acknowledgment will not be altered. But such a case has got to be distinguished from a case of repudiation of a liability. (For example, an acknowledgment of a past liability with a plea of discharge (though false) will not amount to an acknowledgment of liability for the obvious reason that there is no acknowledgment of a subsisting liability.
(emphasis supplied)
In Ex.A9, the defendant has not admitted the jural relationship, such as the defendant is the debtor and the plaintiff is the creditor regarding the suit claim, or on the date of Ex.A9, the appellant company is bound to pay a sum of Rs. 1 lakh, then claiming adjustment, under this letter. This being the position, as held by the Apex Court, it is clear that there was no intention on the part of the appellant, indicating any intention to continue pre existing relationship and in this view, the claim of a sum of Rs. 1,95,200/- would not certainly amount to admission of Rs. 1, lakh, which is the subject matter of the suit, either impliedly or otherwise.
21. A Full Bench of this Court in
22. A Division Bench of Patna High Court in
It is manifest, therefore, that one of the essential ingredients of S. 19 is that there must be an acknowledgment of liability in respect of the right or the claim put forward against the maker and that it must have relation to a present subsisting liability and the words used in the acknowledgment need not be express and may be reasonably inferred from the circumstances and from the words used by the maker. But, it must appear that the statement is made with the intention of admitting the existence of jural relationship between the parties. At the same time, the Court cannot infer an admission, where it is not made, or where a statement is made clearly without intending to admit the existence of jural relationship.
Then considering the letter wherein, it is stated, "If on examination, the claim is found valid and payable" cannot fairly be construed to mean that the claim which the plaintiff put forward was found to be valid or payable, or that there was a subsisting liability in respect of the claim, which the plaintiff had lodged and the letter cannot be construed, as conveying to the plaintiff that its claim had been found to be valid and payable or that there was a subsisting jural relationship between the parties. Here also, the letter Ex.A9, failed to establish the existing jural relationship, as well as the intention and in that case, construing Ex.A9, as an valid acknowledgment is not all possible.
23. As held by the Full Bench of Allahabad High Court, in
24. In
The appeal is allowed setting aside the decree and judgment of the courts below, directing the parties to bear their respective costs throughout.
