Acknowledgment of a debt in writing interrupts the limitation period allowing a fresh period from the acknowledgment date, making the suit valid despite initial time lapse.

JUDGMENT :

K.S. HEMALEKHA, J.

The present first appeal by the defendants arising out of the impugned judgment and decree dated 15.10.2011 in O.S. No.5919/2002 on the file of the XXVII Additional City Civil Judge, Bengaluru (‘the Trial Court’ for short), whereby, the money suit was decreed with cost holding the defendants jointly and severally liable to pay the suit claim of Rs.1,79,141/- together with interest @ 16.5% on Rs.1,47,962/- from the date of the suit till the payment.

2. Parties herein are referred to as per their ranking before the Trial Court for the sake of convenience.

3. Suit instituted for recovery of Rs.1,79,141/- with future interest @ 16.5% p.a. The plaintiff is a company incorporated under the provisions of the Companies Act and is a Government of Karnataka undertaking, first defendant - M/s. Tippeswamy Silk and Cotton Handloom Products is a registered concern with the plaintiff as a Small Scale Industrial Unit. The plaintiff-company was established with the object of assisting the small Scale Industrial Unit in the State of Karnataka. The first Defendant availed the benefits of the “Marketing Assistance Scheme” (hereinafter referred to as ‘the Scheme’) from the plaintiff after participating in the open tenders. The plaintiff-company maintained an open- running account in respect of advances made to the first defendant as and when the payments were received and deductions were given out of the account.

4. The plaintiff-company released Rs.2,80,000/- to the 1^st defendant and both defendants executed the surety bond on 23.09.1996, undertaking to pay the amount within 90 days, as on 12.10.2000, the amount due to the plaintiff was Rs.1,47,962/- and in spite of several requests, the 1^st defendant having failed to clear the dues, a legal notice was issued by the plaintiff-company on 04.11.2000 calling upon the defendants to remit the amount mentioned above with interest and service charges. The 1^st defendant replied to the legal notice, admitting the loan, but with certain conditions. The defendants having not paid the amount after having taken financial assistance from the plaintiff, the plaintiff-company instituted the suit for recovery of money with the prayer to decree the suit against the defendants to pay jointly and severally a sum of Rs.1,79,141/- along with interest @ 16.5% p.a.

5. Pursuant to the notice issued by the Trial Court, the 1^st and 2^nd defendants filed separate written statements, inter alia, denying the plaint averments. The 1st defendant denied the transaction itself and the signing of any documents, the liability on the part of the defendant to pay the suit claim and the suit of the plaintiff is barred by limitation since the transaction relates to the year 1996 and the suit is filed in the year 2002.

6. Defendant No.2 also denied the allegations made in the plaint and did not acknowledge the debt or liability and contended that the suit is barred by limitation.

7. The Trial Court, on basis of the pleadings, framed the following issues:

“1. Whether the plaintiff proves that defendants had transaction with it by receiving advance money from it?

2. Whether the plaintiff proves that defendants failed to repay the advance amount of Rs.1,47,962/-?

3. Whether the plaintiff proves that defendant No.1 has executed on demand promissory note for the advance amount received by him?

4. Whether the plaintiff proves that defendants have executed surety bonds dated 23.9.1996 regarding the advance amount receive