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SANJIB BANERJEE, J.
In the matter of : M/s. Deepika Housing Projects Pvt. Ltd. and etc.
C. A. No. 472 of 2006 and C. P. No. 285 of 2006
Decided on : 16 -7 -2007.
LIMITATION ACT - Acknowledgment of Liability - Section 18 - Whether a document can be considered an acknowledgment of liability under Section 18 of the Limitation Act, 1963, even if it contains a denial of liability.
Fact of the Case:
The petitioner, claiming to be a creditor, filed a petition for winding up the respondent company on the grounds of non-payment of a loan. The company resisted the petition, contending that the claim was barred by limitation and that the petitioner lacked bona fides. The company acknowledged receiving the payment from the petitioner but claimed that it was not a loan but an advance against property and that the amount had been forfeited.
Finding of the Court:
The court held that the company's response to the statutory notice, which acknowledged receiving the payment but denied liability, could be considered an acknowledgment of liability under Section 18 of the Limitation Act, 1963, as the denial of liability was not justified and appeared to be arbitrary.
Issues: 1. Whether the company's response to the statutory notice could be considered an acknowledgment of liability under Section 18 of the Limitation Act, 1963. 2. Whether the company's defense that the claim was barred by limitation was valid.
Ratio Decidendi: The court relied on the Explanation to Section 18 of the Limitation Act, which states that an acknowledgment may be sufficient even if it omits to specify the exact nature of the property or right, or is accompanied by a refusal to pay. The court held that the company's denial of liability in this case was not sufficient to negate the acknowledgment of receipt of payment, and that the document could therefore be considered an acknowledgment of liability under Section 18.
Final Decision: The court dismissed the company's petition and allowed the petitioner's claim to stand relegated to a suit, subject to the condition that the company would not be allowed to sell its Camac Street property without first obtaining the leave of the court.
2. The company accepts having received the payment from the petitioner though the parties are at variance as to the purpose of payment, a matter more of form than of substance. The petitioner claims that it gave a loan of Rs. 9,99,887.96 to the company in six tranches beginning March, 1994 and April, 1996, the entire sum being repayable on demand with interest at the rate of 18 per cent. per annum. Though the petitioner is unable to produce any document evidencing such agreement, it cites the company having unfailingly acknowledged the liability to the petitioner in its successive balance sheets and relies on the last of such balance sheets for the year ended March 31, 2002 which was signed on the company's behalf on July 6, 2002. The petitioner is unable to establish the exact nature of the transaction, however, as the company acknowledges receipt of such sum on account of advance against property.
3. In December, 2003 the petitioner demanded refund of the money it had allegedly made available to the company by way of loan. The company responded to the demand contained in the statutory notice by its writing of February 5, 2004. It is the nature of the company's defence found in its response to the statutory notice that is the key issue in these proceedings as it is the defence found in such response which has been repeated and amplified in the company's affidavit :
"We object to your letter dated December 5, 2003 received by us on January 24, 2004. You have no authority to represent the company or issue any notice.
As you are aware M/s. Carboxy Chemicals Pvt. Ltd. belongs to Sri Vinod Kumar Jain, one of our directors. You have fraudulently purported to show his removal as a director together with his wife. You have also purported to illegally change the share holding. Such wrongful acts are the subject-matter of challenge in C.S. No. 249 of 2003 (Vinod Kumar Jain v. Pawan Kumar Jain) pending before the Hon'ble High Court, Calcutta. Accordingly the letter is illegal, without authority, null and void.
It is important in this context that Mr. Vinod Kumar Jain and his family members and supporters enjoy majority shareholding in Carboxy Chemicals Pvt. Ltd. Without prejudice to the above, we deny that loan was given by Carboxy Chemicals Pvt. Ltd. as alleged. The sum of Rs. 9,99,887.96 was advanced by you for the purpose of purchasing property as you are fully aware. Due to various breaches on your part, the said sum was forfeited of which also you are fully aware. Accordingly no amount is due or payable by us to you."
4. According to the company, it is now controlled by one Vinod Kumar Jain. The company claims that Vinod Jain was the principal person in control of the petitioner company and entitled, by virtue of his shareholding therein, to retain control of the petitioner. The company asserts that Pawan, a brother of Vinod, had usurped control of the petitioner and had made the demand on the petitioner's behalf. Vinod's right to control the petitioner has been asserted in the suit filed before this Court and referred to in the company's response to the statutory notice. The underlying insinuation of the company's charge is that it is Vinod's money from one company parked in another Vinod company, that Pawan is now attempting to collect upon removing Vinod from the petitioner company.
5. The company submits that till such time that the disputes as to the control of the petitioner are resolved, these proceedings cannot be taken forward as it would be inequitable for the company being required to pay the petitioner for Pawan to effectively receive the money. The company urges that in the event Vinod succeeds in the suit filed against Pawan before this Court and gets his rightful control of the petitioner, the likeliest result in such pr
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