A commercial document can be read with an element of commercial sense to determine if it amounts to an admission or acknowledgement within the meaning of Section 18 of the Limitation Act, 1963, even if it does not specify a quantum.

The only ground urged on behalf of the State in this petition under Section 34 of the Arbitration and Conciliation Act, 1996 is that a time-barred claim was entertained by the Arbitrator without any justification in the award as to how the same could be allowed despite the State’s objection on the ground of limitation. The State also questions the grant of interest on the principal sum awarded.

2. The facts are not in much dispute. The contract was completed on August 12, 2002. Clause 17 of the conditions of contract provided, inter alia, that the contractor would be responsible for rectifying the defects in the asphaltic work within a year of the date of completion of the work and the portion of the security deposit relating to asphaltic work would be refundable after the expiry of such period.

3. Thus, in terms of the contract, the claimant was entitled to seek refund of the security deposit furnished on or after August 12, 2003, subject to the work having been satisfactory and the employer not being entitled to make any deductions therefrom. The claim was lodged or the arbitral proceedings were commenced, within the meaning of Section 21 of the Act, on September 8, 2006. At least the letter is dated September 8, 2006 which may have been received within a few days of its issuance.

4. In the reference, the contractor relied on a document dated September 22, 2003 issued by the employer. The document was a statement showing the payments made to the contractor in respect of the road construction work undertaken by the contractor in Paschim Midnapore between the period 2001 and 2003.

5. The last three items of the document are relevant for the present purpose. It is not in dispute that these three items covered the subject contract pertaining to feeder roads leading to NH-6. The statement has 11 columns. The second column describes the work and the tender. The sixth column refers to security deposit. The seventh column refers to income-tax and the eighth to sales-tax. The last two columns indicate, respectively, the amounts actually paid by the employer to the contractor and the total amount covered thereby.

6. It is evident from the statement that the total payment component is comprised of the amount actually paid to the contractor, the amount deducted on account of income tax, the sum deducted on account of sales tax and the security deposit retained by the employer in terms of the contract. Each of the three values in the column of total payment is the sum of the cheque amount made over to the contractor, the security deposit retained by the employer and the income tax and sales tax components deducted from the total bill to be credited to the appropriate authorities.

7. The State asserts that nothing in the document of September 22, 2003 amounts to an admission or acknowledgement within the meaning of Section 18 of the Limitation Act, 1963 which would stretch the period of limitation to three years from such date. The State says that it would not only require a generous dollop of imagination to read the statement of payments as an admission of debt or acknowledgement of jural relationship between the parties, but the facts reveal that a part of the amount apparently shown to have retained by way of security deposit was paid to the contractor. The State contends that the relevant document could not have extended the period of limitation as the document did not amount to an admission of any liability on the part of the State to the contractor.

8. A commercial document has to be read with an element of commercial sense. Section 18 of the said Act of 1963 does not indicate a form in which the admission must be made and the highest judicial authorities instruct that as long as the acknowledgement of a jural relationship is discerned from a document, the same may be regarded as an appropriate document within the meaning of such provision and a fresh period of limitation would begin to count therefrom.

9. Since the security depos