1967 Supreme(Raj) 157

Rajasthan High Court
Shinghal, J.
M/s. Babulal Rukmanand - Appellant
Versus
The Official Liquidator, Bharatpur Oil Mills (Pvt.) Ltd. - Respondents
S.B. Company Appeal No.5 of 1966
Decided On : December 08, 1967

Headnote:(a) Companies Act, Sec. 460(6)—Companies (Court) Rules, R. 164—Appeal against decision of official liquidator—Court may consider additional evidence.(b) Companies (Court) Rules, R. 164—Court may consider additional evidence.(c) Limitation Act, Sec. 19—Balance Sheet of Company—Where signed by duly authenticated person it amounts to acknowledgment of entry—But acknowledgement vitiated if it is shown to be colourable—But where balance sheet signed by other directors also who did not stand in any fiduciary relation to creditor, acknowledgment valid.

       Reading the provision of sub-sec. (6) of sec. 460 of the Act with R. 164, it becomes quite clear that there is justification for the argument that the appeal is really by way of an application for the scrutiny, by the court, of the decision complained against. There is no requirement that this right or opportunity is subject to any rigid rules of procedure for, while R. 164 provides that on the presentation of an appeal, the Court shall have all the powers of an appellate court under the Code of Civil Procedure, it does not go on to provide further that the rigid rules of procedure contained in the Code in respect of an appeal shall be applicable to such appeals also. While considering an appeal against the rejection of a creditors proof, the Court is at liberty to consider any additional evidence that may be led by the parties. (Para 3)

       A balance sheet cannot, with any justification, be excluded from the purview of sec. 19 if it otherwise serves its purpose. If a plea is taken that an entry in it amounts to an acknowledgment within the meaning of sec. 19, it will be necessary to examine it on the merits. If an entry in a balance sheet fulfills the requirement of sec. 19 of the Limitation Act, 1908, there is no reason why it should not amount to an acknowledgment of liability and give a fresh start to the period of limitation. But even if a balance sheet is otherwise found to have been authenticated in accordance with the law, that will not avail the creditor if the authentication is colourable and has been vitiated for some satisfactory reason.

       However, where are of the Directors stood in a fiduciary relationship because of his fathers interest in the debt owed by the Company, each one of those balance sheets having been signed by not less than two other directors who, it is admitted, were not in any way interested in the acknowledgment of the liability in favour of the appellant, there is no reason why they should not be held to be valid acknowledgments of the liabilities with in the meaning of sec. 19 of the Limitation Act, 1908. {paras 8, 10, 15 and 20)