Allahbad High Court
B.DAYALANDS.D.KHARE
Lakshmi Ratan Cotton Mills Co. Ltd. - Appellant
Versus
The Aluminium Corporation of India Ltd. - Respondent
Decided On : 05/19/1966
LIMITATION ACT - ACKNOWLEDGEMENT OF LIABILITY - AUTHORITY OF SECRETARY - SECRETARY OF CORPORATION - POWER TO BIND CORPORATION - ACKNOWLEDGEMENT BY SECRETARY - VALIDITY.
Fact of the Case:
Two suits were filed by the plaintiffs against the defendant corporation for recovery of money due on open and current accounts. The plaintiffs claimed limitation from a letter dated 16th April, 1946, treating it as an acknowledgment of liability. The defendant corporation denied the acknowledgment and contended that the letter was not written by a person with authority to do so on its behalf.
Finding of the Court:
The court held that the letter dated 16th April, 1946 did not amount to an acknowledgment of liability and was not sufficient to extend the limitation. The court found that the secretary of the corporation, who wrote the letter, did not have the authority to bind the corporation by acknowledging liabilities.
Issues: 1. Whether the letter dated 16th April, 1946 amounted to an acknowledgment of liability and extended the limitation for the two suits. 2. Whether the secretary of the corporation had the authority to acknowledge a liability on behalf of the corporation.
Ratio Decidendi: 1. An acknowledgment of liability must be made by a person with authority to do so on behalf of the principal. 2. The secretary of a corporation does not have inherent powers to bind the corporation without proof of any special authority to do so. 3. The fact that the secretary is an officer of the company and is authorized to sign pleadings and receive notices under the Code of Civil Procedure does not mean that he has the authority to borrow loans or to bind the corporation by acknowledging liabilities.
Final Decision: The court dismissed both the suits on the ground that they were barred by limitation. The court also dismissed the appeal filed by the company against the dismissal of a part of its suit.
B. DAYAL, J. :- These three appeals arise out of two suits between the parties. Two of the appeals have been filed by the common defendant while third is by one of the plaintiffs Laxmi Ratan Cotton Mills Co. Ltd. These appeals have been pending in this Court since 1952 mainly because the parties insisted upon bringing lawyers from outside but were unable to decide upon a common date on which lawyers for both the sides were able to attend the Court. After all, with great difficulty, the appeals were started on the 6th of December, 1965 and were partly heard on the 7th of December, 1965 also, on which date learned counsel appearing for the defendant-appellants had finished their arguments. The learned counsel for the plaintiff-respondent started his case and argued for sometime but the cases had to be postponed. Since then several dates were fixed but the plaintiffs were unable to bring any counsel to complete the arguments on their behalf. The cases were ultimately fixed for the 9th of May, 1966 and the learned junior counsel who were appearing for the plaintiff-respondents were definitely informed that the date would not be altered. However, an application was again filed for postponement of the cases, from the 9th of May, 1966 and at the very clear promise on behalf of the learned junior counsel that any date after the 9th of May, 1966 would be adhered to and some senior counsel, who may be able to argue on the new date would be engaged, the cases were postponed to the 12th of May, 1966 by our order dated the 26th of April, 1966 on an application of the same date. However, no one appeared to argue the cases even on the 12th of May, 1966 and in view of the fact that the court was about to close for summer vacations, we refused to postpone the cases any further. The result, therefore, is that we have to dispose of these appeals without hearing the arguments on behalf of the plaintiffs in the two suits.
2. One suit no. 63 of 1949 was filed by Laxmi Ratan Cotton Mills Co. Ltd. against the Aluminium Corporation of India Ltd. while the other suit no. 65 of 1949 was filed by M/s. Behari Lal Ram Charan against the Aluminium Corporation of India Ltd. Before these suits were filed, the defendant the Aluminium Corporation of India Ltd. (hereinafter called the Corporation) as well as the two plaintiff's Lakshmi Ratan Cotton Mills Co. Ltd. (hereinafter called the Company) and M/s. Behari Lal Ram Charan (hereinafter called the Firm) were being looked after by the Gupta group and the Singhania group jointly with the result that the accounts of all the three were being mixed with each other and mutual open and current accounts were maintained in the Corporation, the Company and the Firm showing debit and credit balances in favour of each other. But by means of an award the two groups separated their interests so that the Corporation became the exclusive concern of the Singhania group and the Company as well as the Firm became the exclusive concerns of the Gupta group and it became necessary thereafter to settle the mutual accounts. In order to do so, both the groups appointed one officer each to look into the accounts and to negotiate on matters of difference. On behalf of the Corporation one Shri N. L. V. Subramanayam was directed to go into the accounts and to iron out differences while on behalf of the Gupta group another officer was similarly appointed and correspondence started between the two officers. Being unable to come to a common agreement, correspondence stopped and the Company filed suit no. 63 of 1949 for recovery of a sum of Rs. 3,56,207/9/6 with pendente lite and future interest. Apart from stating the history of the dealings between the parties, the plaint went on to say that an open and current account was being maintained by the plaintiff with regard to dealings with the defendant and that on demand of the balance of the amount due, the defendant paid on the 16th of November, 1944 a sum of Rs. 8,00,000 leaving a ba
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