JUDGMENT

Rajeshwari Prasad, J. - This is an appeal filed by Messrs Rampur Engineering Company Ltd. defendant from the decision of Sri Prayag Narain, District Judge, Rampur, dated 30th April 1965 in Original Suit No. 2 of 1965 filed by the plaintiff-respondent in that court.

2. Major General His Highness Nawab Sir Syed Raza Khan Bahadur, Nawab of Rampur filed this suit for recovery of money on the allegation that the defendant is a company registered under the Rampur State Companies Act, 1932; the plaintiff was a director of the defendant company for a number of years and was interested in its wellbeing. In the year 1960, the defendant company was short of funds and the plaintiff on being approached by it, agreed to finance the company to meet its urgent needs. On 24th Oct. 1950, the plaintiff advanced the sum of Rs. 67,000/- to the defendant company on the promise of payment of interest at the rate of 4 per cent per annum. In the year 1954, the management of the company changed and a new Board of Directors came into existence. The plaintiff's dues however remained unpaid. The plaintiff was willing to forego interest in case the payment was made as promised but as no payment had been made, the assurance of giving up interest also was not binding. Suit was filed for recovery of Rs. 78,453/- principal and interest on account of the above loan. It was further alleged that the loan had been acknowledged and admitted by the defendants from year to year in its annual balance sheets and that therefore the suit was within time.

3. Various pleas including the plea of bar of limitation, were raised by the defendant in the written statement filed by it.

4. The court below came to the conclusion that the suit was within time by virtue if the acknowledgements made in the yearly balance sheets prepared by the defendant company. It decreed the plaintiff's suit for recovery of the sum of Rs. 42,000/-principal and also interest at 5 per cent per annum simple on Rs. 67,000/-from 1st July 1954 to 12th May 1963; on Rs. 52,000/- from 13th May 1963 to 3rd June 1963; and on Rs. 42,000/-from 4th June 1963 to date of suit with proportionate costs and pendente lite and future interest on the amount decreed, at 5 per cent per annum simple.

5. Aggrieved by the said decision, the defendant as noted above, has filed the present first appeal.

6. Mr. Shanti Bhushan appearing for the defendant-appellant pressed two points before us. The first point pressed by the learned counsel for the appellant was that a balance sheet cannot constitute an acknowledgement within the meaning of Sec. 19 of the Indian Limitation Act, and this being so, the claim of the plaintiff was barred by time.

7. The second contention made by his was that the plaintiff never came out with a case that the rate of interest recoverable by him was 5 percent. His case was that it was only at the rate of 4 per cent per annum and consequently the lower court was not justified in awarding interest at the rate of 5 per cent per annum as it has done. He further urged that in case the claim of the plaintiff is found to be within time then it was a fit case in which a decree for payment by instalment may be passed.

8. In support of his contention on the first point, namely, that a balance sheet cannot constitute an acknowledgement within the meaning of Sec. 19 of the Indian Limitation Act, the learned counsel for the appellant pointed out that the plaintiff himself was a director of the defendant company and a party to the preparation of the balance sheet. The plaintiff, therefore, stood in a fiduciary relationship with the company and consequently, a document to which he was a party would not constitute a valid acknowledgement. The learned counsel relied upon some English decisions for the proposition put forth by him. In the next place, he urged that the recitals made in the balance sheets do not amount to acknowledgement of subsisting liability inasmuch as the balance sheet disclosed the financial s