JUDGMENT

The plaintiff in O.S.No.94 of 1999 on the file of the Sub Court, Devakottai is the appellant in this second appeal.

2.The case of the plaintiff is as follows:-

The plaintiff is the owner of the suit well. The defendant approached the plaintiff for permission to lift water from the well on payment of Rs.100/- per day. The defendant is a textile manufacturing industry. The defendant paid a sum of Rs.5,000/- on 11.03.1993 as security deposit. On 23.08.1993, they paid a further sum of Rs.30,000/-. Even though the defendant continued to draw water from the plaintiff's well, no further amount was paid. The defendant owed to pay a total sum of Rs.1,90,000/- by way of arrears. Since the said amount remained unpaid even after the repeated demands, the plaintiff instituted the aforesaid suit.

3.The defendant denied the plaint allegations. The defendant claimed that the amount of Rs.35,000/- paid by the defendant in March 1993 represented advance amount for purchase of the land on which the well is situated. The defendant would further claim that the well was dug by the defendant only. The defendant denied that they had agreed to pay a sum of Rs.100/- per day for lifting water from the said well. The defendant further pointed out that the plaintiff's power agent Mohammed Thasthakir was not only the brother of the plaintiff but also the managing director of the defendant company during the relevant time. Since the so called contract between the plaintiff and the defendant was not formally approved by the board of directors, the so called suit agreement cannot be made binding on the defendant. The trial Judge framed as many as five issues. Mohammed Thasthakir examined himself as P.W.1 and marked Ex.A1 to Ex.A8. On the side of the defendant, three witnesses were examined and Ex.B1 to Ex.B23 were marked. The learned trial Judge came to the conclusion that the defendant was liable to satisfy the suit claim. By Judgment and decree dated 10.07.2007, the suit was decreed. Questioning the same, the defendant filed A.S.No.3 of 2008 before the District Judge, Sivagangai. By Judgment and decree dated 04.06.2008, the Judgment and decree passed by the trial Court was set aside and the first appeal was allowed. Challenging the same, this second appeal came to be filed.

4.The second appeal was admitted on the following substantial questions of law:-

“1.Whether the Judgment and decree of the lower Appellate Court are correct and sustainable since the contract between the respondent and the appellant has not been legally avoided by the respondent, as per Section 297(5) of the Companies Act?

2.Whether the Judgment and decree of the lower Appellate Court dismissing the appellant's suit as barred by limitation are correct and sustainable, since the appellant's case is that the respondent owes to her the cost of the water lifter during the period from 11.03.1993 and 11.06.1999 minus Rs.35,000/- already paid, and the suit was filed on 13.08.1999?

3.Whether the Judgment and decree of the lower appellate Court are correct and sustainable, since the suit claim is not for arrears of rent and hence, Article 52 of the Limitation Act is inapplicable to the case?”

5.Heard the learned counsel on either side.

6.The learned counsel appearing for the appellant submitted that the First Appellate Court erred in reversing the well considered decision of the trial Court. The appellate Court ought not to have invoked Section 297 of the Companies Act for non suiting the appellant herein. The defendant in their written statements have not categorically stated as to when they notified the plaintiff about the voiding of the contract. The learned counsel for the appellant would submit that Section 297 of the Companies Act cannot be applied in the abstract. He also would point out that the defence of the defendant that there was a sale agreement between the parties had already been rejected in the other proceedings instituted by the defendant.

When it has been categorically establi