26 October 2004
Supreme Court


Case number: C.A. No.-002259-002259 / 1999
Diary number: 3913 / 1999



CASE NO.: Appeal (civil)  2259 of 1999

PETITIONER: Food Corporation of India

RESPONDENT: Assam State Cooperative Marketing & Consumer Federation Limited & Ors.

DATE OF JUDGMENT: 01//4\001@\006

BENCH: October 26, 2004.



       The Food Corporation of India, the appellant herein filed a suit for  recovery of Rs. 79,82,105.44p. against four defendants (in fact two sets of  defendants) namely (i) the Assam Cooperative Marketing and Consumer  Federation Limited through its Managing Director; (ii) the General Manager  of the Federation (comprising the first set); (iii) the State of Assam  through  its  Chief  Secretary;  and  (iv) the  Secretary to the Government  of Assam in the Supply Department (comprising the second set) respectively    impleaded  as  defendant Nos. 1, 2, 3 and 4.   Hereinafter,  defendant  Nos.   1 and 2 shall be referred to as the ’Federation’ and defendant Nos. 3 and 4  shall be referred to as the ’State’ for convenience sake.

       According to the plaintiff, the State through its procuring agent, the  Federation, requested the plaintiff through the Government of India to take  over 20,000 metric ton of procured paddy of kharif season 1975-76 as per  specification and price to be fixed by the Government of India.  The request  was acceded to by the plaintiff.  It was also agreed that the plaintiff shall  pay 90 per cent of the amount as advance in nine instalments on the  condition that the balance 10 per cent will be paid after fixation of price by  the Government of India.  An amount of Rs. 1.8 crores was to be paid by way  of advance.  However, by mistake the plaintiff paid a sum of Rs. 2 crores as  advance to the Federation during the period 16/2/76 to 27/2/76.  In a  meeting which took place on 20/9/1976, wherein the representatives of the  parties and the Government of India were present, the price of paddy was  fixed and it was resolved that the value of the paddy supplied by the  Federation to the plaintiff was Rs. 1,60,63,190  as against an advance of Rs.  2 crores by the plaintiff to the Federation and thus there was an amount of  Rs. 39,36,810/- paid by the plaintiff to the Federation in excess.

       Here itself, it may be mentioned that the plaintiff also claimed an  amount of Rs. 7,03,541/- from the Federation on account of quality cut.   However, we do not propose to deal with that claim inasmuch as it has been  negatived by the trial court itself and we do not find any reason to take a  different view.

       Correspondence ensued between the parties regarding the plaintiff’s  claim against the Federation.  Several letters were exchanged.  At the end,  the plaintiff served a legal  notice and filed the suit for recovery on  13/05/1980.         The defendants contested the suit.  The principal defence raised in  the written statement was that the suit was barred by time inasmuch as the  cause of action, if any, had arisen to the plaintiff on 20/09/1976 and the  suit was filed beyond three years from that date and as such was beyond  the period of limitation.  The defendants also expressed in the written  statement a desire of pleading set-off and also of raising a counter claim  but that was not done.  After trying all the issues, the trial court held that



the plaintiff was entitled to recovery of Rs. 39,36,810/- only from the  Federation, but even that claim could not be decreed as the suit was filed  beyond the prescribed period of limitation.  Consequently, the suit was  directed to be dismissed.  

       The plaintiff preferred an appeal  in the High Court.  The only issue  agitated in the High Court was the one of limitation.  The High Court found  no reason to take a view different from the one taken by the trial court and  accordingly, directed the appeal to be dismissed.  This is an appeal by special  leave  preferred by the plaintiff.

       The issue as to limitation centers around two letters respectively  dated 29/03/1977 and 30/07/1977 marked as Exhibits 8 and 9(Annexures  P4 and P5).  According to the plaintiff these two letters written by the  Federation amount to acknowledgement of liability within the meaning of  Section 18 of the Limitation Act, 1963 and have the effect of extending the  period of limitation.  The trial court has found the letters not proved and  also not amounting to such acknowledgement of liability as may attract the  applicability of Section 18 of the Limitation Act.

       The first question which arises for consideration is whether the two  letters have been proved.  Madan Pathak-P.W.1 was Assistant Manager in  Food Corporation of India at the relevant time.  He deposed to all the  relevant facts in issue and substantiated all the material plaint averments.   During the course of his deposition, he stated \026 "Exhibit 7 is the letter given  by defendant No. 1 itself.  In that letter defendant No. 1 admitted to have  received Rs. 2 crores.  Exhibits 8 and 9 are the letters given by defendant  No. 1.  We have filed this suit for non payment of money by defendant No.  1."    There is no cross-examination directed on this part of the statement  made by plaintiff.  There is no suggestion given that such letters were not  sent by or on behalf of the Federation to the plaintiff.

       Both the letters Exhibits 8 and 9 are written on the letter pad of the  Federation.  Both bear despatch numbers.  The letter dated 29th March,  1977 has been written in response to plaintiff’s D.O. No. E-1(7)/75- 76/Proc./292 dated 14/03/1977.  The letter dated 30th July, 1977 (Exhibit- 9) has been written in response to Plaintiff’s D.O. No. ECM/FCI/P/76 dated  16/07/1977.  In both the letters, the Federation has disputed its liability to  pay the amount in view of certain disputes relating to settlement of  accounts.  The fact remains that both the letters acknowledge an amount of  Rs. 2 crores having been received by the Federation from the plaintiff.  The  letter dated 29/03/1977, marked as Exhibit-8, states inter alia \026 "We have  already covered a sum of Rs. 1,77,64,923.89 leaving a balance of only Rs.  22,35,075.11."  In latter part of the same letter the Federation has staked a  claim of Rs.48,73,984.74p.  against the plaintiff, as against the plaintiff’s  claim for the balance of Rs. 22,35,076.11p. and then states \026 "loss balance  amount against deposit of Rs. 2.00 crores".         In the letter dated 30/07/1977 against the same statement has been  reiterated.  The letter states at two places \026 "we have already covered a  sum of Rs.1,77,64,923.89 leaving a balance of only Rs. 22,35,076.11" and  "loss balance amount (Rs.22,35,076.11) against deposit of Rs. 2 crores".  It is  true that the letters Exhibits 8 and 9 were not written in the presence of  P.W.1.  He has also not deposed to any such facts as would amount to proof  of execution of document.  The fact remains that both these letters formed  part of the official record of the plaintiff and are placed as pieces or links  found in the chain of long correspondence entered into between the parties.   According to Section 35 of the Evidence Act - an entry in any public or  other official record  stating a fact in issue or relevant fact and made by  public servant in the discharge of his official duty is itself a relevant fact.   Section 39 of the Evidence Act makes a reference to any statement of  which evidence is given forming part of a connected series of letters or  papers.  In P.C. Purushothama Reddiar Vs. S. Perumal,  [1972] 1 SCC 9, the  question arose as to the admissibility and relevance of certain  correspondence included in the official records.  The Court observed \026  " The  learned Advocate General did not support the



exclusion of the last three on the ground that the copies of  correspondence kept in the Collector’s and taluk offices  were not signed but contended that they were not  admissible under Section 35 of the Indian Evidence Act.   We think however that copies of actual letters made in  registers of official correspondence kept for reference and  record are admissible under Section 35 as reports and  records of acts done by public officers in the course of  their official duty and of statements made to them and that  in the words of their Lordships in Rajah Muttu Ramalinga  Setupati Vs. Periyanayagum Pillai (1874) 1 Ind. App. 209 at p.  238, they are entitled to great consideration in so far as  they supply information of material facts and also in so far  as they are relevant to the conduct and acts of the parties  in relation to the proceedings of Government founded upon  them. We are in agreement with the view taken by the  Madras High Court in that case."           The Court further held that once the document has been marked as  exhibit without any objection from a party then such party cannot object to  the admissibility of document and once a document is properly admitted the  contents of that document are also admitted in evidence though those  contents may not be conclusive evidence.         The documents having been tendered in evidence without any demur  by the defendants, the same coming from proper custody and forming part  of official record of the appellant-Corporation and being part of the chain  of correspondence can be said to have been proved by P.W.1 more so when  his deposition to the effect that the two letters were received from the  Federation was not disputed by the defendant-Federation either by  directing any cross-examination on that part of the statement or by making  any suggestion to the contrary indicating the defendant’s case as regards  the said two letters.  In our opinion, the documents were proved and their  contents can be read in evidence.  Needless to say, there is no rebuttal of  the letters on the part of the defendants by way of evidence adduced in the  case.

       Once it is held that the two letters are proved then the next question  which arises is as to their effect on limitation.         According to Section 18 of the Limitation Act, an acknowledgement of  liability made in writing in respect of any right claimed by the opposite party  and signed by the party against whom such right is claimed made before the  expiration of the prescribed period for a suit in respect of such right has  the effect of commencing a fresh period of limitation from the date on  which the acknowledgement was so signed.  It is well-settled that to amount  to an acknowledgement of liability within the meaning of Section 18 of the  Limitation Act, it need not be accompanied by a promise to pay either  expressly or even by implication.

       The statement providing foundation for a plea of acknowledgement  must relate to a present subsisting liability, though the exact nature or the  specific character of the said liability may not be indicated in words.  The  words used in the acknowledgement must indicate the existence of jural  relationship between the parties  such as that of debtor and creditor.  The  intention to attempt such jural relationship must be apparent.  However,  such intention can be inferred by implication from the nature of the  admission and need not be expressed in words.  A clear statement containing  acknowledgement of liability can imply the intention to admit jural  relationship of debtor and creditor.  Though oral evidence in lieu of or  making a departure from the statement sought to be relied on as  acknowledgement is excluded but surrounding circumstances can always be  considered.  Courts generally lean in favour of a liberal construction of such  statements though an acknowledgement shall not be inferred where there is  no admission so as to fasten liability on the maker of the statement by an  involved or far-fetched process of reasoning.  (See : Shapoor Freedom



Mazda Vs. Durga Prosad Chamaria & Ors. AIR 1961 SC 1236 and "M/s  Lakshmiratan  Cotton  Mills  Co.  Ltd.  Etc. Vs.  The Aluminium Corporation of  India Ltd. 1969 (1) SCR 951). So long as the statement amounts to an  admission, acknowledging the jural relationship and existence of liability, it  is immaterial that the admission is accompanied by an assertion that nothing  would be found due from the person making the admission or that on an  account being taken something may be found due and payable to the person  making the acknowledgement by the person to whom the statement is made.

       The two letters dated 29/03/1977 and 30/07/1977(Exhibits 8 and 9)  clearly acknowledge the amount of Rs. 2 crores having been received by the  Federation from the Food corporation of India whether by way of advance  or by way of deposit.  The letters also indicate that the amount of two  crores was by way of advance or deposit against paddy procurement.  This is  admission of jural relationship of buyer and seller which stood converted  into relationship of creditor and debtor on the failure of the principal  transaction.  However, the acknowledged liability is sought to be disowned by  submitting that on an account being taken nothing would be found due and  payable by the plaintiff to the Federation.  Disputing the liability to repay  the amount acknowledged to have been received does not dilute the fact of  acknowledgement in so far as Section 18 of the Limitation Act is concerned.   The two letters have the effect of extending the period of limitation  prescribed for filing the suit and calculated from the date of the latter of  the two letters i.e. 30/07/1977, the suit filed on 30/05/1980 was well  within the period of limitation.         For the foregoing reasons, we cannot countenance the view taken by  the trial court and the High Court that the suit filed by the appellant was  barred by limitation.         The trial court, as already indicated, has found the plaintiff not  entitled to any claim other than the recovery of Rs. 39,36,810/-.  The claim  for interest was also found not liable to be sustained.  We are not inclined to  take a view different from the one taken by the trial court more so, when  we find that no plea other than that of limitation was pursued and pressed in  the High Court.         The appeal is allowed.  The judgments and decrees of the trial court  and the High Court are set aside.  Instead the suit filed by the plaintiff is  directed to be decreed against the defendant respondent Nos. 1 and 2 for  recovery of Rs. 39,36,810/- with costs proportionate to that amount  throughout.  The plaintiff shall also be entitled to interest calculated at the  rate of 6 percent per annum from the date of the suit till realization.