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PETITIONER: LAKSHMIRATAN COTTON MILLS CO.  LTD.

       Vs.

RESPONDENT: ALUMINIUM CORPORATION OF INDIA LTD.

DATE OF JUDGMENT: 16/10/1970

BENCH: SHELAT, J.M. BENCH: SHELAT, J.M. VAIDYIALINGAM, C.A.

CITATION:  1971 AIR 1482            1971 SCC  (2) 623

ACT: Limitation    Act.   1908,   s.   19(1)-Acknowledgment    of liability--What amounts to-Authority to make  acknowledgment on behalf of corporation, when can be implied.

HEADNOTE: Prior  to  January  18, 1944 six  companies  including  M/s. Lakshmiratan.  Cotton Mills Co. Ltd. (the appellant-company) and  the  Aluminium Corporation of  India  Ltd.  (respondent corporation) were jointly managed by two groups known as the Singhania and Gupta groups.  As a result of disputes between the two groups there was a reference to arbitration.   After January  18, 1944, the date of the award, the aforesaid  six concerns  were brought under the management and  control  of one  or  the other of the two groups- The  Corporation  came under the control and management of the Singhania group.  In cl. 9 of the award it was said that the award did not  cover the advances which either party or their separate firms  may have made to all or any of them or their moneys which may be in deposit with them and that they would be payable and paid in  their  usual  course.  After the  award  the  appellant- Company  sent a statement of account in respect of  advances made to the respondent corporation, and expenditure incurred on its behalf.  The statement was objected to. on the ground that  the appellant company had not properly maintained  its accounts during the period of joint management.  Efforts  at reconciliation of accounts having faded the appellants filed two suits claiming Rs. 3,56,207.9.6 and Rs. 72,595.4.6  from the  Corporation,  being suits Nos. 63 and 65 of  1949.   In suit No. 63 of 1949 it was claimed that the suit was  within time as after adjustment of several items in 1946 and 1947 a sum  of Rs. 2,96,110..11.6 was found due to  the  appellant- company and that in any event the suit was saved from  being barred  by limitation by a letter (Ex.. 1) dated  April  16, 1946 addressed by s the Secretarycum-Chief Accountant of the Corporation,  thereby  acknowledging the  liability  of  the Corporation  to pay the amount which would be found due  and payable  under  the said accounts.  Similar  averments  were made in, Suit No. 65 of 1949.  The written statements  filed on  behalf  of the Corporation inter alia pleaded  that  the said  claim was barred by limitation, that the  said  letter didnot amount to an acknowledgement within the meaning of s.

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19  of theLimitation Act, 1908 which was then applicable  to the  suits,  and  lastly,that even if the  said  letter  did amount  to  an  acknowledgement, it wasnot  binding  on  the Corporation.  The trial court decreed the suits but  theHigh Court  dismissed  them as being time-barred. In  appeals  to this Courtthe questions that fell for consideration were (i) whether   the   letter   in   question   amounted   to    an acknowledgment;(ii) whether it was an acknowledgement by the corporation,  and if not (iii) whethe’r  the  Secretary-cum- Chief  Accountant  had  authority  express  or  implied.  to acknowledge liability on behalf of the Corporation so as, to bind that corporation.  Allowing the appeals, HELD:     (1)  (a)  From the provisions of s. 19(1)  of  the Limitation Act, 1908 it is clear that the statement on which the  plea  of acknowledgement is founded must  relate  to  a subsisting liability as the section requires 624 that  it  must be made before the expiration of  the  period prescribed  by the Act.  It need not, however, amount  to  a promise to pay, for an acknowledgement does not create a new right of action but merely extends the period of limitation. The  statement  need not indicate the exact  nature  or  the specific character of the liability.  The words used in  the statement  in  question, however, must relate to  a  present subsisting  liability  and indicate the existence  of  jural relationship between the partes such as, for instance,  that of a debtor and a creditor and the intention to admit such a jural relationship Such an intention need not be in  express terms  and can be inferred by implication or the  nature  of the admission and the surrounding circumstances.   Generally speaking a liberal construction of the statement in question should be given.  That of course does not mean that where  a statement  is made without intending to admit the  existence of a particular jural relationship, such an intention should be  fastened  on  the  person making  the  statement  by  an involved or a far fetched reasoning. [629 C-E] Khan   Bchadur  Shapoor  Freedoom  Mazda  v.  Durga   Prosad Chamaria,  [1962] 1 S.C.R. 140, Tilak Ram v.  Nathu,  A.I.R. 1967  S.C. 935, 938, 939, Green v. Humphreva, [1884] 26  Ch. D.  474,  481, Tajpal Saraogi v. Lallanjee  Jain,  C.A.  No. 766/62 dt. 8-2-1965 and Abdul Rahim Oosman & Co. v. Ojamshee Prushottamdas  & Co., [1928] I.L.R. 56 Cal.  6,39,  referred to. (b)  From  the  correspondence between the parties  and  the surrounding  circumstances it must follow that there  was  a subsisting account in the name of the appellannt company in the  books  of  the Corporation in  which  interest  on  the balance  shown therein from time to time was being  credited and  in which amounts in respect of items passed during  the course  of  reconciliation  were also  duly  credited.   The statement  in  the letter Ex. 1 that "after  all  the  above adjustments the position will be as per statement attached", that   is  to  say,  that  there  ’was  a  balance  of   Rs. 107447/13/11  due and payable to the appellant company  must clearly  amount to acknowledgement within the meaning of  S. 19(1).  If the letter be looked at in the background of  the controversy  between  the  parties  which  controversy   was limited to the question as to the correct-ness of the amount claimed by the appellant company as also the  correspondence which ensued in regard to it, it would be impossible to  say that  the  letter  and the  statement  of  account  enclosed therewith  were merely explanatory and did not amount to  an admission of the jural reship of debtor and creditor and  of the liability to pay the amount found due at the foot of the account on finalisation. [635 D-F]

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The  mere  fact that letter called for confirmation  of  the amount of the balance mentioned therein and the fact  that the  appellant company failed to confirm it, could not  lead to  a  conclusion  that  the  admission  of  liability   was conditional  and therefore could not operate as  an  acknow- ledgement.  The confirmation sought in the letter was not  a condition  to  the  admission  as  to  the  existence  of  a subsisting  account and the liability to pay  when  accounts were finalised but to the specific amount which according to the corporation would be the amount payable by it  according to  its  calculation.  ’There was no  condition  subject  to which   the  admission  was  to  be  made   which   remained unperformed. [635 G; 636 F-G; 637 B] Maniram   v.  Rupchand,  L.R.  33  I.A.  165,  Raja   Kayali Arunachella  Row  Bahadur  v. Sri  Rajah  Rangiah  Appa  Row Bahadur,   [1906]  I.L.R.  29  Mad.  519  and   Ballapragada Ramamurthy  v. Thammana Gopayya, [1917] I.L.R. 40 Mad.  701, distinguished.  625 LAXMIRATAN COTTON MILLS V. ALUMINIUM CORP. (Shelat, J.) In  re River Steamer Co. v. Mitchell, L.R. 6 Ch.  App.  822, 828, referred to., (ii) The  plea that the letter Ex.  I should be regarded  as an  acknowledgement  by  the  corporation  itself  was   not included  among  the  issues formulated  before  the  courts below.   It could not be allowed to be raised for the  first time in this Court. [628 B] (iii)     If the correspondence between the parties together with  the  statements  of accounts  enclosed  therewith  was closely  examined it became clear that S was  authorised  to scrutinise  the  claim made by the  appellant  company,  the various  items  for  which the  appellant  _company  claimed credit  and  to reject the same and, what is  important,  to allow others.  That he had such an authority was clear  from the  fact  that  in respect of such of the  items  which  he allowed,  credit  was given to the appellant  and  necessary entries  to the credit of the appellant company were  posted in the account maintained by the Corporation in its books of account.   It  was impossible to say that in the  course  of finalising  the accounts, S accorded his assent  to  various items  claimed by the appellant company without having  been authorised so to do.  Nor was it possible to say that on his passing those items necessary entries were made in the books of  accounts  of  the  corporation  without  his  having  so authorised.   Further,  he  could  not  have  sent  to   the appellant company statements of account showing the  balance due  to it "as per the ledger" unless he was  authorised  to finalise  the  accounts  and arrive at the  amount  due  and payable to, the company. [637 E-F; 638 B-C] Uma  Shankar v. Govind Narain, I.L.R. 46 All. 982,  referred to.

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  116,  117 and 119 of 1967. Appeals from the judgment and decrees dated May 19, 1966  of the Allahabad High Court in First Appeals Nos. 441 of  1950, 198 of 1952 and 442 of 1950 respectively. S. V. Gupte, S. T. Desai, J. P.  Goyal and G. N. Wantoo, (or the appellants (in all the appeals). Sidhartha  Ray, A. K. Sen, Rameshwar Nath, Krishna  Sen  and Swaranjit Sodhi, for the respondent (in all the appeals). The Judgment of the Court was delivered by Shelat,  J.  Prior to January 18,  1944  M/s.   Lakshmiratan

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Cotton  Mills  Co.  Ltd. (hereinafter  referred  to  as  the appellant  company),  Aluminium Corporation  of  India  Ltd. (hereinafter  referred to as the corporation, J.K.  Limited, Beharilal Kailashpat India Supplies, Northern India  Trading Co.,  and Northern India Brush Manufacturing Co.  Ltd.  were all jointly managed by two, groups, who may conveniently  be called the Singhania and the Gupta groups.  Disputes  having arisen between them, they were referred to arbitration by  a deed  of  reference,  dated December 9,  1943.   It  is  not necessary to go into the details of the award, dated January 18, 1944, by which these disputes were adjudi- 626 cated upon except that from and after the date of the  award the aforesaid concerns were brought under the management and ,control  of one or the other of the said two  groups.   The corporation  came  under the control and management  of  the Singhania group.               Cl. 9 of the award provided as follows               "The  above award or directions in respect  of               Laxmi  Ratan Cotton Mills Co. Ltd.,  Aluminium               Corporation   of  India  Ltd.,  J.  K.   Ltd.,               Beharilal Kailashpat India Supplies,  Northern               India   Trading   Co.   and   Northern   Brush               Manufacturing  Co. do not cover  the  advances               which either party or their separate firms may               have  made  to  all or any of  them  or  their               moneys  which may be in deposit with them  and               they shall be payable and paid in their  usual               course." According to the appellants, there existed in their  trading books  :accounts in respect of amounts advanced or spent  by them  for,’ the corporation in respect of which cl.  (9)  of the  award  specifically  made provision for  and  also  for interest  due  thereon.   After  the  award  was  made   the appellant-company  sent  a  statement  of  account  to   the corporation, but this was objected to on the ground that the appellant-company, during the course, of the previous  joint management  of the corporation, had not properly  maintained the accounts and that several items were either not properly accounted  for or entered into.  Correspondence thereafter ensued  between  the parties.  The  parties  also  appointed their  respective  officers  to  meet  and  reconcile  their respective accounts the corporation being represented by its Secretary-cum,Chief  Accountant, one Subramanayam,  and  the appellant-company sometimes by one Arora and at other  times by  one Newatia.  Since no settlement could be  arrived  at, the appellants filed two suits claiming Rs. 3,56,207-9-6 and Rs. 72,595-4-6 from the corporation, being Suit Nos. 63  and 65 of 1949. In  para  14 of the plaint in Suit No. 63 of  1949,  it  was claimed  that the suit was within time as after  adjustment of several items in 1946 and 1947 a sum of Rs. 2,96,110-11-6 was found due to the appellant-company and that in any event the  suit  was saved from being barred by  limitation  by  a letter   ,dated  April  16,  1946  addressed  by  the   said Subramanayam,  thereby  acknowledging the liability  of  the corporation  to pay the amount which would be found due  and payable  under  the said accounts.  Similar  averments  were also made in the plaint in Suit No. 65 of 1949.  The written statements filed by the corporation inter alia pleaded  that the said claims were, barred by limitation, 627 LAKSHMIRATAN  COTTON MILLS V. ALUMINIUM CORP.  627  (Shelat, J.) that  the said letter did not amount to  an  acknowledgement

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within  the  meaning of S. 19 of the  Limitation  Act,  1908 which  was  then applicable to the suits, and  lastly,  that even if the said letter did amount to an acknowledgment,  it was not binding on the corporation as the said  Subramanayam had no authority to make any such acknowledgement for and on behalf  of and binding on the corporation.  On the  question of  limitation, the Trial Court raised three  questions  for its  determination;  (1)  whether the  letter  (Ex.  1)  was binding  on the corporation, (2) whether it amounted  to  an acknowledgement, and (3) if so, whether it would extend  the period  of limitation so as to save the claims made  by  the appellants,  from  being barred.  On consideration  of  the, evidence, both oral and documentary, the Trial Court held in favour  of  the appellants on all the  three  questions  and passed decrees in both the suits. Three  appeals  were filed in the High Court  against  those decrees,  two  by  the  corporation and  the  third  by  the appellant company as the claim allowed in its favour was for a reduced amount.  As framed by the High Court, the question common to all the three appeals was whether the said  letter (Ex. 1) amounted to an acknowledgement extending the  period of  limitation.   The High Court, on  consideration  of  the correspondence  between the parties and the other  evidence, reached  the conclusion that the letter (Ex. 1) was  "merely explanatory"  and  was not, meant to bind  the  corporation, that   even   if   it  did  amount  to  "   some   kind   of acknowledgement", its author, the said Subramanayam, bad  no authority to acknowledge any debt or liability on behalf  of the  corporation.. In this view the High Court held the  two suits  barred  by limitation and allowed  the  corporations, appeals.   It  rejected the appellant-company’s  appeal  and dismissed  the two suits.  Hence these three  appeals  under certificates granted by the High Court. It  was never disputed that, except for the letter  (Ex.  1) relied on by the appellant-company, provided it amounted  to an acknowledgement binding on the corporation, the claims of the,    appellants   would   be   barred   by    limitation. Consequently,  the  questions  for  determination  in  these appeals  are  the same as the ones before  the  High  Court. These  questions  were canvassed before us  in  their  three aspects; firstly, whether the letter (Ex. 1) amounted to  an acknowledgement,  secondly,  if it did, whether  it  was  an acknowledgement  by  the corporation, and thirdly,  if  not, whether  the  said Subramanyam, who addressed  it,  had  the authority  express or implied, to acknowledge  liability  on behalf of the I corporation so ’as to bind that corporation. Counsel for the appellant-company sought to argue that in as much as the letter, (Ex. 1) was written by the corporation’s 628 Secretary,  who  also  combined the position  of  the  Chief Accountant,  and furthermore, addressed that letter for  and on  behalf of the corporation, the letter was of and by  the corporation.   Therefore,  if  the  letter  amounts  to   an acknowledgement,  such  acknowledgement  would  be  by   the corporation itself and no enquiry would then be necessary to ascertain whether the said Subramanayam had the authority to acknowledge the liability so as to bind the corporation.  No such plea, however, is to be found in the plant which merely stated   that  "there  are  several   letters   constituting acknowledgement  of  the unsettled account.   The  plaintiff files one of such letters which is dated 16th April,  1946." The written statement denied that the corporation, ever made any acknowledgement or that the letter of April 16, 1946 was any  such  acknowledgement.  It further denied  that  Subra- manayam, who wrote it, had any authority to acknowledge  any

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debt.  Such a comprehensive denial notwithstanding, no issue was  raised  covering the argument now urged that  the  said letter  was  and  must  be  treated as  one  of  or  by  the corporation,  and that therefore, there was no  question  of Subramanayam  having or not having the authority to make  an acknowledgement  on  behalf  of the  corporation.   No  such argument also appears to have been made either in the  Trial Court  or the High Court where the controversy was  centered around  the  question whether the said letter  contained  an acknowledgement  and  whether its writer, addressing  it  on behalf of the corporation, had the authority to make such an acknowledgement binding on the corporation.  In our view Mr. Gupte  could  not, at such a belated stage,  raise  for  the first  time  the  plea that it  was  the  corporation  which through  the said letter made the acknowledgement and  that we   should   understand  that  letter  to  mean   such   an acknowledgement by the corporation itself. The   question,  therefore,  that  really  arises  for   our determination  is  whether  the  said  letter  contains   an acknowledgement,  which  its writer,  Subramanyam,  had  the authority, express or implied, to make.  Even that  question gets reduced in extent and scope as it was never the case of the appellant-company at any stage that the corporation  had clothed its Secretary with such authority expressly.  Such a case Mr" Gupte did not make out even before us and proceeded in fact to argue that the evidence on record showed that  he had such authority given to him impliedly. Sec. 19(1) of the Limitation Act, 1908 provides that  where, before the expiration of the period prescribed for a suit in respect  of  any property or right,  an  acknowledgement  of liability in respect of such property or right has been made in writing signed by the party against whom such property or right  is  claimed, a fresh period of  limitation  shall  be computed from the time 629 when   the  acknowledgement was so signed.   The  expression ’signed’ here means not only signed personally by  such  a party, but also by an agent duly authorised in that  behalf. Explanation   1  to  the  section  then  provides  that   an acknowledgement  would  be  sufficient though  it  omits  to specify the exact nature of the property or right, or  avers that  the  time  for  payment  has  not  yet  ,come,  or  is accompanied  by a refusal to pay or is coupled with a  claim to  a  set-off, or is addressed to a person other  than  the person  entitled to the property or right.  The new  Act  of 1963 contains in S. 18 substantially similar provisions. It is clear that the statement on which the plea of  acknow- ledgement  is founded must relate to a subsisting  liability as  the  section requires that it must be  made  before  the expiration of the period prescribed under the Act.  It  need not,   however,  amount  to  a  promise  to  pay,  for,   an acknowledgement  does not create a new right to  action  but merely extends the period of limitation.  The statement need not indicate the exact nature, or the specific character  of the liability.  The words used in the statement in question, however,  must relate to a present subsisting liability  and indicate  the existence of jural relationship,  between  the parties,  such  as,  for instance, that of a  debtor  and  a creditor,   and   the   intention  to   admit   such   jural relationship.   Such  an intention need not  be  in  express terms and can be inferred by implication from the nature  of the admission and the surrounding circumstances.   Generally speaking,  a  liberal  construction  of  the  statement   in question should be given.  That of-course does not mean that where  a  statement is made without intending to  admit  the

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existence  of jural relationship, such intention  should  be fastened  on the person making the statement by an  involved and far-fetched reasoning. (see Khan Bahadur Shapoor Freedom Mazda v. Durga Prosad Chamaria(1) And Tilak Ram v. Nathu(2). As   Fry,   L.J.,  in  Green  v.   Humphreys(3)   said   "an acknowledgement is an admission by the writer that there  is a debt owing by him either to the receiver of the letter  or to some other person on whose behalf the letter is  received but  it is not enough that he refers to a debt as being  due from somebody.  In order to take the case out of the statute there must upon the fair construction of the letter, read in the light of the surrounding circumstances, be an  admission that  the  writer  owes the debt." As  already  stated,  the person  making  the acknowledgement can be both  the  debtor himself as also a person duly authorised by him to make  the admission.  In Khan Bahadur (1)  (1962) 1 S. C. R. 140. (2)  A. I. R. 1967 S.C. 935, at 938, 939. (3)  (1884) 26 Ch.  D. 474 at 481. 13-L436 Sup C 1/71 630 Shapoor  Fredoom  Mazda’s  case(1)  the  Court  accepted   a statement  in a letter by a bortgagor to a second  mortgagee to  save  the mortgaged property from being sold away  at  a cheap  price  at  the instance of  the  prior  mortgagee  by himself  purchasing it as one amounting to an  admission  of the  jural  relationship of a mortgagor and  mortgage&,  and therefore,  to  an acknowledgement within s. 19.   Also,  an agreement   of  reference  to  arbitration   containing   an unqualified  admission  that whoever on  account  should  be proved  to  ’be the debtor would pay to the other  has  been held to amount to an acknowledgement.  Such an admission  is not  subject  to  the condition that  before  the  agreement should operate as an acknowledgement, the liability must  be ascertained by the arbitrator.  The acknowledgement operates whether  the arbitrator acts or not. (see Tejpal Saraogi  v. Lallanjee  Jain(2), ,approving Abdul Rahim Oosman &  Co.  v. Ojamshee Prushottamdas & Co. (3). The  letter  (Ex.  1) relied on as  an  acknowledgement  was written to the appellant-company by Subramanayam signing  it "for  Aluminium  Corporation of India Ltd." it  consists  of Several  paragraphs dealing with diverse items  relating  to different  amounts  ,claimed by the appellant-company  in  a statement of claim previously sent by it to the corporation, some  of which are refuted by the writer, while  the  others are  accepted.  The penultimate paragraph, which is said  to contain the admission, reads as follows               "After all the above adjustments, the position               will  be as per statement attached.   Interest               has  been  provided on some  balances  and  on               others  it has not been provided.  We  request               you,   to   confirm   the   balance   of   Rs.               1,07,477-13-11,  so that we may  proceed  with               the  calculation of interest and  settle  your               claim once and for all immediately.               Kindly  acknowledge this letter and favour  us               with an immediate reply." The letter speaks in the last sentence of a copy of it to be sent  to Lala Purshottam Dasji Singhania "for  information". The co of the letter, as is clear from the other evidence as also  the words "for information" was not sent for  approval and  was  obviously  not  intended to  be  subject  to  such approval  by Purushottam Singhania.  The statement  enclosed with the letter headed "Account of M/s.  Lakshmiratan Cotton Mills  Co.  Ltd.’ and first sets out the  balance  of  Rs.

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1,00,760-0-7 in  favour of (1)  (1962) 1. S. C. R. 140. (2)  C.A. No. 766 of 1962, decided. on Feb. 8, 1965. (3)  (1928) 1. L. R. 56 Cal. 639. 631 the  appellant-com  any  "as per our  ledger",  meaning  the ledger  of the corporation, and the first foot-note  thereto states that that amount included interest of Rs.  26,490-11- 10  calculated upto March 31, 1943.  Several amounts due  to other  concerns payable to or by the appellant-company  are, then  adjusted  and finally the balance is  struck at  Rs. 1,07,447-13-11  (which  is the one mentioned in  the  letter (Ex.  1)  which if confirmed by the  appellant-company,  the corporation  would  "settle  your claim  once  and  for  all immediately." The High, Court, as aforesaid, held, contrary to the view of the  Trial Court, that these letter was  only  "explanatory" and  was not intended to be an admission of liability or  of the  jural  relationship between the parties as  debtor  and creditor.   Counsel  for  the  corporation  also  argued  in support of the High Court’s view that the letter was written in  the  process  of adjustment and  reconciliation  of  the statement of claim addressed by the appellant-company and  a counter.-statement  to it by the corporation and  therefore, could  not  be held to be one intended as  an  admission  of liability  on the part of the corporation, and that, in  any event,  Subramanayam,  who  wrote it, had  no  authority  to acknowledge any such liability on behalf of the corporation. Before we proceed to inquire into the correctness or  other- wise  of the High Court’s view in regard to the letter  (Ex. 1),  it  would be necessary to  examine  the  correspondence which   previously  ensued  between  the  parties  and   the surrounding circumstances which led to that letter. As  already stated, under cl. (9) of the award by which  the concerns,  once, jointly controlled, were separated,  moneys advanced by either of the parties or their firms or standing in deposit with them were to be payable by one to the other. The award also directed the Gupta group to hand over to  the Singhanias account books and other papers and files relating to  the  corporation.  Accordingly, the Guptas  handed  them over to the corporation on February 1. 1944.  The  complaint of  the  corporation  was  that these  books  had  not  been properly posted up and contained discrepancies and that  the corporation consequently required-the help of the Guptas  to finalise  them.  Early in March 1945, the  appellant-company had  also  sent  a statement of account in  respect  of  the amounts due and payable to it by the corporation.  On  April 20,  1945, one Col.  Naidu, a director of  the  corporation, wrote  to the appellant-company pointing out from  the  said statement  of  account certain items which  the  corporation disputed.   On  11th/12th September,, 1945,  the  appellant- company  sent a statement of account claiming  Rs.  2,94,000 and odd as payable to it.  On December 17, 1945, 63 2 a  reply  thereto was given by a letter sent  by  Lakshmipat Singhania,   the  director-incharge,  of  the   corporation, mentioning various items disputed by the corporation and the efforts  made  by it to reconcile those items  and  enclosed with that reply a reconciliation statement showing the  true position according to the corporation.  Among other  things, the reply stated as follows               "You  will  find from the above that  we  have               tried  our  level  best  to  see  that   these               accounts  are settled as early as possible  as               we  have been very anxious for finalising  but

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             unfortunately,  there has been  absolutely  no               response-from your side.               From  the  reconciliation statement  you  will               find that according to our books amount due to               the Laxmi Ratan Cotton Mills Co. Ltd., is  Rs.               98,101-3-1 which includes interest  calculated               and credited to your account up to 31st March,               1943.   The interest from that date  till  the               date of settlement is further to be calculated               when  this account is properly reconciled  and               confirmed by you." The reply pointed out that as against the said amount of Rs. 98,101-3-1  the corporation claimed Rs. 38,490-2-2  and  Rs. 8,256-13-6  which,  according  to it, had  to  be  adjusted. Lastly,, the reply threatened that unless the accounts  were finalised  within  a month "we will not be  paying  you  any interest on any of your dues beyond 30th September,  1945-". The  position, as stated in the statement enclosed with  the reply, was as follows "Reconciliation  of  Accounts of M/s.   Lakshmiratan  Cotton Mills Co. Ltd.      Balance as per A.C.I. Ltd. Books    Rs.   98,101-3-1       Balance as per statement           Rs. 2,94,658-0-9                                         -----------------                  Difference              Rs. 1,96,556-13-8"                                         ----------------- Then  followed  detailed items claimed  by  the  corporation totalling  Rs.  1,96,556-13-8.  The  statement  referred  to above was the one under which the appellant-company  claimed Rs. 2,94,658-0-9 and which was sent earlier in March 1945 by Ram  Ratan Gupta to Purushottam Singhania.  The  corporation took objection to it by claiming various amounts and against which,  according  to  the corporation, only a  sum  of  Rs. 98,.101-3-1  was  payable by it "as per A.C.I.  Ltd.   Books that is to say, as shown by the books of account  maintained by the corporation.The reply of the appellant-company, dated December 6, 1945, to the  633 of  the  appellant-company, dated December 6, 1945,  to  the afore-aforesaid  letter  of  September  17,  1945 and  the statement  enclosed  thereto shows that the  said  Arora  on behalf of the appellant company and the said Subramanayam on behalf  of  the corporation met and tried to  reconcile  the accounts.   The  appellant company by this reply  also  sent particulars  of  certain  items  apparently  called  for  by Subramanayam  at  that  meeting and in its  turn  asked  for particulars  of  certain  items debited to it  in  the  said reconciliation  statement.   On December  21,  1945,  Subra- manayam   replied  to  the  appellant-company’s  letter   of December  6, 1945.  By that letter he conveyed  two  things, (1)  that  in  respect  of  certain  items  claimed  by  the appellant-company and which were disputed, those items  were either  passed  or  disallowed,  and  (2)  that  since   the appellant.-company  had combined in its statement  of  claim accounts of other allied concerns also, he too had  combined those accounts while preparing the statement of accounts  he was sending along with his letter.  The letter concluded  by stating  :  "we herewith enclose  a  consolidated  statement after  merging all these accounts." The consolidated  state- ment,  (Ex.  44) enclosed by Subramanayam  with  his  reply, reads as follows :        "Accounts of Messrs Lakshmiratan Cotton Mills                          Co.  Ltd.                             1945 December 1. By balance as per our ledger Rs. 1,00,304-7-7

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Then  follow accounts of other concerns whose accounts  were brought  in  in what Subramainayam called  the  consolidated statement of account.  This statement reflected the position of  the  appellant--company in the  corporation’s  books  of accounts as on December 1, 1945. It will be noticed that the amount admitted in the statement by the corporation as due to the appellant-company rose from Rs.  98,000  and odd (as per the  earlier  statement,  dated September 17, 1945) to Rs. 1,00,304-7-7.  This increase  was due  to the fact that, while adjusting the  disputed  items. Subramanayam  had allowed and "passed" some of them  between September  and  December 1945 when the disputed  items  were discussed and adjusted, and entries relating to those  which were  passed  were posted to the credit  of  the  appellant- company in the books of the corporation. The letter of December 21, 1945 was replied to by the appel- lant-company on February 25, 1946 by asking particulars in 63 4 respect of item claimed by Subramanayam in his said  letter. It was in answer to this letter that Subramanayam wrote  the letter  (Ex.  1) in controversy and with which he  sent  the statement  showing  Rs. 1,07,447-13-11 as  "Balance  carried down". Correspondence continued thereafter between the parties, the appellant company maintaining that a much larger amount  was due to it than the sum of Rs. 1,07,447-13-11.  Except  that, the  later correspondence would not throw any light  on  the question  as to acknowledgement, and therefore, we need  now detain ourselves on it. Leaving  aside for the time being the question as to  Subra- manayam’s  authority,  the following facts emerge  from  the correspondence  and the statements of accounts  accompanying some of the letters sent on behalf of the corporation :               (a)   In  pursuance  of cl. (9)  of  the  said               award,  the  appellant-company  sent  to   the               corporation  in the beginning of March 1945  a               statement of account claiming Rs. 2,94,000 and               odd as due to it.               (b)   At   no   time   during   the    lengthy               correspondence   which  ensued   between   the               parties, the corporation denied its  liability               to  pay;  what  it did  was.  to  dispute  the               correctness  of  the  amount  claimed  by  the               appellant-company by challenging certain items               for which the appellant-company claimed credit               and  by making certain counter claims  of  its               own.  As against the statement of account sent               by the appellant-company, the corporation sent               its   own  statement  which  it   called   the               ’reconciliation account’.               (c)   During  the  process of  adjustment  and               reconciliation of the several items claimed by               the  appellant-company some were  allowed  and               some were rejected, and the corporation sought               to  debit certain items claimed by it  against               the appellant-company.               (d)   According    to    the    reconciliation               statement sent by the corporation on September               17,  1945 only Rs. 98,000 and odd was  due  to               the appellant-company as against its claim for               Rs. 2,94,000 and odd.  Later, this figure  was               raised from time to time as some of the  items               claimed by the appellant-company were allowed               6 3 5               with  the  result that in the  statement  sent

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             along with the letter (Ex. 1 ) the balance due               to  the  appellant-company was  shown  at  Rs.               1,07,447.               (e)   The statements of accounts, (Exs. 43 and               44) and the one enclosed with the letter, (Ex.               1  ) in clear terms stated that  the  balances               shown  therein  were as shown  in  the  ledger               maintained  by the corporation.   The  letters               equally  clearly stated that interest on  such               balances  was  being credited  up  to  certain               dates  and  for the further  period  would  be               credited when the accounts were finalised. It must follow from these facts that there was a subsisting. account in the name of the appellant-company in the books of the  corporation  in  which interest on  the  balance  shown therein  from time to time was being credited and  in  which amounts  in  respect of items passed during  the  course  of reconciliation  were also being credited.  The statement  in the letter (Ex. 1) that "after all the above adjustments the position will be as per statement attached", that is to say, that  there  was  a balance of Rs.  1,07,447-13-11  due  and payable to the,appellant-company, must clearly amount to  an acknowledgement within the meaning of S. 19(1).  In our view if the letter (Ex. 1) were to be looked at in the background of  the controversy between the parties,  which  controversy was,  as  aforesaid,  limited  to the  question  as  to  the correctness  of the amount claimed by the appellant  company as also the correspondence which ensued in regard to it,  it would  be impossible to say that the letter (Ex. 1) and  the statement   of  account  enclosed  therewith   were   merely explanatory and did not amount to an admission of the  jural relationship of debtor and creditor and of the liability  to pay  the  amount  found due at the foot of  the  account  on finalisation. But  the argument was that since the letter (Ex.  1)  called for confirmation of the amount of Rs. 1,07,447 as being  the balance  due to the appellant-company and.-as the  appellant company failed to confirm it, the admission of liability was conditional,   and   therefore,   cannot   operate   as   an acknowledgement.  In this connection the decision in Maniram v.  Rupchand(1) was relied on and in particular  the  famous dictum  of  Mellish,  L.J., in In re River  Steamer  Co.  v. Mitehell(2) approvingly cited therein.  The dictum was that an  acknowledgement to take the case out of the  statute  of limitation must be either one from which an absolute promise to pay can be inferred, or secondly, an (1) L. R. 33 1. A. 165. (2) L. R. 6 Ch.  App. 822, at 828. 636 unconditional promise to pay the specific debt, or  thirdly, that there must be a conditional promise to pay the debt and evidence  that  the  condition  has  been  performed.    The statement   relied   on   in   Maniram’s   case(1)   as   an acknowledgement was by the respondent in a written statement filed  by him in an earlier bate proceeding in which it  was averred  that the applicant chand Nanabhai (the  respondent) "had for the last five ye open and current accounts with the deceased  (the testator) that the alleged  indebtedness  did not  affect his right to apply for probate", as one  of  the executors.  It was held that the statement was sufficient to constitute    an   acknowledgement.     "An    unconditional acknowledgement",  said  their Lordships, "has  always  been held to imply a promise to pay, because that is the  natural inference  if nothing is said to the contrary.  It  is  what every  honest man would mean to do.  There can be no  reason

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for  giving a different meaning to an  acknowledgement  that there is a right to have the accounts settled, and no quali- fication  of  the  natural inference  that  whoever  is  the creditor  shall be paid when the condition is  performed  by the  ascertainment of a balance in favour of  the  claimant. It  is  a case of the third proportion of Mellish,  L.J.,  a conditional promise to pay and the condition performed."  We do  not  see how this decision can support  the  corporation since  in the present case also there was an admission of  a subsisting   account  on  the  finalisation  of  which   the corporation was prepared to pay the balance found due at the foot  thereof.   The  only dispute was what  would  such  as balance,  Rs.  1,07,447,  according to  the  corporation,  a larger  sum  according to the appellant.-company.  The  con- firmation  sought  for  in  the letter (Ex.  1)  was  not  a condition  to  the  admission  as  to  the  existence  of  a subsisting  account  an the liability to pay  when  accounts were finalised, but to the specific amount which,  according to  the  corporation,  would  the  amount  payable  by   it. according to its calculation.  The decision in, Raja  Kavali Arunachella Row Bahadur v. Sri R Rangiah App Row  Bahadur(2) does  not  apply  as  the condition  subject  to  which  the settlement there was made was not performed, and  therefore, the document was held to be one which could not be spelt out as  an  acknowledgement.   In  Rallapragada  Ramamurthy   v. Thammana  Gopayva(3)  also,  the  letter  relied  on  as  an acknowledgement  stated that if certain  arbitrators  should decide  that  the defendant should pay any amount  he  would immediately pay, but if the arbitrators failed to decide the plaintiff might sue and the defendant in that case would not plead limitation.  The arbitrators failed to decide.  It was held  that the letter being conditional and  the  condition not having been (1) L. R. 33 1A. 165.     (2) [1906] 1. L. R. 29 mad. 519:               (3) [1917] I. L. R 40 Mad. 701.  637 performed did not operate as an acknowledgement.  This deci- sion  too has no bearing on the facts of the  present  case. Unlike  the cases relied on by Mr. Sen, the present case  is one  of an admission of a subsisting, account and the  jural relationship and the liability to pay whatever amount  would be  found  due  on finalisation of accounts.   There  is  no condition  subject  to which the admission  was  made  which remained unperformed. Ordinarily, the functions of Subramanym as the secretary  of the corporation would be ministerial and administrative.  As a  secretary  only, he would have no authority to  bind  the corporation by entering into contracts or other  commitments on  its  behalf.  As the chief accountant and  holder  of  a power  of  attorney, his functions in regard to  the  former would  be to supervise over maintenance of proper  accounts, and in regard to the latter to look after and represent  the corporation  in litigation.  None of these  three  positions held  by  him  would by itself or cumulatively  make  him  a person duly authorised to make an acknowledgement binding on the  corporation.   Also,  the  fact  that  he  carried   on correspondence  for  the corporation would not make  him  a, person authorised to make an acknowledgement binding on  the corporation.  [see  Uma Shankar v. Gobind  Narain(1)].   But such  a description of the functions and duties perfomed  by him  would not be complete.  If the correspondence  together with  the  statements  of  accounts  encolsed  therewith  is closely examined it becomes clear that he was authorised  to scrutinise  the  claim made by  the  appellant-company,  the various items for which the appellant-company claimed credit

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and  to  reject some, and what is important,  to  allow  the others.   That  he had such an authority is clear  from  the fact  that in respect of such of the items which he  allowed credit  was  given to the  appellant-company  and  necessary entries  to the credit of the appellant-company were  posted in the account maintained by the corporation in its books of account.   Thus,  in the reconciliation statement  (Ex.  43) sent  along with the corporation’s letter of  September  17, 1945.   Rs. 98,101 were shown to be the balance due  to  the appellant  company.  The words used in that  statement  were "balance  as per A.C.I. Ltd.  Books".  These  words  clearly indicate that there was a subsisting account in the name  of the  appellant-company in the books of the  corporation  and that- at the foot of that account the sum of Rs. 98,101  was due to it.  Ex. 44, another statement of account sent to the appellant-company,  stated  Rs. 1,00,304-7-7  as  being  the "Balance  as  per  ledger"  as  on  December  1,  1945.   As explained  earlier,  the increase in the  balance  from  Rs. 98,101  to Rs. 100,304 was due to certain items  aggregating Rs.  2,203-4-6  having  been  passed  by  Subramanayam,  and entries (1)  1. L. R. 46 All. 892. 6 38 having  thereupon  been posted in the  ledger.   Thereafter, further  items  were passed by him  totalling  Rs.  465-10-0 which when added raised the balance to Rs. 1,60,760-1-7,  as at  the end of December 1945.  This was the balance "as  per our  ledger"  stated in the statement sent along  with  the- letter (Ex. 1). It  is impossible to think that in the course of  finalising the  accounts  Subramanayam accorded his assent  to  various items  claimed by the appellant-company without having  been authorised so to do.  Nor is it possible to say that on  his passing those items necessary entries were made in the books of  accounts  of  the  corporation  without  his  having  so authorised.   Further,  he  could  not  have  sent  to   the appellant-company statements of accounts showing the balance due  to it "as per the ledger" unless he was  authorised  to finalise  the  accounts  and arrive at the  amount  due  and payable to the appellant company. In  his  evidence  Subramanayam  testified  that  Lakshmipat Singhania, the director-in-charge of, the corporation,  knew that  he was dealing with Arora, the representative  of  the appellant  company,  in the matter of accounts  between  the parties.   He  also  said  that  he  was  to  find  out  the difference between the two and that as a result many  points were  resolved an he confirmed by letters to  the  appellant company those points which were so resolved.  He then stated that  the  directors of the corporation were  aware  of  the settlement  of  the  said points by  him  but  they  neither ratified nor repudiated them.  This was because, as conceded by  him,  be never placed those settled  points  before  the directors  for their ratification.  He did not say  that  he had  no  authority  to settle the  differences  or  that  he settled  them subject to the approval of the directors.   It is  clear that he could not have settled the various  points of  difference between the parties and suitable  entries  in the  books  consequent upon such settlement could  not  have been  posted  unless he was authorised by the  directors  to finalise  the  accounts and make final adjustment  with  the appellant-company.  He tried, of course, to make out that he had  no  authority except as a secretary to  carry  on  cor- respondence for clarifying the position of the  corporation. He  even denied that entries were made in the books  of  the corporation after he had settled the said items.  The denial

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is  futile because the statements of account sent by him  to the appellancompany from time to time clearly show that such entries were made.  The effect of all this evidence is  that besides his functions as the secretary-cum-chief accountant, he  was  authorised  to finalise the  accounts  between  the parties, to settle differences between them and to arrive at the  final  figure payable by the corporation.   It  was  in pursuance of such authority that he dealt with Arora, passed some of the items for which the 639 appellant-company  claimed credit, had those entries  posted in the books of the corporation, sent statements of accounts from time to time and finally addressed the letter, (Ex. 1), stating   therein  that  according  to  the  books  of   the corporation the sum of Rs. 1,07,447 was the balance  payable to the appellant-company.  He could not possibly have  asked the appellant-,company to confirm that balance unless he had the authority on behalf of the corporation to acknowledge on its  behalf  that  that  was  the  balance  payable  by  it. Therefore,  the  conclusion is inescapable that he  had  the implied authority to make the acknowledgement and wrote  the letter (Ex. 1) with the intention of doing so. Accordingly,  the suits were not liable to be  dismissed  on the ground of their being barred by limitation, and the High Court   was  in  error  in  allowing  the  appeals  by   the corporation and dismissing the suits. The result is that the appeals are allowed, and the judgment and order passed by the High Court are set aside.  The  case will have to be remanded to the High Court for deciding  the rest of the questions arising in the suits and  ascertaining the amounts due to the appellants (the original  plaintiffs) as  the High Court has not gone into those questions  as  it dismissed the suits on the point of limitation.  In view  of the  very  long  period  having  elapsed  due  to  prolonged adjournments  of the appeals while they were pending  before the  High Court, we earnestly hope that the High Court  will dispose  of  the cases as expeditiously  as  possible.   The corporation  will  pay  to the  appellants  costs  of  these appeals, such costs to be in one set of costs. G.C.                                    Appeals allowed. 640