Full Judgment Text
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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.
JUDGMENT:
J U D G M E N T
R.C. LAHOTI, CJI
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
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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
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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
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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.