Madras HC Dismisses Supplier’s ₹2.58-Crore Claim Against Tamil Nadu Cooperative Union As Time-Barred, Finding 2015 Letter Did Not Acknowledge Debt

The plaintiff, proprietor of Sivasakthi Corporation, supplied machinery and equipment valued at Rs.4,97,14,956 to the defendant under a 2012 purchase order. The defendant paid Rs.2,39,23,318, leaving the plaintiff’s claimed balance of Rs.2,57,91,638.

The defendant alleged the goods were defective and unfit for use; the plaintiff denied this and relied, among other things, on later inspection reports.

The plaintiff’s earlier writ petition seeking payment was dismissed because recovery under a private contract was not appropriate for writ adjudication, without deciding the claim on its merits.

The suit was restored after an appeal from its rejection under Order VII Rule 11(d) CPC.

At trial, the principal questions included limitation, acknowledgment of liability, the condition of the goods, and the plaintiff’s entitlement to payment.

Under Section 18 of the Limitation Act, 1963, a written acknowledgment, signed by the party liable or an authorised agent, must acknowledge a subsisting liability and must be made before expiry of the prescribed limitation period to start a fresh period; a later acknowledgment cannot revive a time-barred claim.

Section 25(3) of the Indian Contract Act, 1872 requires a written and signed promise to pay wholly or partly a debt barred by limitation; a mere acknowledgment or statement that payment will be considered later is insufficient.

The Court applied Order XIV Rule 2(1) CPC to decide the remaining issues despite finding the suit time-barred.

It also held that dismissal of a writ petition on the ground that a private contractual money claim was unsuitable for writ adjudication does not, without a decision on the merits, preclude a civil suit.

The Court treated 30 June 2012, the date of the last payment, as the starting point and held that the three-year limitation period expired on 30 June 2015.

Ex.P8, dated 14 May 2015, addressed only disposal of the plaintiff’s representation and service of the resulting order; it did not acknowledge the underlying debt, so it did not extend limitation under Section 18.

The later letters of 2018 and 2019 could not revive the claim after limitation had expired. Ex.P15 also failed under Section 25(3): it left payment subject to a future decision and approval from higher authorities, rather than containing a concluded promise to pay.

The earlier writ dismissal did not bar the suit because the plaintiff’s entitlement had not been decided on the merits.

On the goods, the institutional reports and contemporaneous correspondence, together with the plaintiff’s failure to attend or conduct requested trial runs, supported the finding that the machinery was defective; however, the contract contained no established term requiring the plaintiff to take it back.

It held that the earlier writ dismissal did not bar the civil suit, found the supplied machinery defective, but found no contractual obligation requiring the plaintiff to take it back.

The plaintiff was denied the principal amount, interest, and other relief, and the suit was dismissed with costs.