JUDGMENT
N.K. Kapoor, J.
1. This is plaintiffs regular second appeal against the judgment and decree of the Courts below whereby the suit filed by the plaintiff for recovery of Rs. 2,10,883.65 was dismissed by the trial Court and appeal therefrom also met the same fate.
2. The plaintiff-bank brought forth suit for recovery of Rs. 2,10,883.65 due upto 14.2.1983 on the allegations that on the request of defendant/respondent Kishan Lai Malhotra and Smt. Mangla Devi who are partners of the defendant/respondent No.l were sanctioned packing credit facilities for Rs. 1,50,000/- F.O.B.P. Rs. 4,00,000/- C.C. hypothecation limit of Rs. 1,00,000/- clean D.D. limit Rs. 50,000/- and FAUBC- Rs. 50,000/- on 4.10.1979. These limits were changed subsequently vide Bank orders dated 22.6.1980 and various requisite documents were executed by the defendant/respondents afresh. The old partnership of which Swaran Lai Malhotra and Sunil Malhotra were also partners was dissolved on 4.9.1980 and the new partnership consisting of defendant/respondent No. 2 and 3 confirmed the liability to pay a sum of Rs. 99619.10 in C.C. Hypothecation Account and another sum of Rs. 1,16,744.28 in Export Loan Account vide separate confirmation letter dated 23.8.1980 and thus a total sum of Rs. 2,10,883.65 was due from the defendant/respondents. According to the further allegations made in the plaint, the outstanding amount of Rs. 1,16-T44.28 related to Export Bills bearing FABC No. 79146-P dated 18.12.1978 for U.S.A.$.3284-15 equivalent to Indian currency of Rs. 32000/- and FABC No. 79189-P dated 23.1.1978 for U.S.$ 4032.25 equivalent to Indian currency of Rs. 40,000/-, which was drawn at M/s. Pineer Sports Manufacturing Company, Ghanna, and stood paid in the local currency of Ghanna by the drawee on 11.7.1979 but they were still outstanding in the ledger book of the plaintiff-bank as the amount of these bills could not be repatriated in foreign currency and the defendant/respondents failed to adjust the outstanding amount despite executing balance confirmation letters.
3. The suit was hotly contested by the defendant/respondents by pleading that in all eight bills in the Export Loan Account including the two mentioned in the plaint were entrusted to the plaintiff-bank. The amount of five bills which was recovered and repatriated but credited in the account of the defendant/respondents late. as a result of which the defendant/respondents were unnecessarily burdened with interest. As regards two disputed export bills, the amount involved therein was realised by the plaintiff-bank through its correspondent foreign bank on ll.7.1979 in local currency of Ghanna instead of US $ as per instructions given in this behalf, and thus the correspondent Bank did not transfer the amount in Indian currency of Rs. 72,000/- to the plaintiff-bank. According to the defendants, a sum of Rs. 47,000/- by way of interest charged on the amount of the disputed bill from 11.7.1979 onwards was illegal. The defendant/respondent also averred that in accordance with the instructions given by them the plaintiff-bank was required to return the documents if the foreign buyer failed to make payment in US $ and if the plaintiff bank acted against the instructions it was their negligence for which they should not suffer. The defendants further pleaded that according to the instructions issued by the Reserve Bank of India they were not entitled to deal with the foreign buyer directly. The suit was also resisted on the ground of limitation and its institution by a competent person.
4. On the pleadings of the parties, following issues were framed: –
1/ Whether the plaintiff bank is a body corporate and the suit has been filed through a duly authorised person? OPP
2/ Whether the plaintiff is entitled to recover the suit amount from the defendant? OPP.
3/ Whether the plaintiff is entitled to claim any interest on the amounts of the export bills since 14.6.1979 and 11.7.1979 till the filing of the suit? OPP.
4/ Whether the suit is not within time? OPD
5/ Relief.
5. Issue No. 1 was decided in favour of the plaintiff bank. Under issue No. 2, it was held that the bank is entitled to recover Rs. 91,883.65 in cash credit account but was not entitled to recover the other amount of Rs. 1,19,000/- outstanding in the Export Loan Account. Under issue No. 4, it was held that the balance confirmation letters could not be used as acknowledgements of debt Under Section 19 of the Limitation Act. Respectfully, the entire suit of the plaintiff bank was dismissed as time barred.
6. Before the lower appellate Court the case was once again examined. Learned counsel for the appellant urged that the trial Court erred in holding that his client was negligent and so was not entitled to a sum of Rs. 1,19,000/- outstanding in the Export Loan Account. Reliance for this was placed upon the documents Exhibit P-14, P-25 and P-26 executed by the defendants in favour of the plaintiff bank. Emphasis was laid upon condition No. 3 which reads as, “you will not be responsible for any loss due to any delay in collection, transmission and otherwise of any remittance by the agent, until the same is received and realised by you.” Thus, on the basis of this condition, it was urged by the appellant that since the bank had not received the amount of export bills, it was incumbent upon the defendants to pay the disputed amount to the bank. The lower appellate Court found no merit in this submission of the counsel for the appellant. According to the lower appellate Court, as per Exhibit D-4, it was incumbent upon the bank to recover the payment due on account of the bills and for any loss either on account of moratorium or currency restrictions imposed, it is the bank which is to compensate the customer. The lower appellate Court further noticed that the bank, in fact, had received the amount in dispute. Since it has been stated upon the bills in dispute that the payment was to be received in US $, the receipt of the amount in local currency was against the stipulation as agreed between the parties and so the defendants cannot suffer on account of this negligence on the part of the plaintiff bank. Thus, the Court came to the conclusion that the defendants cannot be fastened with the liability of the disputed amount. As regards the remaining amount in the other accounts, the Court found the same to be due towards the defendants but declined this relief also on the ground of limitation.
7. Learned counsel for the appellant has .assailed the judgment and decree of the Courts below terming these to be illegal and so unsustainable. According to the counsel both the Courts erred in law in holding issues No. 2 and 3 against the plaintiff. In fact, as per documentary evidence on record, it has been conclusively proved by the plaintiff that a sum of Rs. 91,883.65 is due from the defendant-respondents in the Cash Credit Hypothecation account upto 14.2.1984 including interest. Similarly, as per copies of statement of accounts in respect of Export Loan Account (Exhibit P-4 and P-5) a sum of Rs. 1,19,000/- is due from the defendant/respondents upto 14.2.1984. Both the Courts have held the plaintiff to be entitled to recover a sum of Rs .91,883.65 from the defendants but has chosen to decline this claim on the bar of limitation. Such a finding is unsustainable on the short ground that as per section 18 of the Limitation Act, statement of account Exhibit P-2 and P-3 is in the nature of acknowledgement and so the claim would be within limitation. Both the Courts have misconstrued the import of Section 18 of the Limitation act. Similarly, the Court for no valid reason has declined the plaintiffs claim of Rs. 1,19,000/- in respect of Export Loan Account. A bare perusal of various documents which somehow the Court did not keep in mind brings out abundantly clear that for no fault or negligence of the plaintiff the amount could not be recovered in US. There is no negligence on the part of the plaintiff in carrying out the instructions given by the defendants. Otherwise too, local bank at Ghanna was agent of the defendants and for this reason too the plaintiff could not be made liable.
8. Firstly, taking up the matter with regard to the claim of the plaintiff-bank to recover a sum of Rs. 1,19,000/- pertaining to Export Loan Account, this relates to 8 bills. According to the plaintiff, it purchased 8 bills from the defendants and paid the amount of the said bills after obtaining margin money i.e. 25% from the said bills. Admittedly, plaintiff recovered the payment of two bills amounting to US 7325 on 14.6.1979 and another amount of US$ 7940 in respect of the three bills from the foreign buyers on 14.6.1979. The payment of these bills was credited to the account of the defendants on 30.12:1983 i.e. after a gap of about four years and for this intervening period the defendants had been charged interest upon it. It has also come. in the statement of Mr. Krishan Lal Malhotra, DWl, that payment in respect of three bills amounting to US $ 7315.50 (equivalent to Rs. 72,000/- at that time) was received by the bank from the foreign buyers on 11.7.1979 but this was also not credited to the account of the defendants till the filing of the suit. No reasonable explanation has been put forward by the plaintiff as to why this credit was not given to the defendants for the amount received. Keeping this in view, the court came to the conclusion that there was no justifiable reason for the plaintiff to debit the account of the defendants with . interest for the period from 14.6.1979 to 30.12.1983. No illegality is discernible in this approach of the Courts below. Otherwise too, both the Courts on appreciation of evidence have come to the conclusion that the plaintiff bank is not entitled to recover this amount. Accordingly, I find no merit in this contention of the learned counsel for the appellant.
9. In respect of second item relating to recovery of Rs. 91,883.65, though the Courts have come to the conclusion that this loan was due towards the defendants yet declined the relief on the ground of limitation. According to the Courts below, before the acknowledgement is stated to come within the ambit of section 18 of the Limitation Act, such an acknowledgement has to -be in respect of a subsisting liability i.e. liability existing on the date of making acknowledgement of the previous debt and reliance was placed upon the decision of the Supreme Court in case reported as Lakshmiratan Cotton Mills, Co. Ltd. v. The Aluminium Corporation of India Ltd., A.I.R.1971 S.C. 1482 and Shapoor Fredoom Mazda v. Durga Prasad Chamaria and other, A.I.R. 1961 S.C. 1236.
10. Section 18 of the Limitation Act deals with the effect of acknowledgement in writing. According to section 18, where, before the expiration of the prescribed period for a suit, 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 when the acknowledgement was so signed. According to this Section, an acknowledgement to give fresh starting point of limitation is to be before the expiration of period of limitation for the suit, appeal or application. The acknowledgement is to be clear and unambiguous acknowledgement admitting the liability. It is to be signed by the parties or his authorised agent and lastly it is to be of a subsisting liability.
11. In the present case, the dispute between the parties only relate whether the acknowledgement is in respect of a subsisting liability or not. The basis of the claim of the plaintiff is documents Exhibit P-6, P-7 and P-33. Exhibit P-33 is a document duly signed by the defendant admitting his liability for a sum of Rs. 1,16,507-18 as on 30.12.1980. Confirmation by the defendant is dated 2.2.1981. Vide Exhibit P-7, defendant confirmed the balance amount of Rs. 78,669.78 as on 31.12.1981. This acknowledgement is dated 8.3.1982. Similarly, vide Exhibit P-6, defendant admitted amount due i.e. a sum of Rs. 77,496.21 as on 31.12.1982, The acknowledgement is dated 9.8.1983. The suit was filed on 15.2.1984. It is the case of the appellant that vide all the above noted documents the defendant acknowledged the liability to pay the amount due along with interest and so these documents are valid acknowledgements in terms of section 18 of the Act. Both the Courts have erred in misconstruing the validly executed acknowledgements thereby denying the plaintiff the benefit of the extended period of limitation. The counsel further urged that even the decision of the apex Court supports the case of the appellant. Elaborating the counsel urged that as per banking practice, the accounts are finalised in the end of the Year and so in all these documents balance amount due towards the defendants as on 30.12.1980, 31.12.1981 and 31.12.1982 was duly reflected which was also con- firmed by the defendants. The acknowledgements made by the defendants in respect of these amounts were clearly within the period of limitation. Examined so, the suit in respect of the amount due as on 30.12.1980 could validly be brought by the plaintiff within a period of three years from the date of acknowledgement. Since a part of the amount has been paid to the plaintiff during the subsequent period the amount due as on 31.12.1981 was again acknowledged by the defendants on 8.3.1982, Exhibit P-7, and finally on the balance amount of Rs. 77,496.21 (Exhibit P-6) acknowledgement was made by the defendants on 9.8.1983. Thus, the last acknowledgement in respect of the amount due as on-31.12.1982 was within the limitation as the suit was instituted on 15.2.1984. According to the counsel, both the Courts have misconstrued the decisions of the apex court in Lakshmiratan Cotton Mills case (Supra) and Shapoor Fredoom Mazda’s case (Supra).
12. The apex Court in Lakshmiratan Cotton Mills case (Supra) has held that the statement on which the plea of acknowledgement is founded need not amount to promise and need not indicate the exact nature or the specific character of the liability. It must, however, relate to a present subsisting liability. Subsisting liability in common parlance mean the existing liability. Identical expression has been used in Shapoor Fredoom Mazda’s case (Supra). A perusal of the aforesaid two judgments of the apex Court makes it abundantly clear that acknowledgement so made renews the debt. The apex Court further held, “stated generally, courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit the existence of jurial relationship such intention could be fastened on the maker of the statement by an involved or far-fetched process of reasoning.”
13. The facts of the present case are some what similar to the case before the Division Bench reported as Bengal Silk Mills Co. v. Ismail Golam Hossain Ariff, A.I.R. 1962 Calcutta 115. In that case the balance sheet showed the amount in suit as debt owing by company to the plaintiff. A plea was raised that the same was not sufficient acknowledgement within the meaning of section 19 of the Limitation Act and the same could not be deemed to be admission of liability as existing on the day on which admission was made. Repelling the contentions raised, the Court held as under:-
“… In my opinion the balance sheets satisfy the test of an acknowledgement under section 19. Each of them contains an admission that balances have been struck at the end of the previous year and that a definite sum has been found to be the balance then due to the creditor. The natural inference to be drawn from the balance sheets is that the closing balance due to the creditor at the end of the previous year will be carried forward as the opening balance due to him at the beginning of the next year. In each balance sheet there is thus an admission of a subsisting liability to continue the relation of debtor and creditor, and a definite representation of a present intention to keep the liability alive until it is lawfully determined by payment or otherwise. There is necessarily a time lag between the date of the signing of the balance-sheet and the end of the previous year. The balance sheet contain no admission of the amount due on the date of the signature. That amount may be and often. is ‘different from the amount shown as due at the end of the previous year, but that fact alone does not take the amount out of the purview of Section 19. Take the case of a banker and its depositor. Suppose the banker sends to the depositor a monthly statement of account made for the month of February, 1961 and signed on March 15, 1961. The statement gives the balance due on February 28, 1961. The amount due on March 15 may be quite different; the banker might have been made payments for the customer; nevertheless the statement amounts to a sufficient acknowledgement under section 19. I am therefore unable to agree with the decision in AIR 1957 All 143.”
14. Following the judgment in Bengal Silk Mill Co.’s case (Supra), I am of the view that acknowledgements Exhibit P-6, P-7 and P-33 extend the period of limitation as the same were executed within the limitation and so the suit filed for recovery of the balance amount along with interest was within limitation. Findings of the Courts below in this regard are accordingly set aside.
Resultantly, the appeal is partly accepted, decreeing the suit of the plaintiff- bank for a sum of Rs. 91,883.65 along with interest at the rate of 12% per annum from the date of institution of suit till the realisation of the amount and proportionate costs throughout.