JUDGMENT
Usha Mehra, J.
(1) Arham Engineers Pvt. Ltd. has sought the winding up of Cepham Organics Ltd. (hereinafter called the ‘company’) on the ground, that the company invited quotation from the petitioner regarding air conditioning work on the companies project for manufacturing Ampicilin, Sodium Sheryl at Kundli. The tender submitted by the petitioner, for execution of the said work, was separated into two parts; one for supply of equipment and accessories for exhaust and fresh air system and the other for the installation of said equipment. The first part of the contract was awarded to the petitioner. On acceptance of the offer, the company paid an advance ofRs.50,000.00 to the petitioner. The petitioner executed the work and submitted the invoices from time to time. On completion of the contract, the petitioner submitted its final bill/invoice for Rs.89,804.66 p., balance as against the total bill of Rs. 1,79,804.76 p. the company cleared the bill to the extent of Rs. 1,78,764.75 p.there by leaving a principal sum of Rs.88,764.75 p. due. This outstanding due is payable by the company. The company infact confirmed the credit balance. The company also issued Form ‘C’ in respect of the material supplied by the petitioner. The petitioner had been calling upon the company to clear the entire outstanding amount and ultimately served the statutory notice under Section 434 of the Companies Act calling upon the company to pay the principal amount plus interest at the rate of 18% p.a. When the company inspite of notice did not make the payment, hence the petition.
(2) The show cause notice was issued to the respondent, who in response to show cause notice, filed the reply and took up the plea that the petition is barred by time. As the acknowledgement of debt is dated 31st March, 1990 the period of three years has to be counted from 31st March, 1990. The petition having been filed on 17thMay, 1993,on the face of it is barred by time. On merit, it was contended that since the claim is barred by time, therefore, the respondent was not liable to make any payment.
(3) Mr. Arun Kathpalia, appearing for the petitioner, contended that the period of limitation is to be counted from the date the confirmation was signed by the respondent and not from the date the balance was struck. The confirmation of balance as on 31st March, 1990 was signed in this case by the authorised representative of the respondent on 6th September, 1990, or thereafter. Hence limitation is to run from 6th September, 1990. On the other hand, Mr. Chaudhary, appearing for the respondent, contended that since the debt was due and payable from 31 st March, 1990 the credit balance was also struck on 31 st March, 1990, the mere confirmation of the same on 6th September, 1990 would not extend the limitation. It is apparent that after 31st March, 1990 no account continued nor any transaction took place. Hence the period of limitation has to be counted from 31st March, 1990.
(4) I have heard the learned counsel for the parties and perused the record. Perusal of the record shows that the petitioner issued letter on I st September, 1990 filed on record as Annexure ‘A’ asking the respondent to confirm the balance as on 31st March, 1990. This letter was received by the company on 6th September, 1990. So naturally the confirmation which was signed by the Accounts Officer/Authorised officer of the respondent company on the said letter could not have been earlier than 6th September, 1990. Hence the presumption is that either it was signed on 6th September, 1990 or thereafter. Section 18 of the Limitation Act which is reproduced as under, provides that in order to institute a suit in respect of any “right” fresh period of limitation shall be computed from the date of acknowledgement. This conclusion further find support from the reading of sub- section (2) and the Explanation to Section 18 of the Limitation Act. Section 18(1) “WHERE,before the expiration of the prescribed period for a suit or application 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, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed.”
(5) The bare reading of the provisions of this Section would make it clear that an acknowledgement of liability has to be in writing signed by the party and the period of limitation has to be computed when the acknowledgement was so signed. In this case the acknowledgement was signed either on 6th September, 1990 or thereafter. From the reading of this section, it cannot be inferred that the limitation has to be counted from the date the credit balance was struck. On merits respondent company has not raised any defense. I consider that the petition is within time and there being no defense on merits hence it can safely be presumed that there exist present subsisting liability which respondent company has failed to discharge. To strengthen my view, I am supported by the decision of the Andhra Pradesh High’ Court in the case of Shree Vijaya Kumar Machinery. and Electrical Stores vs. Alaparthi Lakshmikanthamma reported in (1968)II Andhra Weekly Report page 567. While interpreting the word acknowledgement of debt it was held that the acknowledgement of debt must relate to a present subsisting liability. The date of signing the balance sheet by the respondent started a fresh period of limitation. The facts of that case were that a suit was filed on the basis of two promissory notes. Original promissory notes were not produced in court but the plaintiff relied on a copy of the trial balance sheet submitted by the defendants before the Income Tax Authorities, acknowledging the subsistence of liability of firm, to respondent. Defendants resisted the claim by raising the plea of admissibility of the trial balance sheet in evidence and also took the ground that the suit was barred by time because acknowledgement on the trial balance sheet would not extend the period of limitation and that the period of limitation should be counted from the date on which the balance sheet was prepared and not from the date it was actually signed by them. The court negatived the contention of the defendants and held that the date of signing the balance sheet would start a fresh period of limitation. That the limitation is not to be counted from the last date of the period for which the balance sheet was prepared. Hence suit was held to be within time. The above said authority is on all force applicable to the facts of this case. I am in respectful agreement with the reasoning given therein. Mr.Chaudhry drew my attention to the decision of the Supreme Court in the case of Shapoor Freedom Mazda, Vs. Durga Prasad Chamaria and others . I am afraid the respondent can not draw any support from the decision of the Supreme Court as this authority is not applicable to the facts and circumstances of this case. I, accordingly, hold that the petition is within time.
(6) Since on merits the respondent has not raised any defense, nor denied its liability, what to talk of bonafide defense. This clearly shows that the respondent has no capacity to pay the amount- even after the, statutory notice. The company is financially insolvent. The only defense which was raised has been negatived. The liability being admitted and the respondent company being not in a position to discharge the same, I have prima facie come to the conclusion that the respondent company is financially insolvent and accordingly direct the petition to be admitted to hearing. Let citation be published in the newspapers “Statesmen” (English Edition), “Navbharat Times” (Hindi Edition) and Delhi Gazette. However, if the respondent company pays the debt within two months from today, till then the citation may not be published.