Case: Kashinath Sankarappa Wani Vs. New Akot Cotton Ginning &amp; Pressing Co. Limited

2. The appellant, who was the plaintiff in the trial Court filed in the Court of the First Additional District Judge, Akola, Civil Suit No. 2-B /7-B of 1944 against the respondent, a limited company incorporated under the Indian Companies Act of 1882, which owned a Ginning and Pressing Factory and carried on business of ginning and pressing cotton at Akot in District Akola.3. The appellant alleged that he was one of the creditors of the company which used to borrow money from him for about 35 years past. He claimed to have acted as Banker of the company and the sums borrowed from him were entered in the account books of the company in two khatas, one known as current account or "chalu khata" and the other described as "fixed deposit khata" An account used to be made up at the end of every year and the amount found due at the foot of the account was entered in the balance-sheet of the company which was adopted at the Annual General Meeting of the company. Deposit receipts also used to be passed for the amounts standing in the fixed deposit khata from time to time and at the end of the year ending July 1939, a sum of Rs. 79,519-12-9 was found due by the company to him on both these accounts. On January 15, 1940, the company passed a deposit receipt in his favour for this amount which he demanded from the company by his letters dated May 10, 1941 and May 17,The company failed and neglected to pay the said amount with the result that he filed on June 16, 1944, a suit against the company for recovery of a sum of Rs. 1,03,988 made up of Rs. 79,519-12-9 for principal and Rs. 24,468 as interest from August 1, 1939, to January 15, 1944.4. The claim as laid in the plaint was that all these amounts which had been borrowed by the company from him were payable on demand to be made by him as creditor and they were deposits with the company, but in order that the company may not be compelled to pay a big sum on demand, items in the current account were being transferred to the fixed deposit account from time to time. The amounts of these deposits being thus payable on demand the cause of action accrued to him on May 17, 1941, and limitation for the suit expired on May 17, 1944. But, as the Courts were closed on that day, the suit was filed on the first opening day i. e., June 16, 1944, and limitation was therefore saved by S. 4 of the Limitation Act. He also relied upon the acknowledgments of his debt made by the company in (a) the resolution passed by the Board of Directors on May 20, 1941, (b) the balance- sheet of the company for the year 1940-41 dated October 10, 1941, and for the years 1941-42 and 1942-43, and (c) the entry in the khata of the plaintiff in the books of the company made on or about July 31, 1941, and signed by the Chairman of the company. He further relied upon an application made under S. 162 of the Companies Act to liquidate the company on June 16, 1941, which application was however dismissed by the Court on June 16, 1944, stating that as he was bona fide prosecuting this application for the same relief as claimed in the suit and as the Court was unable to entertain the application because the debt was disputed by the company, he was entitled to deduct from the period of limitation, the time spent by him under S. 14 of the Limitation Act.This claim of the appellant was contested by the respondent mainly on the ground that the suit was barred by the law of limitation. Both the Courts below negatived this claim. The trial Court dismissed his suit and the High Court, on appeal, dismissed his appeal and confirmed the dismissal of his suit by the trial Court; hence this appeal.

Court's reasoning:
As a matter of fact, such an agreement, either express or implied, was negative by the very terms of the deposit receipt which, apart from mentioning that the monies were received by the company as deposit for 12 months from August 1, 1939, to July 31, 1940, contained on the reverse a note that interest would cease on due date.This was sufficient to establish that the amount due at the foot of the deposit receipt became due and payable on the due date mentioned therein and that there was no question of the amount being payable at any time thereafter on demand being made in this behalf by the creditor.The course of dealings between the parties also negatived any such agreement because it appears from the record that such deposit receipts were passed by the company in his favour from time to time, each of such receipts being for a fixed period in the same terms as the deposit receipt in question and the receipts containing similar notes on the reverse that interest would cease on due date. Both the Courts below were therefore right in coming to the conclusion that there was no agreement of the kind put forward by the appellant that the monies due at the foot of the deposit receipt in question were re-payable on demand and that monies due at the foot thereof became due and payable by the company to him on 31st July 1940.It is to be noted that this presumption is not compulsory as in the case of S. 3 (a) of the Act; it is discretionary with the Court. The difficulty in the way of the appellant here is however insuperable because we find that there were factions in the company at or about the relevant time. A Directors meeting was held on 27th April 1941, and the resignation of the appellant as the Chairman was accepted and another person was appointed in his place. A second meeting was called for 17th May 1941, but it had to be adjourned for want of a quorum. The adjourned meeting was held on 20th May 1941, but no balance -sheet was passed at that meeting. There is nothing on the record to show that there was another meeting of the Board of Directors for passing the Balance-sheet of the company for the yearA general meeting of the Share-holders was called for 16th November, 1941, to pass the balance-sheet. This also had to be adjourned to the following day for want of a quorum. At the adjourned meeting the share-holders then present refused to pass the accounts and it was not till some five weeks later, namely on 30th December 1941, that the rival faction met and passed the accounts. But this meeting only purported to be a continuation of the meeting which had to be adjourned for want of a quorum and that clearly was irregular because the adjourned meeting had to be called within twenty-four hours. It did not purport to be a fresh meeting convened after due notice etc. Under the circumstances, it could not be urged that the balance-sheet was duly passed.Even if the attention of the High Court had been drawn to the provisions of S. 3 (b), Commercial Documents Evidence Act, (XXX of 1939) it would have been perfectly justified in not raising the presumption in regard to the balance-sheet having been duly made by or under the appropriate authority and in regard to the accuracy of the statement contained therein. We are, therefore, of the opinion that this alleged acknowledgement also is of no avail to the appellant.In regard to S. 14, Limitation Act which was sought to be relied upon by the appellant, it may be shortly stated that the liquidation proceedings had not been filed in the Courts below and there is nothing to show that the requirements of S. 14 were at all satisfied. No cogent argument has been advanced before us on behalf of the appellant which would induce us to hold that the conclusion reached by the High Court in this behalf was incorrect in any manner whatever.On all the above grounds we have come to the conclusion that the appellants claim was clearly time-barred and the dismissal of his suit by the trial Court as well as the dismissal of his appeal by the High Court were in order.