FIRST NATIONAL BANK LTD Vs. MANDI (STATE) INDUSTRIES LTD
LAWS(P&H)-1957-8-20
HIGH COURT OF PUNJAB AND HARYANA
Decided on August 22,1957

FIRST NATIONAL BANK LTD Appellant
VERSUS
MANDI (STATE) INDUSTRIES LTD Respondents

JUDGEMENT

- (1.) This case arises out of an application made on behalf of the First National Bank Limited, Ambala, under sections 45D/ 45M of the Banking Companies Act 10 of 1949 as amended by Act 52 of 1953 for the settlement of the list of debtors of the petitioner. The respondent is Mandi State Industries Limited, Joginder Nagar, District Mandi, Himachal Pradesh owing a sum of Rs. 76224/8/- included interest calculated up to 31st March, 1954. It is prayed that payment order be passed for the above amount with costs and future interest at 7 per cent per annum from 1st April, 1954, to the date of payment in full against the pledged property now in the possession of the debtor. The amount was secured against the pledge of Textile Woollen Mills' machinery by the debtor as per list. The goods were secured by the Bank but were handed over to the debtor. On 24th April, 1946, the respondent executed a promissory note Exhibit P.14 for Rs. 90,000 at Lahore undertaking to pay the amount due on demand. After the list of debtors was filed on 26th May, 1944, the present respondent raised several objections to the petitioner's claim which gave rise to three issues, which are, reproduced below - 1. Whether the claim is within time. 2 Whether the amount cannot be recovered in India. 3. What amount is due to the Bank.
(2.) On behalf of the petitioner two witnesses were produced but the counsel for the respondent made a statement that he did not wish to produce any evidence in the case. Mr. Tuli, learned counsel for the petitioner, contends that the petitioner's claim against the respondent is within limitation in view of the provision,; of Article 120 of the Limitation Act The only provision to which reference may possibly be made has no applicability as it applies to the case of a suit for money payable for money lent. This, however, is a claim for the recovery of the money went by enforcing a lien on movable property pledged with the petitioner. Such a right is different from the right to recover the amount from the debtor personally. A suit to enforce the pledge is not governed by Article 57 but by Article 120 vide Madan Mohan Lal v. Kanhai Lal, 17 ILR(All) 284 and Mahalinga Nadar v. Ganapathi Subbien, 1904 27 ILR(Mad) 528. Under the provisions of section 19 of the Limitation Act a fresh period of limitation is computed from the time when the acknowledgment of liability is made in writing in respect of the property or the right which is the subject-matter of the claim. In this case acknowledgment is to be found in the form of entries in the balance sheets and letter Exhibit P.23 dated the 7th of February, 1950, addressed by the respondent to the petitioner confirming the balances. Six balance sheets of the respondent company have been produced, Exhibits P.1 to P.6, relating to the period between 1949 and 1955. In each of these balance sheets, there is an entry referring to this advance showing the amount borrowed from the First National Bank Limited against the machinery pledged at 7 per cent per annum interest. Exhibit P.6 is the balance sheet of the respondent as on 31st March, 1955, containing the following entry :- "Capital & Liabilities Loan and Advances - (Against Machinery pledged) First National Bank Ltd. Last Balance Rs. 62,907-2-6 Add interest @ 7% Rs. 14,054-7-6 Rs. 76,961-10.0 There is ample authority for the proposition that a statement in a balance sheet furnished in compliance with statutory requirement is a sufficient acknowledgment of a debt within the provisions of section 19 of the Indian Limitation Act. It was held in Rajah of Vizianagaram v. Official Liquidator, 1952 AIR(Mad) 136 in para 33, that where a balance sheet presented to the shareholders at annual general meeting of a limited liability company signed by the chartered accountants etc., contained the statement that a sum was due to sundry creditors, it was a sufficient acknowledgment to prevent the debt from being statute barred. In Jones v. Bellegrove Properties, Ltd., 1949 2 KB 700, the balance sheets of the debtor's company contained the following entry - "sundry creditors 7,638 8s. 10d." It was contended on behalf of the defendant-company in that case, that entry was not a clear admission of liability to any one, and would not be an acknowledgment within the provisions of section 23(4) and section 24 of the Limitation Act, 1939. These provisions run as under :- "23.(4) Where any right of action has accrued to recover any debt or ..... pecuniary claim, or any claim to the personal estate of a deceased person or to any share or interest therein, and the person liable or accountable therefor acknowledges the claim or makes any payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment : Provided that a payment of a part of the rent or interest due at any time shall not extend the period for claiming the remainder then due, but any payment of interest shall be treated as a payment in respect of the principal debt." "24. (1) Every such acknowledgement as aforesaid shall be in writing and signed by the person making the acknowledgment. (2) Any such acknowledgement or payment as aforesaid may be made by the agent of the person by whom it is required to be made under the last foregoing section and shall be made to the person, or to an agent of the person, whose title or claim is being acknowledged or, as the case may be, in respect of whose claim the payment is being made."
(3.) The contention on behalf of the defendant-company was repelled, as it was found, that in the balance-sheets there was a general figure of 7,638 8s. 10d, which included the specific sum of 1,807 which had been lent by the plaintiff to the defendant company. Evidence was given in that case to show that the larger figure included the loan in question to the company.;


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