# KaahinatA Sanl:arappa Wani v. New Akol Collon Ginning &: PresMng Oo., Ltd

- **Citation:** [1958] 1 S.C.R. 1331
- **Court:** Supreme Court of India
- **Decided:** 1958
- **Case number:** Civil Appeal No. 77 of 1954
- **Bench:** BHAGWkTI, J. L. Kapur, GAJENoRAGADKAR
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/kaahinata-sanl-arappa-wani-v-new-akol-collon-ginning-presmng-oo-ltd-1418
- **Pages:** 9

## Headnote

Limitation-Suit on deposit receipt-Acknowledgment of
iiability-EUidence-Balance sheet obtained from Registrar of
Companies-Admissibility-Presumption. of awthenticitu andi
corr.ectness-Commercial Documents Evidence Act (XXX of
1939), s. 3(b).
The appellant advanced various sums of money to the respondent, in lieu of which the respondent passed a deposit receipt
for 12 months from August 1, 1939 to July 31, 1940. On June 16,
1944 the appellant filed a suit to recover the amount with interest on the allegation that the amount became due on May
17, 1941 when the demand for the amount was made and limitation for the suit expired on May 17. 1944 and the suit was filed
on the reopening day of the Court thE>reafter.
The appellant
also relied upon the acknowledgments of his debt by the i:espondent in the resolution passed by the Board of Directors on
May 20, 1941 and in the balance sheet of the respondent for the
year 1940-41 dated October 10, 1941:
Held, that the suit was barred by limitation as the monies
due under the deposit receipt became payable on July :n, 1941
and as no 'agreement had been proved th<it the
monies due
under the deposit receipt were re-payable on demand.
Held further, that limitation was not saved by tile alleged.
acknowledgments.
The resolution Qf the Board of Directors merely· proposed ·a
settlement of a claim of the appellant, which, if accepted by the
appe}lant, was to be placed before a general meeting of the
share-holders. The resolution onfy referred to a past liability
of the respondent to the appellant and it could not be construed
19ii8
K. IS. Srinii-a.san
v.
U·iii011. of India
Bu•e J,
1958
February 18.
1958
KaahinatA
Sanl:arappa Wani
v.
New Akol Collon
Ginning &: PresMng
Oo., Ltd.
BluI/Jwati J.
1332
SUPREME COURT REPORTS
[1958]
as an acknowledgment of the liability of tlte respondent unde~
the deposit recelipt in question.
A copy of the balance sheet of 1940-41 obtained, from the
Registrar of Companies which was tiled in the case was wrongly
rejected by the High Court as inadmissible on the ground that
no evidence was adduced to prove it. This copy was admissible
under s. 3(b) of the Commercial "Documents Ev:iden0e Ao!.
Under that section the Court could nlso raise a presumption as
regards the balance sheet having been duly made by or under
the appropriate authority or in regard to the statements contained therein. The presumption was not compulsory, but was
discretionary with the Court. In the circumstances of this case.
where there were facVions in the Company and the regularity
of the meeting at which the balance sheet was passed was in
dispute. the High Court would have been perfectly justified in
not raising the presumption.
Consequently, the acknowlerl11meni in the balance sheet was of no avail to the appellant.

## Text

s:c.R.
SUPREME COURT REPORTS
1331
I would allow the appeal and the petition with costs.
BY COURT: The appeal and the petition are dismissed.
There will be no order as to costs.
Appeal and Petition di.imissed.
KASHINATH SANKARAPPA WANI
v.
NEW AKOT COTTON GINNING & PRESSING CO., LTD.
(BHAGWkTI, J. L. KAPUR and GAJENoRAGADKAR JJ.)
Limitation-Suit on deposit receipt-Acknowledgment of
iiability-EUidence-Balance sheet obtained from Registrar of
Companies-Admissibility-Presumption. of awthenticitu andi
corr.ectness-Commercial Documents Evidence Act (XXX of
1939), s. 3(b).
The appellant advanced various sums of money to the respondent, in lieu of which the respondent passed a deposit receipt
for 12 months from August 1, 1939 to July 31, 1940. On June 16,
1944 the appellant filed a suit to recover the amount with interest on the allegation that the amount became due on May
17, 1941 when the demand for the amount was made and limitation for the suit expired on May 17. 1944 and the suit was filed
on the reopening day of the Court thE>reafter.
The appellant
also relied upon the acknowledgments of his debt by the i:espondent in the resolution passed by the Board of Directors on
May 20, 1941 and in the balance sheet of the respondent for the
year 1940-41 dated October 10, 1941:
Held, that the suit was barred by limitation as the monies
due under the deposit receipt became payable on July :n, 1941
and as no 'agreement had been proved th<it the
monies due
under the deposit receipt were re-payable on demand.
Held further, that limitation was not saved by tile alleged.
acknowledgments.
The resolution Qf the Board of Directors merely· proposed ·a
settlement of a claim of the appellant, which, if accepted by the
appe}lant, was to be placed before a general meeting of the
share-holders. The resolution onfy referred to a past liability
of the respondent to the appellant and it could not be construed
19ii8
K. IS. Srinii-a.san
v.
U·iii011. of India
Bu•e J,
1958
February 18.
1958
KaahinatA
Sanl:arappa Wani
v.
New Akol Collon
Ginning &: PresMng
Oo., Ltd.
BluI/Jwati J.
1332
SUPREME COURT REPORTS
[1958]
as an acknowledgment of the liability of tlte respondent unde~
the deposit recelipt in question.
A copy of the balance sheet of 1940-41 obtained, from the
Registrar of Companies which was tiled in the case was wrongly
rejected by the High Court as inadmissible on the ground that
no evidence was adduced to prove it. This copy was admissible
under s. 3(b) of the Commercial "Documents Ev:iden0e Ao!.
Under that section the Court could nlso raise a presumption as
regards the balance sheet having been duly made by or under
the appropriate authority or in regard to the statements contained therein. The presumption was not compulsory, but was
discretionary with the Court. In the circumstances of this case.
where there were facVions in the Company and the regularity
of the meeting at which the balance sheet was passed was in
dispute. the High Court would have been perfectly justified in
not raising the presumption.
Consequently, the acknowlerl11meni in the balance sheet was of no avail to the appellant.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 77 of
1954.
Appeal from the judgment and decree dated August 25,
1949, of the former
Nagpur High Court in First Appeal
No. 91 of 1945 arising out of the judgment and decree dated
July 31. 1945, of the Court of Second Additional District
Judge, Akola in Civil Suit No. 7-B of 1944.
C. B. Agarwa/a and Ratnaparkhi A. G. for the appellant.
Veda Vyasa and Ganpat Rai, for the respondent.
1958. February 18. The following Judgment of the Court
was delivered by
BHAGWATI, J.-This appeal with a certificate under
s. 109(a) read with s. 1 IO of the Code of Civil Procedure
(Act V of 1908) is directed against the judgment and decree
passed by the Nagpur High Court dismissing the appeal of
the appellant and confirming the dismissal of his suit by the
learned Second Additional District Judge, Akola.
The appellant, who was the plaintiff in the trial court
filed in the Court of the First Additional District Judge,
Akola, Civil Suit No. ;:: of 1944 against the respondent
a limited company incorporated under the Indian Companies
Act of 1882, which owned a Ginning and Pressing Factory
S.C.R.
SUPREl\U~ COURT REPORTS
1333
and carried on business of ginning and pressing cotton a.t
1958
Akot in District Akola.
·KCUJhi'IUlf;h
Sanlcarappa W a.ni
The appellant alleged that he was one of the creditors New A~':,;1 Cotton
·of the company which used to borrow money from him for Ginning cf: Pres1i1111
about 35 years past. He claimed to have acted as Banker of
00
·• Ltd.
the company and· the sums borrowed from him were entered
Blwfl'i'<lti •1·
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 a.mount 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 dep0sit 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, 1941. The company failed
and neglected to pay the said amount with the resu~t that he
filed on June 16, 1944, a suit against the company for recovery of a sum of ~s. 1,03,988 made up of Rs. 79,519-12-9
for principal and Rs. 24,468 as interest from August l, 1939,
to January 15, 1944.
The claim as laid in the plaint was that all these
amounts which bad 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 pa,y 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 tha.t day, the suit was filed on the first
19/iS
Kai:;hin'l·lh
Sa.nkarappa lVaui
•.
New Akot CottO'fl,
Cinning &t Presainu
Co., Ltd.
Blia[Jwati J.
SUPl{Ei\'!E UOUR'r REPORTS
[1958]
opening day i.e:, June 16, l\144, 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, (bl the balance-sheet of the company for the year 194041 dated October 10, 1941, and for the years 1941-42 and
J 942-43, 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 a.pplication 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 appli~ation because the debt was
disputed by the company, he was entitled to deduct from the
period of limitatiorl, 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 his
claim. The trial court dismissed his suit and the High Court,
oh appeal, dismissed his appeal and confirmed the dismissal
of his suit by the trial court; hence this appeal.
The only question which arises for our consideration in
this appeal is .whether the. appellant's suit was barred by
limitation. The appellant, in the first instance, relied upon
the deposit receipt which was passed by the company in his
favour on January 15, 1940. This receipt (Ex. P-1) evidenced
a deposit of Rs. 79,519-12-9 for 12 months from August 1,
1939, to July 31, 1940, and the amount at the foot thereof
became due and payable by the respondent to him on July
31, 1940. The appellant, however, sought to extend the commencement of the period of limitation to May 17, 1941, on
the ground that the monies, the subject-matter of that deposit
receipt, were payable to him on demand, that such demand
was made by him on May 17, 1941, and that therefore that
s.c.n.
SUPRE111E COURT :REPORTS
was the dale for the commencement of the period of limita-
/!JSR
tion. No !!A.press agreement in this behalf could be proved
Ka,,Jd11<11/1
by him nor could an agreement be implied from the course -~"
11 l-n"'Pt'.' Wm•;
of dealings between him and "the company for the period of
°!'."111• .Hot Cullu11
5
d ·
h' h h d )"
·
d b
h
Uh11ti n!J :f: Prt~1Jiu9
2
years
unng w 1c
t e
et! mgs contmue
etween t e
1.,,., !H.
parties. As a matter of fact. such an agreement. either express
or implied, was negatived 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 I, 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 tha.t 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 July
31, 1940.
The next question to consider is whether the bar of
limitation which set in on July JI, 1943, was saved by
reason of the circumst<111ces set out in the plaint for a.voidance of the same. Out of the three acknowledgments of debt
pleaded by the appellant the third was abandoned by him
in the course of the hearing and the only two acknowledg- .
ments which were pressed were (a) the resolution passed by
tlte Board of Directors on May 20, 1941, and (b) the balancesheet of the company for the year 1940-41 dated October 10,
JJ/tflfjll'llf i ,) ,
1336
(l958]
1958
1941. Jt may be nokd that he made no auempt at all to
KM1'i>weh
prove the balance-sheets of the company for the years 1941Sanknrappa Trani· 42 and l942-43.
v.
l\T evi A kut Coffm1
Ginning &; Prcssi11fJ
Co., Ltd.
Bl1ll{l11mti .I.
·in regard to the resolution passed by the Board of
Directors on May 20, 1941, the position is that at that meet·
ing one Pandurang Narsaji Hadole, who was one of the
Directors of the company, made a reference to a proposed
settlement of the claim of the appellant for a sum of
Rs. 67,939 as found due at the end of July 1936, which had
been resolved upon by the Board of Directors on December
22, 1936, but had not been accepted by the appellant. The
resolution then requested the appellant to inform the company again if even then he was prepared to abide by the
terms of that proposed settlement which would be plnced
before the general meeting of all the share-holders of the
company if a reply was received from him in the affirmative.
This resolution of the Board of Directors was alleged
by the appellant to be an acknowledgment of a subsisting
liability in regard to the debt due by the company to him
at the foot of the deposit receipt in question. We do not see
how it could ever be spelt out as such acknowledgment. The
contents of the resolution only referred to a past liability of
the company to the appellant and there was nothing therein
which could be a.ny stretch he construed as referring to the
liability of the company, to him at the foot of the deposit
receipt dated January 15, 1940. Our attention was drawn to
the deposit receipts which had been passed by the company
in favour of the appellant on May 30. 1935, October 18.
1936, and November 30, 1938, each of which was for a. sum
of Rs. 47,500. No connection was. however. established between the sum of Rs. 47,500 the subject-matter of these
receipts, and the sum of Rs. 79,519-12-9, the subject-matter
of the deposit receipt in question and in the absence of any
such connection having been established the appellant could
not avail himself of the alleged acknowledgment of liability
contained in the resolution of the Board of Directors dated
May 20. 1941, even if it could perchance be construed as
RC.R.
SUP1lEME COURT REPORTS
1337
an acknowledgment of a subsisting liability. This resolution
1958
of the Board of Directors dated May 20, 1941, could not,
Kaakinatk
therefore,. avail the appellant as an acknowledgment of his Sankara~~ Wani
debt.
New Akot Cotton
Ginning cb Pressing
In reg:rd to the balance-sheet of the company for the
Co., Ltd.
ye1r 194041 dated October 10, 1941. it is to be noted that,
Bhagwat.i J.
even though the appellant app ied before the trial court for
filing the balance-sh<:et of 1940-41 on April 28, 1945, he
expressly stated that he did not want to adduce any oral
evidence to prove .it. He was, however, aliowed to file the
same. But it was. realised later that the balance-sheet did not
prove itse'f and he therefore made another application on
July l l, t 945, for permission to file a copy from the Registrar 9f Companies and contended that
this proved itselt
This document was, howev(:r, rejected by the trial court as
file:i too late. When the appeal came up for hearing before
the High Court, it was contended on behalf of the appellant
that· the copy which was adduced from the. office of the
Registrar was admissible in evidence but that evidence was
rejected by the High Court on a consideration of ss. 65 and
74(2) of the Evidence Act. The attention of the High Court
was evidently not drawn to the Commercial Documents Evidence Act (XXX of 1939) which has amended the Law of
Evidence with resp;:ct to certain commercial documents.
Section 3 of that Act enacts that "for the purposes of the
Indian Evidence Act, 1872, and notwithstanding anything
contained therein, a Court:
(a) .................................................................... .
(b) may presume, within the meaning of that Act, in relat10n to documents included in Pt. II of the Schedule: -
•
That any document purporting to be a document included in Part I or Part II of the Schedule, as the case may
be, and to have been duly made by or under the appropriate ·
authority, was so made and that the statements contained
therein are accurate."
Item No. 21 in Pt. II of the Schedule menti.ons:-
L/S4SCI-10
1338
SUPREME COURT REPORTS
[1958]
1958
"Copy, certified by the Registrar of Companies of the
KaskinaJh
Balance Sheet, Profit and Loss Account, and audit report of
Bankarappa Wani a company, filed with the said Registrar under the Indian
v.
NewAko!Cotl"" Companies Act, 1913 and the rules made thereunder."
Ginning ~ Prusing
Go., Ltd,
Bhagwati J.
If the attention of the High Court had been drawn to
this provision of law. we are sure, it would not have rejected
the copy of the balance-sheet obtained by the appel:ant from
the office of the Registrar of Companies.
We are of the
opinion that the copy should have been admitted in evidence
and we do hereby admit the same.
The appellant contends that that balance-sheet which
was signed by the Directors contained an acknowledgment
of the debt due by the company to the appellant for the
sum of Rs. 67,939 as and by way of fixed deposit and that
was sufficient to save the bar of limitation.
The question
therefore arises whether any nresumption can be raised as
regards the balance-sheet having been duly made by or
under the appropriate authority or in regard to the accuracy
of the statement contained therein under s. 3(b) of the Commercial Documents Evidence Act (XXX of 1939).
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 April 27, 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 May 17, 1941, but it had to be adjourned for want of a quorum. The adjourned meeting was
held on May 20, 1941, but no balance-sh.eel 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 year 194041. A general meeting of the Shareholders was called for
November 16, 1941, to pass the balance-sheet. This also had
to be adjourned to the following day for want of a quorum.
S.C.R.
SUPRK\lE COURT HRPOHTS
At the adjourned meeting the
shareholder~ then present
19.;r;,
refused lo pass the accounts and it was not till some five
g,,,,J.inof/i
weeks later, namely on Dec.:.nhcr 30. 1941. that the rival So;•k•11"'l'P" lfn;,;
faction met and passed. the. accounts. But ~his m~eting only
Sei,, _-i1.'.;;1 Oottnn
purpo~ted to be a cont111uat1on of the meetmg which had to Oinninff .cPrc~"i••rt
be adjourned for want of a quorum and that dearly was
Co.
Ltd.
irregular because the adjourned meeting had to -be called
within twentyfour 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 Hi!zh Court had been drawn
to the provision's of s. 3 <b) of the Commerci;tl Documents
Evidern:e Act. \XXX of I 939l 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 acknowledgment also is of no avail to the
appellant.
In regard to s. 14 of the Indian 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 be~ow 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 appellant's 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.
This appeal will therefore stand dismissed with costs.
Appeal dismissed.