SUPREME COURT OF INDIA
Food Corporation of India
Vs.
Assam State Co-operative Marketing and Consumers Federation Limited
C.A.No.2259 of 1999
(R. C. Lahoti CJI. and Ashok Bhan JJ.)
26.10.2004
R.C. Lahoti CJI.
1. The Food Corporation of India, the appellant herein filed a suit for
recovery of Rs.79, 82,105.44p. against four defendants (in fact two sets of
defendants) namely (i) the Assam Cooperative Marketing and Consumer Federation
Limited through its Managing Director; (ii) the General Manager of the
Federation (comprising the first set); (iii) the State of Assam through its
Chief Secretary; and (iv) the Secretary to the Government of Assam in the
Supply Department (comprising the second set) respectively impleaded as defendant
Nos.1, 2, 3 and 4. Hereinafter, defendant Nos.1 and 2 shall be referred to as
the 'Federation' and defendant Nos.3 and 4 shall be referred to as the 'State'
for convenience sake.
2. According to the plaintiff, the State through its procuring agent, the
Federation, requested the plaintiff through the Government of India to take
over 20,000 metric ton of procured paddy of kharif season 1975-76 as per
specification and price to be fixed by the Government of India. The request was
acceded to by the plaintiff. It was also agreed that the plaintiff shall pay 90
per cent of the amount as advance in nine instalments on the condition that the
balance 10 per cent will be paid after fixation of price by the Government of
India. An amount of Rs.1.8 crores was to be paid by way of advance. However, by
mistake the plaintiff paid a sum of Rs. 2 crores as advance to the Federation
during the period 16/2/76 to 27/2/76. In a meeting which took place on
20/9/1976, wherein the representatives of the parties and the Government of
India were present, the price of paddy was fixed and it was resolved that the
value of the paddy supplied by the Federation to the plaintiff was Rs. 1,
60,63,190 as against an advance of Rs. 2 crores by the plaintiff to the
Federation and thus there was an amount of Rs. 39,36,810/- paid by the
plaintiff to the Federation in excess.
3. Here itself, it may be mentioned that the plaintiff also claimed an amount
of Rs. 7, 03,541/- from the Federation on account of quality cut. However, we
do not propose to deal with that claim inasmuch as it has been negative by the
trial court itself and we do not find any reason to take a different view.
4. Correspondence ensued between the parties regarding the plaintiff's claim
against the Federation. Several letters were exchanged. At the end, the
plaintiff served a legal notice and filed the suit for recovery on 13/05/1980.
5. The defendants contested the suit. The principal defence raised in the
written statement was that the suit was barred by time inasmuch as the cause of
action, if any, had arisen to the plaintiff on 20/09/1976 and the suit was
filed beyond three years from date and as such was beyond the period of
limitation. The defendants also expressed in the written statement a desire of
pleading set-off and also of raising a counter claim but that was not done.
After trying all the issues, the trial court held that the plaintiff was
entitled to recovery of Rs. 39,36,810/- only from the Federation, but even that
claim could not be decreed as the suit was filed beyond the prescribed period
of limitation. Consequently, the suit was directed to be dismissed.
6. The plaintiff preferred an appeal in the High Court. The only issue agitated
in the High Court was the one of limitation. The High Court found no reason to
take a view different from the one taken by the trial court and accordingly,
directed the appeal to be dismissed. This is an appeal by special leave
preferred by the plaintiff.
7. The issue as to limitation centers around two letters respectively dated
29/03/1977 and 30/07/1977 marked as Exhibits 8 and 9 (Annexure P4 and P5).
According to the plaintiff these two letters written by the Federation amount
to acknowledgement of liability within the meaning of Section 18 of the
Limitation Act, 1963 and have the effect of extending the period of limitation.
The trial court has found the letters not proved and also not amounting to such
acknowledgement of liability as may attract the applicability of Section 18 of
the Limitation Act.
8. The first question which arises for consideration is whether the two letters
have been proved. Madan Pathak-P.W.1 was Assistant Manager in Food Corporation
of India at the relevant time. He deposed to all the relevant facts in issue
and substantiated all the material plaint averments. During the course of his
deposition, he stated - "Exhibit is the letter given by defendant No.1
itself. In that letter defendant No.1 admitted to have received Rs.2 crores.
Exhibits 8 and 9 are the letters given by defendant No.1. We have filed this
suit for non payment of money by defendant No.1." There is no
cross-examination directed on this part of the statement made by plaintiff.
There is no suggestion given that such letters were not sent by or on behalf of
the Federation to the plaintiff.
9. Both the letters Exhibits 8 and 9 are written on the letter pad of the
Federation. Both bear dispatch numbers. The letter dated 29th March, 1977 has
been written in response to plaintiff's D.O. No. E-1(7)/75-76/Proc./292 dated
14/03/1977. The letter dated 30th July, 1977 (Exhibit-9) has been written in
response to Plaintiff's D.O.No.ECM/FCI/P/76 dated 16/07/1977. In both the
letters, the Federation has disputed its liability to pay the amount in view of
certain disputes relating to settlement of accounts. The fact remains that both
the letters acknowledge an amount of Rs. 2 crores having been received by the
Federation from the plaintiff. The letter dated 29/03/1977, marked as
Exhibit-8, states inter alia - "We have already covered a sum of Rs. 1, 77,
64,923.89 leaving a balance of only Rs.22, 35,075.11." In latter part of
the same letter the Federation has staked a claim of Rs.48, 73,984.74p against
the plaintiff, as against the plaintiff's claim for the balance of Rs.22,
35,076.11p. And then states - "loss balance amount against deposit of
Rs.2.00 crores".
10. In the letter dated 30/07/1977 against the same statement has been
reiterated. The letter states at two places - "we have already covered a
sum of Rs.1,77,923.89 leaving a balance of only Rs.22,35,076.11" and
"loss balance amount (Rs.22,35,076.11) against deposit of Rs.2
crores". It is true that the letters Exhibits 8 and 9 were not written in
the presence of P.W.1. He has also not deposed to any such facts as would
amount to proof of execution of document. The fact remains that both these
letters formed part of the official record of the plaintiff and are placed as
pieces or links found in the chain of long correspondence entered into between
the parties. According to Section 35 of the Evidence Act - an entry in any
public or other official record stating a fact in issue or relevant fact and
made by public servant in the discharge of his official duty is itself a
relevant fact. Section 39 of the Evidence Act makes a reference to any
statement of which evidence is given forming part of a connected series of
letters or papers. In P.C. Purushothama Reddiar vs. S. Perumal, , the
question arose as to the admissibility and relevance of certain correspondence
included in the official records. The Court observed-
"The learned Advocate General did not support the exclusion of the last
three on the ground that the copies of correspondence kept in the Collector's
and taluk offices were not signed but contended that they were not admissible
under Section 35 of the Indian Evidence Act. We think however that copies of
actual letters made in registers of official correspondence kept for reference
and record are admissible under Section 35 as reports and records of acts done
by public officers in the course of their official duty and of statements made
to them and that in the words of their Lordships in Rajah Muttu Ramalinga
Setupati vs. Periyanayagum Pillai1, they are entitled to great
consideration in so far as they supply information of material facts and also
in so far as they are relevant to the conduct and acts of the parties in
relation to the proceedings of Government founded upon them.
We are in agreement with the view taken by the Madras High Court in that
case."
11. The Court further held that once the document has been marked as exhibit
without any objection from a party then such party cannot object to the
admissibility of document and once a document is properly admitted the contents
of that document are also admitted in evidence though those contents may not be
conclusive evidence.
12. The documents having been tendered in evidence without any demur by the
defendants, the same coming from proper custody and forming part of official
record of the appellant-Corporation and being part of the chain of
correspondence can be said to have been proved by P.W.1 more so when his
deposition to the effect that the two letters were received from the Federation
was not disputed by the defendant-Federation either by directing any
cross-examination on that part of the statement or by making any suggestion to
the contrary indicating the defendant's case as regards the said two letters.
In our opinion, the documents were proved and their contents can be read in
evidence. Needless to say, there is no rebuttal of the letters on the part of
the defendants by way of evidence adduced in the case.
13. Once it is held that the two letters are proved then the next question
which arises is as to their effect on limitation.
14. According to Section 18 of the Limitation Act, an acknowledgement of
liability made in writing in respect of any right claimed by the opposite party
and signed by the party against such right is claimed made before the
expiration of the prescribed period for a suit in respect of such right has the
effect of commencing of fresh period of limitation from the date on which the
acknowledgement was so signed. It is well-settled that to amount to an
acknowledgement of liability within the meaning of Section 18 of the Limitation
Act, it need not be accompanied by a promise to pay either expressly or even by
implication.
15. The statement providing foundation for a plea of acknowledgement must
relate to a present subsisting liability, though the exact nature or the
specific character of the said liability may not be indicated in words. The
words used in the acknowledgement must indicate the existence of jural
relationship between the parties such as that of debtor and creditor. The
intention to attempt such jural relationship must be apparent. However, such
intention can be inferred by implication from the nature of the admission and
need not be expressed in words. A clear statement containing acknowledgement of
liability can imply the intention to admit jural relationship of debtor and
creditor. Though oral evidence in lieu of or making a departure from the
statement sought to be relied on as acknowledgement is excluded but surrounding
circumstances can always be considered. Courts generally lean in favour of a
liberal construction of such statements though an acknowledgement shall not be
inferred where there is no admission so as to fasten liability on the maker of
the statement by an involved or far-fetched process of reasoning. (See :
Shopoor Freedom Mazda vs. Durga Prosad Chamaria & Ors. and "M/s
Lakshmiratan Cotton Mills Co. Ltd. Etc. vs. The Aluminium Corporation of India
Ltd. ). So long as the statement amounts to an admission, acknowledging
the jural relationship and existence of liability, it is immaterial that the
admission is accompanied by an assertion that nothing would be found due from
the person making the admission or that on an account being taken something may
be found due and payable to the person making the acknowledgement by the person
to whom the statement i made.
16. The two letters dated 29/03/1977 and 30/07/1977 (Exhibits 8 and 9) clearly
acknowledge the amount of Rs. 2 crores having been received by the Federation
from the Food Corporation of India whether by way of advance or by way of
deposit. The letters also indicate that the amount of two crores was by way of
advance or deposit against paddy procurement. This is admission of journal
relationship of buyer and seller which stood converted into relationship of
creditor and debtor on the failure of the principal transaction. However, the
acknowledged liability is sought to be disowned by submitting that on an
account being taken nothing would be found due and payable by the plaintiff to
the Federation. Disputing the liability to repay the amount acknowledged to
have been received does not dilute the fact of acknowledgement in so far as
Section 18 of the Limitation Act is concerned. The two letters have the effect
of extending the period of limitation prescribed for filing the suit and
calculated from the date of the latter of the two letters i.e. 30/07/1977, the
suit filed on 30/05/1980 was well within the period of limitation.
17. For the foregoing reasons, we cannot countenance the view taken by the
trial court and the High Court that the suit filed by the appellant was barred
by limitation.
18. The trial court, as already indicated, has found the plaintiff not entitled
to any claim other than the recovery of Rs. 39,36,810/-. The claim for interest
was also found not liable to be sustained. We are not inclined to take a view
different from the one taken by the trial court more so, when we find that no
plea other than that of limitation was pursued and pressed in the High Court.
19. The appeal is allowed. The judgments and decrees of the trial court and the
High Court are set aside. Instead the suit filed by the plaintiff is directed
to be decreed against the defendant respondent Nos.1 and 2 for recovery of Rs.
39,36,810/- with costs proportionate to that amount throughout. The plaintiff
shall also be entitled to interest calculated at the rate of 6 percent per
annum from the date of the suit till realization.
1(1874) 1 Ind. App.209