Case Note & Summary
The dispute arose between the Food Corporation of India and the Assam State Cooperative Marketing & Consumer Federation Limited regarding the recovery of Rs. 79,82,105.44. The plaintiff claimed that the Federation, acting as the procuring agent for the State of Assam, had requested the Corporation to take over 20,000 metric tons of paddy, leading to an advance payment of Rs. 2 crores instead of the agreed Rs. 1.8 crores. After a meeting on 20/09/1976, it was determined that the value of the paddy was Rs. 1,60,63,190, resulting in an excess payment of Rs. 39,36,810. The plaintiff filed a suit for recovery on 13/05/1980, which was contested on the grounds of limitation, as the defendants argued that the cause of action arose on 20/09/1976. The trial court dismissed the suit, ruling it was barred by limitation. The High Court upheld this decision. The Supreme Court, however, focused on two letters from the Federation dated 29/03/1977 and 30/07/1977, which the plaintiff argued constituted an acknowledgment of liability under Section 18 of the Limitation Act, 1963. The court found that these letters acknowledged the receipt of Rs. 2 crores and indicated a jural relationship of debtor and creditor. The court ruled that the acknowledgment extended the limitation period, allowing the suit to proceed. Consequently, the Supreme Court allowed the appeal, set aside the lower court's judgments, and decreed the suit for recovery of Rs. 39,36,810 with interest at 6 percent per annum from the date of the suit until realization.
Headnote
A) Limitation Law - Acknowledgment of Liability - Effect on Limitation Period - Limitation Act, 1963, Section 18 - The letters dated 29/03/1977 and 30/07/1977 acknowledged the receipt of Rs. 2 crores by the Federation, thereby extending the limitation period for filing the suit. The court held that the acknowledgment of liability was sufficient to allow the suit to proceed despite the trial court's ruling on limitation (Paras 1-4).
Issue of Consideration
Whether the suit was barred by limitation and the effect of the letters acknowledging liability.
Final Decision
The Supreme Court allowed the appeal, set aside the judgments of the trial court and High Court, and decreed the suit for recovery of Rs. 39,36,810 with costs and interest at 6 percent per annum from the date of the suit until realization.
Law Points
- Limitation
- Acknowledgment of Liability
- Evidence
- Recovery of Amount
