AL-AMEEN LTD. Vs. K. P. SETHUMADHAVAN

JUDGEMENT

(1.) It is often said that an 'acknowledgment' merely extends the period of limitation and does not create a new right of action. How far the balance sheet and the profit and loss account will operate as an acknowledgment of liability is the pivotal question in this appeal suit.

(2.) The plaintiff contended that he had advanced money to the defendant on various occasions totalling to Rs.2,65,000/- for the construction of a building and the suit is one for realization of the same. The receipt of the amount by the defendant is not disputed and the same is reflected in Ext.A1 balance sheet and the profit and loss account for the period ending 31/03/1995. The suit is filed in the capacity of a creditor even though the plaintiff is also a director of the defendant which is a company registered under the Companies Act, 1956.

(3.) The defendant contended that the amount was paid back to the plaintiff during the year 1995-96 and the same is reflected in Ext.B11 balance sheet and the profit and loss account for the period ending 31/03/1996. The defendant added that the suit filed on 03/01/2000 for realization of the amount allegedly due on 31/03/1995 is hopelessly barred by the law of limitation. The defendant pointed out that Ext.A1 balance sheet and the profit and loss account does not operate as an acknowledgment and that the same can at best relate to the period ending 31/03/1995.