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Haresh P. Jashnani v/s Satco Securities & Financial Services Ltd.

    Company Petition No.375 of 2008

    Decided On, 04 April 2009

    At, High Court of Judicature at Bombay


    For the Petitioner: J.P. Sen, Neeta Solanki i/b M/s. Kiran Jain & Co., Advocates. For the Respondent: Simil Purohit, Gaurav Joshi i/b M/s. Purohit & Co., Advocates.

Judgment Text


1. The facts pertaining to the merits of this case are identical to the facts in Company Petition No.751 of 2007. I have today passed an order in Company Petition No.751 of 2007.

2. In addition thereto, in this case, the company has raised the defence of limitation.

3. The transactions in securities pertain to the period between 9.2.2005 to 18.3.2005. The petition was filed on 3.4.2008 i.e. after a period of more than three years. Mr. Sen, however, relied upon the ledger maintained by the company for the period 1.4.2005 to 31.3.2006.

4. The first item in this ledger account is dated 1.4.2005. This however is the opening balance. Considering the nature of the account in this case it is a moot point as to whether the ledger can be said to constitute an open mutual and current account within the meaning of Article 1 of the Limitation Act. I will assume that the question whether an opening balance constitutes "the last item admitted or proved as entered in the account" within the meaning of that expression in Article 1 of the Limitation Act, 1963 is an arguable point.

5. Mr. Sen also submitted that this ledger account was an enclosure to a letter addressed by the company dated 7.7.2005 and therefore constituted an acknowledgement of liability within the meaning of Section 18 of the Limitation Act. This submission is well founded. In paragraph 4 of the letter, it is stated as follows :-

"We may point out to you that in the said claim, we have already given credits in respect of the amounts claimed by the complainant in the present complaint as seen from the ledger copy enclosed as Annexure-I."

6. Section 18 of the Limitation Act, 1963 reads as under :-

"18. Effect of acknowledgment in writing. ?

(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.

(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received.

Explanation. - For the purposes of this section, -

(a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right,

(b) the word "signed" means signed either personally or by an agent duly authorised in this behalf, and

1. an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right."

7. The question is whether the letter dated 7.7.2005 read with Annexure-I referred to therein and enclosed therewith constitutes an acknowledgement in writing signed by the party i.e. the company, as required by section 18 of the Limitation Act, 1963.

8. When a document incorporates by reference the contents of another document it in effect adopts what is stated therein as its own. Incorporation by reference is often resorted to in the formation of contracts including adopting arbitration clauses contained in the document incorporated. It is quite obvious and only logical that in such cases what the party in effect intended to do and did was to rewrite the contents of the earlier document in the later signed document. Such contents thereby become a part of and must be read into the signed document.

9. If a document or the contents thereof which constitute an acknowledgement of liability are incorporated by reference in a document which is signed, the latter document satisfies the requirements of section 18. This of course is if the former unsigned document constitutes an acknowledgement of liability and the party intended incorporating the contents or at least the relevant contents thereof in the latter document. It is not necessary that the contents of the incorporated document are reproduced or set out verbatim in the latter document. It is sufficient if that was the intention.

10. A mere reference in one document to another would not necessarily evince an incorporation thereof or an intention to incorporate the same in the later, referring document. That would depend upon the nature of the document in and the facts of, the case.

11. In the present case there is a clear intention on the part of the company to incorporate the contents of the Annexure-I referred to therein in the letter dated 7.7.2005. This intention is clear from paragraph 4 of the letter I have set out earlier and especially the words "as seen from the ledger copy enclosed as Annexure-I." (emphasis supplied) Paragraph 4 in effect incorporates the contents of Annexure-I in the letter dated 7.7.2005.

If indeed the Petitioner?s case on merits is well founded and the defence of the company regarding the clubbing of the said thirty two accounts is not accepted, this letter read with Annexure-I thereto would constitute an acknowledgement of liability as the annexure is incorporated therein. The acknowledgement therein would therefore be one in writing and signed by the company.

12. In the circumstances, the following order is passed :-

i). The Company is directed to deposit in this Court a sum of Rs.3,88,462/- on or before 31.7.2009.

ii). Upon the amount being deposited, the same shall be invested in a nationalized bank initially for a period of one year and thereafter for like periods of one year each.

iii). In the event of the amount being so deposited and in the event of the Petitioner filing a suit within twelve weeks from the date of the Petitioner?s advocate being informed of the same in writing, the amount sh

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all stand transferred to the credit of that suit. The Petitioner shall be at liberty to make an application in the suit for withdrawal of the amount. iv). In the event of the suit not being filed as aforesaid, the petition shall stand dismissed and the amount with interest thereon shall be refunded to the Respondent - Company. v). In case of failure on the part of the Company to deposit the amount as aforesaid, the Petition shall stand admitted and to be advertised in Free Press Journal, Maharashtra Times and Maharashtra Government Gazette. The Petitioner to deposit an amount of Rs.10,000/- with the Prothonotary and Senior Master of this Court within four weeks from the date of default.