Delhi High Court

Lufthansa German Airlines vs Ifc Despatch (I) Pvt. Ltd. on 6 July, 2009

Author: Manmohan Singh

*          HIGH COURT OF DELHI : NEW DELHI

+                      CS (OS) No.1214 /2005

%                      Judgment reserved on :       6th May, 2009

                       Judgment pronounced on :       6th July, 2009


Lufthansa German Airlines                        ...Plaintiff
                    Through : Ms. Neelam Rathore, Adv. with
                              Ms. Sarika Gandhi, Adv.

                       Versus

IFC Despatch (I) Pvt. Ltd.                         ....Defendant
                      Through : Mr. Rajiv Bansal, Adv. with
                                Mr. Shwetank Sailwal, Adv.

Coram:

HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                                  Yes

2. To be referred to Reporter or not?                               Yes

3. Whether the judgment should be reported                          Yes
   in the Digest?

MANMOHAN SINGH, J.

1. The plaintiff has filed the present suit for recovery of the sum

of Rs. 1,19,25,865.45/-. The plaintiff has its head office at Von-Gablenz

Strasse, 2-6 D-50664, Cologne, Germany and its Indian branch office at

56, Janpath, New Delhi. The cargo division of the plaintiff handles

transportation of luggage to and from India.

2. The defendant company is engaged in the business of

couriering and merging retail courier companies, and in its line of

practice approached the plaintiff for air carriage of its couriers agreeing

to pay the freight and payable charges on the same. The operations of

the defendant started in May 1993 whereupon it used the plaintiff‟s

services regularly. The plaintiff kept a running account of the bills

raised upon the defendant. The plaintiff submits that the defendant was

often irregular with the payment of freight and other charges payable

and in fact, on various occasions the cheques issued by the defendant in

lieu of the plaintiff‟s services were dishonoured.

3. There occurred various correspondences between the two

parties. The plaintiff submits that vide its letter dated 29th June, 1995, it

conveyed to the defendant that as the latter‟s cheques were being

dishonoured, the plaintiff was compelled to reduce its credit limit to Rs.

30 lac on a 15 day credit basis. The plaintiff then sent a follow up to the

previous letter by a letter dated 6th July, 1995. Due to continuous non-

payment on behalf of the defendant, the plaintiff sent to the defendant

three letters dated 11th July, 1995, 21st July, 1995 and 29th August, 1995

- all to the effect that the plaintiff would discontinue its business with it

if the latter persisted in non-payment of its long outstanding dues. The

plaintiff sent similar letters dated 29th September, 1995 and 19th

October, 1995, but to no avail. The only effect that the plaintiff‟s letters

had on the defendant was that it sent an apology and promise to pay by

letter dated 8th July, 1995, and gave empty assurances of prompt

payment by further two letters dated 24th May, 1995 and 30th July, 1995.

4. Eventually, by letter dated 22nd November, 1995 the plaintiff

gave an ultimatum to the defendant to the effect that if its outstanding

dues were left unpaid till after 1st December, 1995, the plaintiff would

not only stop accepting shipments on cash basis but also inform others

in the trade, of the defendant‟s mala fides and initiate legal action as

well. The plaintiff alleges that the defendant issued three cheques

totalling a sum of Rs. 1,22,93,433/-. These cheques, however, were all

allegedly dishonoured on presentation on 8th January, 1996. The cheque

numbers and Cheque dates of these three cheques are given as:

           i)          Cheque No. 972366 dated 04.01.1996
           ii)         Cheque No. 972365 dated 05.01.1996
           iii)        Cheque No. 972364 dated 08.01.1995

5. The plaintiff submits that in a meeting held between the

parties on 22nd November, 1995, the defendant verbally assured the

plaintiff that it would clear its dues of Rs. 1,22,93,433/- by 21st

December, 1995. The said amount was also allegedly mentioned as a

cautious reminder by the plaintiff in its letter dated 5th February, 1996,

which was a reply to the defendant‟s letter dated 31st January, 1996

wherein the latter had informed the former that it had prepared a bank

draft of Rs. 25,00,000/- in its favour. However, the plaintiff contends

that no such draft or other payment was received by it from or on behalf

of the defendant.

6. The plaintiff avers that around this time the defendant closed

its Delhi office without any intimation to the plaintiff. It is the

contention of the plaintiff that the said closure was only a tactic of

evasion on the defendant‟s part. Pursuant to an inspection in the

Registrar of Companies‟ records, the plaintiff sent a Legal Notice dated

19th April, 1996 to the defendant‟s Mumbai office, claiming the due sum

of Rs. 1,22,93,433/-. The said office replied vide letter dated 13th May,

1996 that the above-mentioned Legal Notice would be replied to after

receiving appropriate instructions.

7. Since no reply was received, the plaintiff again sent a Legal

Notice dated 20th May, 1996 to which the defendant‟s counsel replied on

20th June, 1996, allegedly raising false excuses and baseless counter

claims. The plaintiff further alleges that various meetings were held

thereafter between the parties, and the defendant persistently promised

that the dues would be paid and requested the plaintiff to accommodate

the delay till the defendant‟s financial condition improves a little.

8. To verify the actual financial condition of the defendant, the

plaintiff claims that it inspected the records of the Registrar of

Companies again, and on such inspection found that the defendant had

made several acknowledgments of its debts to the plaintiff. The plaintiff

submits that in its Balance Sheet for the financial year of 1998, filed

with the Registrar in 1999, the debt owed to the plaintiff is

acknowledged by the defendant to be of Rs. 1,08,70,556.45/-. The

Balance Sheet for 1999, filed in 2000, reduces this liability to Rs. 25 lac.

Strangely, the Balance Sheets for the years 1996 and 1997 were filed

very belatedly by the defendant in June 2002 and August 2002

respectively, and in both places the defendant has claimed a liability of

Rs. 1,08,70,556.45/- to the plaintiff.

9. The plaintiff claims that the amount due to it from the

plaintiff is of Rs. 1,19,25,865.45/- after adjustment from the original

amount of Rs. 1,22,93,433/-. The plaintiff submits that it is basing its

present suit on the basis of the defendant‟s admission of liability of Rs.

1,08,70,556.45/- in its Balance Sheet filed with the Registrar of

Companies on 29th August, 2002 (for the financial year 1997). As per

this submission, the plaintiff further avers that the period of limitation

for filing the present suit would be till 29th August, 2005 and the

plaintiff filed the present suit on this day, i.e. on 29th August, 2005.

10. The defendant has vehemently opposed the plaintiff‟s suit on

the ground that it is hopelessly barred by limitation. It has been

submitted that the dues are with respect to services provided for the

period from May, 1993 to January 1996. The alleged „admissions‟ of

liability for the sum of Rs. 1,08,70,556.45/- were made on 29th

November, 1996, 10th November, 1997 and 10th September, 1998 for the

financial years of 1996, 1997 and 1998 respectively, i.e. when these

balance sheets were signed by and on the defendant‟s behalf.

11. The defendant has also contended that there were several

disputes between the parties as the plaintiff did not weigh the courier

bags at the check in counter as per proper procedure. Further, the

defendant was neither allowed to present the Airway Bills nor did it

receive any credit for free baggage allowance in spite of being entitled

to the same. Further still, the defendant contends that there were

frequent cases of mishandling of baggage by the plaintiff so much so

that on an average there were at least two cases of mishandling in a

fortnight.

12. The defendant has submitted various counter claims to the

plaintiff‟s present suit. These are:

i) Rs. 45,171.75/- for wrongful weighing of the baggage;

ii) Rs. 44,82,609/- on account of non-deduction of baggage

allowance;

iii) Rs. 62,34,363.55/- on account of mishandled baggage; and,

iv) Rs. 4,05,437/- on account of non-acceptance of debit notes

of the plaintiff for which the defendant is entitled to due

credit.

13. On the basis of the pleading of the parties, following issues

were framed on 25th February, 2008:

"1. Whether the plaintiff is entitled to a decree in a sum of Rs.1,19,25,865.45, or such other amount, as claimed? OPP

2. Whether the plaintiff is entitled to interest at the rate of 12% as claimed? OPP

3. Whether the written statement is liable to be rejected as not being properly verified? OPP

4. Whether the defendant is entitled to claim any set-off as shown in paras 4 (i) to 4(o) of the written statement, and if so, to what effect? OPD

5. Whether the suit is barred by limitation? OPD

6. Relief."

14. Issue No.5 is treated as a preliminary issue and arguments

were heard on this point by this Court.

15. The plaintiff relied upon various case laws. The defendant

relied upon the case of Bank of Baroda v. S.K. Aggarwal; 1995 (35)

DRJ 687 wherein a similar issue was involved and it was held that

"under Section 18 of the Limitation Act, 1963, an acknowledgment of

liability must be made before the expiration of limitation and it must be

of a subsisting liability or existing jural relationship which must be

signed by the party or his authorised agents". It was held in para 11 as

under:-

"11. Apparently, in order that an acknowledgment may give a fresh starting point under Section 18 of the Limitation Act

(i) It must have been made before the expiration of the period of limitation for the suit, appeal or application, as the case may be."

(ii) It must be of a subsisting liability or existing jural relationship though the exact nature or the specific character of the specific liability may not be indicated in words.

16. In the present case, as submitted by the defendant the claim

on the basis of which the plaintiff‟s suit was based arose during the

period of May 1993 to January 1996. The suit has been filed on 29 th

August, 2005. In view of the judgment in the case of S.K. Aggarwal

(supra), it is clear that for an acknowledgment to give a fresh starting

point under Section 18 of the Limitation Act, it must have been made

before the expiration of the period of limitation for the suit, appeal or

application and it must be of a subsisting liability or existing jural

relationship though the exact nature or the specific character of the

specific liability may not be indicated in words.

17. In the present case, it is argued by the learned counsel for the

plaintiff that the filing of the respective Balance Sheets with ROC

amounts to acknowledgement by defendant with respect to accounts or

liability due towards the plaintiff which were respectively made from

the year ending on 31st March, 1996 to the year 2000. The defendant in

reply to the submission of the plaintiff argues that it is the date of

signing of the Balance Sheet which is the relevant date for the making

of an acknowledgment . The defendant submits that the Balance Sheets

of the defendant for the Financial Year ending 31.03.1996 to 31.03.1999

were respectively signed, and filed with the ROC on the dates

mentioned here-in-below:

 Balance Sheet            Date of            Date of Filing
 For the Year ending Signing                  With ROC
 31.3.1996                29.11.1996         29.01.1997
 31.3.1997                10.11.1997         01.01.1998
 31.3.1998                10.09.1998         22.12.1998
 31.3.1999                04.09.1999         25.02.2000.

18. Under Section 18, a statement in a balance sheet submitted as

per statutory requirement acknowledging a debt due is sufficient. In

each balance sheet, there is thus an admission of a subsisting liability to

continue the relation of debtor and creditor, and a definite representation

of a present intention to keep the liability alive until it is lawfully

determined by payment or otherwise. It is the date of the signing of the

balance sheet that starts a fresh period of limitation though the period

for which the balance sheet was actually prepared was different.

19. The contention of the plaintiff that the balance sheet was

filed in the year 2002 and thus the acknowledgement period starts from

that date, has no force as it is only the date of signing of balance sheet

that is to be seen in order to acknowledge the liability. In the last years