Implied promise to pay saves limitation period; respondent ordered to pay Rs. 9,00,000.

The court found that the issuance of forms C did not constitute an acknowledgment of liability to save the limitation period. However, the letter dated June 9, 2005, was deemed an implied promise to pay the amount due upon reconciliation of accounts, saving the limitation period under Section 25(3) of the Indian Contract Act. Consequently, the respondent company was ordered to pay Rs. 9,00,000 to the petitioner within twelve weeks, with the threat of the winding-up petition being admitted and advertised in case of non-compliance.

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Issues Involved:
1. Whether the claims are barred by limitation.
2. Whether the issuance of forms C constitutes an acknowledgment of liability under Section 18 of the Limitation Act.
3. Whether the letter dated June 9, 2005, constitutes an implied promise to pay the amount due.

Detailed Analysis:

1. Whether the claims are barred by limitation:
The petitioner sought the winding-up of the respondent company under sections 433 and 434 of the Companies Act, 1956, for a debt of Rs. 13,19,853.48 with interest. The petitioner supplied goods based on purchase orders from the company, evidenced by 58 invoices issued between April 9, 2001, and November 3, 2001. The company acknowledged its liability in various letters, the last being on April 19, 2002. However, the petition was filed on August 9, 2005, more than three years after the last acknowledgment, thus raising the issue of the claims being barred by limitation.

2. Whether the issuance of forms C constitutes an acknowledgment of liability under Section 18 of the Limitation Act:
The petitioner argued that the issuance of forms C under the Central Sales Tax Act constituted an acknowledgment of liability, thus saving the limitation period. Section 18 of the Limitation Act, 1963, states that an acknowledgment of liability in writing, signed by the party, renews the period of limitation. However, the court concluded that the execution or issuance of a form C does not save the bar of limitation under Section 18. Form C is primarily for availing a reduced rate of sales tax and does not imply an acknowledgment of a present subsisting liability. The court found no surrounding circumstances indicating that the issuance of form C was intended to acknowledge a subsisting liability.

3. Whether the letter dated June 9, 2005, constitutes an implied promise to pay the amount due:
The petitioner also argued that the bar of limitation was saved by the company's letter dated June 9, 2005, which implied a promise to pay the amount due upon reconciliation of accounts. The letter contained statements suggesting the need for account reconciliation and a call for a joint meeting to reconcile accounts by an independent expert. The court interpreted these statements as an implied promise to pay the amount found due upon reconciliation, thus saving the limitation under Section 25(3) of the Indian Contract Act, 1872, which allows a time-barred debt to be enforceable if there is a written promise to pay.

Conclusion:
The court concluded that the issuance of forms C did not constitute an acknowledgment of liability to save the limitation period. However, the letter dated June 9, 2005, constituted an implied promise to pay the amount due upon reconciliation of accounts, thus saving the limitation period under Section 25(3) of the Indian Contract Act. The court ordered the respondent company to pay Rs. 9,00,000 to the petitioner within twelve weeks, failing which the petition for winding-up would be admitted and advertised.

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