Appeal Success: Liability Acknowledgment Extends Limitation, Rs. 39,36,810 Recovered with 6% Interest Per Annum.

The SC allowed the appeal, overturning the TC and HC judgments, and decreed the suit in favor of the plaintiff for the recovery of Rs. 39,36,810 with 6% interest per annum. The acknowledgment of liability in letters dated 29/03/1977 and 30/07/1977 extended the limitation period, enabling the recovery of the excess payment.

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Issues Involved:
The issues involved in the judgment are the recovery of excess payment made by the Food Corporation of India to the Assam Cooperative Marketing and Consumer Federation Limited, the applicability of the period of limitation for filing the suit, and the effect of acknowledgment of liability on the limitation period.

Recovery of Excess Payment:
The Food Corporation of India filed a suit for recovery of excess payment made to the Federation. The plaintiff paid &8377; 2 crores as advance instead of &8377; 1.8 crores. The price of paddy supplied was fixed at &8377; 1,60,63,190, resulting in an excess payment of &8377; 39,36,810. The plaintiff also claimed an additional amount for quality cut, which was not upheld by the trial court.

Applicability of Limitation:
The main defense raised by the defendants was that the suit was barred by limitation as the cause of action arose on 20/09/1976, and the suit was filed beyond three years from that date. The plaintiff argued that two letters dated 29/03/1977 and 30/07/1977 from the Federation acknowledged the liability, thus extending the limitation period. The trial court and the High Court initially held the suit as time-barred.

Effect of Acknowledgment of Liability:
The letters dated 29/03/1977 and 30/07/1977 acknowledged the receipt of &8377; 2 crores by the Federation from the plaintiff. These letters indicated a jural relationship of buyer and seller, converting into a creditor-debtor relationship. The acknowledgment of liability extended the limitation period, and the suit filed on 30/05/1980 was within the prescribed time.

Conclusion:
The Supreme Court allowed the appeal, setting aside the judgments of the trial court and the High Court. The suit was decreed in favor of the plaintiff for the recovery of &8377; 39,36,810 with interest at 6 percent per annum. The acknowledgment of liability in the letters proved crucial in establishing the extension of the limitation period and the entitlement to recover the excess payment made.

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