Supreme Court rules Exhibits B-4 & A-8 not valid acknowledgments of liability, suit barred by limitation

The Supreme Court held that Exhibits B-4 and A-8 did not constitute valid acknowledgments of liability by the Appellant, thus not extending the limitation period under Article 47 of the Limitation Act, 1963. As a result, the suit filed by the Respondent for recovery of the bid amount was deemed barred by limitation. The appeal was allowed, and the judgments of the trial court and the High Court were set aside, leading to the dismissal of the Respondent's suit without any costs awarded.

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Issues Involved:
1. Whether Exhibits B-4 and A-8 contain any acknowledgment of liability by the Appellant.
2. Whether the suit filed by the Respondent for recovery of the bid amount is barred by limitation under Article 47 of the Limitation Act, 1963.

Detailed Analysis:

1. Acknowledgment of Liability:
The primary issue is whether Exhibits B-4 and A-8 can be considered as acknowledgments of liability by the Appellant, the State of Kerala. The trial court and the High Court held that these exhibits constituted acknowledgment, thereby preventing the suit from being barred by limitation. However, the Supreme Court disagreed, noting that:
- Exhibit B-4: This document is a Government Order extending the period of the contract due to the fire damage but does not address the claim for a refund of the bid amount. It does not acknowledge any liability towards the Respondent's claim.
- Exhibit A-8: This is a communication from the Divisional Forest Officer stating that the Respondent failed to remit the balance of the bid amount and the remaining forest produce would be auctioned. It does not imply any acknowledgment of liability for refunding the bid amount.

The Court emphasized the requirements under Section 18 of the Limitation Act, 1963, which necessitates a clear acknowledgment of liability in writing, signed by the party against whom the claim is made. The Court concluded that neither document met these criteria.

2. Limitation Period:
The suit's timeliness hinges on whether the acknowledgment of liability extends the limitation period. Article 47 of the Limitation Act, 1963, prescribes a three-year period from the date of failure of consideration, which in this case is the date of the fire (February 21, 1974). The suit was filed on July 28, 1977, beyond the three-year period unless extended by an acknowledgment of liability.

The Court reiterated that:
- The limitation period starts from the date of the failure of consideration, i.e., the fire date.
- Since Exhibits B-4 and A-8 do not constitute acknowledgments of liability, the limitation period is not extended.

Additional Contention:
The Respondent's counsel argued that the extension of the contract period should shift the failure date to August 10, 1974, making the suit timely. The Court rejected this argument, noting:
- It was a new point not raised in lower courts.
- The suit is based on the frustration of the contract due to the fire, not on the failure to perform the contract, which would constitute a breach, not frustration.

Conclusion:
The Supreme Court concluded that the suit is barred by limitation as there was no valid acknowledgment of liability to extend the limitation period. Consequently, the appeal was allowed, and the judgments of the trial court and the High Court were set aside, resulting in the dismissal of the Respondent's suit. No order as to costs was made.

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