Balance-sheet acknowledgments can save limitation where they admit a subsisting debt and are ratified by the company.

Balance-sheets may operate as acknowledgments of a subsisting debt under Section 19 of the Indian Limitation Act when they record the liability and are adopted by the company, so the claim is not barred by limitation. The analysis also notes that balance-sheets signed by managing agents can bind the company where the agents have general authority and the company later adopts the statements in general meeting, amounting to ratification. The legal point is that an express promise to pay is unnecessary; a conscious admission of liability, coupled with corporate adoption or ratification, is sufficient to keep the debt alive.

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Issues: (i) Whether the balance-sheets of the company amounted to acknowledgments of liability sufficient to save limitation under Section 19 of the Indian Limitation Act. (ii) Whether the balance-sheets, signed by the managing agents and later passed by the company in general meeting, were duly authorised acknowledgments binding on the company.

Issue (i): Whether the balance-sheets of the company amounted to acknowledgments of liability sufficient to save limitation under Section 19 of the Indian Limitation Act.

Analysis: The balance-sheets recorded the debt due to the creditor at the end of each relevant year and were adopted by the company. An acknowledgment under Section 19 need not be an express promise to pay, but it must amount to a conscious admission of a subsisting liability. The entries in the balance-sheets, read with the surrounding circumstances and the annual carry-forward of the debt, constituted such an admission and indicated an intention to keep the liability alive until discharge.

Conclusion: The balance-sheets constituted sufficient acknowledgments of liability under Section 19 and the claim was not barred by limitation.

Issue (ii): Whether the balance-sheets, signed by the managing agents and later passed by the company in general meeting, were duly authorised acknowledgments binding on the company.

Analysis: The managing agents had general authority to manage the company's affairs, borrow and repay moneys, and act on its behalf. Although the creditor was one of the partners of the managing agency firm, the company did not repudiate the entries and instead adopted the balance-sheets at its annual general meetings. That adoption amounted to ratification, with the result that the acknowledgments became effective as if made with the company's express authority.

Conclusion: The acknowledgments were duly authorised and binding on the company.

Final Conclusion: The appeal failed because the company's balance-sheets saved limitation by valid acknowledgments of a subsisting debt, and the decree in favour of the creditor stood affirmed.

Ratio Decidendi: A company's balance-sheet can operate as an acknowledgment under Section 19 of the Indian Limitation Act when it records a subsisting liability and is adopted or ratified by the company through duly authorised corporate action.

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