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Issues: (i) Whether the letter dated 16th April, 1946 amounted to an acknowledgment of liability sufficient to extend the period of limitation for the suits; (ii) Whether the writer of the letter, the company secretary, had authority to bind the corporation by such an acknowledgment.
Issue (i): Whether the letter dated 16th April, 1946 amounted to an acknowledgment of liability sufficient to extend limitation.
Analysis: The Court examined the content and context of the correspondence between the parties and found the letters to be exploratory and item-wise attempts to clarify and adjust accounts rather than definitive admissions of debt. The judgment notes that the letters sought confirmation and further particulars and that no ratification or entries in the corporate books followed from the writer's admissions. Having regard to the nature of the correspondence, the Court treated the communication as not constituting a binding acknowledgment under the Limitation Act.
Conclusion: The letter dated 16th April, 1946 did not amount to an acknowledgment of liability sufficient to extend the period of limitation.
Issue (ii): Whether the company secretary who wrote the letter had authority to bind the corporation by acknowledging liability.
Analysis: The Court considered evidence on the writer's authority and found none beyond routine correspondence. The secretary's own testimony indicated that he carried out routine correspondence, that settlements were to be placed before the directors, and that directors neither ratified nor repudiated his actions. The Court relied on authorities and company law principles that a secretary's ordinary position does not, without specific authority, permit binding the company in financial liabilities. The special procedural authority to sign pleadings under the Code of Civil Procedure was held not to imply general financial authority.
Conclusion: The writer of the letter did not have authority to acknowledge or bind the corporation; therefore the letter cannot operate as an acknowledgment by the corporation for limitation purposes. This conclusion is against the plaintiffs and in favour of the defendant-corporation.
Final Conclusion: The appeals are disposed of on the ground that the purported acknowledgment was ineffective both because of its exploratory character and because the author lacked authority to bind the corporation; accordingly the decrees founded on the alleged acknowledgment cannot be sustained.
Ratio Decidendi: An acknowledgment which extends limitation must be made by a person having authority to bind the principal; routine correspondence by a corporate secretary, without proven authority or subsequent ratification by the directors, does not constitute such an acknowledgment.
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