Judgment :- 1. The appellant is the plaintiff in O.S. No. 60 of 1971, on the file of the Subordinate Judge's Court, Mavelikkara. The suit was for recovery of Rs. 10,613.98 with interest at 6% from the date of the plaint. 2. During the period 3-11-1963 to 25-6-1967, the appellant was the President of the Akhilakerala Viswakarma Maha Sabha, which is registered under the Companies Act with its office at Mavelikkara (for short the Sabha). While so functioning he is stated to have advanced loans to the Sabha on various occasions. On 31-12-1966 an amount of Rs. 11,763.48 was due from the Sabha to the appellant. The same stood included in the balance sheet of the Sabha for the said year. Towards the above transaction an amount of Rs. 1,000/- was paid on 25-6-1968. The balance-sheet dated 31-12-1968 mentioned that Rs.10,613.98 was due to the appellant. The said amount continued to be included in the balance-sheets for the years 1969 and 1970. On the failure of the Sabha to return the amount, the appellant sent a registered notice on 17-9-1971. The Sabha sent a reply to the above notice denying the transaction and alternatively setting-forth the bar of limitation. The suit was, accordingly, filed on 10th November, 1971. 3. The first respondent Sabha filed a written statement, through its Secretary, the third defendant, the President, fifth defendant, and the Treasurer, the sixth defendant. Defendants 2 and 4, according to the written statement, were not Office Bearers of the Sabha. The contesting defendants denied the loan According to them, since the affairs of the first defendant Sabha were being managed by contributions from its members, there was no occasion to borrow amounts from the plaintiff. The plaintiff manipulated the accounts of the Sabha during his tenure of office as President with a view to put forward a claim based on the loan. The entries in the accounts were fraudulent and had no foundation on truth, and as such, they are not binding on the first defendant Sabha or its members. The first balance-sheet of the company including the amount of Rs. 11,763.48 was prepared on 6-5-1967 when the plaintiff was the President. The balance-sheets for subsequent years only repeated the liability. The averment, that there was a payment of Rs. 1,000/- on 25-6-1968, is false. The first balance-sheet of the company including the amount of Rs. 11,763.48 was prepared on 6-5-1967 when the plaintiff was the President. The balance-sheets for subsequent years only repeated the liability. The averment, that there was a payment of Rs. 1,000/- on 25-6-1968, is false. The balance-sheet for the year ending 31-12-1968 did not correctly conform to the entries in the account books for the year. The balance-sheet being a document prepared by the auditors, the general body of the members is not bound by its contents. It was not the practice for the general body to go into correctness or otherwise of the balance-sheet. The balance-sheets for the years 1969 and 1970 have not been accepted as correct by the general body. The contesting defendants also put forward a case, that the alleged loan was discussed during general body meeting held on 27-5-1967, under the Presidentship of the plaintiff. At the said meeting the plaintiff voluntarily relinquished his right to claim any amount from the Sabha. The said relinquishment is seen noted in the proceedings of that meeting which was passed on 24-6-1967. Being a voluntary relinquishment, in writing in his own hand, the plaintiff is bound by the relinquishment. The relinquishment has been accepted by the general body. The inclusion of the amount of Rs. 10,613.98 in the subsequent balance-sheets did not amount to acknowledgment of liability by the Sabha. On the face of it, the suit was barred by limitation. 4. The plaintiff presented his case on the footing that there was a settlement of accounts between the Sabha and himself and that it was the amount arrived at as a result of such settlement of account that found a place in the balance-sheet of the year 1967 and subsequent years. The trial court upheld the plaintiff's case, that he had advanced loans to the Sabha, and that the amount shown in Ext. A2 and Ext. A3. the balance-sheets for the years 1966 and 1967, was really due to the plaintiff. The contention of the contesting defendants, that there was a relinquishment of the amount by the plaintiff, was not accepted by the trial court. The court, however, held that the plaintiff would be entitled to get only such amounts as were paid by him within three years prior to 6-5-1967, the date when the balance-sheet of the Sabha for the year 1966 was prepared. The court, however, held that the plaintiff would be entitled to get only such amounts as were paid by him within three years prior to 6-5-1967, the date when the balance-sheet of the Sabha for the year 1966 was prepared. Amounts advanced prior to the period of three years were held to be barred by limitation. So far as the amounts advanced within three years of 6-5-1967 were concerned, the inclusion thereof in the balance-sheets kept alive the liability. This amount, less by Rs. 1000/- paid on 25-6-1968, was held to be due to the plaintiff. The balance, if any, was held to be barred by limitation. A preliminary decree for the above-said amount with interest at 6% from the date of suit till the date of realisation was, accordingly, passed. The question of costs was left to be decided in the final decree proceedings. The appeal relates to the amount, which has been disallowed by the trial court. 5. Respondents 1, 7 and 8, who are respectively the Sabha, its President and Secretary, filed a cross-objection challenging the preliminary decree passed and contending that no amount was due to the plaintiff-appellant. 6. Though it was vaguely asserted that the amounts entered in the accounts of the Sabha as advances made by the appellant were really amounts received in transactions entered by him in his capacity as President of the Sabha, in the absence of definite materials in support of that case, the contention was not pursued. The case that the entries in the account in relation to the advances were manipulations by the appellant was also not pressed seriously at the time of hearing. While the appellant tried to maintain that the suit was on settled accounts and that he was entitled to the full amounts sued for, the gamut of the contention on behalf of the respondent, Sabha, was that entries in the balance-sheet did not amount to acknowledgment of liability. There was also the alternate contention that the appellant had relinquished whatever amount that was paid by him to the Sabha and as such the decree already passed should stand vacated. 7. Ext. Al is the 15th annual report of the Sabha approved by the Board of Directors and presented by the Secretary before the general body meeting held in December, 1964. 7. Ext. Al is the 15th annual report of the Sabha approved by the Board of Directors and presented by the Secretary before the general body meeting held in December, 1964. At page 1 of the printed report while dealing with the activities of the Sabha it is mentioned that the amount required for printing records for the several branches was advanced by the President. The appellant was the President during the relevant period. It is thus clear that the Sabha used to borrow amounts from the President. Unless prohibited by memorandum or articles of association a director of a company including its Chairman may lend money to the company provided it is for its benefit. There is no case that any portion of the amount sued for was utilised otherwise than the benefit of the Sabha. According to the appellant, the amounts were utilised for constructing buildings for the Sabha and other binding purposes. There are entries in Ext. A5 and Ext. B3 day books of the Sabha, which prove that amounts were in fact advanced to the Sabha and a portion had been repaid. 8. Ext. A2 is the earliest of the balance-sheets produced wherein the loan due to the appellant is mentioned. Ext A2 contains columns showing the amounts to be paid by the Sabha and the out standings to be collected. Besides the appellant, other persons including Velu Achari (Clerk) are seen mentioned as those to whom amounts were due. Ext. A2 was prepared under the signature of Chartered Accountants as auditors. It is noted from Ext. A2 that the President, the General Secretary, a member of the Board of management and two members of the management council have signed the original of that document. It so happened that the appellant himself happened to be the President of the Sabha when Ext. A2 was prepared. This is not a relevant factor because Ext. A3 series, the balance-sheets for the years 1967 to 1970, were prepared at a time when the appellant ceased to be the President. The then office bearers of the Sabha have signed in these documents besides the the auditors. It is also the admitted case that these balance-sheets were passed and accepted by the general body of the Sabha. 9. A3 series, the balance-sheets for the years 1967 to 1970, were prepared at a time when the appellant ceased to be the President. The then office bearers of the Sabha have signed in these documents besides the the auditors. It is also the admitted case that these balance-sheets were passed and accepted by the general body of the Sabha. 9. The respondent's case that the advances even if true have been relinquished by the appellant is spoken to by Dw-1, the 3rd defendant, who was the General Secretary in May, 1967. According to him, the annual meeting of the general body of the Sabha was on 27th May 1967. The proceedings are recorded in Ext. B1 minutes book. It was as a result of the election held during the annual meeting that the appellant ceased to be the President. One of the members brought a resolution that the amount due to the appellant be allowed to be paid in instalments without detriment to the activities of the Sabha. The appellant then said that he did not want the amount. In token of the relinquishment the appellant himself wrote that fact in Ext. B1 and the general body accepted the offer. At page 39 of Ext. BI the minutes book what was originally written was that the general body accepted the suggestion of the appellant that the amount due to him might be paid to him in instalments. The original entry is however seen modified to the effect that the appellant was asked about the proposal to repay the amount in instalments and the appellant then stated that he did not want the amount. Corrections to the above effect are seen made in the recorded minutes for the meeting held on 27th May, 1967. It appears that the corrected minutes were approved by the Board at its meeting held on 24-6-1967. The appellant admitted that the corrections were made in his handwriting. He would, however, say that the general body of the Sabha has taken decisions even in the subsequent years that the amounts due to the appellant should be paid and some amount towards the loan transaction was paid after 27-5-1967. The appellant explained the correction in Ext. BI by saying that what he meant was that he did not want payment of the amount in instalments. The appellant explained the correction in Ext. BI by saying that what he meant was that he did not want payment of the amount in instalments. That there was no intention on the part of the appellant to forgo the amount and the Sabha also did not accept the offer to relinquish the amount is made out by subsequent conduct as disclosed by the balance sheets themselves. Amounts were actually paid by the Sabha towards the loan transaction and such amounts were accepted by the appellant. 10. How far the balance sheets could be acted upon in deciding the claim of the appellant is the next question. The appellant relies on the balance sheets as acknowledgment of liability contemplated in S.18 of the Limitation Act, 1963. Under S.18 an acknowledgment of liability signed by the party against whom the right is claimed gives rise to a fresh period of limitation. Under Explanation (b) to the Section the word 'signed' means signed either personally or by an agent duly authorised. A company being a corporate body acts through its representatives, the Managing Director and the Board of Directors. Under S.210 of the Companies Act it is the statutory duty of the Board of Directors to lay before the Company at every annual general body meeting a balance sheet and a profit and loss account for the preceding financial year. S.211 directs that the form and contents of the balance sheet should be as set out in Part I of Schedule VI. The said form stipulates for the details of the loans and advances and also of sundry creditors. The balance sheet should be approved by the Board of Directors, and thereafter authenticated by the Manager or the Secretary if any and not less than two directors one of whom should be the Managing Director. (See S.215). The Act also provides for supply of copies of the balance sheet to the members before the company in general meeting. Going by the above provisions, a balance sheet is the statement of assets and liabilities of the company as at the end of the financial year, approved by the Board of Directors and authenticated in the manner provided by law. The persons who authenticate the document do so in their capacity as agents of the company. Going by the above provisions, a balance sheet is the statement of assets and liabilities of the company as at the end of the financial year, approved by the Board of Directors and authenticated in the manner provided by law. The persons who authenticate the document do so in their capacity as agents of the company. The inclusion of a debt in a balance sheet duly prepared and authenticated would amount to admission of a liability and therefore satisfies the requirements of law for a valid acknowledgment under S.18 of the Limitation Act, even though the directors by authenticating the balance sheet merely discharge a statutory duty and may not have intended to make an acknowledgment. 11. The question whether inclusion of a debt in the balance sheet of a company would amount to acknowledgment of liability has come up for decision before Courts on various occasions. The uniform view is that such inclusion would amount to acknowledgment of liability (See In re Atlantic and Pacific Fibre Importing and Manufacturing Company, Limited (1928) Law Chancery p. 836), Ledingham & Others v. Barmejo Estancia Co. Ltd. Agar & Others (1947 (1) AER. 749), Jones v. Bellegrove Properties, Ltd. (1949(2) AER. 198), Rajah of Vizianagaram v. The Official Liquidator (AIR. 1952 Mad. 136), In re New Era Manufacturing Co. Ltd (1967)0) Comp. Law Journal p. 122), Babulal Hukmanand v Official Liquidator (1968) (1) Comp. Law Journal p.1.), Bharalpur Oil Mills (Pvt.) Ltd. v. Official Liquidator (1969) (39) Com Cases 670 ) 12. It is true that one of the signatories to Ext. A2 is the appellant himself. But he was obliged to sign in the balance sheet as he happened to be the President of the Sabha during the relevant period. If it had been the case that there were only two signatories one of them being the appellant, there would have been scope for a contention that the appellant took undue advantage of his position and got an acknowledgment of a debt due to himself. But in the instant case even excluding the appellant, there were four signatories to Ext. A2 balance sheet and the balance sheet has been accepted by the company in its annual general meeting. It cannot be said that the appellant misused his position as President of the Sabha for securing the acknowledgment of a debt which the Company owed to himself. A2 balance sheet and the balance sheet has been accepted by the company in its annual general meeting. It cannot be said that the appellant misused his position as President of the Sabha for securing the acknowledgment of a debt which the Company owed to himself. It has been held in Babulal Hukmanand's case (1968 (1) Comp. LJ 1) that where the balance sheet is signed by minimum of two directors as required by law, and having no fiduciary relationship with the creditor, the acknowledgment is not vitiated by the mere fact that the balance sheet is also signed by a person having fiduciary relation with the creditor. 13. That the appellant has not taken advantage of his position as President is also made out from the fact that the debt due to him has been included in the balance sheet for the subsequent years, during which period the appellant was not the President of the Sabha. The trial court was therefore fully justified in granting a decree in favour of the appellant treating the entries in the balance sheet as valid acknowledgment of liability. 14. The further question is whether the appellant's claim that the entries in the balance sheet should be taken as settlement of accounts and a decree should be given in his favour on that basis is sustainable in law. An account stated or a settlement of accounts is a bilateral transaction wherein the parties take an account of their dealings and arrive at the balance by mutual agreement. One of the parties agrees to pay the balance while the other agrees to give discharge of the whole liability if such balance is paid. The agreement amounts to a novation of the contract and gives rise to a fresh cause of action for realisation of the balance amount found due. The appellants' contention that a balance sheet evidences a settlement of accounts cannot be accepted. A balance sheet is a document prepared and signed by the directors in discharge of a statutory obligation, No bilateral agreement or settlement of accounts by mutual agreement can be spelt out from the fact that certain amounts are mentioned in the balance sheet of a company as due to a person No promise to pay the amount is involved by the inclusion of a debt in the balance sheet. It follows that a balance sheet is not an account stated. It follows that a balance sheet is not an account stated. (See John Shaw and Bans Salfara Ltd. v. Shaw - 1935 K B. 113). Inclusion of a debt in a balance sheet is only an acknowledgment of liability. To claim the benefit of S.18 of the Limitation Act the acknowledgment must be made before the original debt is time-barred. The trial court was therefore right in holding that the appellant was entitled to a decree for such amounts only as were not barred on 6-5-1967 the date of Ext. A2 balance sheet less the amounts paid by the Sabha during the said period and subsequently. The appeals and the cross-objection will stand dismissed. The parties will bear their respective costs.