Judgment :- Asim Kumar Ray, J. This is a suit on obtaining leave under Clause 12 of the Letters Patent praying for a decree of Rs. 29,89,511.77/-along with other consequential reliefs. The plaintiff Govind Prasad Dalmia is carrying on business of manufacturing aluminum conductors under the name and style of M/s. Govind Prasad Dalmia and Sons at Deogarh, Bihar. The said business is duly registered as small scale industry with the District Industrial Centre, Deogarh, Bihar having registration No. 03/14/01806/SSI dated 26-02-1977. The defendant West Bengal State Electricity Board had floated a tender bearing specification No. P-23/87 for supply of all aluminum conductors (AAC) and aluminum conductors steel reinforced (ACSR) of diverse sizes on various terms and conditions. In response to that tender the plaintiff submitted quotation along with earnest money by way of Bank Guarantee of Rs. 25,000/-on 11th September, 1987. The said quotation was opened on 16th September, 1987 and it was accepted by the defendant. The defendant issued its first order on 27th November,1987 for supply of 100 KMs of AAC Ant and 150 KMs of ACSR Weasel at the agreed rate. The plaintiff duly supplied those goods to the defendant and received payment. On 19th January, 1987 the controlled price of aluminum was increased by the Government and the plaintiff demanded increased cost on production. On 30th January, 1988 the defendant issued second purchase order for supply of 1500 KMs ANT conductors to be delivered within June,1988. The plaintiff did not accept the offer and sought for clarification since the order did not provide for the increase rate of price of aluminum. On 8th February, 1988 the defendant issued a third purchase order for supply of 900 KMs ACSR RABBIT conductor to be delivered within April, 1988. In February, 1988 the plaintiff was assured by the defendant that they will give effect to the price increase. Relying on the said assurance the plaintiff offered 456.200 KMs of AAC Ant for supply to the defendant subject to increase of price. On 29th March,1988 the plaintiff submitted two bank guarantees for Rs. 1,86,500/-each (total for Rs. 3,73,000/-) on account of security deposit against the order dated 30.1.1988. On 14th March, 1988 the defendant issued instruction for delivery of 456.200 KMs. Of AAC Ant after taking prior inspection of the said goods. On 29th March,1988 the plaintiff submitted two bank guarantees for Rs. 1,86,500/-each (total for Rs. 3,73,000/-) on account of security deposit against the order dated 30.1.1988. On 14th March, 1988 the defendant issued instruction for delivery of 456.200 KMs. Of AAC Ant after taking prior inspection of the said goods. In pursuance of the said dispatch instruction the plaintiff supplied 455.755 KMs of AAC Ant between 19th March, 1988 and 23rd March, 1988 at different places according to the instruction of the defendant. Plaintiff submitted bills for a sum of Rs. 24,42,925.60 and also submitted a claim for Rs. 1,02,859.57 towards increase cost. The defendant from time to time paid a sum of Rs. 24,31,974.40 long after the due date after deducting Rs. 10951.04 on account of alleged penalty. The defendant by its letter dated 21st August,1990 terminated the order dated 30th January, 1988 and forfeited the security deposit and levied penalty on account of alleged late delivery of goods and non-delivery of goods. In pursuance of the order dated 8th February, 1988 the plaintiff duly offered 315.225 KMs of ACSR RABBIT to the defendant on 8th March,1988. On 17th March,1988 defendant issued despatch instruction for 316.135KMs of ACSR RABBIT and between 27th March,1988 and 28th March,1988 316.22 KMs of ACSR RABBIT were supplied by the plaintiff to the defendant at different places according to their direction. The plaintiff submitted bill of Rs. 21,14,293.57. The defendant paid only a sum of Rs. 18,33,832.34 leaving an outstanding of Rs. 2,80,461.23. Out of the said sum of Rs. 2,80,461.25 a sum of Rs. 2,54,704.05 was appropriated by the defendant towards security deposit. The defendant also deducted Rs. 25,757.18 from the bill submitted by the plaintiff in pursuance of the deliveries made against despatch instruction dated 17th March,1988. The plaintiff could not supply goods as per the order dated 8th February, 1988 within the stipulated time for the reasons of non-payment of the amount within the due date. Plaintiff asked for extension of the period of delivery and was verbally assured by the defendant and the plaintiff expected that time for delivery would be extended. Relying on such assurance and having legitimate expectation as aforesaid the plaintiff further offered delivery of 136.359 KMs and 185.816 KMs of ACSR RABBIT on 3rd June,1988 and 20th July, 1988 respectively. Plaintiff asked for extension of the period of delivery and was verbally assured by the defendant and the plaintiff expected that time for delivery would be extended. Relying on such assurance and having legitimate expectation as aforesaid the plaintiff further offered delivery of 136.359 KMs and 185.816 KMs of ACSR RABBIT on 3rd June,1988 and 20th July, 1988 respectively. The dispatch instruction in respect of the said office were issued by the defendant on 22nd June,1988 and 8th April,1988 respectively. The plaintiff accordingly made further supplies of 322.175 KMs of ACSR RABBIT during the period between 24th June,1988 and 18th September,1988. The plaintiff raised bill of Rs. 21,99,523.94 against the supply of 322.175 KMs of ACSR RABBIT out of which the defendant paid only Rs. 20,46,338. 28 leaving an outstanding of Rs. 1,53,185.66. On 14th March, 1988 the defendant issued an order for supply of 400 KMs Ant and 600 KMs ACSR RABBIT deliverable within April 1988 and March 1989 respectively but the said order did not provide for the increased rate in respect of AAC ANT. The plaintiff sought for necessary clarification of the said order. On 29th April, 1988 the defendant had expressed its unwillingness to increase the rate of AAC ANT and the plaintiff refused to accept the order of dated 14th March,1988 in so far as the same related to supply of AAC ANT. In May 1988 the defendant assured the plaintiff that period of delivery of ACSR RABBIT would be extended and acting on such assurance on 3rd June,1988 the plaintiff offered for delivery of 211.497 KMs of ACSR RABBIT to the defendant . The defendant issued despatch instruction on 30th July,1988 and the plaintiff delivered 211.497 KMs of ACSR RABBIT to the defendant at different places according to their instruction. A bill of Rs. 14,38,148.57 was submitted by the defendant . The plaintiff paid Rs. 10,21,469.78 leaving an outstanding of Rs. 4,16,678.79. Out of a sum of Rs. 4,16,678.79 a sum of Rs. 21,098.50 was appropriated by the defendant towards security deposit and a sum of Rs. 19956.69 was deducted towards penalty for alleged late delivery. The plaintiff finding no alternative stopped further delivery of goods under the order dated 14th March,1988. 10,21,469.78 leaving an outstanding of Rs. 4,16,678.79. Out of a sum of Rs. 4,16,678.79 a sum of Rs. 21,098.50 was appropriated by the defendant towards security deposit and a sum of Rs. 19956.69 was deducted towards penalty for alleged late delivery. The plaintiff finding no alternative stopped further delivery of goods under the order dated 14th March,1988. By two letters both dated 21st August, 1990 the defendant terminated the order dated 8th February, 1988 and 14th March, 1988 and expressed that security deposit will be forfeited and there will be a penalty for delivery and nondelivery of goods. An aggregate sum of Rs. 9,64,136.29 is due and payable by the defendant to the plaintiff. The plaintiff is also entitled to an interest @ 23.75% per annum under the act enacted subsequent to the Ordinance No. 15 of 1992 being the interest on delayed payment to Small Scale and Ancillary Industrial Undertakings Ordinance ,1992 and/or Sales of Goods Act with monthly rests from the due date indicated above which amounts to Rs.20,25,375.48. Thus, a sum of Rs. 29,89,511.77 is due and payable by the defendant to the plaintiff inclusive of interest calculated upto 31st July, 1993. Defendant by filing a written statement has denied and disputed all the material averments set-forth in the body of the plaint and has contended, inter alia, that by letter dated 10th December, 1987 the plaintiff expressed his willingness to supply the subject material to the defendant at the same rate and terms and solicited for placement of further orders of the subject materials. By another letter dated 7th December, 1987 the plaintiff approached the defendant further to permit him to supply the subject materials manufactured by their sister concern. Thereafter by letter dated 10th Decemeber,1987 the defendant informed the plaintiff that only upon completion of the delivery of the goods covered in the order dated 27th November, 1987 within December 1987 further order for subject material would be placed by March,1988. The order dated 30th January, 1988 was placed on the basis of request and assurance made by the plaintiff to the defendant by its letter dated 10th December, 1987. It is denied and disputed by the defendant that the plaintiff did not accept the order dated 30th January, 1988 and sought for clarification. The order dated 30th January, 1988 was placed on the basis of request and assurance made by the plaintiff to the defendant by its letter dated 10th December, 1987. It is denied and disputed by the defendant that the plaintiff did not accept the order dated 30th January, 1988 and sought for clarification. The defendant did not assure the plaintiff regarding increase of price of the subject material and it is denied and disputed that the plaintiff offered for supply of subject material on the basis of any assurance of the defendant agreeing to increase the price of the said materials. The statement covering two bank guarantees being No. 31/5 and 31/6 both dated 28th February, 1988 of Rs. 1,86,500/-each are not admitted. The plaintiff supplied 455.755 KMs of AAC ANT but the value of the said goods amounting to Rs. 25,45,785.17 as claimed by the plaintiff has not been calculated as per the relevant terms and conditions embodied in the order dated 30th January, 1988. The defendant is not liable to pay the increased sum of Rs. 1,02,859.57 with interest. The plaintiff claimed Rs. 10,947.04 in the concerned bill in excess of the amount to which it is entitled too. The plaintiff had accepted the order dated 30th January, 1988 unconditionally and has duly executed the said order in part on the terms and conditions contained therein. The termination of the order dated 30th January, 1988, forfeiture of security deposit and levy of penalty for late delivery and nondelivery of goods were in accordance with the terms and conditions of the order dated 30th January, 1988. The defendant has duly paid to the plaintiff the amount which the plaintiff is lawfully entitled to for the price of the subject materials supplied under order dated 30th January, 1988. The plaintiff has failed to complete the delivery of the goods covered in the order dated 8th February, 1988 within the time schedule. The defendant has duly paid to the plaintiff the amount which he is lawfully entitled to for the price of the materials supplied under the said order. The defendant has deducted Rs. 2,54,704.05 from the bill amount of the plaintiff in accordance with the terms and conditions governing the said order towards security deposit as the plaintiff did not make any security deposit although required to do so. The defendant has deducted Rs. The defendant has deducted Rs. 2,54,704.05 from the bill amount of the plaintiff in accordance with the terms and conditions governing the said order towards security deposit as the plaintiff did not make any security deposit although required to do so. The defendant has deducted Rs. 25,757.18 from the bill of the plaintiff towards penalty as the plaintiff failed to supply the subject materials within the time schedule. It has been denied specifically that the plaintiff asked for the extension of period of delivery and the defendant gave verbal assurance that the time for delivery of the goods under order dated 8th February, 1988 would be extended. The plaintiff made part supplies of materials covered under the order dated 14th March, 1988. No assurance whatsoever was given by the defendant to the plaintiff about the extension of time for completing delivery of the subject materials and the plaintiff could have any legitimate expectations to that effect. The order dated 14th March, 1988 itself contained price variation clause to which the plaintiff agreed to. It is specifically denied that the plaintiff refused to accept the order dated 14th March, 1988 in so far as the same related to supply of AAC ANT. The defendant has paid the bill raised by the plaintiff in respect of supplies effected by it under order dated 14th March, 1988 to which the plaintiff was lawfully entitled to. A sum of Rs. 19,956.69 has been levied as penalty as the plaintiff failed to supply the goods within the stipulated period of delivery in accordance with the terms and conditions covering the said order dated 14th March, 1988. A sum of Rs. 2,71,098.50 was deducted from the bill amount towards security deposit as the plaintiff failed to furnish security deposit in accordance with the terms and conditions covering the said purchase order dated 14th March, 1988. The question of extension of period of delivery of goods by the defendant could not and did not arise. It is disputed that a sum of Rs. 4,16,678.79 is due and payable by the defendant to the plaintiff. The defendant has rightly terminated the order dated 8th February, 1988 and 14th March, 1988 as the plaintiff has failed to comply with the terms and conditions covering the said two orders. It is disputed that a sum of Rs. 4,16,678.79 is due and payable by the defendant to the plaintiff. The defendant has rightly terminated the order dated 8th February, 1988 and 14th March, 1988 as the plaintiff has failed to comply with the terms and conditions covering the said two orders. It is denied that the plaintiff did not accept the order dated 14th March, 1988 in so far as the same related to supply of AAC ANT and it has been further denied that the plaintiff was prevented from supplying ACSR RABBIT under the order dated 14th March, 1988 due to failure on the part of the defendant to make payment against the supply made within the agreed period. It is denied and disputed that anaggregate sum of Rs. 9,64,136.29 is due and payable by the defendant to the plaintiff. The plaintiff is not at all entitled to Rs. 20,25,378.48 towards interest from the defendant. The plaintiff is not entitled to a total sum of Rs. 29,89,511.77. The claim of the plaintiff is barred by law of limitation and the suit is liable to be dismissed. On the basis of the pleadings of the parties the following issues were framed: 1. Was the plaintiff entitled to increase in price of the subject material as pleaded in the plaint? 2. Was the defendant entitled to deduct any sums on account of penalty from the bills payable to the plaintiff? 3. Was the defendant entitled to forfeit the security deposit to levy penalty for late delivery or non-delivery of the goods as alleged in the written statement? 4. Is the plaintiff entitled to a decree of Rs. 29,89,511.77 p. as claimed in the plaint? 5. Is the plaintiff entitled to interest @ 23.75 % as claimedor at any other rate? 6. Is the plaintiff entitled to a decree for declaration for adjudging the Bank guarantee dated 28th March, 1988 as void or to deliver up and cancellation thereof as claimed? 7. Is the suit barred by laws of limitation? 8. To what relief if any is the plaintiff entitled? Issue No. 7 (Limitation) Mr. Dhruba Ghosh, learned counsel of the plaintiff has opened his argument taking issue No. 7-the issue on the point of limitation. 7. Is the suit barred by laws of limitation? 8. To what relief if any is the plaintiff entitled? Issue No. 7 (Limitation) Mr. Dhruba Ghosh, learned counsel of the plaintiff has opened his argument taking issue No. 7-the issue on the point of limitation. He has contended that the defendant by its letters dated 21-8-1990 had acknowledged its jural relationship with the plaintiff and the same constituted an acknowledgement under Section 18 of the Limitation Act,1963. The defendant acknowledges the subsistence of relationship of buyer and seller by the letters dated 21-8-1990. It is admitted that the security deposit amount was forfeited only upon termination i.e. 21-8-1990. Such appropriation of money of the plaintiff automatically extends the period of limitation as prescribed in Article 14 and 15 of the Limitation Act by another three years. Section 19 of the Limitation Act, 1963 required to be considered in this regard. Therefore, the claim of the plaintiff is not barred by limitation . Mr. Ghosh has relied on the decisions reported in AIR 1961 SC 1236 and (2004) 12 SCC 360 and has also contended that the jural relationship is not limited to debtor and creditor relationship only as argued by the learned counsel of the defendant citing the decision reported in AIR 1971 SC 1482 . To counter the argument advanced by Mr. Ghosh, Mr. Chowdhury learned counsel of the defendant has contended that Articles 14 and 15 of the Limitation Act, 1903 are the only relevant articles. Goods in question were received by the defendant in the year 1988 and credit period thereof expired in the year 1988. Payment in respect of the invoices raised were also in the year 1988. He has referred to the answer to question No. 184 of the plaintiff’s witness. He has contended that three tests laid down in the decision reported in AIR 1961 SC 1236 i.e. existence of subsisting liability, jural relationship as that of a debtor and creditor and the letters to show admission of such jural relationship are nowhere in the instant case. The decision reported in (2004) 12 SCC 360 reiterates the three tests laid down in the decision reported in AIR 1961 SC 1236 . The letters dated 21-8-1990 do speak that there is no conversion of relationship of buyer and seller to that of creditor and debtor. Mr. The decision reported in (2004) 12 SCC 360 reiterates the three tests laid down in the decision reported in AIR 1961 SC 1236 . The letters dated 21-8-1990 do speak that there is no conversion of relationship of buyer and seller to that of creditor and debtor. Mr. Chowdhury has contended that three tests to bring the case within the ambit of Section 18 of the Limitation Act has been reiterated by the Hon’ble Supreme Court in AIR 1971 SC 1482 . Therefore, he has closed his argument touching the point of limitation that the suit is hopelessly barred by limitation. It is an admitted position that the goods in question were all received in the year 1988 and the payment in respect of the invoices raised were also made in the year 1988. We may see annexure B,C and D to the plaint and also the Ext. JJ. The plaintiff has examined Vijay Kanta Jha as his witness. Mr. Jha has stated in course of his evidence that “ all these deductions and adjustments had been done in the year 1988 and the plaintiff was fully aware of the same.” (vide answer to question No. 184 ). The plaintiff has taken three letters all of dated 21-8-1990 to bring his case under the protective umbrella of Section 18 of the Limitation Act so that the period of limitation for three years to initiate the suit may be calculated from that date i.e. from 21-8-1990. Section 18 of the Limitation Act,1963 is set out below for proper appreciation of the argument advanced by the learned counsel of the parties . “18. Effect of acknowledgment in writing .-(1) Where before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed , or by any person through whom he derives his title or liability , a fresh period of limitation shall be computd from the time when the acknowledgement was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed ; but subject to the provisions of the Indian Evidence Act, 1872 ( 1 of 1872 ), oral evidence of its contents shall not be received.” In the case of Shapoor Freedom Mazda –vs-Durga Prasad Chamaria and others, reported in AIR 1961 SC 1236 , the Hon’ble Supreme Court has observed as follows : “ 6. It is thus clear that acknowledgement as prescribed by Section 19 merely renews debt, it does not create a new right of action. It is a mere acknowledgement of the liability in respect of the right in question ; it need not be accompanied by a promise to pay either expressly or even by implication. The statement on which a plea of acknowledgement is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgement must , however, indicate the existence of jural relationship between the parties such as that of debtor and creditor , and it must appear that the statement is made with the intention to admit such jural relationship . Such intention can be inferred by implication from the nature of the admission and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement. In construing words used in the statements made in writing on which a plea of acknowledgement rests oral evidence has been expressly excluded but surrounding circumstances can always be considered. Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or far-fetched process of reasoning. Broadly stated that is the effect of the relevant provisions contained in Section 19 and there is really no substantial difference between the parties as to the true legal position in this matter. “ Section 19 which is coming out from the aforequoted para 6 is now Section 18 of the Limitation Act, 1963. In Food Corporation of India vs. Assam State Co-operative Marketing and Consumer Federation Limited and others reported in (2004) 12 SCC 360 , the Hon’ble Supreme Court has observed as follows : “15. The statement providing foundation for a plea of acknowledgement must relate to a present subsisting liability , though the exact nature or the specific character of the said liability may not be indicated in words. The words used in the acknowledgement must indicate the existence of jural relationship between the parties such as that of debtor and creditor. The intention to attempt such jural relationship must be apparent. However , such intention can be inferred by implication from the nature of the admission and need not be expressed in words. A clear statement containing acknowledgement of liability can imply the intention to admit jural relationship of debtor and creditor. Though oral evidence in lieu of or making a departure from the statement sought to be relid on as acknowledgement is excluded but surrounding circumstances can always be considered. Courts generally lean in favour of a liberal construction of such statement though an acknowledgment shall not be inferred where there is no admission so as to fasten liability on the maker of the statement by an involved or far-fetched process of reasoning (SeeShapoor Freedom Mazda –vs-Durga Prasad Chamaria and others) (Supra). So long as the statement amounts to an admission, acknowledging the jural relationship and existence of liability, it is immaterial that the admission is accompanied by an assertion that nothing would be found due from the person making the admission or that on an account being taking something may be found due and payable to the person making the acknowledgment by the person to whom the statement is made.” “16. The two letters dated 29-3-1977 and 30-7-1977(Exhibits 8 and 9 ) clearly acknowledge the amount of Rs. 2 crores having been received by the Federation from the Food Corporation of India , whether by way of advance or by way of deposit. The two letters dated 29-3-1977 and 30-7-1977(Exhibits 8 and 9 ) clearly acknowledge the amount of Rs. 2 crores having been received by the Federation from the Food Corporation of India , whether by way of advance or by way of deposit. The letters also indicate that the amount of two crores was by way of advance or deposit against paddy procurement. This is admission of jural relationship of buyer and seller which stood converted into relationship of creditor and debtor on the failure of the principles transaction. However, the acknowledged liability is sought to be disowned by submitting that on an account being taken nothing would be found due and payable by the plaintiff to the Federation. Disputing the liability to repay the amount acknowledgement insofar as Section 18 of the Limitation Act is concerned . The two letters have the effect of extending the period of limitation prescribed for filing the suit and calculated from the date of the latter of the two letters i.e. 30-7-1977 , the suit filed on 30-5-1980 was well within the period of limitation.” In the case of M/s. Laxmi Ratan Cotton Mills Ltd. vs. The Aluminum Corporation of India Ltd.. reported in AIR 1971 SC 1482 , the Hon’ble Apex Court has observed as follows : “It is clear that the statement on which the plea of acknowledgement is founded must relate to a subsisting liability as the section requires that it must be made before the expiration of the period prescribed under the Act. It need not , however, amount to a promise to pay, for, an acknowledgement does not create a new right of action but merely extends the period of limitation. The statement need not indicate the exact nature or the specific character of the liability. The words used in the statement in question, however, must relate to a present subsisting liability and indicate the existence of jural relationship between the parties, such as, for instance, that of a debtor and a credit, and the intention to admit such jural relationship. Such an intention need not be in express terms and can be inferred by implication from the nature of the admission and the surrounding circumstances. Generally speaking, a liberal construction of the statement in question should be given. Such an intention need not be in express terms and can be inferred by implication from the nature of the admission and the surrounding circumstances. Generally speaking, a liberal construction of the statement in question should be given. That of course does not mean that where a statement is made without intending to admit the existence of jural relationship, such intention should be fastened on the person making the statement by an involved and far-fetched reasoning. (see Khan Bahadur Shapoor Freedom Mazda v. Durga Prosad Chamaria, 1962-12SCR 140= ( AIR 1961 SC 1236 ) and Tilak Ram v. Nathu, AIR 1967 SC 935 at pp. 938,939. As Fry, L.J., in Green v. Humphreys, (1884) 26 Ch D 474 at p.481 said “ an acknowledgement is an admission by the writer that there is a debut owing by him, either to the receiver of the letter or to some other person on whose behalf the letter is received but it is not enough that he refers to a debt as being due from somebody. In order to take the case out of the statute there must upon the fair construction of the letter, red in the light of the surrounding circumstances , be an admission that the writer owes the debt.” As already stated, the person making the acknowledgment can be both the debtor himself as also a person duly authorised by him to make the admission . In Khan Bahadur Shapoor Freedom Mazda’s case, 1962-1 SCR 140= ( AIR 1961 SC 1236 ) the Court accepted a statement in a letter by a mortgagor to a second mortgagee to save the mortgaged property from being sold away at a cheap price at the instance of the prior mortgagee by himself purchasing it as one amounting to an admission of the jural relationship of a mortgagor and mortgagee, and therefore, to an acknowledgement within Section 19 . Also , an agreement of reference to arbitration containing an unqualified admission that whoever on account should be proved to be the debtor would pay to the other has been held to amount to an acknowledgment. Such an admission is not subject to the condition that before the agreement should operate as an acknowledgment , the liability must be ascertained by the arbitrator . The acknowledgment operates whether the arbitrator acts or not. Such an admission is not subject to the condition that before the agreement should operate as an acknowledgment , the liability must be ascertained by the arbitrator . The acknowledgment operates whether the arbitrator acts or not. (see Tejpal Saraogi v. Loallanjee Jain, Civil Appeal No. 766 of 1962, D-/ 8-2-1965(SC) approving Abdul Rahim Oosman & Co. v. Ojamshee Purshottamdas & Co., ILR 56 Cal 639=(AIR 1930 Cal 5 ).” Three tests have been laid down by the Hon’ble Supreme Court to bring a case within the ambit of Section 18 of the Limitation Act and the same are – I. There must have subsisting liability, II. There must have an acknowledgment indicating existence of jural relationship between parties such as that of debtor and creditor, III. Such jural relationship must appear from the statement divulging the intention to admit such jural relationship. The Hon’ble Court has been pleased to observe further that in construing word used in the statements made in writing in which a plea of acknowledgment rests on evidence has been expressly excluded but surrounding circumstances can always be considered. The question as to what is an acknowledgment has been answered by Fry.L.J. as early as 1884 A.D. in Green v. Humphreys , 1884-26 Ch D 474 at p.481. The answer is often quoted with approval. “What is an acknowledgment”, asked Fry, L.J., be proceeded, “in my view an acknowledgment is an admission by the writer that there a debt owing by him, either to the receiver of the letter or to some other person on whose behalf the letter is received but it is not enough that he refers to a debt as being come from somebody. In order to take the case out of the statute there must upon the construction of the letter, read by the light of the surrounding circumstances, be an admission that the writer owes the debt.” Two letters dated 20-8-1990 have been exhibited (Ext.G). One letter in connection with order of 900 KMS of ACSR, Rabbit conductors and another letter in connection with order of 400 KMS of AAC ANT and 600 KMS ACSR Rabbit conductors. Language of both the letters are almost same. One letter in connection with order of 900 KMS of ACSR, Rabbit conductors and another letter in connection with order of 400 KMS of AAC ANT and 600 KMS ACSR Rabbit conductors. Language of both the letters are almost same. One of the letters is set out below : WESTBENGAL STATEELECTRICITY BOARD CENTRAL STORES AND PURCHASE DEPARTMENT BIDHYT BHAVAN (10th FLOOR), SALT LAKE BLOCK-DJ, SECTOR –II, BIDHANNAGAR CALCUTTA-700091 Memo No. P & S/P-23/87/Cond/19383 Date : 21.8.90 To M/s. G.P. Dalmia & Sons, Dalmia House, Josidih-814142 SUB: Manufacture , testing, supply and delivery of ACSR Conductors against Purchase Order No. P&S/P-23/87/Cond/417P3 dt. 8.2.88 place on you. -Cancellation of order. Dear Sirs, We write to inform you that the above referred order had been placed on your for manufacture, testing, supply and delivery of 900 Kms. of ACSR, Rabbit conductors. As per terms of the order, the schedule period of commencement of delivery was March,1988 and schedule period of completion of delivery was April, 1988. Out of above you could only deliver 638.30 Kms. as on August, 1988. Thus, the balance quantity of 261.70 Kms. of conductor are yet to be delivered by you. We had requested you in many occasions and by way of bi-lateral discussions to commence supply for the balance quantities but no fruitful result was obtained from you towards supply of the balance quantities and hence it is not worthful to keep the order alive further. Now, therefore, we hereby terminate the above referred purchase Order No. P & S/P-23/87/Cond/417P3 dt. 8.2.88 for manufacture , testing , supply and delivery of ACSR, Rabbit conductors upto the above extent of actual delivery already affected until this date with forfeiture of security deposit and imposition of penalty for late delivery of materials and unexecuted quantities of materials as per terms of the order. Further, it may be noted that penalty already deducted will not be refunded and penalty as imposed above will also be realised , where necessary , from the unpaid bills, if any. Yours faithfully, (S.K.Ghosh ) Material Controller If we analyse the contents of the letters set out above we cannot construe that the same were written for the purpose of admitting any relationship with the plaintiff as that of a debtor and a creditor. Yours faithfully, (S.K.Ghosh ) Material Controller If we analyse the contents of the letters set out above we cannot construe that the same were written for the purpose of admitting any relationship with the plaintiff as that of a debtor and a creditor. It cannot be construed further that light is coming out therefrom to say that the relationship of the parties of buyer and seller stood converted as that of a debtor and a creditor . The letters cannot be taken as an acknowledgment for admission by the writer that there was a debt owing by him to the addressee of the letter. I repeat that the goods in questions were all received by the defendant in the year 1988, bills raised in connection with those goods in that year and the payment was also made in the same year i.e. in the year 1988. There is no scope of denial of the fact by the plaintiff that the plaintiff was well aware as back as in the year 1988 that the bill which he raised was not fully paid by the defendant and in such circumstances it is relevant to have a glance on Article 14 and 15 of the Limitation Act of 1963. Article 14 and 15 of the Limitation Act, 1963 are set out hereunder. “Art. 14. Description of suit-For the price of goods sold and delivered where no fixed period of credit is agreed upon. Period of limitation-Three years Time from which period begins to run-The date of the delivery of the goods. Art. 15, Description of suits-For the price of goods sold and delivered to be paid for by a bill of exchange , no such bill being given. Period of Limitation-Three years Time from which period begins to run-When the period of credit expires.” On reading of Articles 14,15, 18 of the Limitation Act, letters dated 21-8-1990 and regard being had to the three decisions referred above I find reason and ample reasons to express that the tests enumerated in the citations to place this case within the fold of Section 18 of the Limitation Act, 1963 have not been fulfilled . In that view of the matter there is no option but to come to a finding that the case in hand is barred by limitation. The Issue No. 7 is answered accordingly. Issue No. 1(price escalation ) Mr. In that view of the matter there is no option but to come to a finding that the case in hand is barred by limitation. The Issue No. 7 is answered accordingly. Issue No. 1(price escalation ) Mr. Ghosh has contended that the terms of purchase order dated 30-1-1988 were never agreed to by his client. It was only upon verbal assurance of the defendant to allow weight to weight price increase the plaintiff supplied 455.5 KM of ACSR. The plaintiff wrote letter dated 14-2-1988 and 13-2-1988 to the defendant informing it that the supply were made subject to price increase. There was an increase of price of aluminum and the same comes to Rs. 1381 per metric ton which is Rs. 1.381 per kilogram and the resultant effect that the corresponding price increase per kilometer of ACSR would be Rs. 145/-(since 1 KM weighs 145 kg.). Thus the increase in price of 455.57 KM will come to a total sum of Rs. 1,02,589 approximately. Even though no bill is on record for such sum, the plaintiff had categorically proved the liability of the defendant to pay the said a mount. Mr. Chowdhury has contended that the plaintiff has accepted all the purchase order and has effected supply in terms thereof. The plaintiff, therefore, cannot approbate and reprobate and accept what it likes and reject what it does not in the purchase order The demand of the plaintiff for price escalation mentioned in Ext. JJ (at the foot note ) for an amount of Rs. 1,02,859.30/-has no basis whatsoever. No bill was raised for the said sum and the demand has been made for the first time only by way of foot note of Ext. JJ. Similarly, the only other item claiming price escalation is for an amount of Rs. 19,229.72 (being bill No. 24C) at annexure C to the plaint. The said bill number 24C has not been exhibited. The plaintiff is therefore, not entitled to price escalation. We may see the purchase order dated 30-1-1988 (Ext. D). The said order has a reference to the letter dated 7-11-1987 (Ext.I) and to the letter dated 10-12-1987 (Ext.Z/E-3). On plain perusal of the letter dated 17-11-1987 it transpires that the plaintiff has accepted the payment terms, risk purchase clause , penalty clause and price valuation clause. We may see the purchase order dated 30-1-1988 (Ext. D). The said order has a reference to the letter dated 7-11-1987 (Ext.I) and to the letter dated 10-12-1987 (Ext.Z/E-3). On plain perusal of the letter dated 17-11-1987 it transpires that the plaintiff has accepted the payment terms, risk purchase clause , penalty clause and price valuation clause. It is also an admitted fact that no bills have been raised for an amount of Rs. 1,02,859.30 and the same has surfaced only through a footnote of Ext. JJ. There is no denial of the fact too that bill No. 24C meant for claim of escalation price amounting to Rs.19,229.72/-has not been exhibited. Mr. Ghosh has highlighted two letters i.e. letter ted 4-2-1988 and 13-2-1988 in course of his argument to give a thrust that the plaintiff supplied parts of the goods ordered through purchase order dated 30-1-1988 on an assurance of payment of escalation price. Letter dated 4th February, 1988 specifically mentioned that the price variation formula stipulated in the order does not cover the actual increase that has taken place. In that background plaintiff requested the defendant to allow price on weight to weight increase. The letter dated 13th February,1988 reflects the plaintiff’s hope for consideration of their request cfor payment on weight to weight increase. These two letters did not spell out that plaintiff supplied parts of the goods ordered through purchase order dated 30-1-1988 acting on the assurance given by the defendant for payment of escalated price. Furthermore, on perusal of the letter dated 7th November,1987 (Ext. 1), it transpires that the plaintiff accepted all the clauses at the time of response of the tender floated by the defendant. Taking the aforesaid background in judicious mind it is not wrong to utter that the base of the claim of the plaintiff of escalation price to the tune of aforesaid sum is nowhere insight. Even if we try to visualise the plaintiff’s claim for the arguments sake leaving aside the accepted payment terms and other clauses of the letter dated 7th November ,1987, it is very hard to swallow that it was only upon verbal assurance of the defendant to allow weight to weight price increase the plaintiff supplied 455.5 KM of ACSR in the month of March, 1988. It is also on record that the defendant refused to allow such weight to weight increase by a letter dated 29-4-1988 at the time of giving reply to the plaintiff letter dated 13-2-1988. We find reason to say that the plaintiff is not entitled to price escalation. This issue is answered accordingly against the plaintiff. Issue No. 2 and 3 (penalty and security deposit ) These issues are taken together for the sake of convenience , brevity and to avoid repetition. Mr. Ghosh has contended that there is no dispute as to the quantum or quality of the goods supplied by the plaintiff . The defendant was under obligations in terms of the contract to pay the entire bill amount but in vain. The defendant has withheld Rs. 10,075/-without reasons. the bank guarantee given by way of security were never invoked or encashed by the defendant and such act of the defendant shows that the defendant has no claim in respect of the purchase order dated 30-1-1988 from the plaintiff. Regarding purchase order dated 8-3-1988 and 14-3-1988, it is a fact that the plaintiff supplied part of the goods but did not receive timely payment as agreed upon. Due to delay in payment, the plaintiff, being a small scale unit, was unable to manufacture and deliver part of the goods. Moreover, the defendant also delayed in respect of the approval of the goods. The difficulties faced by the plaintiff were communicated to the defendant and there was no denial of the same by the defendant. Both purchase orders were issued long after the validity of the offers (dated 1-9-1987, 07-12-1987 and 10-12-1987 had expired) as a result of which the plaintiff was not in a position to supply the goods within a month. Moreover, regarding order dated 14-3-1988 there was delay in delivery because of the flood in Manipur (force meajure). The deductions made by the defendant are misconceived and the plaintiff is entitled to entire price of the materials supplied by it. The defendant is a public utility and its object is not to make profit by imposing arbitrary penalty on its small supplier. The defendant has not proved that it had suffered any losses whatsoever in respect of the order dated 30-1-1988 that question of entitlement of the defendant to any reasonable compensations does not arise. The defendant is a public utility and its object is not to make profit by imposing arbitrary penalty on its small supplier. The defendant has not proved that it had suffered any losses whatsoever in respect of the order dated 30-1-1988 that question of entitlement of the defendant to any reasonable compensations does not arise. The defendant is not entitled to automatic compensation without proving any factum of losses. Mr. Ghosh has relied on AIR 1970 SC 1955 , AIR 1973 SC 1098 and (1974) 2 SCC 237 for the explanation of Section 74 of the Contract Act. There is no averment in the written statement that the amount sought to be deducted were genuine pre-estimate of damages. Thus, the defendant has no right to penalty not forfeiture at all and is liable to pay the admitted sum payable to the plaintiff with interest. The plaintiff is entitled to compensation in respect of the supply made by it under Section 70 of the Contract Act and also entitled to interest at the rate of 5 % for small scale unit above the bank rate as per Interest Act applicable to small scale unit in view of Section 4 of the Ordinance of 1992 later enacted and incorporated in 1996. Mr. Sabyasachi Chowdhury has contended that the plaintiff by its letter dated 7th November, 1987 had accepted all the clauses including the penalty clause and the said letter has been referred in all the purchase orders. The condition by way of penalty and for forfeiture of security deposit were thus in the nature of pre-determined compensation in the event of breach. In the instant case the pre-determined amount of Rs. 8.40 lacs has been deducted which is reasonable taking the admitted position that the plaintiff defaulted in supplying 1694.01 MT in respect of three purchase orders for which the admitted loss is Rs. 21,70,026,80 (Rs. 1281 per MT). He has relied on AIR 1934 Cal 285, (2003) 5 SCC 705 and has contended that burden is on the other side to lead evidence of proving that no loss is likely to occur by breach. He has also referred question Nos. 174,175 and 179 to 184 of the evidence of plaintiff. 21,70,026,80 (Rs. 1281 per MT). He has relied on AIR 1934 Cal 285, (2003) 5 SCC 705 and has contended that burden is on the other side to lead evidence of proving that no loss is likely to occur by breach. He has also referred question Nos. 174,175 and 179 to 184 of the evidence of plaintiff. The amount which was deducted was a genuine pre-estimate damages and in the instant case it is not possible for the Court to otherwise assess actual damage because of complexity is involved. Alternatively, if the stipulation reiterated by way of penalty, then also the test and reasonableness is satisfied the stipulated amount being only the ceiling. Therefore, the above issues may be answered in favour of the defendant but against the plaintiff. Ext. I at page 28 of the plaint Judge’s brief of document is the plaintiff’s letter dated 7th November, 1987. The plaintiff has accepted the terms and conditions of the offer and the said letter has been referred to in all the purchase orders. It is an admitted position that plaintiff has not supplied 1043.80 MT, 388.51 MT and 261.70 MT aggregating to 1694.01 MT in respect of three purchase orders vide question Nos. 168,169 and 171 and the letters dated 21-8-1990. The acceptance of all the clauses including the penalty clauses by the plaintiff through its letter dated 7th November, 1987 is admitted fact. The conditions by way of penalty and for forfeiture of security deposit were thus in the nature of pre-determined compensation in the event of breach. The contract was not honoured by the plaintiff as he failed to supply substantive parts of the goods ordered and also stopped supply of goods taking the plea that payment was not made weight to weight increase by the defendant. Facts comes out that actually there was a breach in the contract . Therefore, the Court is to see as to whether the stipulated pre-determined figure was reasonable in the light of the breach or not. At the instance of the plaintiff Ext. R is on record wherefrom it is seen that there was a price increase in aluminum even on the date of that letter by Rs. 1380/-per MT. On the said basis itself on a short supply of 1694.01 MT an admitted increases will show that the defendant had suffered a loss of more than 21 lakhs . R is on record wherefrom it is seen that there was a price increase in aluminum even on the date of that letter by Rs. 1380/-per MT. On the said basis itself on a short supply of 1694.01 MT an admitted increases will show that the defendant had suffered a loss of more than 21 lakhs . The case which is in our hand displays that 8.40 lakhs –the pre-determined amount has been deducted by the defendant and in the background of admitted position pertaining to damages to the tune of Rs. 21 lakhs and odd it may be said that the same is nothing but reasonable. In Mahadeoprasad –vs-Siemens Ltd. , reported in AIR 1934 Cal 285, the Hon’ble Court has observed that ,”commercial transactions in these days are not confined to sales of bags of sugar or marketable commodities, and particularly, in the case of the sale of specialised machinery and where the investigation as to damages must be very complex, very expensive and very uncertain, it seems to be entirely unreasonable that the parties should not be allowed to make a pre-estimate; subject to this , for which the se ctionprovides, that, if it is clearly shown that the amount is unreasonable, then the Court may, in its discretion, depart from it.” In the case of Fateh Chand –vs-Balkishan Dass, reported in AIR 1963 SC 1410, the Hon’ble Court held : “Jurisdiction of the Court to award compensation in case of breach of contract is unqualified except as to the maximum stipulated; but compensation has to be reasonable, and that imposes upon the Court duty to award compensation according to settled principles. The section undoubtedly says that the aggrieved party is entitled to receive compensation from that party who has broken the contract whether or not actual damage or loss is proved to have been caused by the breach. Thereby it merely dispenses with proof of “actual loss or damage.” In Oil and Natural Gas Corporation Ltd. –vs-Saw Pipes Ltd. , reported in (2003) 5SCC 705, the Hon’ble Court has held : “41. Thereby it merely dispenses with proof of “actual loss or damage.” In Oil and Natural Gas Corporation Ltd. –vs-Saw Pipes Ltd. , reported in (2003) 5SCC 705, the Hon’ble Court has held : “41. Therefore, when parties have expressly agreed that recovery from the contractor for breach of the contract is pre-estimated genuine liquidated damages and is not by way of penalty duly agreed by the parties , there was no justifiable reason for the Arbitral Tribunal to arrive at a conclusion that still the purchaser should prove loss suffered by it because of delay in supply of goods.” “64.It is apparent from the aforesaid reasoning recorded by the Arbitral Tribunal that it failed to consider Sections 73 and 74 of the Indian Contract Act and the ratio laid down in Fateh Chand case wherein it is specifically held that jurisdiction of the court to award compensation in case of breach of contract is unqualified except as to, the maximum stipulated; and compensation has to be reasonable. Under Section 73, when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss caused to him which the parties knew when they made the contract to be likely to result from the breach of it. This section is to be read with Section 74, which deals with penalty stipulated in the contract, inter alia (relevant for the present case ) provides that when a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, the party complaining of breach is entitled, whether or not actual loss is proved to have been caused, thereby to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named. Section 74 emphasized that in case of breach of contract, the party complaining of the breach is entitled to receive reasonable compensation whether or not actual loss is proved to have been caused by such breach. Therefore, the emphasis is on reasonable compensation. If the compensation named in the contract is by way of penalty, consideration would be different and the party is only entitled to reasonable compensation for the loss suffered . Therefore, the emphasis is on reasonable compensation. If the compensation named in the contract is by way of penalty, consideration would be different and the party is only entitled to reasonable compensation for the loss suffered . But if the compensation named in the contract of such breach is genuine pre-estimate of loss which the parties knew when they made the contract to be likely to result from the breach of it, there is no question of proving such loss or such party is not required to lead evidence to prove actual loss suffered by him. Burden is on the other party to lead evidence for proving that no loss is likely to occur by such breach. Take for illustration: if the parties have agreed to purchase cotton bales and the same were only to be kept as a stock –intrade. Such bales are not delivered on the due date and thereafter the bales are delivered beyond the stipulated time, hence there is breach of the contract. The question which would arise for consideration is – whether by such breach the party has suffered any loss. If the price of cotton bales fluctuated during that time, loss or gain could easily be proved. But if cotton bales are to be purchased for manufacturing yarn, consideration would be different.” In the case of H.M.Kamaluddin Ansari and Company -vs-Union of India, reported in AIR 1984 SC 29 , the Hon’ble Court impliedly overruled the decision of Raman Iron Foundry –vs-Union of India , reported in AIR 1974 SC 1265 , the stipulation by way of penalty and/or forfeiture of security deposit was genuine pre-estimate of damages agreed upon by the parties. Furthermore the plaintiff did not make out a case in the plaint that defendant did not suffer any actual loss. In Ram Swarup Gupta-vs-Bishun Narian Inter College and others , reported in AIR 1974 SC 1242, the Hon’ble Court has observed : “ It is well settled that in the absence of pleading, evidence if any, reduced by the parties cannot be considered. It is also equally settled that no party should be permitted to travel beyond its pleading and that all necessary and material acts should be pleaded by the party in support of the case set up by it. The object and purpose of pleading is to enable the adversary party to know the case it has to met. It is also equally settled that no party should be permitted to travel beyond its pleading and that all necessary and material acts should be pleaded by the party in support of the case set up by it. The object and purpose of pleading is to enable the adversary party to know the case it has to met. In order to have a fair trial it is imperative that the party should state the essential material facts so that other party may not be taken by surprise.” The plaintiff witness Mr. Jha has admitted that the deduction of both penalty and security deposit in view of the breach of contract by the plaintiff was correct vide answer to question Nos. 174,175,179,218 and question No. 184. In the instant case assessment of actual damage is very complex in nature and the same is not possible for the Court. Alternatively if the stipulations are regarded by way of penalty, then the test and reasonableness is satisfied and stipulated amount being only the ceiling. I find substantive force in the argument advanced by Mr. Chowdhury to say that the plaintiff unequivocally accepted all the clauses including penalty clauses and the letter dated 7th November, 1987 (Ext. 1) is the document on record and the said letter has been referred in all the purchase orders. The condition by way of penalty and for forfeiture of security deposit were thus in the nature of pre-determined compensation in the event of breach and the amount which has been deducted by the defendant has passed the test of reasonability. Issue No. 3 and 4, therefore, answered in the affirmative in favour of the defendant but against the plaintiff. Issue No. 4 and 5 ( decree of Rs. 29,89,511.77 p. along with interest @23.75%) The principal amount claimed in the plaint is Rs. 9,64,136.29/-. The rest of the claim is on account of interest. Since the principal claim gets negated, no question arises of payment of interest. The said issue is answered against the plaintiff. Issue No. 6 ( Bank Guarantee) The issue pertaining to declarations for adjudging the bank guarantee has not been pressed as the bank guarantee has lapsed. It is decided accordingly. Issue No. 8 (Relief) Considering the facts and circumstances and the discussions touching the rest of the issues the plaintiff is not entitled to any relief. The Court fee paid is sufficient . It is decided accordingly. Issue No. 8 (Relief) Considering the facts and circumstances and the discussions touching the rest of the issues the plaintiff is not entitled to any relief. The Court fee paid is sufficient . The suit stands dismissed. No order as to costs.