(1) THIS appeal is directed against judgment and decree dated 15/02/2000 passed by learned Additional District Judge in Suit No. 62 of 1999. Plaintiff/ appellant had filed Suit for recovery of Rs.4.00 lakhs alongwith cost and interest. By the impugned judgment and decree the Suit is partly decreed for a sum of Rs.36,404.08 paise representing five bills raised by the plaintiff on the defendants against supply of goods. The details of these bills are as under:-
DATE BILL NUMBER AMOUNT
15.12.1995 427 11,780-00
01.02.1996 437 8,424-00
09.02.1996 439 5,876-00
14.02.1996 440 5,162.04
26.02.1996 442 5,162.04
(2) THE plaintiff had filed the Suit for recovery of amount against supply of goods in respect of various other bills as well. However, the learned Additional District Judge by impugned judgment and decree held that the claim in respect of these bills, which were prior in time to the aforesaid bills, was time barred and thus rejected l rest of the claims and decreed the claim in respect of the aforesaid bills only which were found to be within limitation. The plaintiff has filed this Appeal challenging the finding of the Trial Court holding rest of the claims as time barred.
(3) THE plaintiff had filed statement of accounts (Exhibit Public Witness.1/56). It starts from 12/02/1994 and gives the details of various bills raised from time to time when the material was supplied to the defendant. It also mentions various payments made by the defendant to the plaintiff, credit of which has been given in the statement of account. Suit for recovery was filed on 15/02/1999. Article 14 of the Limitation Act prescribes limitation for a Suit filed for particulars of goods sold and delivered. Period of limitation is three years which is to be determined from the date of delivery of goods. However, as per the agreement between the parties 60 days credit was to be given to the defendant for making payment. Under Article 15 of the Limitation Act, the Limitation starts from the date of expiry of fixed period of credit. On this reckoning by counting the period of limitation of three years backward from 15/02/1999 when the Suit was filed, the Trial Court held that claim in respect of aforementioned five bills only was within limitation.
(4) THE case of the plaintiff before the Trial Court was that entire claim was within the period of limitation in view of the provisions of Article 1 of the Limitation Act inasmuch as it was a case of mutual, open and current account and the three years limitation period was to start from the closing of the year in which the last item admitted or proved is entered in the account. Plaintiff's submission was that last payment was made on 26/07/1997 and the date of close of that year was 3 1/03/1998. The Suit filed on 15th February, 1999 was very much within the period of limitation if three years period is to be reckoned from 31/03/1998. This contention was rejected by the learned Trial Court holding that provisions of Article 1 of the Limitation Act had no application. Before us, in this appeal, the learned counsel for the plaintiff/appellant limited his argument to the aforesaid aspect. The learned counsel submitted that various payments made by the defendants would show that those payments were made on account inasmuch as there were certain payments in round figures and even odd figure payments did not tally with the amount mentioned in the bills from which it could clearly be inferred that payment did not relate to any specific bill but were on account. We had summoned the record and perused the statement of account (Exb.Public Witness. 1/56) the genuineness of which is not in doubt. The perusal of the statement of account confirms the truthfulness of the stand taken by the plaintiff/appellant. Therefore to this extent there cannot be any dispute viz. that payment made by the defendant to the plaintiff were not in respect of specific bills/supplies and could be treated as payment made on account. However, whether Article 1 of the Limitation Act would still apply on the facts of this pase is a question to be decided. To appreciate the controversy let us first re- produce the provisions of Articles-
Description of Period of limitation Time from which
suit period begins to
run.
1 .For the balance Three years The close of the year
due on a mutual, in which the last item
open and current admitted or proved is
account, where there entered in the account,
have been reciprocal such year to be computed
demands between the as in the account.
parties.
A÷¿ A plain reading of the description of Article 1 suggests that in orderto apply this Article following conditions have to be satisfied :- The suit should be for the balance due. ii. On a mutual, open and current account iii. Where there have been reciprocal demands between the parties.
(5) THUS, merely because the Suit is for balance due on the basis of an account would not bring the Suit within the purview of Article 1. The nature of the account is specifically mentioned, namely, it has to be a mutual, open and current account and further that in, such an account there have been reciprocal demands between the parties.
(6) 'ACCOUNT current' is an open account between two or more paities or an account which contains items between parties from which the balance due to one of them is, or can be, ascertained, from which it follows that such an account comes under the terms of an open account in so far as it is running, unsettled or unclosed. To this extent, there is no difficulty however, the theory upon which the doctrine as Mutual Account rests is that there is a mutual understanding between the parties, either expressed or implied, that they will continue to credit each other until one signifies a contrary intention, when the balance being scertained, becomes due and payable. In Hindustan Forest Company Vs. Lalchand, reported in AIR 1959 SC 1349 the Supreme Court defined Mutual Account as under:-
"To be mutual there must be transactions on each side creating independent obligations on the other and not merely transactions which create obligations on the one side, those on the other being merely complete or partial discharges of such obligation"
.
(7) THE instant case cannot be treated as a case of mutual accounts. Keshrichand Jaisukhalal Vs. Shillong Banking Corporation Limited, Shillong (in liquidation) reported in AIR 1959 SC 1349 was a case of mutual account. In that case, the respondent bank gave loans on overdrafts, and the appellant made deposits. The loans by the respondent created obligations on the appellant to repay them. The respondent was under independent obligations on the appellant to repay the amount of the cash deposits and to account for the cheques, hundis and drafts deposited for collection. There were thus transactions on each side creating independent obligations on the other, and both sets of transactions were entered in the same account. The deposits made by the appellant were not merely complete or partial discharges of it obligations to the respondent. There were shifting balances; on many occasions the balance was in favour of the appellant and on many other occasions, the balance was in favour of the respondent. There were reciprocal demands between the parties, the account was mutual,
(8) THUS for an account properly to be called Mutual Account there must be mutual dealing in the sense that both the parties come under liability under each other. In this case, this ingredient is not satisfied. It was simply a case of debtor and creditor only and not a case of mutual obligations which will in the ordinary way result in enforceable liabilities on each side. Mutual Account is when each has a demand or right of action against the other.
(9) THUS, applying the aforesaid principles it clear that in the instant case account in question was not mutual, open and current account nor was it a case reciprocal demands. The learned Trial Court was therefore right in holding that Article 1 of the Limitation Act did not apply. In fact in such a case payment was made by the defendant from time to time, as per Section 60 of the Indian Contract Act, it was open to the plaintiff to adjust the payment received against any of the bill at his discretion. Therefore, in order to save limitation the plaintiff could adjust the payment made against the oldest bills. But Section 60 of the Contract Act would not extend limitation period.
(10) THE finding of the learned Trial Court, therefore, that the claim in respect of the bills prior to 15/12/1995 being time barred is correct in law. This appeal is without any merit and is accordingly dismissed in limine.
