Delhi High Court
M/S.Fashion Express & Ors. vs M/S.Shakti Industries on 27 January, 2012
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA 199/2003
% 27th January, 2012
M/S.FASHION EXPRESS & ORS. ..... Appellants
Through : Mr. Chittaranjan Hati, Advocate.
versus
M/S.SHAKTI INDUSTRIES ..... Respondent
Through : Mr. Anun Sharma, proxy Advocate
for Mr. C.M. Oberoi, Advocate.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
1. The challenge by means of this Regular First Appeal (RFA) filed
under Section 96 of Code of Civil Procedure, 1908 (CPC) is to the impugned
judgment of the trial Court dated 26.11.2002 decreeing the suit of the
respondent/plaintiff for recovery of Rs.3,40,609/- with interest @ 18% per
annum.
2. The subject suit came to be filed by the respondent/plaintiff for
recovery of moneys on account of knitted fabric etc, supplied by it to the
RFA No.199/2003 Page 1 of 6
appellants. Before the trial Court, the respondent/plaintiff proved the bills
by which goods were supplied as Ex.PW1/2 to Ex.PW1/55. The
corresponding orders placed by the appellant/defendant were exhibited as
Ex.PW1/56 to PW1/61. The statement of accounts was proved and
exhibited as Ex. PW1/62.
3. The trial Court has held the suit to be within limitation by giving
following findings with respect to issue No. 3.
"ISSUE No. 3
Whether the suit of the plaintiffs is time barred ?
OPD
20. The counsel for the defendant has argued that
although the plaintiff has relied upon the statement of
account, but Article 1 of the Schedule of Limitation Act,
1963 does not apply and article 14 applies. The goods
were supplied by the plaintiff to the defendants for the
period upto Feb, 1995, while the present suit is filed in
November, 1998 beyond prescribed period of three years
as per Article 14 of Schedule 1 of Limitation Act and the
suit is barred by time and only the suit regarding
transaction made by the defendants in 1996 of the value
of Rs.11940,50P is within time, so the suit may be
dismissed being barred by time, but for the said
transaction in the sum of Rs.11940.50P.
21. The Ld. counsel for the plaintiff on the other hand,
has argued that Article 1 of Schedule 1 of Limitation Act
applies because it is a suit filed on the basis of accounts
and the period of limitation would commence from the
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date of close of the year in which last transaction is
admittedly proved i.e. of 1996 vide bill No. 3440 dt.
7.8.96, so the limitation period would commence from
1.4.97 and the suit is filed within prescribed period of
limitation.
22. Article 1 of Schedule 1 of Limitation Act, 1963
applies only to the cases of mutual, open and current
account between the parties. The mutual accounts are
such as consist of reciprocity of dealings between the
parties and are not those accounts having items on one
side only, though made of debits and credits. There
should be two sets of independent transactions-two
parties and in one transaction one of the party should be
debtor, and other creditor. The dealings should indicate
independent obligation on both sides so that the balance
shown sometime be on one side and at other time on the
other.
23. Coming to the case in hand, the goods were
supplied by the plaintiff only and on corresponding
goods or material was supplied by the defendants, so
despite the fact that payments made by the plaintiff to the
defendants against supply of goods were credited to the
accounts of the defendants in the record of the plaintiff,
the account maintained by the plaintiff with regard to the
transactions with the defendants and also payments
received cannot be termed as „mutual, open and current
account‟ between the parties, as there was no reciprocal
demands between the parties. I am in agreement with the
Ld. counsel for the defendants that Article 14 of
Schedule I of Limitation Act, 1963 applies and the period
of Limitation is three years from the date of deliveries of
goods supplied by the plaintiff to the defendants. But the
case of the plaintiff with regard to transactions upto
23.2.95 cannot be thrown out being barred by limitation
for the simple reason that the defendants have made part
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payments of the amount due to the plaintiff from time to
time as depicted in the statement of accounts filed by
both the parties. Thus, by virtue of section 19 of
Limitation Act, 1963, the period of limitation would
expend from time to time from the date of making of part
payment for another three years period. In view of the
above, I hold that the suit is not barred by time. Issue is
decided in favour of the plaintiff and against the
defendants."
4. Learned counsel for the appellant argued that the suit was hopelessly
barred by limitation inasmuch as once the suit was not under Article 1 of the
Limitation Act, 1963 and Article 14 of the Limitation Act, 1963 applied, the
last admitted payment as per the statement of accounts Ex.PW1/62, being a
sum of Rs.50,000/- on 21.8.1995 can extend the limitation only for three
years upto 21.8.1998. But, since the suit was filed on 9.11.1998, the suit
was clearly barred by time.
5. It is argued that the trial Court has rightly held the account not to be
mutual, open and current account, in view of the judgment of the Supreme
Court in Hindustan Forest Company v. Lal Chand and Others AIR 1959
SC 1349.
6. It is argued that after the bills which have been exhibited as Ex.PW1/2
to Ex.PW1/55 and which were of the year 1994-95, there was only one
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transaction of the year 1996 being the bill No. 3440 dated 7.8.1996 for
Rs.11,940.50/-. It is argued that the appellants/defendants are ready to pay
the amount of this bill and which bill will be within limitation.
7. Learned counsel for the respondent could not dispute the proposition
that even if acknowledgment of debt by payment of Rs.50,000/- dated
21.8.1995 is taken, the suit with respect to the bills prior to 21.8.1995 would
become barred on 21.8.1998. Since the account is not an open, mutual and
current account, inasmuch as there are neither shifting balances nor any
independent obligations, the relation being only of the appellant being the
buyer and the respondent being the seller, therefore, in my opinion, the trial
Court has wrongly held the suit to be within limitation. The ratio of the
judgment in the case of Hindustan Forest Company (supra) squarely
applies that the account between the parties cannot be held to be an open,
mutual and current account.
8. In fact, a reading of para 23 of the impugned judgment shows that the
trial Court has glossed over the issue of limitation by not referring to any
dates at all. The trial Court in para 23 ought to have referred to the fact that
last payment is dated 21.8.1995, and if it would have so referred then the
consequential time would necessarily come to an end on 21.8.1998 for filing
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the suit and since the subject suit was filed only on 9.11.1998, the same
would be barred by limitation except with respect to bill of Rs.11,940.50/-
dated 7.8.1996.
9. In view of the above, the present appeal is allowed. The suit of the
respondent/plaintiff is held to be barred by time except for an amount of
Rs.11,940.50/- for which amount a decree is passed in favour of
respondent/plaintiff. The respondent/plaintiff will be entitled to interest @
18% per annum on this amount of Rs.11,940.50/- from 7.8.1996 till the
amount was deposited in this Court by the appellant.
10. The present appeal is allowed to the extent as stated above and
disposed of accordingly. Parties are left to bear their own costs. Decree
sheet be prepared. Trial Court record be sent back.
11. Since the respondent has already received the amount under the
impugned judgment and decree, which has been set aside today, the
appellant will be entitled to recovery of the amount from the respondent
from the bank guarantee which has been furnished by the respondent in this
Court.
VALMIKI J. MEHTA, J.
JANUARY 27, 2012
AK
