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Madhav Motiram Vs. Jairam Sakharam - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtMumbai
Decided On
Case NumberSecond Appeal No. 415 of 1920
Judge
Reported inAIR1921Bom451; (1921)23BOMLR540
AppellantMadhav Motiram
RespondentJairam Sakharam
DispositionAppeal dismissed
Excerpt:
.....demands, or whether the balance may shift from one side to the other. the article contemplates mutual dealings; and it is intended that if there is a continuous account of mutual dealings, then for the purposes of the suit the period of limitation shall be computed from the close of the year in which the last item admitted or proved is entered in the account. - indian succession act (39 of 1925), section 63: [s.b. sinha & cyriac joseph, jj] will validity - deceased, was a very wealthy person - he floated several companies - he left behind his daughters, s and j - he was suffering from various diseases including some neurological ones - for his treatment, he used to frequently visit united states of america accompanied by his wife and daughter - by reason of a will, he is said to..........was kept accordingly as a continuous account, which contained several items which brought down the mutual dealings to march 1868. it was held that the case fell within section 8 of act xiv of 1859, and was not barred by limitation, oven as to the items which were dated more than three years before the institution of the suit.6. section 8 of act xiv of 1839 said :in suits for balances of accounts current between merchants and traders who have had mutual dealings, the cause of action that be deemed to have arisen fit, and the period of limitation shall be computed from, the close of the year in the accounts of which there is the last item admitted or proved indicating the continuance of mutual dealings, such year to lie reckoned as the same is reckoned in the accounts.7. that section.....
Judgment:

Norman Macleod, Kt., C.J.

1. The plaintiff sued to recover on a Khata or account of dealings which had continued between the parties from the 1st March 1913. The business between the parties was that the plaintiff advanced money to the defendant to buy cotton which was ginned and pressed by the plaintiff, the charges being debited to the defendant, and after that the cotton was sent to Bombay through the plaintiff and sold, the plaintiff being credited with the sale proceeds as against the advances made by him to the defendant.

2. The only question in this appeal is whether, such being the facts, the account between the parties was mutual, open and current, so that the period of limitation would be fixed by Article 85 of the first Schedule to the Indian Limitation Act instead of by Article 62 or 57, in which case only the items in the account within the last three years before suit could be considered. The question whether a particular account between two parties can be called a mutual, open and current account, has given rise to a considerable amount of controversy. The difficulty of coming to a decision is intensified by the words which have been added to Article 85 ' where there have been reciprocal demands between the parties.' These words which were intended to define what is meant by a mutual, open and current account singularly fail to do so, moreover they might also be interpreted as limiting-cases of mutual, open and current accounts coining within the Article to those cases only in which reciprocal demands have been made.

3. In Ganesh v. Gyanu I.L.R (1897) 22 Bom. 606 the learned Judges said : The dealings to be ' mutual' must be transactions on each side creating independent obligations on the other, and not merely creating obligations on one side, and the other side being merely discharges of these obligations,' Following that definition strictly it must be that where A advances, say Rs. 1,000, to B, and B works off that debit by sending cotton to A to be sold, the sale proceeds to be credited to B, that could never be a mutual, open and current account; and that was the view taken in Shivi Gowda v. Fernandes I.L.R (1910) Mad. 513.

4. The decision in Ganesh v. Gyanu was considered by Mr. Justice Batchelor in Bhavdu Vedu v. Govindji Viramji (S.A. Nos. 734, 865 of 1913 (Unreported), The learned Judge said the test was not whether the balance as a matter of fact occasionally shifted from one side to the other, but whether the nature of the dealings was such that the balance might so shift, and, therefore, held, in the case before him, that there was a mutual, open and current account.

5. I doubt whether that is a sufficiently satisfactory definition, because it might be said that in every account between two parties it might happen that the balance may shift. It cannot be that parties will agree that the balance should always be in favour of one of them, and unless they do so agree, the possibility of the balance shifting to the other side cannot be excluded. But I think the decision of the Privy Council in Watson v. Aga Mehedee Sherazee (1874) L.R. 1 IndAp 346 may throw some light on the matter for the purposes of this case. There there was an agreement between a principal and his agent commencing with an admitted balance, which contemplated the existence of an account current consisting of mutual items of debit and credit. The agreement contained a stipulation that on the adjustment of the accounts the principal should be bound to pay such balance as might be found due from him. The account was kept accordingly as a continuous account, which contained several items which brought down the mutual dealings to March 1868. It was held that the case fell within Section 8 of Act XIV of 1859, and was not barred by limitation, oven as to the items which were dated more than three years before the institution of the suit.

6. Section 8 of Act XIV of 1839 said :

In suits for balances of accounts current between merchants and traders who have had mutual dealings, the cause of action that be deemed to have arisen fit, and the period of limitation shall be computed from, the close of the year in the accounts of which there is the last item admitted or proved indicating the continuance of mutual dealings, such year to lie reckoned as the same is reckoned in the accounts.

7. That section differs very slightly from Article 85 of the present Limitation Act, and the test appears to me to be whether the dealings are mutual, that is to say, entered in an account consisting of mutual items of debit and credit, and not whether they might give rise to independent obligations or reciprocal demands, or whether the balance might shift from one side to the other. Evidently Article 85 contemplates mutual dealings, and it was intended that if there was a continuous account of mutual dealings, then for the purposes of a suit the period of limitation should be computed from the close of the year in which the last item admitted or proved was entered in the account. No doubt the decision of the Court below was correct and the appeal must be dismissed with costs in favour of respondents Nos. 1 to 6 only.


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