1. The defendants are Mill Agents and the plaintiffs entered into an agreement (Ext. A) with them on April 30, 1915, under which in consideration of procuring the sale of all goods manufactured in the two mills of the defendants and financing the sales, the plaintiffs were entitled to their commission specified in the agreement. Subsequently, certain alterations took place in the constitution and name of both the plaintiffs and the defendants, which are not however material for the purpose of this suit. On April 30, 1919, the agency terminated. The plaintiffs sue on an amount for Rs. 52,940-9-0 specified in the plaint as being due to them from the defendants under the agreement.
2. This amount may, for clarity's sake, be divided into five kinds: first, interest alleged by the defendants to be due to them in the first place from the dealers who purchased the goods through plaintiffs and ultimately from the plaintiffs themselves and wrongly debited to the plaintiffs. This item of interest can be divided into three kinds according to the objections of the plaintiffs specified in para. 10 of the plaint. According to the plaintiffs while interest from dealers was really due only from the due date of delivery in the original agreement, the defendants have wrongly debited the amounts from earlier dates, such as, firstly, from the date in the agreement although the defendants had failed to manufacture the goods and they were not ready for delivery ; secondly, although the goods were rejected by the dealers purchasers for quality, the defendants accepted the objection and manufactured fresh goods and gave delivery considerably later ; and, thirdly, even when the due date was extended by the defendants to suit their own convenience.
3. The fourth item comprising nearly half the total claim specified in para. 14 of the plaint is claimed as commission either under Clause 24 of the agreement or alternatively quantum mauriti in respect of contracts which were cancelled without delivery of the goods on payment of compensation to the defendants by the dealers purchasers originally concerned.
4. The fifth item is a miscellaneous item totalling small amounts, D such as Rs. 500 paid for the lease of a shop, which was shortly made over to the defendants on the termination of the agency, and solicitors' notices to dealers for interests etc. due.
5. The defendants contend that the suit is barred by limitation ; that the accounts between the parties as a whole and in respect of all these five classes have been adjusted and settled, that in any case in respect of the fourth item of about half the claim the plaintiffs are not entitled to the amount under the agreement Clause 24 or on any other ground, and that the cancellation was in the interests of the plaintiffs and was usually brought about by them, as failing such cancellation, under the agreement, the plaintiffs would have had to take delivery and sustain the loss which had ensued owing to a slump in the market.
6. The following issues were framed :-
(1) Whether the suit is barred by limitation ?
(2) Whether the account of interest on overdue goods is a settled account ?
(3) Whether the account of expenses debited to the plaintiffs is a settled account ?
(4) In the event of issues 2 and 3 being answered in the negative, whether the plaintiffs have been wrongly debited with interest on overdue goods and expenses ?
(5) Whether the plaintiffs are entitled to commission at two and a half per cent. or reasonable remuneration in respect of the goods instead of in the plaint para. 14 ?
(6) General issue.
7. On these issues the first question which arises, in my opinion, is whether in respect of any or all five accounts of the items now in question the account is a mutual, current and open account within the meaning of Article 85 of the Second Schedule of the Indian Limitation Act, or whether it is either for the entire period of the claim or up to any particular date within it settled or closed. The plaintiffs contend that it is a mutual, current and open account to which Article 85 applies. The agency had terminated on April 30, 1919. This Court was closed about the middle of April. The plaint was filed on the reopening of the Court after the vacation. Therefore, according to the plaintiffs, the entire suit and all the items claimed are well within time;
8. According to the defendants, Articles 62 and 115 bar the suit on the ground that even if the plaintiffs have not expressly signed or admitted the correctness of the account, they have acquiesced in it they failed throughout to specify any particular item to which they objected with the exception perhaps of items in respect of four dealers mentioned by them in their letter of May 26, 1917.
9. It is necessary in order to decide the question to consider the relationship and the usual dealings between the parties. The relationship was that of principal and agent under the agreement Ext. A, The usual course appears on the pleadings and the evidence of Mr. Benjamin, who was, during the greater portion of the period in suit, the Assistant Manager dealing with the plaintiffs on defendants' behalf and from the books of the defendants to have been as follows. The goods were sold in advance prior to manufacture under an agreement between the defendants and the dealers purchasers with the stamp of the plaintiffs to show that the sale was through them. When they were ready in the defendants' Mills, the defendants informed the plaintiffs, the latter paid the deposit due under the agreement, informed the dealers, gave late delivery, obtained from them sums due and paid in from time to time to the defendants, who kept an account of all these sums and transactions crediting and debiting the plaintiffs with the sums under the agreement.
10. In regard to the interests of the three classes, it appears that in the first instance interest was calculated against the dealers in the defendants' books. At the end of the year the entire total of such interest was transferred to the debit of the plaintiffs in the defendants' books, the defendants sending to the plaintiffs a copy of particulars of interest in respect of each dealer with the total and informing him that it was debited to the plaintiffs. Apart from this, accounts seem to have been sent by the defendants to the plaintiffs about every five or six months. The plaintiff sent his man to compare and tally with his own accounts. The plaintiff alleges that he has lost all his books of accounts while he was shifting his business premises. Admittedly the defendants' own books contain no signature of settlement or acceptance by the plaintiffs.
11. I do not desire to attempt the task of defining the nature of a mutual, open and current account. It is perhaps best grasped by contrasting each of the three terms with the opposite. An account where one party only borrows or lends is not a mutual account. An account which is settled is not an open account. An account which is closed is not a current account. In the present case credit and debit entries are carried over from time to time, from year to year, from transaction to transaction. As regards the balance, it is not absolutely necessary that the balance should actually shift from one side to the other. All that is necessary is that from the nature of the transactions, it is capable of so shifting : Satappa v. Annappa. I.L.R. (1922) 47 Bom. 128 Besides the case cited at the Bar, Watson v. Aga Mehedee Sherazee, (1874) L.R. 1 IndAp 346 I might refer to three other cases not referred to, viz., the decision of Sir Charles Sargent in Narrandas Hemraj v. Vissandas Hemraj I.L.R.(l881) 6 Bom. 134 : the test laid down in Ganesh v. Gyanu I.LR. (1897) 22 Bom. 606 and Chittar Mal v. Bihari Lal. I.L.R. (1909) All. 11 If further confirmation is needed, it will be found in the evidence of Benjamin himself, and of the defendants' own books such as the ledger for 1917-18. In his evidence dated December 13, 1924, Benjamin states 'the account was on the whole a running account of which the balance was taken to the following year after adjustment.' I am of opinion, therefore, that in its nature the account between the parties was a mutual, open and current account.
12. In regard to acquiescence, it is undoubted, as observed by Chandavarkar J. in Haji Abdul v. Haji Bebee (1904) 7 Bom. L.R. 151 that words or conduct may amount to acquiescence as to the correctness of an account and may even operate as a settlement. But in the present case all that the defendants are able to allege is, not that the plaintiffs actually acquiesced, on the contrary, both from the letters such as those of April 3 and 6, May 26 and 28, June 5 and 7, 1917, May 22, 1918, March 19, 1919, and the evidence of Mr. Benjamin, it is clear that the plaintiffs did take objection. The utmost argument for the defendants is that the objection was vague and did not take the form of a definite item on definite grounds of a definite transaction. No authority has been cited, and I know of none, that a general objection but with an omission to specify it as definitely as it might perhaps be specified, can be held tantamount to acquiescence or settlement of an account, particularly a mutual, open and current account. Even after considering the nature of each of the five classes, stated at the outset of this judgment, it appears to me that neither Article 62 nor Article 115 of the Indian Limitation Act has any application. Article 85 applies, and therefore on the first issue of limitation, the finding must be that the present suit is not barred by limitation.
13. Similarly, on the second and third issues the finding is that the accounts are not settled accounts.
14. The fourth issue as to whether the plaintiffs have been wrongly debited with interest on overdue goods and expenses is a matter for the Commisioner after evidence and report. At present there are no materials before me to decide.
15. On the fifth issue under Clause 24 of the agreement the commission is expressly due on cloth 'sold and delivered to and paid for by purchasers.' In the case of contracts cancelled, clearly no goods were sold and delivered to and paid for. It is impossible, therefore, for the plaintiffs to sustain their claim under this clause of the agreement; and no other clause can be appealed to. Accordingly, they seek to fall back on the principle of quantum meruit.
16. To that the reply, in my opinion, is simple. Firstly, in point of fact the defendants have pleaded, and it is plain from the very nature of the transactions that the cancellation of the contract benefited not only the dealers but at least equally the plaintiffs. It is admitted that the contracts were cancelled not at the instance of the defendants but in the first instance at least of the dealers, in other words, because of a slump in the market. The argument for the plaintiffs has been supported by a number of hypothetical considerations. Assuming that the contention is good in law, what is the basis of the calculation of quantum Are the plaintiffs to get the commission as though the original agreement had not been cancelled Or are they to get it on the amount accepted by the defendants for cancellation Or, as was actually argued for the plaintiffs, is this amount to be raised by the amount of hypothetical profits, if any, in addition, which the defendants obtained if the goods were near completion All these questions illustrate the weakness of the plaintiffs' argument. It suffices against them to say that in fact it was at least equally for the benefit of the plaintiffs as it was for the benefit of the dealers that the contracts should be cancelled. The services rendered were far more to themselves than to the defendants. In law, where the agreement, as here, limits the plaintiffs' commission to goods delivered, there is little or no scope for the application of the principle of quantum meruit. The plaintiffs in effect ask the Court to add an essential term to the contract which the parties themselves here failed to insert. The case of contracts being cancelled is a very common case which was perfectly within the knowledge of the present parties to the suit. If the plaintiffs desired to obtain their commission in the case of cancelled contracts also, it was their duty to provide for the case expressly in the agreement and to include it in the contract, and they cannot ask the Court to add to the agreement a clause based vaguely on quantum, meruit. I am indebted to the learned counsel for the defendants for the English case of Howard Houlder and Partners, Ld. v. Manx Isles Steamship Co.  1 K.B. 110 where McCardie J. at p. 115 has pointed out the similar view laid down by the Courts in England. The fifth issue must, therefore, be answered in the negative.
17. [His Lordship then referred the suit to the Commissioner with certain directions.]