1. The short but important question that arises in this Civil Revision Petition is, whether the account of the defendant in the books of the plaintiff giving rise to the suit claim, is a mutual, open and current account. It is conceded by both the parties that if the account is a mutual, open and current account, then, the suit is not barred by time under Art. 1 of the I Schedule to the Limitation Act ; but, if it is not a mutual open and current account within the meaning of the Article, then, the suit claim is barred by time.
2. The material facts giving rise to the above Civil Revision Petition may briefly stated. The respondent-plaintiff filed a suit against the petitioner-defendant for the recovery of an amount of Rs. 636-07 Ps. On Khata dealings. In the plaint the respondent averred that the defendant had opened a khata in his favour in the plaintiff's firm made payments to his credit and took goods when ever necessary. As per the statement of account filed the defendant owed the plaintiff a sum of Rs.636.07 ps it was an open mutual and current account, because there were suit Khata dealings between the plaintiff and the defendant, creating reciprocal demands against each other.
3. The petitioner-defendant resisted the suit. According to him, the account was not a mutual, open and current account. The transactions on either side were not independent of each other creating independent obligations. The transaction on one side created obligations and those on the other side, were either complete or partial discharges of such obligations, or payments towards the value of the goods to be supplied immediately in the near future. The defendant made payments towards the costs of goods supplied or to be supplied, but never as separate transactions. Article 1 of the first schedule to the Limitation Act did not apply to the account and hence the suit was barred by Limitation. The defendant also denied the last credit entry for Rs. 150 /- dated July 13, 1964.
4. On the basis of these plaintiffs, the Subordinate Judge of Machilipatnem framed the following point for consideration :--
' Whether the plaintiff is entitled to recover the suit amount from the defendant. '
5. The plaintiff's Accountant was examined in support of the plaintiff's case and the defendant examined himself in support of his version. On the basis of that evidence, the learned Subordinate Judge observed that the defendant failed to produce his account-books or the receipts obtained by him from the plaintiff to prove his contention that the defendants which he had with the plaintiff's company were not mutual, open and current account as independent transactions, and as such, an adverse inference has to be drawn against him. With those observations, the learned Subordinate Judge held that the suit account was a mutual, open and current account and the suit amount based on it was not barred by limitation, and accordingly decreed the suit to the extent of Rs. 467-70 Ps. With proportionate costs.
6. Aggrieved by the above decree, the defendant has filed this Civil Revision Petition. The only contention raised before me is that, the suit account was not a mutual, open and current account and no independent obligations were created. The defendant paid the amounts to the plaintiff for the fertilisers supplied or to be supplied by the plaintiff. No independent obligations arose against each other and, hence, the account was not a mutual, open and current account. In support of that contention, the learned Counsel relied upon the decision of the Supreme Court in Hindustan Forest Company v. Lal Chand, : 1SCR563 .
7. The learned Counsel for the plaintiff-decree-holder, on the other hand , contended that the defendant paid moneys and there was no obligation on the part of the plaintiff to supply fertilisers. The plaintiff, to that extent, was under a liability to pay back the money to the defendant. The defendant had to pay the costs of the fertilisers purchased by him. The balances were shifting from one side to the other. Sometimes the plaintiff was the debtor of the defendant and sometimes the defendant was the debtor of the plaintiff. Hence, the account created mutual and independent obligations against each other. It was, therefore, mutual, open and current account. The Subordinate Judge had drawn an adverse inference against the defendant because he failed to produce the account books and, therefore, came to the conclusion that the defendant failed to prove that it was not a mutual, open and current account. That is finding of the fact which is binding of this Court. The suit claim was, therefore, within time and trial Court rightly decreed the suit. In support, the learned counsel relied upon the decision of the Madras High Court in Kesava Chettiar v. M, M. Ramanatha Mudaliar, : AIR1959Mad470 .
8. I am unable to appreciate the reasoning given by the Subordinate Judge for drawing adverse inference against the defendant and decreeing the suit against him. The plaintiff who comes to Court has to establish that he has pleaded the special facts which bring the suit account into mutual, open and current account. It is also for the plaintiff to establish that the suit was within time.
9. P. W. 1, who was examined as the sole witness on behalf of the plaintiff, deposed that the defendant had a running khata, paid cash and took articles from the plaintiffs firm. There were credit balances in favour of the plaintiff and also debit balances. In cross-examination, the plaintiff's Accountant, P. W. 1, deposed that there were no other independent transactions between the plaintiff and the defendant except those of fertilisers. He could say even whether the credits in favour of the defendant were anterior towards the supply of fertilisers or later. According to him, the defendant was paying cash and taking fertilisers also on credit. Towards the value of the goods delivered, it was likely either two days prior to or two days later to the delivery they were taking money from their customer. He could also say whether there were any dealings which could show cash receipts and cash repayments.
10. The defendant in his evidence deposed that all the credits in suit Khata related to payments made towards the value of fertilisers supplied. Sometime prior to or subsequent to the delivery, moneys were paid and there were no independent transactions between him and the plaintiff, except the fertiliser transactions.
11. This is all the evidence on record on the basis of which the question whether the suit account is or is not a mutual, open and current account, has to be decided.
12. The applicability of Art. 1 depends upon special facts. What those special facts are, can be seen from what has been laid down by Rankin, C. J. , in the case of Tea Financing Syndicate Ltd. V. Chandrakamal, ILR ( 1931 ) 58 Cal 649 = ( AIR 1931 Cal 359 ) and that is --
'..............There can, I think, be no doubt that the requirement of reciprocal demands involves, as all the Indian cases have decided following Halloway A. C. J. transactions on each side creating independent obligations on the other and not merely transactions which create obligations on one side, those on the other being merely complete or partial discharge of such obligations. '
13. Those special facts that have to be pleaded and proved by the plaintiff who claims the account to be mutual, open and current account are ; (1) there must be transactions on each side ; (2) the transactions must create independent obligations on the other ; (3) they should not merely transactions which create obligations on one side and those on the other being merely complete or partial discharge of such obligations. Except merely stating that the account is a mutual, open and current account, the plaintiff in the plaint did not plead the special facts which go to establish that the account, on the basis of which the suit claim was made, was a mutual, open and current account. P. W. 1 clearly says that there are no other independent transactions between them, except those of fertilisers. He does not even know whether the credits in favour of the plaintiff were anterior towards the supply of fertilisers or not. The witness further clearly stated something which is damaging to his own case and that is ' towards the goods delivered, it is likely that two days prior or two days later to the delivery, we use to take amount from our customers...............'
14. On the above pleading and proof itself, I should hold that the account on the basis of which the plaintiff had filed the suit, is not a mutual, open and current account. However, I will examine the cases cited by the parties in support of the respective stands taken by them. In : 1SCR563 the admitted facts are these : The parties agreed in writing for the supply of 5,000 maunds of maize, 500 maunds of wheat and 100 maunds of Dal at the rates and times specified. The buyer paid Rs. 3,000 /- on the date of the agreement and had agreed to pay further a sum of Rs. 10,000 /- within ten or twelve days as advance and the balance due for the price of goods delivered after the expiry of every month. It was admitted that the said sum of Rs. 10,000 /- was later paid by the buyer to the sellers.
15. On the basis of those facts, it was contended in that case that, the plaintiffs having received a certain amount of money, they became debtors to the defendant Company to that extent and when the supplies exceeded Rs. 13,000 /- the defendant-Company became debtors to the plaintiff and later on, when again the plaintiff's supplies exceeded the amount paid to them, the defendants again became the debtors, and that would show that there are reciprocity of dealings and transactions on each side creating independent obligations on the other.
16. Dealing with these contentions, A. K. Sarkar J., ( as he then was ), speaking for the Supreme Court observed thus :--
'.............This reasoning is clearly erroneous. On the facts stated by the learned Judges there was no reciprocity of dealings ; there was no independent obligations. What in fact had happened was that the sellers had undertaken to make delivery of goods and the buyer had agreed to pay for them and had in part made the payment in advance. There can no question that in so far as the payments had been made after the goods had been delivered, they had been made towards the price due. Such payments were in discharge of the obligation created in the buyer by the deliveries made to it to pay the price of the goods delivered and did not create any obligation on the sellers in favour of the buyer..................'
17. The facts of this case, exactly, in my opinion, fit in with the facts of the case before the Supreme Court. There is no force in the contention of the learned Counsel for the respondents that the facts of the case of the Supreme Court are distinguishable from the facts of the case, and the only distinguishable feature, according to him, is that in the Supreme Court, case, there was an agreement, and in the instant case before me, there is no agreement. I am unable to appreciate this argument. Agreement may be express or implied. It may be inferred from the course of conduct and dealings between the parties. On a perusal of the statement of account on the basis of which the suit was filed an agreement is clearly inferable from the transactions and the entries in the Account. I, therefore, hold that the facts of the instant case are almost identical with the facts that were considered by the Supreme Court in Hindustan Forest Company v. Lal Chand, : 1SCR563 .
18. The next argument that was advanced by the learned Counsel for the plaintiff was that the defendant had paid moneys to the plaintiff and there was no obligation on the part of the plaintiff to supply fertilisers. The plaintiff had become liable to the defendant for the repayment of those amounts and, therefore, he was a debtor. Even in the accounts, the balance shifted from on be side to the other and, therefore, reciprocity of demands was clearly visible from the accounts.
19. Dealing with such a contention, the learned Judge, in the above referred case, observed thus :-
'.................there was no reciprocity of dealings, there were no independent obligations. In so far as the payments had been made after the goods had been delivered, they had been made towards the price due, and were in discharge of the obligation created in the buyer by the deliveries made to him to pay the price of the goods delivered and did not create any obligation on the sellers in favour of the buyer. The sum of Rs. 13,000 /- paid as and by way of advance payment of price of goods to be delivered was paid in discharge of obligations to arise under the contract. It was paid under the terms of the contract, which was to buy goods and pay for them. It did not itself create any obligation on the sellers in favour of the buyer ; it was not intended to be and did not amount to an independent transaction detached from the rest of the contract. The sellers were under an obligation to deliver the goods but that obligation arose from the contract and not from the payment of the advance alone. If the sellers had failed to deliver goods, they would have been liable to refund the monies advanced on account of the price and might also have been liable in damages, but such liability would then have arisen from the contract and not from the fact of the advances having been made.................'
20. The position in this case, is exactly the same as was in the case before the Supreme Court. There is no evidence on record, on the basis of which I could give finding that the defendant had advanced moneys to the plaintiff independent of the fertiliser transactions. There are no instances of repayment of moneys in cash by the plaintiff to the defendant. The course of conduct as exhibited by the entries in the account books abundantly proves that all these transactions were in respect of the transactions of fertilisers. Either the moneys were advanced just sometime before the supplies were made or moneys were paid a few days after the purchases were made. Both the payments, anterior and subsequent to the actual deliveries of fertilisers were thus intimately connected with the deliveries of fertilisers. There were no independent transactions creating independent obligations. Merely because on one or two occasions the balance shifted from one side to the other and remained undischarged for a few days, it cannot be said that the account was a mutual, open and current account. Following the decision of the Supreme Court, which is in all fours with the facts of the present case . I must hold that the account is not a mutual, open and current account.
21. Let me then consider the decision of the Madras High Court in L. Kesava Chettiar v. M. M. Ramanatha Mudaliar, : AIR1959Mad470 , on which strong reliance is placed by the plaintiff's counsel. In that case the facts are : the plaintiff was a wholesale merchant in yarn and the defendant a retailer in the same commodity. During that period, supplies and distribution of yarn was controlled by the State. The defendant made advances of sufficiently large amounts to the plaintiff. Payments were mostly in the nature of price for the yarn supplied. On 7-8-1947, there was a credit balance in favour of the defendant, which meant that the respondent began to advance to the defendant. On those facts a Division Bench of the Madras High Court held that :
'...................though the advances were intended to procure supplies of yarn and eventually to liquidate the price of the yarn supplied by the plaintiff to the defendant, this would not mean that the obligation to return the advance was non-existent or was not independent of the obligation arising under the sale and purchase of yarn. The legal import of the transactions between the parties was such as to give rise to cross-claims or reciprocal demands.......................'
It was, accordingly, held that the account was a mutual, open and current account.
22. In my opinion, the decision of the Madras High Court in L. Kesava Chettiar v. M. M. Ramanatha Mudaliar, : AIR1959Mad470 runs directly contrary to what the Supreme Court has held in the aforesaid case relied upon by the defendant. Merely because on one or two occasions the balance had shifted in favour of the defendant and remained undischarged for a few days, could it be said that the account was a mutual, open and current account or that such obligation was an independent obligation In short the entire case of the plaintiff, in the case before me, was that the defendant had paid either a few days prior to the supplies of fertilisers, or two days after the supplies were made. This is nothing but a running account and cannot, by any stretch of imagination, be said to be a mutual, open and current account.
23. I, therefore, hold that the account on the basis of which the money suit was filed, was an ordinary running account and not a mutual, open and current account within the meaning of Article 1 of the Limitation Act. Since it was admitted that if it was not a mutual, open and current account, the suit was barred. I hold that the suit was barred by limitation and the Subordinate Judge was not right in directing the plaintiff's suit.
24. I, therefore, set aside the judgment and decree of the lower Court and dismiss the suit with costs. The costs of the revision-petition shall be paid by the plaintiff.
25. The Civil Revision Petition is allowed with costs.
26. Petition allowed.