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Smt. Sukhdei and ors. Vs. Naipal Ram Jagannath Prasad - Court Judgment

LegalCrystal Citation
SubjectCommercial;Limitation
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 1048 of 1973
Judge
Reported inAIR1974All408
ActsLimitation Act, 1963 - Schedule - Articles 1, 26 and 91
AppellantSmt. Sukhdei and ors.
RespondentNaipal Ram Jagannath Prasad
Appellant AdvocateR.A. Sharma, Adv.
Respondent AdvocateR.N. Singh and K.P. Singh, Advs.
DispositionAppeal dismissed
Excerpt:
.....will start from date of refusal to return - not from date of supply of raw material - held, suit not barred by limitation. - - it may be stated here that the said provision corresponds with article 49 of the old limitation act shri singh's contention is that the suit in effect is a suit based on bailment and, therefore, the limitation started only when the defendants illegally failed to return the raw material claimed by the plaintiff. the judicial commissioner took the view that an unqualified acknowledgment like the one in the suit, and the statement of the account under which the entry had been made, were sufficient to furnish a cause of action to the plaintiffs for maintaining the present suit. we are satisfied that no exception can be taken to this conclusion. i, therefore,..........and manufacture of brass vessels in thatheri bazar, varanasi city, for the last many years. late madho kumhar alias mahadeo kumhar used to take brass-sheets, popularly known as 'chan-da', from the plaintiff firm for preparing vessels on usual labour charges. mahadeo kumhar had a running account in the karigar bahi or the malkhata of the plaintiff-firm. it contained all entries regarding the amount of brass-sheets taken by madho kumhar for preparing vessels, the labour charges paid to him etc. etc. the account was squared up on savan badi 13 sambat 2018, thereafter, during the period savan sudi 6 sambat 2018 -- corresponding to 17-8-61 to aghan badi 14 sambat 2025--corresponding to 19-11-68, madho kumhar took a total of brass-sheets weighing 9636.220 kgs. and a cash of rs. 8315.63 p......
Judgment:

Mehrotra, J.

1. This is the defendants' second appeal. The trial court substantially decreed the suit and the lower appellate court has affirmed the said decree. The defendants have felt aggrieved and have filed the instant second appeal in this Court.

2. I am reproducing the following portion of the judgment of the lower appellate court with a view to state the facts of the case :

'The plaintiff M/s. Naipal Ram Jagannath Prasad filed this suit on 17-3-71 for recovery of Rs. 5373.40 P. plus Rs. 1934.28 P. interest, i.e. a total of Rs. 7307.68 P. The plaint allegations are that the plaintiff is a registered partnership firm carrying on the business of sale, purchase and manufacture of brass vessels in Thatheri Bazar, Varanasi City, for the last many years. Late Madho Kumhar alias Mahadeo Kumhar used to take brass-sheets, popularly known as 'Chan-da', from the plaintiff firm for preparing vessels on usual labour charges. Mahadeo Kumhar had a running account in the Karigar Bahi or the Malkhata of the plaintiff-firm. It contained all entries regarding the amount of brass-sheets taken by Madho Kumhar for preparing vessels, the labour charges paid to him etc. etc. The account was squared up on Savan Badi 13 Sambat 2018, Thereafter, during the period Savan Sudi 6 Sambat 2018 -- corresponding to 17-8-61 to Aghan Badi 14 Sambat 2025--corresponding to 19-11-68, Madho Kumhar took a total of brass-sheets weighing 9636.220 Kgs. and a cash of Rs. 8315.63 P. But Madho Kumhar prepared vessels of the total weight of 9177.760 Kgs. and returned the vessels to the plaintiff-firm during the period Bhadon Badi 8 Sambat 2018-- corresponding to 2-9-61 to Miti Poos Sudi 11' Sambat 2025-- corresponding to 30-12-68 and earned a total amount of Rs. 8787.59 P. as his labour charges therefor. Thus, Madho Kumhar had to return an account for brass-sheets weighing 458.460 Kgs. and to get a sum of Rupees 471.96 P. by way of his labour charges.

Madho Kumhar died some 11/2 years prior to the filing of the suit leaving behind defendant No. 2 as his daughter from his first wife and defendant No. 1 as his second wife. Both of these defendants have inherited and succeeded to the assets of Madho Kumhar as his heirs and are in lawful enjoyment thereof. The final balance was struck in the plaintiff's books of account on 11-3-68 -- according to which Madho Kumhar had to return and account for brass Chanda weighing 458.450 Kgs. and he had to receive Rupees 471.96 by way of his labour charges. The price of this much of brass Chanda at the rate of Rs. 12.75 P. per Kg. comes to Rs. 5845.36 P. and after deducting the labour charges due to Madho Kumhar, the final balance comes to Rs. 5373.40 P. Hence, the claim for Rs. 5373.40 P. plus interest Rs. 1934.28 P.

The defendants have contested the suit denying all the allegations as made in the plaint. They have contended that Madho Kumhar had stomach trouble and he had been seriously ill for the last 10 years and it was wrong to say that he took brass-sheets from the plaintiff-firm for preparing vessels on labour charges. It is also denied that he ever received any cash from the plaintiff towards labour charges or any such brass sheets. They have contended that the books of account relied upon by the plaintiff firm are all forged and fictitious calculated to make undue gain. It is further contended that the plaintiff did not file the suit within 3 years in any case and, as such it was barred by law of limitation. The defendants are not liable on any account to pay the debt in question.

The learned trial court found that the books of accounts relied upon by the plaintiff firm are quite genuine and the plaintiff was entitled to the sum of Rupees 5373.40 P. as the price of the brass-sheet' supplied to Madho Kumhar, but in the absence of any agreement as to interest it could not be allowed to the plaintiff The learned trial Court rejected the contention of the defendants that the books of account relied upon by the plaintiff-firm were forged and fictitious, and proceeded to decree the suit for Rs. 5373.40 P disallowing the interest claimed. Hence this appeal by the defendants.'

3. In the lower appellate court questions both of law and fact were raised but ultimately the said court also rejected the submission made on behalf of the defendants and maintained the decree passed by the trial court. In the second appeal Shri R. A. Sharma, learned counsel for the defendante-appellants has raised only one contention, namely, that the suit was barred by time and therefore, could not be decreed. In my view, he has properly not addressed me on questions of facts in regard to which the findings of the courts below are final and binding on me in the second appeal. Now, the point of limitation arises in this way. The suit was filed on 9th March, 1971. The plaintiff's case as set out in the plaint was that the deceased Madho Kumhar was a technical hand and he used to take raw material from the plaintiff with a view to convert it into utensils and return the same to the plaintiff. Madho Kumhar used to be paid settled wages for the job which he did. The plaintiff further averred that in its account books there was a regular account in the name of Madho Kumhar where these transactions were regularly noted, Whatever raw material was given to him used to be entered in his account and the weight of the utensils which he returned also used to be noted in the said account from time to time. Similarly, whatever wages used to be paid in account to Madho Kurnhar were also noted in the account of Madho Kumhar. The plaintiff further claimed in the plaint that therewas settlement of account for the period ending Sawan Badi 13 Sambat 2018. During the period from Sawan Sudi 6 Sambat 2018-- corresponding to August 17, 1960 to Aghan Badi 14 Sambat 2025--corresponding to November 19, 1969, the plaintiff claimed that raw material weighing 9636.220 Kgs. was handed to Madho Kumhar. During this period he was paid a total sum of Rs. 8315.63 by way of wages paid to him in account from time to time. During the period from Bhadon Badi 8 Sambat 2018--corresponding to 2-9-1961 up to Poos Sudi 11 Sambat 2025 corresponding, to 30-12-1968 Madho Kumhar returned to the plaintiff utensils weighing 9177.760 Kgs. His wages for this quantity of utensils amounted to Rupees 8787.59 P. From these figures the plaintiff claimed that Madho Kumhar had in his possession the unutilised 458.460 Kgs. of the raw material and he was entitled to receive the balance amount of Rupees 471.96 by way of his outstanding wages, from the plaintiff. The plaintiff further averred that it was entitled to the return of the said raw material or compensation in respect thereof at the prevailing market price. 458.460 Kgs. of the raw material was valued at Rs. 5845.36 and deducting the said sum of Rs. 471.96 payable to Madho Kumhar by way of his outstanding wages the net amount for which Madho Kumhar was liable came to Rs. 5373.40. It is an admitted fact that Madho Kumhar died about 11/2 years before the institution of the suit and the defendants are his legal representatives. The plaintiff, therefore, sought a decree for the return of the said quantity of raw material weighing 458.460. Kgs. from the defendants or, in the alternative for compensation amounting to Rs. 5845.36 in respect thereof. The plaintiff however, conceded that out of the said amount of compensation the defendants were entitled to a deduction of Rs. 471.96 which was the amount of outstanding wages due to Madho Kumhar from the plaintiff. Therefore, the net principal amount of Rupees 5373.40 was claimed along with interest amounting to Rs. 1934.28. Further, pendente lite and future interest was also claimed. The trial court held the suit within time because the account between the parties was held to be a mutual, open and current account. The lower appellate court also affirmed the said view. In the judgment of the lower appellate court it has been wrongly stated that the suitwas filed on 17-3-1971. In fact, the suit was filed on 9-3-1971. It is not disputed before me that in case the account is held to be mutual, open and current then the courts below have taken the correct view in holding that the suit is within time. However, Shri Sharma, the learned counsel for the defendants-appellants, contends that the account between the parties was not a mutual, open and current account as the said expression has come to be interpreted in the decided case law. In particular, he has placed reliance on Hindustan Forest Co. v. Lal Chand : [1960]1SCR563 where U has been laid down as under:

'The requirement of reciprocal demands involves 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 discharges of such obligations.'

I think that Shri S-harma is right in his contention. In the present case, what has happened is that Madho Kumhar used to be paid his wages from time to time in account. No independent obligations were being created between the parties. The wages which were payable to Madho Kumhar were not in the nature of independent obligations arising out of independent transactions. They arose out of the one and the same transaction between the parties. As stated above, raw material was being given to Madho Kumhar for being converted into finished goods and the finished goods were to be returned to the plaintiff. For the work done Madho Kumhar was entitled to his wages. Therefore, it cannot be said that here is a case of independent obligations coming into existence as a result of contract between the parties.

4. However, I think the findings of the courts below on the question of limitation can be affirmed on an alternative ground which has been pressed on me by Shri R. N. Singh, the learned counsel for the plaintiff-respondent. He has contended that if Article 1 of the new Limitation Act was not applicable on the ground that the account between the parties was not mutual, open and current then it will be Article 91 (b) of the new Limitation Act which will be applicable to the facts of the case and under the said Article also the suit will be within time. The said Article lays down as under:--

91

For compensation: -

(b)

for wrongfully taking or injuring or wrongfullydetaining any other specific movableproperty.

Three years

When the nropertv Is wrongfully taken or injuredor when the detainer's oosses-sion becomes unlawful.

It may be stated here that the said provision corresponds with Article 49 of the old Limitation Act Shri Singh's contention is that the suit in effect is a suit based on bailment and, therefore, the limitation started only when the defendants illegally failed to return the raw material claimed by the plaintiff. Shri Singh has placed reliance on Mt. Laddoo v. Jammaluddin (AIR 1920 All 353 (2)) where it is laid down:--

'Where movables are entrusted to any person on the condition that they will be returned on the expiry of a specified period the fact that they are detained beyond that period and no demand is made for their return does not render the detainer's possession unlawful. It is only when a demand is made and there is a refusal to comply with the demand that possession becomes unlawful, and the period of limitation for a suit for the return of the movables or in the alternative for their value commences to run from the date of such refusal under Article 49.'

Shri Sharma, the learned counsel for the appellants, however, contended that without the necessary pleadings and the evidence in the record, it was not permissible for the plaintiff-respondent to set up the alternative contention based on Article 91 (b) of the new Limitation Act. In this connection he invited my attention to a passage in : [1960]1SCR563 which I reproduce below:--

'The applicability of that Article depends on special facts. No such facts appear in the plaint. There is no hint there that the account was mutual. We feel sure that if the attention of the learned Judges of the High Court had been drawn to this aspect of the matter, they would not have permitted any question as to Article 115 being raised, and the parties would have saved considerable costs, thereby.'

Shri Sharma further placed reliance on Hira Lal y. Badkulal : [1953]4SCR758 where it is laid down as under :

'Mr. Bindra next urged that the plaintiff's suit should have been dismissed because it could not be maintained merely on the basis of an acknowledgment of liability, that such an acknowledgment could only save limitation but could not furnish & cause of action on which a suit could be maintained. The Judicial Commissioner took the view that an unqualified acknowledgment like the one in the suit, and the statement of the account under which the entry had been made, were sufficient to furnish a cause of action to the plaintiffs for maintaining the present suit. We are satisfied that no exception can be taken to this conclusion.'

5. Lastly, Shri Sharma contended that Article 91 (b) was not applicable to facts of the case. He did not want to commit himself as to which particular Article would be applicable to the facts of the case but he suggested that it might be Article 26 though he insisted he was not making any concession or statement on the point. Article 26 in the new Indian Limitation Act lays down as under:--

'26.

For money payable to the plaintiff for money foundto be due from the defendant to the plaintiff: on accounts stated therein,

Three years

When the accounts are stated in writing signed bythe defendant or his agent duly authorised inthis behalf, unless where the debt is, by a simultaneous agreement in writingsigned as aforesaid, made payable at a future time, and then when that timearrives.'

If this article be deemed to be applicable then according to Shri. Sharma the suit must be held to be barred by time. He further submitted that in the plaint it has been stated by the plaintiff-firm itself that there used to be an annual settlement of account and, therefore, as the transactions in the suit spread over a period of 1961 to 1968, therefore, the suit must be held to be barred by tune, on the basis of the annual settlement of accounts. Shri Sharma drew my attention to the allegations in the plaint and in particular to para 9 where the dates of the accrual of the cause of action to the plaintiff are stated. He contended that the entire approach of the plaintiff is to seek a decree on the basis of his accounts. The cause of action is also stated to be based on the accounts maintained by the plaintiff. Shri Sharma further drew my attention to the statement of P.W. 1 Devi Prasad in support of his contention that it is not open to the plaintiff now to seek the aid of Article 91 (b) with a view to claim that the suit is within time. I have given serious consideration to the contentions which have been raised by Shri Sharma. However, I feel that the suit can rightly be held to be not hit by the rule of limitation on the ground of Article 91 (b) of the new Limitation Act. In para 6 of the plaint the plaintiff states that despite, repeated demands the defendants were not returning the balance quantity of the raw material which remained outstanding against the deceased Madho Kumhar nor were they paying compensation in respect thereof, to the plaintiffs. Hence, the plaintiffs alleged, arose the necessity of the suit I, therefore, think that basically it is a suit on the basis of bailment and it is covered by Article 91 (b) of the new Limitation Act. Specific movable property was wrongfully detained by the defendants and therefore, they were liable to pay compensation in respect of such property. The mere fact that in respect of transactions in the nature of bailment of goods or articles regular accounts are also kept does not mean that the claim of a party ceases to be a claim based on the contract of bailment I, therefore, do not agree with Shri Sharma that the plaintiffs' claim ceased to be based on the contract of bailment merely on the ground that it was mentioned in the plaint that the plaintiff was maintaining regular accounts in respect of the suit transactions. The learned counsel's own contention is that Article 1 of the new Limitation Act dealing with mutual, open and current account is not applicable to the facts of the case,

6. Article 26 will not be applicable because the expression 'accounts stated' in the said Article has come to acquire a settled meaning and the present case will not be covered by the interpretation which has been placed on the said expression by the law courts. This Article in the new Limitation Act corresponds with Article 64 of the Limitation Act of 1908 and in Bishun Chand v. Girdhari Lal the Privy Council interpreted the said article in the following observations:--

'......... The fact that there are crossitems of account and that the parties, mutually agree on the several amounts of each and by treating the items so agreed on the one side as discharging the item on the other side pro tanto, go on to agree that the balance only is payable. Such a transaction is in truth bilateral, and creates a new debt and a new action. There are mutual promises, the one side agreeing to accept the amount of the balance of the debt as true (because there must in such cases be, at least in the end, a creditor to whom the balance is due) and to pay it, the other side agreeing the entire debt as at a certain figure and then agreeing that it has been discharged to such and such an extent, so that there will be complete satisfaction on payment of the agreed balance. Hence, there is mutual consideration to support the promises on either side and to constitute the new cause of action. The accounts stated is accordingly binding, save that it may be reopened on any ground for instance, fraud or mistake which would justify setting aside any other agreement.'

7. The real ingredient of an account stated is a contract or agreement between the parties who have agreed to set off the cross items of the account against one another to agree that the balance struck is payable from one party to another. In Gordon Woodroffe & Co. v. Sk. M. A. Majid & Co. 0065/1966 : AIR1967SC181 it was laid down as under:--

'Accounts are settled or stated if they are submitted and accepted as correct by the other side to whom the accounts have been rendered. Such a statement of account need not be in writing, nor is it necessary that before the accounts are settled, they should be gone into by the parties and scrutinised and supported by vouchers. It is sufficient if the accounts are accepted and such acceptance may be inferred by the conduct

A used to send statements of account to B giving full particulars of the amount due to him together with the deduction and showing the net balance due to him and enclosing a cheque for such balance or .giving credit to him for the sum in the accounts. B admitted receipt of such statements and account and payments by cheques and raised no objection whatever to such statements of account sent to him. Further, on one occasion B accepted the correctness of the balance struck by A and signed a memorandum to that effect.

Held, that the account between the parties was a 'settled' or 'stated' one and to an account of this description equitable doctrine of 'settled account' has to be considered.'

8. It should be emphasised here that the Supreme Court was not concerned with any question of limitation. In para 12 of the judgment Justice Ramaswami stated :

'We pass on to consider the second question involved in the case, viz., whether there was a settled account between the parties and whether it is open to the plaintiff to reopen it'

and in this connection the learned Judge observed that such a statement of accounts need not be in writing and the acceptance of the accounts may be inferred by the conduct of the parties. In my view, it would be wrong to invoke the aid of the said observations to contend that Article 26 of the new Limitation Act can be applicable even when the accounts are not in writing and not signed by the defendant or his agent duly authorised in this behalf. The Article itself says that the starting point for limitation is when the accounts are stated in writing signed by the defendant or his agent duly authorised in this behalf, unless where the debt is by an agreement in writing signed as aforesaid, made payable at a future time and then when that time arrives. Therefore, in my view, Article 26 can become applicable only when the account is in written signed by the defendant or his duly authorised agent. However, the real ingredient, as emphasised earlier, of an account stated is an agreement between the parties accepting the correctness of the accounts between them and the balance payable from one party to another. Now, in the present case I do not think that these ingredients are in existence. There is no account in writing signed by the defendants or their duly authorised agent. It is not even alleged in the plaint that there was any agreement between the plaintiff and Madho Kumhar or between the plaintiff and the defendants where by the latter accepted the correctness of the plaintiff's account. The learned counsel emphasised that the plaintiff's witness Devi Prasad (P.W. 1) himself stated that in every Sambat year the plaintiff's account used to be maintained annually up to Chit Badi 15. Actually, the witness did not mean to suggest that every year Madho Kumhar and the plaintiff sat down and settled accounts whose correctness was acceptable to Madho Kumhar. When the plaintiff wanted to allege such kind of settlement between them it explicitly made a statement to that effect in para 2 of the plaint where it is stated that there was a settlement of account between the parties i.e. between the plaintiff and Madho Kumhar for the period ending Miti Sawan Badi 13, Smvt. 2018. It is not stated in the plaint that there was any such settlement between the parties after that date. The fact that the plaintiff made up its accounts annually and struck balance annually did not mean a settlement of accounts with Madho Kumhar in the manner in which there was such settlement for the period ending Sawan Badi 13, Sambat 2018. Therefore, in my view Article 26 does not apply to the facts of the case. I, therefore, uphold the contention of Sri Singh that Article 91 (b) covers the instant case. I do not think that the observations in : [1960]1SCR563 are applicable to the facts and circumstances of the present case. The necessary facts have been stated in the plaint. It is for the courts concerned to apply the correct Article of the Indian Limitation Act to the said facts. The courts below thought that Article 1 would apply on the ground that there was a mutual, open and current account between the parties. That view is not correct but then the next question does arise as to which Article will be applicable to the facts and circumstances of the case. In my view, the most appropriate Article applicable will be Article 91 (b). The limitation started when after the death of Madho Kumhar the defendants refused to return the raw material as and when the same was demanded from them and refused to pay compensation in respect of the same to the plaintiff. Reading the entire plaint, it seems to me that the plaintiff did not treat Madho Kumhar during his lifetime to be in illegal possession of the outstanding raw material, even though it was pressing upon him to convert the said outstanding raw material into utensils and hand back the same to the plaintiffs. It seems that the plaintiff was not treating the custody of the raw material by Madho Kumhar to be unlawful. The plaintiff was entitled to wait and to go on treating Madho Kumhar to be in lawful custody of the raw material. Therefore, it cannot be said that the mere fact that the plaintiff was from time to time asking Madho Kumhar to convert the raw material into finished goods and there was no compliance on the part of Madho Kumhar to do so, resulted in the limitation running in respect of the suit claim. Moreover, it has not come as to on what particular dates the demands were made upon Madho Kumhar. I, therefore, think that the detention of the raw material became unlawful only when, the defendants as the legal representatives refused to return the same and also failed to pay compensation in respect thereof. The limitation did not start earlier. I, therefore, hold that the suit is not barred by limitation and was rightly decreed by the courts below.

The appeal is dismissed with costs.


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