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Firm Mansa Ram and Sons Vs. Hira Lal Sanon and anr. - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtAllahabad
Decided On
Reported inAIR1940All209
AppellantFirm Mansa Ram and Sons
RespondentHira Lal Sanon and anr.
Excerpt:
- - the case has been very well argued before me on both sides. if that is the case and it is possible that one day the plaintiff can say that defendant owes him a certain amount and on another day the defendant can say that the plaintiff is indebted to him then clearly it is a case of mutual, current and open account. in these circumstances i am clearly of opinion that the account between the parties is open, current and mutual and therefore the case is governed by article 85, limitation act, and was within limitation. the learned judge of the court below has held that the suit was bad for non-joinder but i do not think that that point affects the case as against the defendants. no suit can fail because of non-joinder of the parties......can say that the plaintiff is indebted to him then clearly it is a case of mutual, current and open account. it appears to me that if that test is applied to the case before me it becomes clear that the case is one of open, current and mutual account. as i have already stated, at first the defendants deposited a sum of money with the plaintiff. the plaintiff became a debtor to the defendants. later on, the defendants borrowed a large sum of money from the plaintiff and so the defendants became debtors. for determining the question of mutuality, it is not necessary that there must be a large number of transactions between the parties. the only thing that is to be seen is whether owing to the transactions between the parties each party could say to the other during the continuance of.....
Judgment:
ORDER

Rachhpal Singh, J.

1. The plaintiff firm Mansa Ram and Sons instituted a suit against Hira Lal Sanon and Daulat Ram Sanon in the Court of Small Causes at Dehra Dun to recover a sum of Rs. 931-8-0. The plaintiff firm carry on business as bankers, and it was alleged by them that according to the account between the parties the above mentioned sum was due to them from the defendants. The learned Judge of the Court below has held that the suit was not within limitation and has therefore dismissed it. The plaintiff firm has come up in revision to this Court. The plaintiff pleaded that the account between the parties was open, mutual and current and therefore the suit was governed by Article 85, Lim. Act. The defendants denied that the account between them and the plaintiff was open, mutual and current. The learned Judge of the Court below held that if it be found that the account between the parties was open, mutual and current then the suit would be within limitation. This is the principal question which has been argued before me.

2. The legal proposition has been correctly stated by the learned Judge when he says in his judgment that when the balances are sometimes against and sometimes in favour of the defendant, it may be called a mutual, open and current account. The learned Judge was of opinion that the account of the defendants with the plaintiff from a perusal of the accounts did not fall within the definition of mutual, open and current account. The case has been very well argued before me on both sides. After a consideration of the nature of the accounts between the parties I have arrived at the conclusion that the view taken by the learned Judge of the Court below cannot be sustained.

3. The pass book of the defendants show that on 10th June 1930, they (four partners owning the firm styled Sanon Brothers) opened an account with the plaintiff Bank and deposited a sum of Rs. 500. It appears that up to 29th December 1931, the defendants had always a credit balance. After that date there was a debit balance against the defendants. On 29th December 1931, the defendants executed a promissory note and a receipt in favour of the plaintiff under which they borrowed a sum of Rupees 5000 and withdrew this amount on the same date. The mistake made by the learned Judge is that he has treated the case as one in which the account between the parties opened on the date of this loan of Rs. 5000. This is not correct. The account between the parties had started in 1931 when the defendants deposited a sum of Rs. 500 with the plaintiff Bank. That account was never closed. There is no evidence to show that that account was closed. The fact that when the account was opened in 1931, there were four partners of the defendant firm and later on there were two or only one proprietor does not make the slightest difference to the nature of the accounts between the parties. If four persons continued to be partners the plaintiff's remedy would be against all. But if the number decreased then the suit would be only against those who owned the firm at the time the suit was instituted. According to the test mentioned by the learned Judge of the Court below the account between the parties was open, mutual and current. The balance when the accounts opened was in favour of the defendants. Later on, the balance went against them.

4. Learned counsel for the defendants has relied on the case in Ramahan v. Md. Dost Khan (1931) 18 AIR Lah 241. I think that the facts of that case were different. The learned Judges who decided that case, after going through the state of accounts, came to a definite finding that the dealings between the plaintiff and Dost Muhammad Khan were of simple money loans as between creditors and debtors and the account was not mutual in any sense of the term. Another case cited by learned Counsel for the defendants was Puttu Lal Kunji Lal v. B. Jagan Nath : AIR1935All53 . In that case also the finding was that there was never a possibility of balance standing in favour of the defendant and therefore it could not be said that there were mutual dealings.

5. On behalf of the plaintiff applicant, learned Counsel for the plaintiff has placed reliance on Punjab United Bank, Ltd. v. Mohammad Hussain (1934) 21 AIR Lah 358, Kushalo v. Behari Lal (1881) 3 All 523 (at p. 526) and Gopi Nath v. Chameli : AIR1938All508 . On a perusal of the rulings cited on both sides, it is clear that the real test in finding out whether a case is governed by Article 85, Limitation Act, is to find out whether the balance was shifting in favour of one party or the other. If that is the case and it is possible that one day the plaintiff can say that defendant owes him a certain amount and on another day the defendant can say that the plaintiff is indebted to him then clearly it is a case of mutual, current and open account. It appears to me that if that test is applied to the case before me it becomes clear that the case is one of open, current and mutual account. As I have already stated, at first the defendants deposited a sum of money with the plaintiff. The plaintiff became a debtor to the defendants. Later on, the defendants borrowed a large sum of money from the plaintiff and so the defendants became debtors. For determining the question of mutuality, it is not necessary that there must be a large number of transactions between the parties. The only thing that is to be seen is whether owing to the transactions between the parties each party could say to the other during the continuance of the account that 'you are indebted to me' this day having regard to the nature of the accounts. There should be two sets of transactions. In one set one party should hold the position of a creditor and the other a debtor; and in the other set the position should be reversed. In the case before me we find that when the accounts opened the plaintiff's position was that of a debtor. The defendants deposited a sum of money with the plaintiff Bank and to the extent of the money deposited the plaintiff's position was that of a debtor. That position continued till the date on which the defendants executed the promissory note and a receipt and from that date the plaintiff Bank became the creditor and the defendants became the debtors. The receipt which the defendants executed on 29th December 1931, along with the promissory note is a very important document in favour of the plaintiff's contention. The receipt is as follows:

Received from Messrs. Mansa Ram & Sons, Bankers, Mussoorie, a sum of Rs. 5,000 only being the amount of our pro-note of debt by overdraft to be allowed on our current account.

6. The receipt makes it clear that the defendants admit that they have a current account with the plaintiff and the overdraft of Rs. 5000 has been allowed on account of that current account. The position therefore was that the plaintiff was at first a debtor of the defendants because the defendants had deposited a certain amount of money and later on the defendants became the debtors. The important question to be borne in mind is that it was during the continuance of open and current account which was already in existence and which had not been closed, that as soon as the defendants borrowed money immediately the account standing between the parties which might have been only open and current account became also mutual account. In other words, it became an account in which the balance was shifted from one side to the other sometimes in favour of the plaintiff and sometimes against the plaintiff. In these circumstances I am clearly of opinion that the account between the parties is open, current and mutual and therefore the case is governed by Article 85, Limitation Act, and was within limitation.

7. The plaintiff had made an attempt in the Court below to prove that there had been an acknowledgment of liability because of a certain payment of a sum of Rupees 21. As regards that matter, I am in entire agreement with the view taken by the Court below that it is not an acknowledgment which would save limitation. But that question loses all its importance in view of my finding that the suit is governed by Article 85, Limitation Act. The learned Judge of the Court below has held that the suit was bad for non-joinder but I do not think that that point affects the case as against the defendants. It is possible that at the time when the accounts started there were two other persons who were partners in the firm of Sanon & Brothers. If all those persons had remained partners, they would have been all liable for the payment of the debt due. But as two of them ceased to be members the plaintiff has not sued them. The liability of all the partners in the firm was joint and several and if some of the partners go out and if the plaintiff does not seek any relief against them his case is not weakened as against the other defendants who have been sued. No suit can fail because of non-joinder of the parties. The question which the Court has to see is whether relief can be granted in view of the pleadings of the parties as against the defendants who are on the record. In the present case, in my opinion, the plaintiff firm is entitled to a decree against the two defendants.

8. The result is that the revision application of the plaintiff is allowed, the decree of the Court below dismissing the plaintiff's suit against the defendants is reversed and the case is sent back to the Court below with directions that it shall be readmitted and then after a finding has been given on the last issue it will be disposed of according to law. The plaintiff-applicants will get their costs from the defendants in this Court.


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