T.K. Joseph, J.
1. The plaintiff, a Banking Company, is the appellant. The defendant borrower money from the plaintiff from time to time. The suit which was for the balance due was filed more than 3 years after the date of the last transaction. The plaintiffs case was that the amount was due under a mutual, open and current account governed by Article 85 or the Indian Limitation Act. The, defendant contended inter alia that the suit was barred by limitation.
The other contentions of the defendant are not material for the purpose of this second appeal. The trial Court held 'that Article 85 was applicable and the plaintiff was given a decree as prayed for. On appeal it was held that the transaction would not fall under Article 85 and that the suit was barred by limitation. The appeal was therefore allowed, dismissing the suit.
2. The only point arising for decision is whether Article 85 of the Limitation Act is applicable. The last item of borrowing was on 31-3-1950 and the suit was instituted on 14-8-1953. If Article 85 is applicable the suit is within time, as the plaint was presented within 3 years of the last day of 1950.
3. In deciding the nature of the transaction it is useful to refer to the circumstances under which dealings between the plaintiff and the defendant began. On 29-4-1949, the defendant sent a letter Ext. B to the plaintiff asking for overdraft accommodation. Ext. B reads as follows :
'N. R. Nair and Co. Merchants and Commission Agents,
The Managing Director, Union Bank Ltd., Trivandrum.
We have to request you to kindly sanction us temporary credit facilities up to Rs. 2000/- (Rupees two thousand only). As usual we shall repay the same, by the week end.
Thanking you and awaiting your favourable orders.
4. The request was granted and the defendant began to borrow various sums from time to time. Repayments were made fairly regularly during the initial stages as seen from Ext. A, copy of the plaintiff's ledger. Ordinarily such a transaction would not fall under Article 85, but it was contended that on certain occasions the defendant paid more than what was due from him so as to leave a credit balance in his favour and that this was sufficient to satisfy the test of 'mutuality.' The leading case in India on the point is Hirada Basappa v. Gadigi Mudappa, 6 Mad HCR 142. Holloway, Ag. C. J., held as follows:
'In order that an account might be mutual there must be transactions on each side, creating independent obligations on the other, and not merely transactions which create obligations on the one side, those on the other being merely complete or partial) discharges of such obligations.'
5. The dictum has been the foundation of all the later decisions in India on the point, Mutuality involves reciprocal demands and the requirement of reciprocal demand has been stated to be transactions on each side creating obligations on the other. After reviewing the decisions in India, England and the United States, Mookerjoe, J., also came to this conclusion in Ram Pershad v. Harbans Singh, 6 Cal LJ 158. We may in this connection refer to a recent decision of the Madras High Court in Kesava Chettiar v. Ramanatha Chettiar, AIR 1956 Mad 210. Ramaswami, J. has made an exhaustive review of decisions of the several courts and held that the distinguishing characteristics of a mutual account are :
(1) that there should be two sets of independent transactions between the parties in one of which one of the parties should hold the position of debtor and the other that of a creditor, and in the other, the reverse position.
(2) that the dealings should disclose independent obligations on both sides, and not merely obligations on one side, the acts done by the other being merely discharge of such obligations, and
(3) that each party must be able to say to the other 'I have an account against you.'
6. The Travancore-Cochin High Court has also been following these principles. See Abubaker Oomerkutity v. I. S. and C. Mechado, 1953 Ker LT 332: AIR 1953 Trav-Co 391 and Travancore Mica Co. Ltd. v. KelJ and Huxford Chambers, Madras, AIR 1956 Trav-Co 97. Judged in tho light of these principles it is impossible to hold that the transaction which has given rise to this suit has these characteristics. Ext B shows that what was intended was that the plaintiff should allow overdraft facilities to the defendant to th' extent of Rs. 2,000 and that the latter should repay 'the amount borrowed at the end of each week. The Managing Director of the Plaintiff-Bank, who was examined as Pw. 1 described the transaction as a temporary overdraft.
It is no doubt true that at least on four occasions there was a small credit balance in favour of the defendant. It is not the plaintiff's case that such credit balance resulted from any amounts deposited by the plaintiff in the Bank. The defendant stated that he was not informed about the exact amounts due from him from time to time and that amounts were' remitted by him to cover more or less the amounts due from him. The nature of the transaction shows the defendant's version to be true. Besides, in such a transaction the fact that the balance was sometimes in favour of the debtor cannot make it a mutual account.
As pointed out by Pontifex, J. in Hajee Syud Mahomad v. Mt. Ashrufoonissa, ILR 5 Cal 759, the mere fact that the balance is on some occasions in favour of the defendant is not always sufficient to constitute by itself a mutual, open and current account; for it might very well be though the balances wore generally against the defendant they sometimes fluctuate and show a balance in favour of the defendants, created by payments made on their account into the plaintiffs Bank, In this case it cannot be said that there were transactions oh each side creating independent obligations on the other. This is clearly a case of borrowings by the defendant from the Bank and repayments of the sums borrowed in whole or in part.
7. Reliance was placed on the decisions of Rankin, C, J., in Tea Financing Syndicate v. Chandra Kamal, AIR 1931 Cal 359, in support of the appellant's case. While upholding the principles laid down in the earlier decisions, Rankin, C. J., held on the facts that there were counter claims arising out of independent transactions. Firm Mansa Ram and Sons y. Hira Lal Sanon, AIR 1940 All 209 is another decision relied on by the appellant. What is held in that case is that where a person deposits a certain amount with a Bank in the Current Account and then makes an overdraft of a larger amount which is allowed on account of his current account and executes a promissory note and receipt in lieu of the overdraft, the transaction falls under Article 85.
It was held that there were two transactions giving rise to independent obligations. There is however an observation in the judgment that the real test in finding out whether a case was governed by Article 85 of the Limitation Act is to find out whether the balance was shifting in favour of one party or the other. With great respect we cannot agree with this view, as a shifting balance has invariably been considered only as one of the tests of a mutual account. These decisions cannot therefore be of any help to the appellant.
8. So far as the facts go, we have pointed out that this case cannot be treated as one of mutual, open and current account governed by Article 85 of the Limitation Act. The claim is therefore clearly barred and the decree of the lower appellate court has to be confirmed.
9. In the result, the decree of the lower appellate court dismissing the suit is confirmed andthe second appeal is dismissed with costs.