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Shiev Gowda Vs. C.S. Fernandez - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtChennai
Decided On
Reported in(1911)21MLJ391
AppellantShiev Gowda
RespondentC.S. Fernandez
Cases ReferredChittarmal v. Bihari Lal I.L.R.
Excerpt:
.....payment by way of damages. 606, where the dealings consisted of loans on both sides and the parties were also partners, shares being debited and credited in the accounts, is clearly distinguishable on the facts. it is agreed that the same conditions applied to the numerous subsequent loans made by the plaintiffs to the defendants as well as to the sums disbursed by them for the purchase of goods and other objects on the defendants' behalf. 7. the learned district judge sums up the business thus in terms which are in substantial accordance with the pleas on both sides, as well as with the accounts above summarised......and buyer as regards the coffee consigned to the plaintiffs, nor that of principal and agent in respect of coffee consigned to the plaintiffs nor that of principal agent in respect of the coffee sold by plaintiffs - see musamat phool koomaree bibee v. woonkar pershad rustoly (1867) 7 w.r. 67 but that the contract between the parties was, as would seem to be suggested in paragraph 4 of the plaint and in the concluding portion of paragraph 6 of the learned judge's judgment that the plaintiffs should finance the defendants, and' that defendants should keep the plaintiffs secured in respect of the advances made by the plaintiffs on their behalf b; consigning to them coffee of a value equal to the amount of their indebtedness being given credit for the proceeds of the coffee as and when.....
Judgment:

Charles Arnold White, Kt., C.J.

1. The main question raised in this appeal is whether the suit is for the balance due on a mutual, open and current account, and whether there have been reciprocal demands between the parties within the meaning of Article 85 of the Second Schedule to the Limitation Act. If so, the defendant's plea of limitation fails. If not, the plaintiffs are not entitled to recover in respect of items in the account prior in date to three years before the institution of the suit.

2. The District Judge held that Article 85 applied and the suit was not barred by limitation, apparently on the ground that the accounts had been open and running for many years. He does not seem to have considered the question with reference to the words of the article 'where there have been reciprocal demands between the patties.' The oral evidence affords little assistance as to the course of business between the parties and we have to rely in the main on the plaintiffs' accounts. The plaintiffs are merchants and the defendants are coffee-planters, and the plaintiffs' accounts show that from the year 1893 the plaintiffs had been financing the defendants and the defendants had been sending consignments of coffee to the plaintiffs. In April 1893 a sum of Rs. 4,000 was advanced by the plaintiffs and the account for 1893-94 (Exhibit V) states that a document was executed for this amount. During 1893 further advances were made by the plaintiffs and sundry payments amounted to Rs. 10,700. In January 1894 a consignment of coffee was received by the plaintiffs from the defendants and other consignments were received later. These consignments were sold by the plaintiffs and the defendants were credited with the sale proceeds with interest. A balance was struck in May 1894, the defendants being debited with interest on the moneys paid by the plaintiffs and also with what was termed 'commission.' This was not really commission but an amount calculated at Rs. 2 per candy, every Rs. 1,000 advanced being taken as the equivalent of thirty candies in respect of advances made before any coffee was received by the plaintiffs and every Rs. 1,000 being taken as the equivalent of 10 candies in respect of advances made subsequently. The higher rate is described in paragraph 4 of the plaint as damages for the defendants' default in not supplying the full quantity of coffee, in other words, for not keeping the plaintiffs fully secured in respect of advances made by them to the defendants and on their behalf. The accounts for 1895-96 (Exhibit IV) and 1896-97 (Exhibit III) show that business was continued on the same lines. In June 1896, the defendants made a cash payment of Rs. 13,000 and the balance against them was reduced to Rs. 5,500 (Exhibit II). In May 1897, the balance was Rs. 5,545 and odd and on this the plaintiffs claimed to charge interest at 15 per cent. In November, 1899, the balance shown in the plaintiffs' account (Exhibit A) was Rs. 7,500 and odd and this is the amount for which the suit was brought. I am of opinion that, having regard to the course of business, so far as it can be ascertained from the plaintiffs' accounts, the relation between the defendants and plaintiffs was not that of seller and buyer as regards the coffee consigned to the plaintiffs, nor that of principal and agent in respect of coffee consigned to the plaintiffs nor that of principal agent in respect of the coffee sold by plaintiffs - see Musamat Phool Koomaree Bibee v. Woonkar Pershad Rustoly (1867) 7 W.R. 67 but that the contract between the parties was, as would seem to be suggested in paragraph 4 of the plaint and in the concluding portion of paragraph 6 of the learned Judge's judgment that the plaintiffs should finance the defendants, and' that defendants should keep the plaintiffs secured in respect of the advances made by the plaintiffs on their behalf b; consigning to them coffee of a value equal to the amount of their indebtedness being given credit for the proceeds of the coffee as and when sold by the plaintiffs, and that if they failed to do this they should make the further payment which is called commission but which is really payment by way of damages. I do not think it can be said that this is a case in which there are independent obligations on both tides - see the judgment of Holloway J. in Hirada Basappa v. Gadigi Muddappa (1871) 6 M.H.C.R. 142. No doubt if at an time the sale proceeds of the coffee had exceeded the amount c the defendants' indebtedness, the plaintiffs would have bee accountable for the balance as money received for the use of the defendants. But this, in my opinion, does not in itself make the account mutual or give rise to reciprocal demands. I think the case falls within the principle of the decisions in Horgopol Premsukdas v. Abdul Khan Haji Mahomed (1872) 9 B.H.C.R. 429 (where certain jewels were sold by the plaintiffs on the defendants behalf and the defendants credited with the proceeds) and Velu Pillai v. Ghose Mahomed I.L.R. (1894) `M. 293. Ganesh v. Gyanu I.L.R. (1898) B. 606, where the dealings consisted of loans on both sides and the parties were also partners, shares being debited and credited in the accounts, is clearly distinguishable on the facts. I accept the general principle laid down in the American Cyclopaedia of Law and Procedure, Vol. XXV, p. 1, 125 as applicable to the article in question under the Indian Limitation Act :--'As a general rule payments made on account by one party and credited by the other, whether in money or in goods, do not render the accounts mutual so as to defer the operation of the statute to the date of the last item, etc.' lam of opinion, though the mater is not free from difficulty, that the case before us does not come within the Article 85 of the Second Schedule to the Limitation Act and that the plea of limitation must be upheld.

3. The plaintiffs are only entitled to recover in respect of transactions which took place within three years prior to the institution of the suit and an account must be taken on this basis. Mr. K. Srinivasa Iyengar intimated that if the plea of limitation was upheld he would not press the point that the second defendant and defendants Nos. 3 to 8 did not form a joint family or the plea of discharge. The decree against the defendants Nos. 1 to 8 on the amount (if any) found to be due will be limited to the share of the family property. In the court below, the plaintiffs will have proportionate costs on the amount (if any found due on the taking of the accounts.

Ayling J.

4. In the case out of which the present appeal arises the plaintiffs (respondents) sued to recover the balance due on a running account between themselves and the defendants (appellants) from the 24th April 1893 onwards, and the chief contention raised by the latter in appeal is that the suit is time-barred as regards all items arising before the 24th May 1897, three years prior to the filing of the suit. This contention, if established, reduces the plaintiffs' claim to a comparatively insignificant amount. On behalf of the respondent it is argued that the account is a mutual, open and current one with reciprocal demands between the parties within the meaning of Article 85, Schedule II, of the Indian Limitation Act.

5. The question of limitation is embodied in issue No. 4, but the learned District Judge, in dealing with it in paragraph 6 of his judgment, has confined himself to considering whether the account is open and current (which he rightly decides to be the case) and has appearently left the question of mutuality and reciprocity of demands out of consideration. The oral evidence is directed to other points but upon the plaintiffs' account (produced and marked as Exhibits A, V and VI aided to some extent by the pleadings of the parties) it is possible to determine the nature of the business. The latter opens on the 24th April 1893 with a loan Rs. 4,000 from the plaintiffs to the defendants on a bond. The latter is not now in existence but there seems to be no dispute that the conditions of the loan included interest at 12 per cent per annum and that repayment was to be effected by the defendants sending consignments of coffee to the plaintiff which the latter was to sell, crediting the proceeds to the defendants, account The plaintiffs were further entitled to make a further charge, which is called 'commission' The charge is not really commission at all, but a special additional interest calculated on all sums advanced, the rate being three times as high on all sums, advanced before the first consignment of coffee for the year as on those advanced subsequently. It is agreed that the same conditions applied to the numerous subsequent loans made by the plaintiffs to the defendants as well as to the sums disbursed by them for the purchase of goods and other objects on the defendants' behalf.

6. The accounts shew that on the 5th May 1894, the balance due to the plaintiff had increased to Rs. 8,650 for which another bond was executed. On the 30th May it had amounted to Rs. 15,581-4-2 and on the 15th May to Rs. 18552-3-4. On the 6th January 1896 it was reduced by a cash payment of Rs. 13,000 (all previous credits to the defendants being the sale price of coffee received and sold) and 6th June 1896 accounts were struck and the balance due to the plaintiffs was found to be Rs. 5500. The account Exhibit II was signed by the 2nd defendant in token of liability. From this time forward there are no further cash loans and only a few disbursement on the defendants' account but the small consignments of coffee received were insufficient to keep pace with the interest and by the 30th November 1899 the* defendants' debt had increased to Rs. 7586-9-9 the amount sued for.

7. The learned District Judge sums up the business thus in terms which are in substantial accordance with the pleas on both sides, as well as with the accounts above summarised.

8. 'Defendants have borrowed money from plaintiffs; they have obtained goods of various kinds through them, and they have made payments from time to time by sending in coffee.'

9. The question is whether the account is one under Article 85 above referred to and it appears to me that it is not.

10. The oldest Madras case bearing on the point is Hirada Basappa v. Gadigi Muddappa (1871) 6 M.H.C.R. 142 and followed in Velu Pillai v. Ghose Mahomed I.L.R. (1894) M. 293. The principle laid down appears to be that the test of mutuality is not the existence of a 'shifting balance' (which is important evidence of mutuality but not conclusive) but - to quote Holloway J. - 'to 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.' This feature, the existence of independent obligations, appears to be entirely wanting in the present case. A scrutiny of the accounts leaves no doubt that every consignment of coffee was made simply and solely on account of antecedent loans and with a view to reduce the balance due thereunder.

11. Not only was the balance never shifted to the defendants' credit but there was never any approval to such a desirable state of affairs. Apparently the balance against the defendants was never lower than the initial amount (Rs. 4,000); and the only substantial reduction was by the cash payment of Rs. 13,000 refered to above.

12. Applying the principle quoted above, I must hold that the account was not a mutual one with reciprocal demands.

13. Numerous rulings have been quoted by one side or the other, but none of them tend to really shake the above conclusion. That the fact that the repayment was mostly by consignments of goods and not in cash makes no difference may be deduced from Hargopal Premsukdas v. Abdul Kkan Haji Mahomed (1872) 9 B.H.C.R. 429 if any authority were needed. The judgment in Ganesh v. Gyanu I.L.R. (1897) B. 606 is in complete accord with that in Velu Pillai v. Ghose Mahomed I.L.R. (1894) M. 293 and follows the same principle; and I can find nothing inconsistent therewith either in Lalji Sahoo v. Raghunandan Lal Sahoo I.L.R. (1909) A. 11 or in Chittarmal v. Bihari Lal I.L.R. (1881) C. 447, the other cases quoted by the respondents' vakil. The other points raised in appeal may be summarily dealt with. I agree with the District Judge in rejecting the plea of discharge and in holding that the defendants formed a joint family with the 2nd defendant as its managing member.

14. On the other hand, I can find nothing in Exhibit J which would, as contended by die respondents' vakil, render the debt personally binding on any but the 2nd defendant.

15. I would amend the decree of the District Court by reducing the defendants' liability to the items occurring after the 24th May 1897 and by limiting the liability of all the defendants other than the 2nd defendant to their share of the joint family property. The plaintiffs should be allowed proportionate costs in the lower court, defendants bearing their own, and the appellants should recover their costs in this Court from respondents.


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