Pratibha Bonnerjea, J.
1. The plaintiff instituted this suit against the defendant for recovery of Rs. 5,89,175.50 on the allegations that pursuant to a verbal agreement in the year 1965 with the defendant, the plaintiff supplied Sul-pher and Rochphosphate to the defendant on terms that the provisional price would be paid by the defendant before supply. The final total price of each consignment would be determined thereafter. The plaintiff would keep a mutual, open and current account between the parties and the account would be adjusted on 31st March every year. Upon adjustment of the provisional price with the final price, the balance found due would be paid either by the defendant to the plaintiff or by the plaintiff to the defendant depending on the result of the adjustment. The unpaid balance would carry interest at the rate of 12% per annum. These terms were set out in paras 4 and 5 of the plaint. It was further alleged that the transactions were carried on between 1765-70 and the last entry was made in the said account on 31-3-1970. Between 7-3-1970 to 9-9-1972, the defendant wrote 6 letters to the plaintiff acknowledging in writing its liability in respect of the said transactions. Upon adjustment, the amount mentioned above was found due to the plaintiff and the suit was instituted on 5-4-1974. No part of the claim is barred by limitation.
2. The defendant filed its written statement denying the alleged verbal contract of 1965 and its alleged terms. The allegations that the account be-tween the parties was mutual, open and current account was also denied. The defendant alleged that the Government of India used to allot the goods to the defendant from time to time and the plaintiff used to supply the same on the basis of such allotment letters, containing terms and conditions of sale. Each transaction was a separate, distinct and independent transaction. The allegations of provisional payment and fixation of final price later on were admitted. The allegation of adjustment of the account and its correctness were disputed and it was alleged that on proper account being taken a large sum would be found due to the defendant by the plaintiff. The defendant denied that there was any acknowledgment of liability in writing by the defendant and alleged that the plaintiff's claim if any, was barred by limitation.
3. On the basis of the pleadings, the following issues were raised :--
1. Was there any agreement as alleged in paras 4 and 5 of the plaint?
2. Was a mutual open and current or current and continuous account maintained by the plaintiff as alleged in para 6 of the plaint?
3. (a) Did the defendant No. 2 acknowledge its liability, if any, or make any admission as alleged in para 7 of the plaint?
(b) Did the letters mentioned in para 7 of the plaint constitute acknowledgment or admission of liability?
4. Is the plaintiff entitled to any interest?
5. Is the claim of the plaintiff barred by limitation?
6. To what relief, if any, the plaintiff is entitled to?
4. At the time of the hearing, it was agreed between the parties that in case it was found that the plaintiff's claim was not barred by limitation, then the matter would be sent to reference for taking accounts between the parties and for finding out whether any sum would be payable by the defendant to the plaintiff on adjustment of the said accounts.
5. The plaintiff examined two witnesses, one S. Mukherjee and one B Bhattacharjee. No oral evidence was adduced on behalf of the defendant. Mr. Bhattacharjee is the present Marketing Manager of the plaintiff and during 1965-67 he was the AssistantRegional Manager of the plaintiff. This witness, in examination-in-chief, stated that there were some understandings between the plaintiff and the defendant regarding these transactions and the terms and conditions were reduced to writing. In cross-examination, he said that there were several agreements between the parties from time to time in writing (Q. 74-75). He further stated that the copies of the terms and conditions used to be sent to the allottees from Delhi office (Q. 78). From pages 2-12 and 16-30, of Ext. A, it appears that along with each allotment, the Delhi office used to send terms and conditions of each transaction in writing. These documents are admitted by the plaintiff and corroborate the evidence of Bhattacharjee mentioned above.
6. On the basis of the oral evidence of the plaintiff's witness B. Bhattacharjee and the above admitted documents, I hold that the plaintiff has failed to prove that there was an oral agreement between the parties in 1965 as alleged in paragraphs 4 and 5 of the plaint.
7. It is clear that each transaction was entered into on the basis of the written terms and conditions which included a common term that the initial payment made by the buyer would be treated as a provisional payment and upon assessment of the final price the adjustment would be made either by payment of extra amount by the defendant to the plaintiff or by refund of the excess payment by the plaintiff to the defendant depending on the basis of upward or downward rate of the goods.
8. It was submitted on behalf of the plaintiff that the plaintiff used to keep a mutual, open and current account in respect of the transactions between the parties to the knowledge of the defendant and both the parties acted on that basis. If there was any excess payment by the defendant, instead of refunding the same, the amount used to be adjusted against the defendant's liability to make extra payment in respect of subsequent transactions and the defendant had full knowledge thereof. The term of keeping this account, even if it was not expressly agreed to, it was arrived at by the conduct of the parties. In support of his contention that the account was mutual open and current, the plaintiff's counsel cited AIR1931 Cal 359 (Tea Financing Syndicate Ltd. v. Chandra Kamal). But the facts of that case were totally different from the present case. In that case, the plaintiff agreed to finance the defendant's business and the defendant hypothecated his entire tea crop and agreed to send the manufactured tea for sale by the plaintiff by public auction. The account between the parties contained entries in respect of the advances made by the plaintiff as well as the credit entries in favour of the defendant in respect of the sale proceeds of the tea. The suit was filed by the plaintiff for the balance sum due on adjustment of this account. The Division Bench held that the account was mutual open and current as there were two distinct and independent transactions between the parties. At page 372 of this report, it was held:--
'.....In other words, each party mustbe able to say to the other at some time or other during the period of account 'I have an account against you' i. e. not merely a shifting balance but reciprocity of dealings and the right to mutual, demand which form the essential ingredient of a mutual, open and current account.'
9. The defendant's counsel relied on the aforesaid observations and submitted that the accounts disclosed by the plaintiff would show a shifting balance only in favour of one party or the other at times. There were no independent transactions or reciprocity of dealings giving rise to independent obligations. Hence the account could not be mutual, open and current as alleged by plaintiff. The plaintiff's counsel also relied on : 1SCR563 (Hindusthan Forest Co. v. Lal Chand). In this case there was an agreement for sale of grain and under the terms of the contract the buyer was to make advance payment. The last delivery was made on 23-6-47 and the suit was instituted on 10-10-50 for the balance amount due on the account. The trial Court dismissed the suit on the ground of limitation but the High Court decreed the suit holding that the account was mutual, open and current. The matter went up to the Supreme Court. The Supreme Court relying on AIR 1931 Cal 359, held that the payments were made in discharge of the obligation to pay for the goods delivered by the seller and did not create any Independent obligation onthe seller in favour of the buyer. There was no reciprocity of dealings, or independent obligations. At page 1352 it was held:--
'If the seller 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 that the advances having been made.'
10. The defendant's counsel very strongly relied on the passage quoted above. He submitted that the plaintiff's obligation to refund the excess payment in this case, also arose from the same contract. There was no reciprocity of dealings between the parties. The plaintiff's counsel thereafter relied on : AIR1960Cal285 (Kalipada Banerjee v. Sree Bank Ltd). In para 14 of this report, it was held:--
'This much however is settled that payment shown on one side should not merely be offset by entries of repayment of a debt due to the one side, but payment in the course of independent transactions mutual accountability between the parties is a test based on the existence of demands .....The essence of a mutual, open and current account is that there must be independent dealings between the parties which can be duly offset against each other.'
11. This case also does not help the plaintiff. The account in the present suit, does not reveal that there were independent dealings between the parties or there were independent obligations arising out of the independent dealings and transactions. What it reveals is that in terms of the transaction between the parties, there is a possibility of having a shifting balance in favour of one party or the other at times. The ingredients to make an account mutual, open and current are independent dealings giving rise to independent obligations which are totally absent in the present case. I am unable to accept the submissions on behalf of the plaintiff that the account in the present case is mutual, open and current or current and continuous. The defendant's counsel, submits that each transaction being separate and distinct transaction, they would give rise to independent causes of action in respect ofeach case. There being no mutual, open and current account between the parties the plaintiff's claims are barred by limitation. The Article 1 of the Limitation Act of 1963 (old Article 85) will have no application on the facts of this case. I agree with the defendant on this point.
12. The next question is whether there was any acknowledgment by the defendant of its liability in the said account as pleaded in the plaint.
13. According to the plaintiff's counsel there were clear acknowledgments in writing and the same will appear from the defendant's letters contained in pages 11, 12, 13, 17, 21 and 23 of the Ext. A.
14. In the letter dated 7-7-1970 at page 11 of Ext. A, the defendant stated as follows:--
'We are in receipt of your letter of the 30th ultimo regarding the above, showing that a sum of Rs. 2,55,791.11 is due to you. In reply we like to state that we are also due to receive a large sum from you and it is likely that we shall be on the plus side after the adjustment.'
15. In letter dated 20-5-1970 at page 12 of Ext. A it was alleged:--
'In this connection, we remember to have submitted to you a considerable number of debit notes for various allied matters and we shall be pleased to receive your reply showing therein in detail the necessary adjustment made by you prior to arriving at the final payable or receivable amount, to enable us to revert to the matter.'
16. The next letter dated 10-8-1972 at page 13 of Ext. A, contains the following statements:--
'We have no objection to pay provided any amount is due to you and we solicited your statements accounts to enable us to go through the same in order to ascertain the position since those relate to old matters and after certain discussions your Mr. Subra-manium handed over a statement of their accounts to us and we assured them that we shall look into the matter immediately and let you know the position within two days positively.
However, before we proceed further in the matter, we find the following glaring discrepancies in your statement of accounts, which on being corrected will show a sizable credit balance in our favour and we put below the relevant figures for your kind attention.'
17. The letter dated 20-8-72 appears at page 21 of Ext. A. It is alleged by the defendant in this letter as follows:--
'You would recall that while handing over the statements we requested you to reconcile the statement of accounts and furnish your complete observation substantiating the same with a statement of your account along with a list of claims so that we may also examine and rectify the discrepancy if any in our accounts. The discrepancy pointed out in your letter of 10-8-72 is not clear to us as the amount paid by you against supply of sulphur ex-s. s. Parvati Jayamti has already been included in the statement.'
18. In the letter dated 21/22-8-1972, at page 17 of Ext. A, the defendant alleged as follows:--
'You have ' accused us of dilatory tactics, but you will kindly observe that while our transactions with you ceased on 31-12-69, you came to us for settlement of accounts on 8-8-72, ie. after 32 months.....'
19. The last letter relied on by the plaintiff is dated 9-9-72 and is at page 23 of Ext. A:--
'We are in receipt of your letter of the 30th ultimo. We note you have admitted to delete Rs. 80,184/- A/c. s.s, Katarina. This would reduce your alleged dues from us to Rs. 3,26,143.93p. as your letter No. STC/CA/BT/Chem of 13-6-72 states that you are due to receive Rs. 4,06,327.93p from us.
We would not find where you have taken our payment of Rs. 4,09,884.04p for consignment ex. s. s. Parvati Jayanti into account in your statement. This amount on adjusting with your alleged dues of Rs. 3,26,143.93p will show a credit of Rs. 83,740.11p in our favour as per your figures submitted to us.'
20. The counsel for the plaintiff submitted that these letters would clearly establish that the defendant through out admitted the existence of an unadjusted account between the parties. There were statements that a large sum was due to the plaintiff but after setting off defendant's alleged claims against the plaintiff's dues, nothing would be found due and payable to the plaintiff by the defendant. There is also a clear promise to pay in letter dated 10-8-72 if anything is found due to the plaintiff on adjustment of the account. According to the plaintiffs counsel, such admissions and statementsamount to clear acknowledgment of liability by the defendant in the said account. The plaintiffs counsel relied on (1906) 33 Ind App 165 (PC), (Mani-ram v. Rupchand). In this case the suit was instituted by the plaintiff against the defendant for the recovery of the amount found due in the account in favour of one Maniram, deceased. The plaintiff relied on an acknowledgment made by the defendant, in a previous legal proceeding, where the defendants had admitted as follows:--
'For the last five years he (the defendant) had open and current account with the deceased (Maniram).'
21. In this case the suit would have been barred by limitation in spite of the account being mutual, open and current, unless there would be an acknowledgment of liability in writing by the defendant. The Judicial Committee construing the above words came to a finding as follows:--
'There is, therefore, a clear admission that there were open and current account between the parties at the date of death of Motiram. The legal consequence would be that at the date either of them had a right as against the other to an account. It follows equally that whoever on the account should be the debtor to the other was bound to pay his debt to the other, and it appears to their Lordships that the inevitable deduction from this admission is that the respondent acknowledged his liability to pay his debt to Motiram or his representative if the balance should be ascertained to be against him.'
22. In my opinion the aforesaid observations of the Judicial Committee will apply in full force even if the account between the parties was not mutual, open and current but was an ordinary account only where on adjustment, there was a possibility of having a shifting balance in favour either of the plaintiff or of the defendant. The only difference would be that in case of a mutual, open and current account, the entire claim would be saved by the acknowledgment, whereas in case of an Ordinary account, the claims within the period of three years prior to the date of acknowledgment would be saved and in both the courts fresh period of limitation would start from the date of acknowledgment.
23. Under Section 18 of the new Limitation Act of 1963, the explanation (a) is as follows: --
'an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay deliver, perform, or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than the person entitled to the property or right'
24. The next case cited on behalf of the plaintiff is (1898) 25 Ind App 95 (PC) (Shukhomoni Chowdhurani v. Ishan Chunder Roy). It was a suit for contribution by one of the three joint debtors against a second who pleaded limitation. In that case all three joint debtors had made a petition to court earlier for protection of their joint property by payment of their joint debts in which a list of creditors and the amounts due to them was given. In this case the admissions as to the names of the creditors and their respective dues were clearly before the court. The facts of that case are entirely different from the facts of the present case.
25. The plaintiff's counsel then cited : AIR1961Cal188 (Kalipada Sinha v. Mahaluxmi Bank Ltd.) In this case the Division Bench of this High Court, relying on (1906) ILR 33 Cal 1047: (33 Ind App 165 (PC).) mentioned above held at page 190 :--
'Ever since the decision of the Judicial Committee in the case of Maniram v. Rupchand, (1906) ILR 33 Cal 1047: 33 Ind App. 165 (PC) it has been an established rule of law that admission of the existence of an unadjusted account would bring a case within the purview of Section 19.'
26. He then relied on (Mst. Biro v. Dulla Singh). In this case the plaintiff Mst. Biro instituted the present suit against Dulla Singh for recovery of Rs. 1470/-. For the purpose of saving limitation, in the plaint she was relying on the statements of the defendant contained in a written statement filed before the Debt Conciliation Board: --
'I had affixed my thumb impression in the sahi. No account was explained and thr amount consisted of interest and compound interest and as such the entire amount should be disallowed.During this period I have paid thousands of rupees and nothing is due from me. From one account two accounts have been prepared. The accounts from the very start should be summoned and examined and the entire amount should be rejected. In case any amount is found due from me, 1 may be allowed instalments.'
27. The Division Bench of Punjab High Court in this case inter alia relied on AIR 1939 Mad 300, AIR 1951 Trav Co. 93 and (1906) 33 Ind App 165 (PC) and held that the admission of unadjusted account would amount to an acknowledgment of liability within the meaning of Section 19, Limitation Act.
28. The Division Bench of the Punjab High Court in this case relied on paragraph 12 of (1906) 33 Ind App 165 (PC) :--
'An acknowledgment of liability, should the balance turn out to be against the person taking it, is a sufficient acknowledgment under Section 19 of the Limitation Act (XV of 1877) and there is no distinction in this respect between the English and the Indian Law.'
29. Commenting on the three aforesaid decisions the Division Bench held:
'The ratio decidendi, however, of all these cases is that where the debtor has admitted the existence of an account, it must be deemed to be an acknowledgment of liability for whatever is found due from him on the settlement of the account. A debtor,may, while admitting the existence of an account also say that on account of set off, which he claims, nothing will be found due to the creditor, or may say that on account of payments which he has made, the balance of the account will be found to be in his favour.
All the same, he would be deemed to have admitted the existence of the account and would be deemed to have acknowledged his liability to pay whatever money is found due on the basis of the said account.'
30. There is no doubt, that all the letters relied on by the plaintiff in this case, are clear acknowledgments of liability by the defendant and will come under the purview of Section 18 and its explanation (a) of the Limitation Act of 1963.
31. The defendant's counsel strongly relied on paragraph 6 of : 2SCR623 :--
'The words used in the statement in question, however, must relate to a present subsisting liability and indicate the existence of jural relationship between the parties, such as for instance, that of a debtor and a creditor and the intention to admit such jural relationship. Such intention need not be in express terms and can be inferred by implication from the nature of the admission and the surrounding circumstances.'
32. According to him none of the letters relied on by the plaintiff would show that the defendant admitted the existence of jural relationship or subsisting liability.
33. But in : 2SCR623 also an admission regarding the existence of an unadjusted account was held to be am acknowledgment as will appear from page 1489 of this report :--
'.....in the present case also therewas an admission of a subsisting account on the finalisation of which the corporation was prepared to pay the balance found due at the foot thereof.'
34. Then at page 1490 :--
'.....the present case is one of anadmission of a subsisting account and the jural relationship and the liability to pay whatever amount would be found due on finalisation of accounts.'
35. I am unable to accept the submissions of the defendant's counsel that the defendant's letters do not show any admission of liability of subsisting jural relationship. The law on this point has been uniformly settled from 1903 (1906) 33 Ind App 165 (PC) to 1971 : 2SCR623 that the admission of an existing unadjusted account by a party to the account will operate as an acknowledgment of liability as well as the admission of subsisting jural relationship between the parties to the said account. On the basis of these authorities, I hold that all the letters relied on by the plaintiff are acknowledgments of liability by the defendant.
36. In the present case, the lasttransaction in the account was made on31-3-70. The first acknowledgmentwas by the letter dated 7-7-70 andthe subsequent letters are dated 20-5-70, 10-8-72, 20-8-72. 21/22-8-72 and 9-9-72 respectively. The suit was filed on 5-4-1974. In my opinion all the claims of the plaintiff after 20-5-1967 have been saved by virtue of these acknowledgments and are still alive. The plaintiff will be entitled to interest on the sum found due in its favour, if any, on adjustment of the account at the rate of 6% per annum under the Sale of Goods Act. The issues are therefore, answered aa follows:--
Issue No. 1 -- No.
Issue No. 2 -- No.
Issue No. 3 (a) -- Yes.
Issue No. 3 (b) -- Yes,
Issue No. 4 -- Yes.
Issue No. 5 -- Yes. All claims prior
to 20-5-1967 are barred by limitation.
37. In the premises there will be a preliminary decree for accounts in favour of the plaintiff. Mr. K. P. Bose, Barrister-at-law and Mr. Rabindranath Kandari. Advocate of No. 5, Kiran San-kar Roy Road, Calcutta, are appointed as the joint special referees to find out whether any sum is due and payable by the defendant to the plaintiff after 20-5-1967 in the account maintained by the plaintiff in respect of the transactions in suit. The parties will be entitled to make fresh discoveries before the special Referees, if necessary, and ask for suitable directions to that effect from the Special Referees. The report of the Special Referees to be filed within two months after the long vacation. The remuneration of Mr. K. P. Bose will be 15 Gms per sitting and that of Mr. Kandari will be 5 Gms per sitting irrespective of hours. The costs of the suit up to the preliminary decree will abide by the result of the final decree in the suit. Certified for two counsel.