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Dukhi Sahu and anr. Vs. Mahomed Bikhu - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtKolkata
Decided On
Judge
Reported in(1884)ILR10Cal284
AppellantDukhi Sahu and anr.
RespondentMahomed Bikhu
Cases ReferredSheik Akbar v. Sheik Khan I.L.R.
Excerpt:
limitation act, xv of 1877, schedule ii, article 64 - statement of account unsigned--cause of action. - .....the debts of which it is a statement. but there is abundant authority for the proposition that an account stated does not supersede these debts; see smith v. page 15 m. and w. 683; perry v. attwood 25 l.j. q.b. 108. then it has been asked that if an account stated does not constitute a now contract, what is it? the answer is, that it is only evidence of an existing debt: see newhall v. halt 6 m. and w. 662. this question has been exhaustively discussed by scotland, c.j. and innes, j. in hirada karibasappah v. gadiji muddapah 6 mad. h.c. 197. i cannot do better than reproduce here the following extract from the judgment bearing upon this question. the learned judges, after finding that in that case there were no cross demands which were adjusted between the parties and that the.....
Judgment:

Mitter, J.

1. I am of opinion that the question referred in this case is a question of limitation which arises in the case, and has not been decided in the order of reference.

2. The plaint in this suit, which was filed on the 30th September 1880, states that there was an adjustment of accounts between the parties on the 18th October 1877.

3. In the order of reference, we decided two questions-first, that the suit was not based upon an express contract made between the parties on the 18th October 1877; secondly, that the transaction which took place on that date did not amount to an implied contract. We felt no doubt upon this last mentioned point; and the authorities which are all cited in our judgment are all one way, and fully support the view which we have taken; no conflict of authorities, as far as we are aware, exists on this point. Under these circumstances, we felt that we could not refer this question to the decision of a Full Bench. Our opinion upon the point being clear, and there being no conflict of authorities, we should not have been justified in referring this question to a Full Bench.

4. The points that we have decided, therefore, in the order of reference are: (1) that the suit was not based upon any express contract made between the parties on the 18th October 1877; and (2) that the transaction which took place on that date did not constitute an implied contract. The question now is whether the conclusion at which we arrived upon these two points, virtually disposed of the third contention that was raised before us, viz., that the suit was not barred by limitation, because it falls under Article 64, Schedule II, Act XV of 1877. It has been said that our conclusion that the transaction, which took place on the 18th October 1877, did not constitute a new contract, is tantamount to a finding that the cause of action upon which the plaintiff based his suit was not made out. The plaintiff sued for the price of cloth supplied to the defendant from time to time. I have examined our order of reference, and I do not find a single passage in which we have held that his claim was not made out. It is true that the plaintiff alleges that the cause of action arose on the date when the statement of accounts took place. If that turns out to be a mistake on his part, it would not follow that he would not be able to recover in this suit upon establishing a real cause of action not inconsistent with his allegations in the plaint. Let it be supposed for a moment that the plaintiff's claim is not barred by limitation, can it be said that upon our judgment it must be held that his claim is not made out when that claim is established by the witnesses believed by the lower Courts-witnesses who deposed that the defendant admitted the correctness of the balance found against him? It had been said that a statement of account necessarily constitutes a new contract; and as we have held in the order of reference that the transaction of the 18th October 1877 did not constitute a new contract, therefore we have held also that there is no cause of action in this suit.

5. With reference to this observation I have simply to say that in the reference order we have not held that a statement of account necessarily constitutes a new contract. Neither have I been able to come to that opinion. But if that be a correct proposition of law, even then it cannot he said that on our reference there was no question to be decided, because that question is decided on this reference, although there was no argument upon it.

6. I shall now state the reasons which weigh with me in thinking that it is not a correct proposition of law. If it were a correct proposition, it would follow that a statement of account would supersede and extinguish the debts of which it is a statement. But there is abundant authority for the proposition that an account stated does not supersede these debts; see Smith v. Page 15 M. and W. 683; Perry v. Attwood 25 L.J. Q.B. 108. Then it has been asked that if an account stated does not constitute a now contract, what is it? The answer is, that it is only evidence of an existing debt: see Newhall v. Halt 6 M. and W. 662. This question has been exhaustively discussed by Scotland, C.J. and Innes, J. in Hirada Karibasappah v. Gadiji Muddapah 6 Mad. H.C. 197. I cannot do better than reproduce here the following extract from the judgment bearing upon this question. The learned Judges, after finding that in that case there were no cross demands which were adjusted between the parties and that the transaction in question in that case simply amounted to 'the ascertainment by reference to the plaintiff's accounts of the whole amount of the item on the debit side, and of the payments on account credited on the other side, and the acknowledgment of the balance appearing thereupon to be due,' observed as follows:

Then does the arrangement, alleged to have taken place between the appellant and the respondent, evidence a new contract? The striking of the balance and the admission that the amount was due, evidenced a present promise to pay it, but that was nothing more than the law already implied from the previous existence of the debt, and was all that such an executed consideration could support: and it is obvious that, if nothing more than that were necessary, the limitation bar might always be evaded by acknowledgments and admissions not in writing. What we must look to see is, whether the arrangement involved any new consideration for the promise to pay the balance. Now, where there are cross demands and, on a settlement of accounts, items, agreed to on one side, are wiped out by an appropriation to their discharge of admitted items of claim on the other side, and thereupon a balance is struck and payment promised, the mutual agreement to set off, pro tanto, one set of items against the other constitutes a new consideration for the promise to pay the settled balance, and both make a new contract. For this Ashby v. James 11 M. and W. 542 is a direct authority. But where there is no cross claim to be set off, and no new agreement of appropriation, a settlement of the balance due on the examination of accounts is merely a statement of an antecedent debt. The parties simply agree as to how much of the debt remains due. In such a case there is plainly no new contract. This distinction is briefly expressed in Lay cock v. Pickles 33 L.J. Q.B. 43. Blackburn, J. there said:'In common talk, an account stated is treated as an admission of a debt due from the defendant to the plaintiff; but there is also a real account stated, which is equivalent to what is called in the old law an insimul computaverunt, when several items of claims are brought into account on either side, and being set against one another a balance was struck, and the consideration for the payment of the balance was the discharge on each side.' And the arrangement in that case was upheld as being such a real statement of account.

7. Enough of authority has been shown to establish the proposition that a statement of account does not necessarily constitute a new. contract. It is only where there are cross demands, and they are set off one against another so as to extinguish the old debts, that an account stated does amount to a new contract. Therefore, the reference order deciding that the transaction of the 18th October 1877 between the parties to the suit did not constitute a new contract, did not dispose of the question whether it amounted to an account stated within Article 64, Schedule II of the present Limitation Act.

8. If an account stated necessarily constituted a new contract, that would be a ground upon which the question referred should be answered in the negative. If it does not in all cases amount to a new contract, then it is to be seen whether in other respects the account stated in this case falls under Article 64, Schedule II of the Limitation Act, The question referred to the Pull Bench, therefore, was not decided by us in the order of reference; and it arises upon the facts stated in the order of reference and found by the lower Court. It was urged before us that the claim is not barred by limitation, because it falls under Article 64, Schedule IT of the Limitation Act. Our view upon this question was against this contention, but that view is in conflict with the decision in Sheik Akbar v. Sheik Khan I.L.R. 7 Cal. 256 as will appear from the following extract from that judgment:

It was ingeniously suggested in argument on behalf of the plaintiff, that as Article 64 of Schedule II of the Limitation Act says nothing in the third column as to accounts stated by word of mouth, that article must be considered as applicable only to accounts stated in writing; and that as no special period of limitation is prescribed for suits upon accounts stated orally, the period of limitation for such suits would be six years. It is certainly difficult to understand what the Legislature could have intended by this omission, but we think that giving a reasonable construction to Article 64, we must consider that the second column means to fix three years as the period of limitation in all suits upon accounts stated. To prescribe a limitation of three years in suits upon accounts stated in writing, and six years in suits upon accounts stated orally, would be an obvious absurdity.

9. Our opinion being thus in conflict with the decision cited above under the rules of practice of this Court, we were bound to refer the question which we have referred.

10. For the foregoing reasons, it seems to me (1) that the question referred is a question of limitation; (2) that it arises in the case which cannot be disposed of without deciding it; and (3) that it was not disposed of in the order of reference.

11. I am of opinion, therefore, that the question should be answered by the Full Bench and, for the reasons given in the order of reference, which I need not repeat here, it should be answered in the negative.

McDonell, J.

12. In this case the learned Judges of the Division Bench have decided that what occurred on the 18th October gave rise to no substantive cause of suit, They find that there was no express contract on that day, and then that there was no implied contract, and that the plaintiff's claim would be barred by limitation unless Article 64, Schedule II of the Limitation Act of 1877 applies, and I concur with them in holding that it does not do so; and that to give a fresh ground of limitation under that section, the account stated should be in writing; and that when there is no writing, Article 64 does not apply.

Prinsep, J.

13. It is no doubt at all times more satisfactory that on a reference to a Full Bench, all matters connected with the particular point should be referred, and so far I think it is to be regretted that we have not had to consider the exact effect of an account stated, both as a cause of action and as giving a fresh starting point for the purpose of limitation, independently of the original transaction which may have led to that account stated.

14. I am further of opinion that we should give our answer to the point referred, which, as pointed out by Mitter, J., legitimately arises in the case.

15. With respect to the point referred, I am of opinion that the account stated in the present case, which is not a written document signed by the defendant, cannot properly fall within the terms of Article 64, Schedule II of the Limitation Act, nor under Article 120 as relating to a 'suit for which no period of limitation is provided elsewhere in the schedule.' The statement of account, admitted by defendant by word of mouth, is only evidence of the admission of the defendant. The present suit would, as regards limitation, depend upon the date of the contracts or debts to which each item included in that account relates.

Tottenham, J.

16. I confess that I do not very clearly see how the particular question put to us arises in the present case.

17. The suit which purports to be based upon a transaction which took place on the 18th October 1877 was instituted within three years of that date; and if it be assumed that a suit can be brought upon the basis of that transaction, it is hardly material to enquire if it is governed by Article 64. Similarly, if it be held that the transaction affords no basis for a suit, it is superfluous to inquire whether this or that article of the schedule to the Limitation Act applies; for when there is no cause of action, no article of that schedule applies. As, however, the majority of the Court are of opinion that we should give a reply to the question, I find no difficulty in stating that inasmuch as Article 64 distinctly refers only to accounts stated in writing and signed by the defendant or his agent, it does not include the transaction upon which this suit is based which was not accompanied by any signature of the defendant or his agent.

Richard Garth, C.J.

18. With all due respect to the opinion of some of my learned brothers, it seems to me that this case has been already disposed of in the order of reference, and that the question referred to us does not arise.

19. That question is one of limitation, namely, whether the claim of the plaintiffs, as based upon the statement of account of the 18th of October 1877, falls within Article 64, Schedule II of the Limitation Act of 1877?

20. Now it seems to me that before any question of limitation can arise under this or any other article of the Limitation Act, we must assume the existence of a cause of suit.

21. Bach of these articles of limitation applies to some particular cause or causes of suit; and unless there is first proved to be a cause of suit, no question can arise as to limitation.

22. Now the plaintiffs' suit in this case was based entirely upon the alleged statement of account on the 18th of October. They contended that the statement of account which then took place gave rise to a substantive cause of action as upon an account stated. This appears not only from the plaint, and from the judgments of the lower Courts, but also from the very first sentence of the referring order, which runs thus:

'This appeal relates to that part of the plaintiffs' claim, which was based on a statement of account on the 18th of October 1877.' And, again, a few lines further on,--'the ground of action, as alleged in the plaint, was the statement of account on the 18th of October 1877, and it is expressly stated in the plaint that the cause of action for the item under consideration arose on that date.

23. No other cause of action was alleged or proved; and therefore, unless the statement of account on the 18th of October gave rise to a substantive cause of action as upon an account stated, the plaintiffs, as it seems to me, had no case.

24. Now the learned Judges of the Division Bench have decided, if I understand them rightly, that what occurred on the 18th of October gave rise to no substantive cause of suit. They find, first, that there was no express contract on that day, and then that there was no implied one.

25. That finding, as it seems to me, disposes of the case. If no substantive cause of action arose on the 18th of October, it must surely be immaterial, whether, if there had been a cause of action, it would have been barred by limitation.

26. In the case which has been alluded to in the order of reference with which the learned Judges say they cannot agree, the only question of limitation which we had to decide was, whether a cause of action on an account stated orally came within Article 64 or Article 120* of the Limitation Act; or, in other words, whether the three years or the six years rule of limitation applied to such a cause of action.

27. But for the purposes of that question we assumed that a substantive cause of action upon an account stated orally had arisen; and except upon that assumption any question of limitation would have been immaterial.

28. The point, therefore, which arose in that case does not in my opinion arise in this, for two reasons: 1st, because, as I have before explained, it has here already been found by the Division Bench that the transaction of the 18th of October gave rise to no new or substantive cause of action; and, 2ndly, because if it had given rise to such a cause of action, the suit was brought within three years from that date; so that no question as to the three years or the six years limitation could arise.

29. If I rightly apprehend the meaning of my brother Mitter's judgment, I gather that the main difference between us is not upon any question of limitation, but as to the nature and meaning of a cause of action upon an account stated He appears to think that a cause of action upon an account stated is not a substantive cause of suit, or, in other words, a new contract.

30. I have always understood that, unless it is a new contract, it is no cause of action at all. The consideration for it may be, and generally is, a past debt; but it is as much a new contract as a promissory note or a bill of exchange, which may also be given for a past debt.

31. Again, I think, that some misapprehension has arisen as to the difference between an account stated, which is a substantive cause of suit in itself, and a promise to take a debt out of the operation of the Limitation Act, which need not, and often does not, amount to a substantive cause of suit.

32. A promise of that kind must be in writing, both here and in England. An account stated in England may or may not be in writing, and I see no reason why the law should not be the same here. But as to that, there seems some difference of opinion.

33. This is a question which I shall be very glad to discuss when the occasion arises; but it seems to me, for the reasons which I have given, that it does not arise in this case.

34. There are also other points in my brother Mitter's judgment with which I. do not agree; but I do not think it necessary to advert to them, because, in my opinion, they are not material to this case.

35. Although some of my learned brothers and myself take a some what different view of the question referred to us, the result, I consider, will be the same; namely, that the special appeal will be decided in accordance with the views of the Division Bench.

36. The appeal will therefore be dismissed with costs.

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*[Article 120:

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Description of suit. Period of Limi- Time from which period begins

tation. to run.

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Suit for which no period of mimi- Six years.... When the right to sue accrues.]

tation is provided elsewhere in

this schedule.

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