Mutual account limitation test: Article 1 applies only where reciprocal demands exist; otherwise Article 137 governs delivery-based claims.

Article 1 of the Limitation Act applies only where a supplier's account with the buyer is truly mutual, open and current, with reciprocal demands on both sides. A one-sided running account, where the buyer merely pays for goods supplied and never becomes a debtor, does not satisfy that test. In such a case, Article 137 governs limitation, computed from each delivery, with section 458A of the Companies Act, 1956 relevant to exclusion of time in liquidation. Only invoices within time remain recoverable, and contractual interest may run at 12% per annum on the admitted amount after 30 days from delivery.

---

---

Issues: (i) Whether the supplier's claim was based on a mutual, open and current account with reciprocal demands so as to attract Article 1 of the Limitation Act; (ii) whether the claim, if not governed by Article 1, was barred in whole or in part and what interest was payable on the admitted balance.

Issue (i): Whether the supplier's claim was based on a mutual, open and current account with reciprocal demands so as to attract Article 1 of the Limitation Act.

Analysis: A mutual account requires independent obligations on both sides and reciprocal demands, not merely payments made by one side against supplies made by the other. An open or current account may remain unsettled, but that by itself does not make it mutual. On the facts, the company under liquidation was only supplying goods and the respondent was making payments against those supplies. The company never became a debtor of the respondent, and the account remained one-sided.

Conclusion: Article 1 of the Limitation Act did not apply; the account was not mutual, open and current with reciprocal demands.

Issue (ii): Whether the claim, if not governed by Article 1, was barred in whole or in part and what interest was payable on the admitted balance.

Analysis: The claim was not a suit for price of goods under Article 14, and the residuary Article 137 governed the application. Limitation had therefore to be computed from the date of each delivery, with the benefit of exclusion under section 458A of the Companies Act, 1956. On that basis, only the amounts covered by the specified invoices remained within time, while the balance was barred. As the contractual rate of interest was not in dispute, interest at 12% p.a. was allowable on the recoverable amount after expiry of 30 days from delivery.

Conclusion: The application was maintainable only to the extent of the timely invoices, and interest at 12% p.a. was payable on the allowed sum; the rest of the claim was barred by limitation.

Final Conclusion: The claim succeeded only for the limited amount found to be within limitation, and the remaining claim was rejected as time-barred.

Ratio Decidendi: In a supplier's claim against a company in liquidation, Article 1 applies only where the account is truly mutual with reciprocal demands; otherwise the residuary Article 137 governs, limitation runs from each delivery, and section 458A does not revive a time-barred debt.

---