2011 (12) TMI 716 - HC - Indian Laws

Decree in Recovery Suit Against Appellant Upheld, Limitation Not Barred

The suit for recovery of Rs. 26,30,000 filed on 2.9.1985 was decreed against the appellant, with the court holding it was not barred by limitation. The ... - Issues Involved:1. Whether the suit filed on 2.9.1985 was barred by limitation.2. Whether the account between the parties was a mutual account as envisaged in Article 1 of the Schedule to the Limitation Act, 1963.3. Which Article in the Schedule to the Limitation Act, 1963 applies to the present case.Summary:Issue 1: Limitation of the SuitThe appeal arises from a judgment and decree dated 29.8.2001, where the suit for recovery of Rs. 26,30,000/- filed by the respondent was decreed against the appellant. The primary issue was whether the suit filed on 2.9.1985 was barred by limitation. The claim was based on 56 bills for hides sold, with the last supply on 3.9.1982. The appellant argued that limitation would run for each supply, and the account was not mutual. The learned Single Judge applied Article 1 of the Schedule to the Limitation Act, 1963, which provides that limitation begins from the close of the year in which the last item is entered in the account, thus holding the suit within the prescribed limitation period.Issue 2: Mutual AccountThe question was whether the account between the parties was mutual. The Supreme Court in Kesharichand Jaisukhlal v. The Shillong Banking Corporation defined a mutual account as one with transactions on each side creating independent obligations. The court observed that for an account to be mutual, there must be reciprocal demands between the parties. In the present case, the dealings disclosed a single contractual relationship of buyer and seller, not creating independent obligations on each side. Thus, the account could not be termed as mutual, and Article 1 of the Schedule to the Limitation Act, 1963, did not apply.Issue 3: Applicable ArticleSince Article 1 did not apply, the court considered which Article in the Schedule to the Limitation Act, 1963, was applicable. The appellant argued for Article 14, which applies to suits for the price of goods sold and delivered when no fixed period of credit is agreed upon. However, the court noted that in a running and non-mutual account, the action is for the balance due at the foot of an account, not for the price of goods sold and delivered. Therefore, Article 14 was not applicable. The residual Article 113, which provides a three-year limitation period from when the right to sue accrues, was applicable. The right to sue accrued when the claim was denied on 13.7.1985, and since Rs. 7,000/- was paid on 13.7.1985 and 24.7.1985, limitation commenced from 24.7.1985. The suit filed on 2.9.1985 was within limitation.Conclusion:The appeal was dismissed, and the judgment and decree dated 29.8.2001 were upheld. The appellant was ordered to pay the costs assessed by the Taxation Officer to the respondent.