Limitation by acknowledgment and partner authority confirmed, with bank set-off against secured deposits upheld.

A suit on a mutual, open and current account remains within limitation where the last relevant entry starts a fresh period and written acknowledgments of an existing liability, signed before expiry, extend time. In partnership law, a partner has implied authority to act for the firm in the course of its business, and an acknowledgment of subsisting liability by one partner binds the firm unless excluded by statute or the partnership arrangement. Where an overdraft is secured by fixed deposit receipts and the borrowers default despite notice, the bank may exercise its general lien and right of set-off against the secured funds, and interest supported by the contract and banking records is enforceable.

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Issues: (i) whether the suit for recovery was within limitation on the basis of the running account and the written acknowledgments executed on behalf of the firm; (ii) whether the acknowledgment by one partner bound the firm and the other partners under the law of partnership; (iii) whether the bank was entitled to liquidate the fixed deposit receipts and whether the rate of interest awarded was justified.

Issue (i): whether the suit for recovery was within limitation on the basis of the running account and the written acknowledgments executed on behalf of the firm.

Analysis: A suit on a mutual, open and current account is governed by the limitation period prescribed for accounts, and a fresh period begins from the relevant last entry. The record also contained written acknowledgments of liability signed before expiry of the prescribed period. Such acknowledgments satisfied the statutory requirement of a signed acknowledgment of an existing liability and extended limitation.

Conclusion: The suit was within limitation.

Issue (ii): whether the acknowledgment by one partner bound the firm and the other partners under the law of partnership.

Analysis: A partner is an agent of the firm for the purpose of the firm's business and has implied authority, subject only to statutory exceptions. The partnership deed relied on by the appellants regulated account operation but did not exclude the partner's authority to acknowledge a subsisting liability. The acknowledgment was therefore binding on the firm.

Conclusion: The acknowledgment by the partner bound the firm and the other partners.

Issue (iii): whether the bank was entitled to liquidate the fixed deposit receipts and whether the rate of interest awarded was justified.

Analysis: The overdraft was secured by fixed deposit receipts, and the borrowers failed to regularise the account despite notice. In those circumstances the bank was entitled to exercise its general lien and right of set-off against the secured funds. The claim for interest was supported by the contractual documents, the bank records, and the regulatory directions governing advances and interest. The trial court's assessment of dues and interest was therefore justified.

Conclusion: The bank was entitled to appropriate the fixed deposit proceeds and the award of interest was upheld.

Final Conclusion: The challenge to the decree failed on all material grounds, and the decree in favour of the bank was sustained.

Ratio Decidendi: A written acknowledgment of a subsisting liability signed by a partner having implied authority binds the firm and extends limitation, and a bank may appropriate secured deposits towards an overdue liability by exercising its general lien and set-off where the contract and surrounding circumstances so permit.

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