Account stated can arise from agreed lending transactions, creating a fresh debt even where some items are time-barred.

An account stated under Article 64 of Schedule 1, Limitation Act, 1908 is not limited to reciprocal money claims in a narrow sense. Where the parties mutually agree the items on both sides of a money account, treat them as discharging one another pro tanto, and strike a balance payable as a new debt, the settlement is bilateral and creates a fresh cause of action. Purely financial dealings between lender and borrower can support such a settlement, and the arrangement is not defeated merely because some items may be time-barred. The settlement was therefore treated as an account stated.

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Issues: Whether a settlement of accounts in a money-lending transaction, where the account consists of debits for advances and credits for payments, can amount to an account stated within Article 64 of Schedule 1, Limitation Act, 1908.

Analysis: An account stated is not confined to cases of reciprocal money claims in the narrow sense. The essential feature is that the parties mutually agree the items on each side, treat the agreed items as discharging one another pro tanto, and strike a balance payable as a new debt. Such a settlement is bilateral in nature, supported by mutual consideration, and gives rise to a fresh cause of action. The character of the underlying dealings does not prevent an account from being stated, and purely financial dealings between lender and borrower may still support such a settlement if the balance is agreed between the parties. The binding effect of the settlement is not defeated merely because some items may be time-barred.

Conclusion: The settlement reached between the parties was an account stated within Article 64 of Schedule 1, Limitation Act, 1908, and the conclusion was in favour of the appellants.

Ratio Decidendi: A money account may be an account stated where the parties mutually agree the items on both sides and strike a balance payable as a new debt, even though the dealings are purely financial and some items may be statute-barred.

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