TaxTMI 
TaxTMI 
1941 (4) TMI 21
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....eadquarters. For this purpose they were in need of money and they, therefore, approached the Bank of Bihar with whom apparently they had dealt for several years, and asked for an overdraft. The agent of the bank consented to their overdrawing j their current account to the extent of Rs. 30,000 on condition of their mortgaging the land on which their business premises stood together with the existing buildings and any other buildings which they might subsequently construct on it. The bond stipulated for the payment of interest at 9 per cent, per annum to be compounded at the end of every six months. It further stipulated that payments were to be made in instalments, and that the whole of the amount should be repaid on or before 31st December....
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....s to his credit are not sufficient to meet it but expecting the bank nevertheless to honour it, he impliedly applies to the bank for an overdraft or a loan. If the suit had. been instituted within a period of three years from, the date on which the earliest of the various sums-amounting in all to this Rs. 5025-15-9 had been, paid out by the bank, the suit would undoubtedly have had to be decreed. The suit, however, as I have already said, was not instituted until 17th November 1937, and the last of the advances made to the defendants had been made as far back as 26th January 1931. The question, therefore, that arises is whether or not the suit, so far as this part of the claim was concerned, was or was not barred by limitation. The lower Co....
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....ouring cheques, drawn by the defendants, when they were presented for payment. He did not say categorically that either he himself, or the other officer or servant of the bank who passed the cheques for payment, was under the impression that the defendants had given security for a sum in excess of Rs. 30,000 and that if he had not been under that impression he would not have honoured the cheques. It is difficult to believe that the manager was or could have been under any misapprehension as to the nature or extent of the security which the defendants had furnished. They had been customers of the bank for a very considerable time and were men in a large way of business. It is in evidence that some time before this mortgage bond was executed,....
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....e account." Mr. Netai Chandra Ghosh points out that the account of the defendants was described in the books of the bank as a current account and that the pass-book, which has been produced in Court, was sent by the defendants regularly to the bank every six months until the latter part of 1937 when the suit was instituted. Even, however, if it could be assumed that the account between the defendants and the bank was an open and current account, it would still have to be shown that it was a mutual account. In Wood on Limitations, Edn. 4, Vol. II, p. 1434, it is said that mutual and open account current means a course of dealing where each party furnishes credit to the other on the reliance that on settlement the accounts will be allowed, so....
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....tion runs from the date of each loan, notwithstanding the transaction opens with a credit to the depositor. 8. Mr. Netai Chandra Ghosh in attempting to support his argument referred to Fyzabad Bank Ltd. Arrah Branch v. Ramdayal Marwari A.I.R. 1924 Pat. 107. It appears that in that case there had been dealings between the bank and the defendant over a period of several years and that whereas during the earlier part of this period the account of the defendant had always been in credit, during the latter part he was consistently in debt to the bank. It was contended that during the latter period the account between the bank and him could not be a mutual account. 9. Kulwant Sahay, J. declined to accede to the proposition mainly on the gro....