Har Sahay Mull and Others vs Gokul Chand

Das, J.—This is a second appeal by the defendants against a decision of the learned Additional Subordinate Judge of Hazaribagh, by which the learned Subordinate Judge has reversed the decision of the learned Munsif of Hazaribagh in a money suit which the plaintiff-respondent had brought against the present appellants. The suit was for recovery of Rs. 450 and odd annas, being the price of goods supplied by the plaintiff-respondent to the defendants-appellants from time to time till 18-6-1939. The case of the respondent was that he had a shop at Sariya and the appellants had a shop at Hazaribagh. Prom 1992 Sambat till Ashar Sudi 1, 1996 Sambat, the appellants had purchased goods, such as salt, flour, etc., worth Rs. 3091-15-3, and up till the 14th sawan, 1996 sambat, which would correspond to 14-8-1939, the appellants had paid Rs. 2641 50, leaving a balance of Rs. 450-10-3 for which the respondent brought his suit. The defence of the appellants, so far as it is relevant to the question raised in the present appeal, was that there were no transactions prior to 1995-96 Sambat. The appellants said that the transactions between the parties commenced on Magh Sudi 5, 1995 Sambat, and there were no transactions prior to that date. The transactions in 1995-96 Sambat amounted to Rs. 992 and odd annas, out of which the appellants had paid Rs. 990 and odd annas, leaving a balance of about Rs. 2 only. The appellants further alleged that the suit having been filed on 17-6-1942, the balance of Rs. 446-1-9, which the respondent showed in his account books as the arrears due on account of the transactions from 1992 to the 14th Kartik, 1995 Sambat, was barred by time.

On the aforesaid pleadings two main questions arose for determination: the first question was if there were any transactions prior to Magh Sudi, 1995 Sambat; and the second question was if any part of the claim of the respondent was barred by time. The learned Munsif found that the respondent had failed to prove any transactions prior to 1995-96 Sambat. He accepted the account of the respondent for the transactions of 1995-96 which showed that a sum of Rs. 4 and odd annas only was due to the respondent. In view of that finding of the learned Munsif regarding the transactions prior to 1995-96, the question of limitation did not arise. The learned Munsif has, however, given his finding on the question of limitation as well, as was only proper for him to. He has found that if there were any transactions between the parties prior to the 15th Kartik, 1995 Sambat, leaving a balance of Rs. 446-1-9 in favour of the respondent, the claim of the respondent with regard to that amount was barred by time, the suit having been filed more than three years after the 15th of Kartik, 1995 sambat. On these two findings the learned Munsif gave a decree to the respondent for the sum of Rs. 4 and odd annas only besides interest. The learned Subordinate Judge has found that the respondent has proved the transactions alleged by him in the plaint commencing from 1992 and ending with 1996 sambat. On the question of limitation he has expressed his finding as follows:

I have shown above that the payments were not made item by item and hence it must be held that the payments made by the defendants in 1995-96 were credited by the plaintiff towards previous dues. This being so, no part of the claim is barred by limitation.

On this finding the learned Subordinate Judge has allowed the claim of the respondent in full.

In the second appeal before me, learned Counsel for the appellants has rightly conceded that the finding about the prior transactions cannot be challenged by him. It is a finding of fact and is binding in second appeal. The only question which learned Counsel for the appellants has raised before me is the question of limitation. It has been contended by him that Article 85 which gives the period of limitation for the balance due on a mutual, open and current account, does not apply in the present case. If this Article had applied, the period of three years would be counted from the last item entered in the account which was the last payment on 14-8-1989. Learned Counsel for the appellants had no difficulty in showing that the respondent''s account, which the Court of appeal below has accepted as correct does not constitute a mutual account, as contemplated by Article 85 of Schedule I, Limitation Act. It has been laid down in several decisions and is now well settled that to constitute a mutual account there must be transactions on each side creating independent obligations on the other, and not merely transactions which create obligations on the one side, those on the other being merely complete or partial discharges of such obligations. The latest decision of this Court on the point is Uma Shanker Prasad v. Bank of Bihar Ltd. AIR 1942 Pat. 201. The accounts in the present case show transactions which give rise to a liability on one side only, which liability is discharged partially or completely by sundry payments made from time to time. It is, therefore, clear to me that the account in question is not a mutual account, and Article 85 does not apply.

Learned Counsel for the respondent has, however, contended that u/s 60, Contract Act, it was open to the creditor to apply at his discretion any payment made to a lawful debt actually due and payable to him by the debtor, whether its recovery was or was not barred by limitation, where the debtor had omitted to appropriate the payment to any particular debt. The final Court of fact has found in this case that there was an arrear of us. 446 and odd annas on account of the transactions of the previous years. When the payments were made in 1995-96 by the appellants, they did not appropriate the payments to any particular debts. The learned Munsif thought that the payments made in 1995-96 related to particular items of the supply of goods of that year, and that each item of payment or a series of payments related to a particular item of the supply of goods. The learned Subordinate Judge, however, has found that the accounts cannot be explained in that way. A copy of the accounts filed by the respondent has been placed before me by learned Counsel for the appellants. It appears therefrom that the payments cannot be explained chronologically as relating to particular items of the supply of goods: sometimes a part payment has been made against an earlier debt, when other dues were still outstanding. Take, for example, the supply of goods worth Rs. 816-3-3 on BAISAKH BADI 14; according to the appellants this liability was discharged by three payments--of Rs. 150 on BAISAKH BADI 15 of Rs. 100 on BAISAKH SUDI 7 and of Rs. 66-3-0 on JETH BADI 9. In between, however, there were other payments on BAISAKH SUDI 12, JETH BADI 4 and JETH BADI 5. The learned Subordinate Judge has rightly drawn attention to this aspect of the matter which shows that the debtor had not appropriated the payments to any particular debts. In such circumstances, it was open to the creditor to appropriate the payments towards previous dues, and this is a finding Which has been arrived at by the Court of appeal below, viz., that the plaintiff credited the payments made towards the previous dues. In this view of the matter, no part of the claim is really barred by time. The payments made having been appropriated towards the earlier dues, the suit for the balance has been brought within three years from the last supply of goods, worth Rs. 1031-15-0, made on 18-6-39. This view finds support from a decision of this Court in Bishun Perkash Narain Singh v. Md. Siddique. (16) 1 P.L.J. 474, which also related to a suit for the price of goods sold. In that case also various payments were made by the defendants towards payment of the goods sold; but none of those payments were appropriated towards a particular portion of the debt due. The outstanding balance claimed was Rs. 4095-7-9. It was held in that case that there having been no express appropriation, all the payments that were made were to be applied in the order in which the debts were contracted, and the plea of the defendants that a part of the claim was barred by time was repelled. It was further observed in that case that the law of appropriation that prevails in England {vide Cory Bros. & Co. Ltd. v. The "Mecca". (1897) 1897 A.C. 286 is in conformity with the enactment contained in Sections 60 and 61, Indian Contract Act. The same view has been expressed in another decision of this Court in Firm Jibinram Ram Chander v. Sagarmal Khemka. (33) 145 I.C. 611, where the following observations have been made:

The only question which comes up for our determination is whether there has been an appropriation by the plaintiffs saving limitation. The law in this respect is clear and is provided by Section 60, Contract Act. As between a creditor and debtor, the debtor in making payments may appropriate the payment in what manner he likes and failing such appropriation the creditor may appropriate. It is important to note that in addition he may appropriate payments towards debts which would otherwise be barred by limitation.

The finding of the Court of appeal below is that the plaintiff has appropriated the payments in 1995-96 towards the arrear dues outstanding on account of the prior transactions. Learned Counsel for the appellants has referred me to a Bombay decision in Atmaram Vinayak Kirtikar Vs. Lalji Lakhamsi, , where the effect of Article 52 with reference to the cause of action arising out of a series of transactions has been considered, and where it has been observed that the starting point of time is the date of the delivery of goods, although the cause of action is one for the price of all the goods delivered. It has been further observed there that the Court is bound to check the various items which go to constitute that cause of action and to apply Article 52 to deliveries which took place more than three years before the filing of the suit. It has been contended before me on the strength of the aforesaid decision that if the same test is applied, as in the Bombay decision, part of the claim of the respondent would be barred by time. In the Bombay decision the question of appropriation was not considered, and there is no reference to Sections 60 and 61, Contract Act. The parties do not appear to have raised that question, and I am of the view that the Bombay decision can be of no help to the appellants in the present case.

For the reasons given above, I hold that the Court of appeal below has correctly decided the question of limitation. In the result, the appeal fails, and is dismissed with costs.