Raju and Others vs L. Kumaramuthu

Ramaprasada Rao, J.—The legal representatives of the first defendant who died during the pendency of the suit in O. S. No. 117 of 1968

on the file of the court of the District Munsif of Nagapattinam are the petitioners. The plaintiff-respondent filed the suit for recovery of a sum of Rs.

896-30 on the foot of dealings had by him as a maligai merchant. On the foot of the accounts maintained by the plaintiff said to be in the usual

course of business, he claimed a sum of Rs. 751-25 from the first defendant when he was alive for dealings between 1-4-1957 and 24-4-1965.

He claimed interest at six per cent per annum on the balance so struck by him in his books of account. The first defendant admitted the dealings,

but pleaded that a portion of the claim in any event is barred by limitation. The learned District Munsif found that the suit having been filed on 8-3-

1968, transactions referable to a period of three years prior to such institution alone were in time and he accordingly decreed the suit for a sum of

Rs. 27/- with proportionate costs and dismissed the balance of the claim. On appeal, the learned District Judge reversed the decision of the

learned District Munsif and held that the account ought to be treated as a mutual open and current account and in that view, as the balance was

struck only on 24-4-1965, the suit claim was within time. He therefore decreed the suit in its entirety. As against this judgment, the present civil

revision petition has been filed.

A mutual open and current account has a special significance in the Law Merchant. The mere striking of the balance after the parties have had a

continuous dealings as between themselves cannot prima facie make that account a mutual open and current account. The account may be current

and equally it may be open, but unless it is mutual it ceases to be a mutual open and current account. To establish such mutuality, it is necessary

that at one point of time at least each of the parties should have a credit as against the other. In other words, the account should be capable of

giving rise to shifting balances. Unless it is established that during the dealings one party has become a creditor to the other and at another, time, the

other party who was a creditor has become a debtor to the other which brings out the essence of mutuality in the accounts, is ceases to be mutual

open and current account. In this sense, if a final balance is struck in a non-mutual account the court cannot assume as a matter of course that the

account is a mutual open and current account on the only ground and for the only reason that the account consists of both debits and credits. It

must be found as a fact that at least at one stage or other, there was mutuality and shifting of the balance of accounts as explained above. In that

sense, the accounts of the plaintiff have not been examined by the court below. It assumed as a matter of course that the account is a mutual open

and current account because of the presence of entries in the accounts both on the debit and on the credit sides without a further probe into the

question whether the balance did shift at any one or more particular point of time. The first court has examined this aspect and found that such of

those transactions which were within three years from the date when the balance was struck were alone payable by the defendant. The appellate

court had a cursory examination of the accounts and applied the theory of mutual open and current account and was of the view that the plaintiff

was entitled to an automatic decree. In my view, the decision based on such an opinion evidence suffers from want of jurisdiction on the part of the

lower appellate court.

The plaintiff is not represented before me. I am therefore constrained to remit the matter once again to the appellate court for a further

examination of the accounts and on the merits decide as to whether the account is a mutual open and current account. If it finds that it is so in

accordance with the accepted principle of law, then the appellate court can act and decree the suit in accordance thereto. But if the account fails to

satisfy the standards of a mutual open and current account, then the decree of the trial court will have to be restored. With these observations, the

Civil Revision Petition is allowed and the matter is remitted back to the lower appellate court for a fresh disposal. There will be no order as to

costs.