Execution of a promissory note in acknowledgment of a balance due on a particular date amounts to an account stated within the meaning of Article 64 of the Limitation Act, and subsequent dealings cannot make the account open and current again.

( 1 ) THIS is an Appeal against the Judgment of the Subordinate Judge, rajahmundry, in O. S. No. 50 of 1951, on the file of his Court. The suit was brought by the respondent, (since adjudicated insolvent and represented by the Official receiver, Rajahmundry), in this appeal, against the present appellant for the recovery of moneys due on khata dealings between them during the period 11 th July, 1946 to 31st December, 1947. Though, according to the khata, a sum of rs. 17,270-8-6 is found due by the defendant to the plaintiff, a sum of Rs. 8,270-8-6 has been given up and the plaintiff had restricted his claim only to a sum of Rs. 9,000. The case of the plaintiff is as follows :-

( 2 ) THE defendant was a ryot of Yeturu Nagavaram village in the Hyderabad State. He was taking advances of money from the plaintiff for tobacco cultivation. He was sending the tobacco to the plaintiff s shop at Rajahmundry for sale on commission. The plaintiff was selling tobacco and after deducting, the commission due to him, the balance of sale proceeds were credited to the defendant s khata. On nth July, 1946, the balance of the accounts was struck and it was found that a sum of Rs. 16,800 was due from the defendant to the plaintiff. On that date, the defendant executed a promissory note in favour of the plaintiff in the plaintiff s ledger. The dealings between the parties continued subsequently upto 31st December, 1947, by which date a sum of Rs. 17,270-8-6 was found due from the defendant. The plaintiff filed the present suit on 19th December, 1950 for the recovery of Rs. 9,000 as stated already.

( 3 ) THE defendant raised various pleas. He denied the settlement of accounts on nth July, 1946. He denied the execution of the promissory note. He denied also that he was indebted to the plaintiff in a sum of Rs. 16,800 by nth July, 1946. He challenged the correctness of the suit khata. He pleaded that the plaintiff must have illegally mixed up karchi tobacco with the defendant s supply and misappropriated the proceeds of sale from the defendant s tobacco which was of the best variety. The defendant pleaded limitation and denied that the suit khata was a mutual, open and current account.

( 4 ) UPON those contentions, the trial Court framed the following three principal issues : (1) Whether the settlement of account, dated nth July, 1946 and the execution of the pronote on that date referred to in the plaint are true ? (2) Whether the suit account is true and correct ? (3) Whether the suit is in time ?

( 5 ) ON issue I, the trial Court found that there was a settlement of accounts on 11th July, 1946 and that the defendant did execute a promissory note (Exhibit A-1) in the plaintiff s ledger. On issue 2, it held that the suit account is true and correct.

( 6 ) ON issue 3, the trial Court held that the suit was filed within time. Upon those findings, the trial Court granted a decree in favour of the plaintiff for the amount claimed in the suit with costs and subsequent interest at 6 per cent per annum. In this appeal, filed by the defendant, the findings of the trial Court on issues I and 2 are not challenged. The only point argued before me by the learned counsel for the appellant is one of limitation. According to him, the suit khata cannot be regarded as a mutual, open and current account within the meaning of Article 85 of Schedule I to the Indian Limitation Act. It is contended by him that, on 11th july, 1946 the accounts between the parties were settled, the balance struck and acknowledged to be correct by the defendant as evidenced by the execution of Exhibit a-1 and that, therefore, that amount cannot be carried over to the subsequent account that closed with 31st December, 1947. The learned Subordinate Judge has observed that if the account is not a mutual, open and current account, several items of the suit khata would be time-barred and that a small amount of about Rs. 500 alone would be due from the defendant. The question I have to determine her

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