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High Court Of Calcutta
Ramendra Mohan Datta, S. K. Hazra
BENGAL CREDIT CORPORATION - Appellant
Versus
CENTRAL BANK OF INDIA - Respondent
A. F. O. D. 121 Of 1970
Decided On : 04/25/1978
ACCOUNT STATED - LIMITATION ACT, 1963, ARTICLE 26 - BANKER AND CUSTOMER - ACCOUNT STATED IN WRITING - ESSENCE AND NATURE - IMPLIED PROMISE TO PAY - BALANCE DUE - ADJUSTMENT OF ACCOUNTS - CONFIRMATION OF BALANCE - DOCUMENT EVIDENCING ACCOUNT STATED - SIGNATURE OF PARTY - APPLICATION OF MIND BY PARTIES - MUTUAL AGREEMENT - NEW CAUSE OF ACTION.
Fact of the Case:
The plaintiff bank filed a suit against the defendant company for recovery of a sum of Rs. 33,311.14 due on account of dealings and transactions between the parties up to December 31, 1964. The plaintiff's claim was based on an account stated in writing (Exhibit 'E') dated January 11, 1965, wherein the defendant confirmed the correctness of the securities held by the bank and the balance due as on December 31, 1964, as Rs. 32,708.05. The defendant contended that Exhibit 'E' did not constitute an account stated under Article 26 of the Limitation Act, 1963.
Finding of the Court:
The court held that Exhibit 'E' was an account stated in writing and that the plaintiff's claim was not barred by limitation. The court found that the parties had gone through their respective accounts and arrived at the balance due as on December 31, 1964. The defendant's partner had signed Exhibit 'E' on a revenue stamp, which indicated an implied promise to pay the balance due. The court also found that the parties intended to close their account but the same could not be actually closed because the payment had not been made.
Issues: 1. Whether Exhibit 'E' constituted an account stated in writing under Article 26 of the Limitation Act, 1963? 2. Whether the plaintiff's claim was barred by limitation?
Ratio Decidendi: 1. An account stated is a bilateral transaction in which the parties mutually agree on the several accounts of each and, by treating the items so agreed on the one side as discharging the items on the other side protanto, go on to agree that the balance only is payable. Such a transaction creates a new debt and a new cause of action. 2. In the case of a banker and a customer, an account stated can be arrived at even though the constituent did not sign either the bank's books where the transaction had been entered or on a document containing the entire statement of account. The essence of an account stated is the application of mind by both parties and the adjustment of accounts in order to arrive at the balance amount due. 3. A document evidencing an account stated need not contain both items of credit and items of debit. The signature of the party on such a document signifies that the party went through the account and agreed to the balance due.
Final Decision: The appeal was dismissed with costs. The court held that Exhibit 'E' constituted an account stated in writing and that the plaintiff's claim was not barred by limitation.
( 1 ) THIS appeal has been preferred from the judgment and decree dated Dec. 16, 1968 passed by K. L. Roy, J.
( 2 ) THE plaintiff respondent the then Central Bank of India Limited, now Central Bank of India, filed the suit against the appellant Bengal Credit Corporation for a sum of Rs. 33,311. 14 p. due on account of the dealings and transaction between the parties up to Dec. 31, 1964, inter alia, on the ground that the said accounts were adjusted and/or stated in writing on or about Jan. 11, 1965 and upon such adjustment and/or account stated a sum of Rs. 32,708. 05 was found due and owing from the defendant to the plaintiff. The learned trial Judge held that the plaintiff's claim is based on an account stated in writing (exhibit 'e'), and as such, no part of the claim of the plaintiff is barred by the law of limitation. In the premises, the learned trial Judge passed a decree for Rs. 32,708/- with interest.
( 3 ) THE point for consideration in this appeal is whether the document, exhibit 'e' being the letter dated Jan. 11, 1965 could be held to be an account stated under Article 26 of the Limitation Act, 1963.
( 4 ) THE said Ext. "e" is set out as follows :--"under Certificate of Posting duplicate THE CENTRAL BANK OF INDIA LIMITED Registered Office : Mahatma Gandhi Road, Bombay-1, 33, Netaji Subhas Road, Place - Calcutta Date - 11-1-1965. M/s. Bengal Credit Corporation 9, India Exchange Place, Calcutta. Sir, we beg to inform you that the interest on your Hire Purchase Account with us up to 31st Dec. 1964 amounts to Rupees 567,69. You are requested to pay in this amount at your earliest convenience. The Balance in your account on that day was Rupees 32,708. 05 P. including interest and we held the following securities against this account on that day. We shall be obliged if you will kindly confirm the correctness of the securities and the balance in the account returning us of the duplicate advice attached hereto duly stamped and signed in the space provided in it for the same, yours faithfully, Sd/- Illegible Agent. Securities:-- Demand Pronote dated 26-6-58. Letter of Continuity dated. Letter lien Dated. Govt. Securities, shares scrips etc, as under: hire purchase agreement. We hereby confirm the correctness of the securities mentioned above and that the balance now due by me/us in the above account against the said securities inter alia is Rs. 32,708. 05 as at 31-12-64. For Bengal Credit Corporation. Sd/- Bhagawati Prasad Ganariwala. Partner. 19-1-65. " (India Revenue 10 np.)
( 5 ) IT would appear from the above that the said document was sent to the constituent and the same was signed by the partner Bhagwati Prasad Ganariwala on Jan. 18, 1965 confirming the balance due as on Dec, 31, 1964 on a revenue stamp of 10 np.
( 6 ) IT is in evidence before us that similar letters used to be seat by the bank to the constituent periodically and the same would be returned to the bank by the constituent after putting their signature on revenue stamps but it is significant to note that in every such letter the language of the last paragraph of the letters was different from the language used in Ext. E in so far as the confirmation portion thereof was concerned. The other identical letters which are Exts. F, G and H series contained in the following printed writing immediately after such securities were mentioned in such letters :--"p. S. If we do not hear from you anything to the contrary within a week from the receipt of this letter we shall conclude that you admit the statement of above securities held by us on your account as correct. "underneath the said writings the constituent's said partner Bhagwati Prasad Ganariwalla for the Bengal Credit Corporation put his signature on a revenue stamp of 10 naya paise.
( 7 ) GANERIWALLA gave evidence before the trial Court, In answer to questions put in cross-examination the witness said that there was a loan account with the Central Bank of India wherefrom cer
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