The suit for recovery fell within the limitation period as it fell under Article 1 of the Limitation Act, 1963, based on the maintenance of a mutual open current account.

Valmiki J. Mehta, J.

1. No one appeared for the parties on 19.11.2009 when adverse orders were deferred in the interest of justice. This matter is on the 'regular board' of this Court since 3.1.2011 and today is effective item No. 10. No one appears for the parties although it is 12.25 pm. I have therefore perused the record and am proceeding to dispose of the appeal.

2. The facts of the case are that the Appellant bank filed a suit for recovery against the Respondents for credit facilities granted, and which suit was dismissed as barred by time as per the finding on the issue of limitation being issue No. 5 and also by holding that certain documents are forged, which was a finding with respect to issue No. 6. I may note that after holding the suit to be time barred, issues No. 2,3 and 7 have not been decided on merits.

3. The suit was filed on 24.12.1985. It has been held that the suit is barred by time because the first acknowledgment of debt was dated 30.9.1979 and the second acknowledgement was dated 30.12.1982 i.e., beyond the period of three years of execution of the first acknowledgment of debt. It was held that since the acknowledgement of debt has to form a chain which has to be within three years of execution of earlier acknowledgment of debt and therefore the suit has been held to be barred by time. Although, the finding of the trial court with respect to requirement of subsequent acknowledgments to be within the period of limitation cannot be disputed however, the finding of the trial court that the suit is barred by time is clearly illegal and perverse. This is for the reason that the suit which has been filed by the bank is one on the basis of running account and thus falls under Article 1 of the Limitation Act, 1963. In terms of Article 1 of the Limitation Act, when a mutual open current account is maintained, limitation starts from the end of the financial year in which the last entry is admitted or proved. This aspect has been sufficiently pronounced upon by various courts including the Supreme Court. In the present case, the Appellant/bank proved its statement of account which was duly certified under the Bankers Books Evidence Act, 1891 as Ext.PW3/2. The last entry in the account is on 12.12.1985, and which is a debit entry with respect to interest for the period from 1.10.1982 to 30.9.1985. There are also other entries of interest another one of which is dated 8.10.1982. Interest is an entry which can be said to be an entry which is proved in terms of Article 1 of the Limitation Act because a bank is surely entitled to claim contractual interest with respect to credit facilities granted. If we take the last entry of interest of December, 1985, the suit which was filed on 24.12.1985 therefore is within limitation. Even when we take the other earlier entry of interest dated 8.10.1982, the limitation as per Article 1 would begin on 1.4.1983 and therefore the suit could have been filed till 31.3.1986, whereas the suit has been filed on 24.12.1985. The suit is therefore clearly within limitation and the finding of the trial court that the suit is barred by time while dealing with issue No. 5 is therefore clearly illegal and perverse and is set aside. I have also noted above that the trial court has failed to discuss anything on merits while dealing with issue Nos. 2,3 and 7 on the ground that the suit has been barred by limitation. This finding is also against the provision of Order 14 Rule 2 Code of Civil Procedure which requires that there should be a finding on all issues. These findings are also set aside.

4. The suit has been dismissed also as per decision on issue No. 6 because the Appellant did not file replication which specifically denied the allegations of alleged forgery made in the written statement with respect to certain bank documents. Since I have already set aside the impugned judgment and decree on the ground of limitation, it would be appropriate therefore that this issue be also decided a