The main legal point established in the judgment is the application of Art.1 of the Limitation Act, 1963 to mutual, open, and current accounts.

1. The plaintiff in a suit on accounts is the appellant in the Second Appeal. The short facts of the case shorn of unnecessary details are: The plaintiff-appellant is a dealer in provisions and the defendant-respondent was an employee in the shop from 1956 onwards. In November 1969 the respondent ceased to be an employee of the appellant. While in employment the respondent used to purchase goods on credit and also take loans from the appellant. The amounts thus due from the respondent used to be adjusted from his salary. As per the accounts on 30-11-1969 some balance was due to the appellant. The suit was filed for the recovery of the above balance from the respondent as per accounts.

2. The respondent filed a written statement denying liability and also contending that the suit was barred by limitation.

3. The trial court found the accounts as genuine but rejected the appellant's contention that the same was a mutual, open and current account and held that it was Art.14 of the Limitation Act, 1963 that was applicable to the case and not Art.1 of the Act. Accordingly the trial court held that except the last three items which fell within three years of the date of suit, the rest of the plaint claim was barred by limitation and the suit was disposed of on that basis.

4. The plaintiff-appellant challenged the above judgment and decree of the trial court in appeal. The respondent filed a cross-objection also. The lower appellate court confirmed the judgment and decree of the trial court and dismissed the appeal and cross-objection.

5. It was under the above circumstances that this Second Appeal was filed. The main contention of the learned counsel for the appellant was that the suit was one for the balance due on a mutual, open and current account and since the suit was filed within three years of the close of the year in which the last item proved was entered in the account, no part of the plaint claim was barred by limitation. Hence, according to the learned counsel the courts below decided wrongly a substantial question of law namely, whether the accounts in question are mutual, open and current.

6. It was not disputed that if the accounts in question were mutual, open and current it was Art.1 of the Limitation Act, 1963 that applied to the case and hence no part of the plaint item would have been barred by limitation. So the questions that arise for consideration are, what is a mutual, open and current account and whether the accounts in question satisfy these tests?

7. Art.1 of the Limitation Act, 1963 reads:

The corresponding provision in the Indian Limitation Act, 1908 was Art.85. Art.1 applies only when the account is mutual, open and current. An account is nothing but a detailed statement of a series of receipts and disbursements. An account is said to be open when it is not settled. It is current when it is not closed. Then the further question is when can an account be considered as a mutual account. It is only when parties agree to bring together their items of debits and credits relating to their mutual dealings for a set off against each other, that a mutual account comes into existence. The mutual dealings must result in independent obligations in both directions. There should be two sets of independent transactions between the parties with the result that the creditor in one will be the debtor in the other. It is then that there will be room for reciprocal demands between the parties. This does not mean that either party must have actually made a demand against the other. Going by the nature of the transactions there need only be a possibility of cross claims. Mutuality will not be lost if the claims are of different nature. When one party claims wages for services rendered the other party can demand price of goods delivered. But both the sets of transactions must be entered in the same account. A shifting balance will no doubt be a test of mutuality but it is not a must. It is enough that the nature of the