The court clarified conditions for a reciprocal, mutual account under the Limitation Act, excluding claims due to lack of independent obligations among parties.

JUDGMENT :

Sathish Ninan, J.

The decree in a suit for money is under challenge in these appeals. R.F.A.No.375 of 2012 is by defendants 1 and 4 and R.F.A.No.198 of 2012 is by the 2^nd defendant.

2. The plaintiff company is engaged in the manufacture and sale of iron and steel. The 1^st defendant partnership firm is its authorised dealer. Defendants 2 to 4 are arrayed as the partners of the 1^st defendant firm.

3. According to the plaintiff, the 1^st defendant purchased goods on credit and there was an open, mutual and current account between the parties. Payments were defaulted since the year 1997. The last payment made by the defendants was an amount of Rs.52,250/- on 19.02.1998. The suit is filed claiming an amount of Rs.80,74,224/-, including the principal amount of Rs.47,29,420.99/- and interest thereon till the date of suit.

4. The 1^st defendant did not dispute about the distributorship of the plaintiff. That credit purchases were effected by the 1^st defendant was also not disputed. The amount claimed was challenged. It was also contended that there was no agreement for payment of interest.

5. The 2^nd defendant denied the allegation that he is a partner of the firm. His liability for the plaint claim was also denied.

6. The trial court upheld the plaintiff's claim for the principal amount. The claim for interest till the date of suit was declined since the plaintiff failed to prove any agreement for payment of interest. There is no appeal by the plaintiff.

7. We have heard Sri.Varghese C. Kuriakose and Sri.G. Krishnakumar, the learned counsel on behalf of the respective appellants, and Sri.V.N.Haridas, on behalf of the respondents.

8. The points that arise for determination in these appeals are;

(i) Is the transaction between the parties based on a mutual, open and current account attracting Article 1 of the Limitation Act ?

(ii) Is the plaint claim barred by limitation?

(iii) Has the plaintiff succeeded in proving the plaint claim? (iv) Is the 2^nd defendant a partner of the 1^st defendant firm?

(v) Does the decree and judgment of the trial court warrant any interference?

9. The plaint proceeds as if the suit is one based on an open, mutual and current account of the 1^st defendant maintained by the plaintiff. Article 1 of the Limitation Act reads thus;

The trial court held that the suit falls within Article 1 of the Limitation Act . The learned counsel for the appellants vehemently argued that the account in question is not an open, mutual and current account attracting the application of Article 1 .

10. To be an open, mutual and current account, there must be mutual dealings between the parties creating mutual debts or reciprocal demands. There should be two sets of independent transactions between the parties; the creditor in the one will be the debtor in the other. As to what is a mutual, open and current account was considered by the Apex Court in Hindustan Forest Company v. Lal Chand and others [AIR 1959 SC 1349]. Therein, the Apex Court held that a transaction between a buyer and seller, wherein the buyer pays the price for the goods sold by the seller, is only a payment in discharge of the obligations under the contract to buy goods and to pay for them. It does not create independent obligations on the parties. Such transaction was held to be not a mutual, open and current account.