Legal elements of mutual and current account.

The essential facts of this appeal, from the Judgment and Decree of Kunhamed Kutti, J., in O.S. No. 77 of 1960 before the learned Judge, may be briefly set forth as follows: V. V. Shanmuga Nadar &38; Brothers (plaintiffs) sued the defendant Gopal Chettiar, who is the appellant, for moneys in respect of dealings said to be due upon certain accounts relating to the business of the defendant at Pollachi, Coimbatore and Kumbakonam. According to the case in the plaint, in respect of orders placed by the defendant with the plaintiffs, for purchase and supply of goods, the plaintiffs advanced moneys and were entitled to repayment of the moneys with interest. The dealings took place between 26th February, 1953 and 15th March, 1959, on the basis of a mutual, open and current account, according to particulars furnished along with the plaint. Very briefly stated, the defendant put forward, as his main plea, a plea of limitation. According to him, the dealings were not on the basis of a mutual, open and current account, and, many of the transactions were thus time-barred, particularly in relation to the Coimbatore account. The plaintiffs were not entitled to make appropriations of payments in the manner that they had done, nor were they entitled to charge interest on outstanding advances. Of the issues framed in the suit, the main issues that concern us are:

1. Whether there was a mutual, open and current account between the parties?

2. Whether the suit was in time? and

3. Whether there was a contract to pay interest at certain rate?

In view of the order that we propose to make in this appeal, remanding the suit for further and full determination in the light of our observations, since it appears beyond controversy, in our view, that certain vital aspects have not been tried out at all, we think that we should not proceed into the merits in any great detail. But, indisputably, we feel constraint d to record our reasons why we consider this remand of the suit for further trial essential in the interest of justice. Our observations must not be regarded as any pre-judgment of the merits, since the suit is now going to have a more extensive and adequate trial, covering all issues in controversy between the parties, and, all vital aspects of such issues.

Firsly, the very procedure of trial in the suit has inevitably given rise to some difficulty. That, of course, cannot be a matter for which the learned Judge could be regarded as responsible, in any view. The plaintiffs adopted the somewhat curious procedure of producing all their books of accounts, but actually not marking those books as evidence; on the contrary, schedule of entries, which is Exhibit D-1, and which, in fact, forms the main document in the case, was extracted from the plaint schedule, and marked by defendant. It must immediately be conceded that the defendant (appellant), far from objecting to this course, of the failure to exhibit the original account books, based his defence upon Exhibit D-1 itself, with the result that neither the Court nor the party had the advantage of a scrutiny of the original accounts, ledgers and cash books. In our view, that has handicapped the trial, in the sense that it has not been possible to focus attention on certain vital aspects of the controversy between the parties. Another lacuna or defect in the trial, has been that the oral evidence in the entire trial consists exclusively of the testimony of Dorai Pandian (P.W. 1), a partner of the plaintiff firm. The defendant did not get into the box, and did not throw light, by means of testimony, upon the defences that he sought to raise in contesting this suit. Further, as we shall presently show, certain vital aspects of the material impinging on the main plea of limitation have not been brought forward and elucidated at all during the trial, or, apparently, even during the arguments before the learned Judge.

As the plaint was filed, it sought to do this; there were dealings betw