Requirement of tests to decide mutuality.

This Letters Patent Appeal is directed against the judgment and decree of Ramaswami, J., in C.M.A. No. 442 of 1953. The decree in that appeal confirmed the decree of the District Judge of North Arcot in A.S.No. 377 of 1951, which reversed the decree of the Subordinate Judge of Vellore in O.S.No. 41 of 1951.

The appellant before us is the plaintiff in O.S. No. 41 of 1951. The suit was laid for recovery of a sum of Rs. 4,371-12-6 due on dealings between the plaintiff and the defendant, had from 29th April, 1946 to 26th March, 1948. The suit itself was instituted on 7th March, 1951 within three years from the date of the last dealing shown in the accounts of the plaintiff. The defendant resisted the suit inter alia on the ground of limitation. The plaintiff pleaded that the account between the parties was a mutual, open and current account, and that, since Article 85 of Schedule II of the Limitation Act applied, the suit was in time. He also relied on acknowledgment by part payments and contended that the suit was also saved by section 20 of the Indian Limitation Act. On the first question the learned Subordinate Judge held that Article 85 of the Limitation Act applied and granted a decree for a sum of Rs. 3,584-10-0 after adjusting payments made, which were pleaded by the defendant or were found against. The learned District Judge of North Arcot, on appeal, took a different view, and held that Article 85 would not apply for the recovery of the balance due on the plaintiff’s account and remanded the suit for fresh disposal and directed the Subordinate Judge to investigate the question whether the balance claimed was otherwise saved. By this he obviously referred to the plea of saving of limitation based upon section 20 of the Indian Limitation Act.

On appeal, Ramaswami, J., confirmed the decision of the District Judge, but, in addition, went into the question of applicability of section 20 of the Limitation Act, which was based upon the construction of certain receipts signed by the defendant, which are contained in Exhibits A-5 and A-6, and concluded that these were not sufficient to save limitation. Therefore, he dismissed the suit of the plaintiff.

Mr. S.V. Venugopalachariar, learned counsel for the respondent, very properly did not invite us to examine the correctness of the view that Exhibits A-5 and A-6 series were not sufficient to constitute acknowledgments within section 20 of the Indian Limitation Act, especially when this question had not been agitated before or examined by both the Subordinate Judge and the District Judge who have dealt with this case. The arguments addressed to us referred only to the question of the applicability of Article 85 of the Indian Limitation Act.

The facts necessary for the purpose of ascertaining the applicability of Article 85 are not in dispute. The appellant-plaintiff was during the period covered by suit dealings a wholesale merchant carrying on business in yarn at Ami and the defendant respondent was a retailer in the same business at Kalambur. Throughout the period of the dealings between the parties, there was a State machinery, controlling the supply and distribution of yarn. Though there was some dispute on the pleadings as regards the period of dealings, it is now agreed that the period commenced from 29th April, 1946 and ended with 26th March, 1948. It is seen from the copy of accounts of the plaintiff that, commencing from 29th April, 1946 up till 9th October, 1946 the respondent was advancing substantial sums — a few thousands of Rupees — to the plaintiff appellant even before supplies of yarn were made by the appellant. Subsequent to October, 1946, payments made by the respondent to the appellant were mostly in the nature of payment of price for the yarn supplied. This position continued till 7th August, 1947, when, again, there appears a credit balance in favour of the respondent in the account, which means that, again, the respondent began to advance moni