JUDGMENT :- This is an appeal preferred against the decree and judgment of the learned District Judge of North Arcot in A.S. No. 377 of 1951 reversing the decree and judgment of the learned Subordinate Judge of Vellore in O.S. No. 41 of 1951 and remanding the suit.

2. The facts are : The plaintiff is a wholesale merchant carrying on business in yarn at Ami. The defendant is a retailer in the same business at Kalambur. The plaintiff supplied yarn whenever the defendant wanted and the defendant paid for those supplies and also advanced moneys for procuring a continuous supply because throughout the period of their transactions there was a State machinery controlling the supply and distribution of yarn and naturally a wholesaler like the plaintiff could supply in accordance with the scheme and at prices fixed only to retailers who advanced considerable sums against the anticipated supplies of yarn.

It has to be borne in mind that the wholesaler himself got the quotas allotted only as against cash down. Because of the advances the balances shifted, being sometimes to the credit of the plaintiff and sometimes to that of the defendant. Finally the wholesaler had to file this suit for recovery of an amount of Rs. 4371-12-6 due upon mutual accounts and dealings during the period from 29-4-1946 to 26-3-1948. The defence was that Art. 85 of the Limitation Act did not apply and if it were so, there is no dispute that a great part of the transactions relied upon would stand barred by limitation.

The learned Subordinate Judge held that this was an open, mutual and current account to which Art. 85 did apply and he decreed the suit. There was an appeal therefrom by the defendant to the learned District Judge of North Arcot and he held that the account no doubt was an open and current account but not mutual and that Art. 85 could not apply. Therefore, he remanded the suit for decision upon the question of fact viz., which transactions were otherwise saved and what was the result of such settlement of accounts. The defeated plaintiff appeals.

3. There is no dispute that the account between the parties was an open and current account one and the only dispute is whether it was a mutual one within the meaning of Art. 85 of the Limitation Act. In Chitsleys Limitation Act, note (3), page 1440, the distinguishing characteristics of mutual account have been summarised as follows :

"(1) that there should be two sets of independent transactions between the parties. In one of which one of the parties should hold the position of debtor and the other that of a creditor, and in the other, the reverse position.

(2) that the dealings should disclose independent obligations on both sides, and not merely obligations on one side, the acts done by the other being merely discharges of such obligations, and

(3) that each party must be able to say to the other I have an account against you."

4. These principles have been embodied in a judgment of this Court by Holloway Ag. C.J. in - Hirada Basappa v. Gadigi Mudappa, 6 Mad HCR 142 (A) as follows :

"In order that an account might be mutual there must be transactions on each side, creating independent obligations on the other, and not merely transactions which create obligations on the one side, those on the other being merely complete or partial discharges of such obligations."

5. The main line of decisions is also to the effect that a shifting balance is not per se a conclusive test of mutuality. In - Shiv Gowda Iv. Fernandez, 34 Mad 513 (B) it was held by White, C.J. and Ayling, J. that to bring a case within Art. 85 there must be independent obligations between the parties and that the existence of shifting balances, though important evidence of mutuality, is not conclusive and that there must be transactions on each side creating independent obligations on the other. The decisions referred to are 6 Mad HCR 142 (A) and - Velu Filial v. Ghose Mahamed 17 Mad 293 (C).

6. In - Fyzabad Bank Ltd. v. Ram Dayal, AIR 1924 Pa