Article 1 of the Limitation Act, 1963, applies to suits for the balance due on mutual, open, and current accounts, where there have been reciprocal demands between the parties. In the absence of mutuality of dealings and independent obligations on both sides, Article 1 is not applicable.

P. K. MOHANTY, J.

( 1 ) THIS Civil Revision arises out of a suit for recovery of money.

( 2 ) THE plaintiff is a wholesale dealer in cloth. He filed the suit on the allegation that the defendant who is a dealer in ready-made garments used to purchase cloths from him on credit and make payments from time to time in due discharge of the credit account. Last purchase was made by the defendant on 16-8-73 and the last payment was made by him on 28-9-73. Thereafter the defendant discontinued his business transaction with the plaintiff. A sum of Rs. 1,476. 67 paise was left unpaid by the defendant. He did not pay up the dues despite demands. Hence the suit for recovery of Rs. 1. 474. 67 paise with interest at 12 p. c. p. a.

( 3 ) THE defendant admitted that he had business transactions with the plaintiff and that he was making payments towards the total dues from time to time, but contended that he had discontinued his business transaction with the plaintiff after 1972. The allegation that last purchase of cloth was made on 168-73 and last payment was made on 28-9-73 was denied and the suit was resisted on the ground of limitation.

( 4 ) THE trial court, on a consideration of the evidence on the record, held that the plaintiffs case that the last transaction was made in August. 1973 and the last payment was made in Sep. 1973 is true, but it held that there being no open, mutual and current account between the parties Article I of the Limitation Act could not apply and that the suit was governed by Article 14 of the Limitation Act. Accordingly he found that the different transactions between the parties being distinct and separate all the items of suit claim except the one for Rs. 98. 25 paise under Dill No. 300 dated 16-8-73 were barred by limitation and that the plaintiff was not entitled to any interest. Upon such findings, the plaintiff's suit was decreed in part for a sum of Rs. 98. 25 paise with proportionate costs.

( 5 ) ON appeal, the learned Additional District Judge held that the parties were taking all the transactions to be a continued whole and that payment were made by the defendant and appropriated by the plaintiff from time to time towards the total balance dues, but not towards the particular item of transaction. Accordingly he differed from the finding of the trial Court and held that this was an open, mutual and current account to which Article 1 did apply and on such findings he decreed the suit claims but dismissed the claim for interest.

( 6 ) THE main question for consideration in this revision is whether Article 1 or Article 14 of the Limitation Act, 1963, is applicable to the facts of this case. Article 1 applies to suits for the balance due on the mutual, open and current account, where there have been reciprocal demands between the parties. In such a case limitation is three years computed from the close of the year in which the last admitted or proved is entered in the account. Article 14 applies to suits for the price of goods sold and delivered where no fixed period of credit is agreed upon. Period of limitation in such a suit is three years from the date of the delivery of the goods.

( 7 ) ARTICLE 1 applies to a case where balance is due on mutual, open and current account and when there had been reciprocal demands between the parties. The distinctive features of a mutual account are that there should be two sets of independent transactions between the parties and in one transaction one of the parties should be debtor and the other creditor, whereas in the other transaction the parties should occupy reverse positions. The dealings should indicate independent obligation on both sides and not merely obligations on one side. The test of mutuality is that the dealings between the parties should be such that the balance is sometimes in favour of one party and sometimes in favour of the other. In the case of Hindusthan Forest Co. v. Lal Chand : AIR 1959 SC 1349, their Lordships while construing the prov