The main legal point established in the judgment is the application of the provisions of the Limitation Act, specifically Article 5, Article 26, and Article 113, in determining the limitation period for filing a counter-claim.

( 1 ) THE appellant, in the present appeal, has questioned the legality of the judgment and decree dated 16-7-2001 passed by the First Additional District judge, East Nimar, Khandwa in Civil Suit no. 9b/2001, to the extent that the counterclaim for Rs. 3,72,000. 00 filed by the appellant-defendant has been dismissed.

( 2 ) THE facts of the case in brief are that the appellant and the respondent were both partners in a firm M/s. Naredi Goel Auto services, Civil Lines. Khandwa. By a deed of dissolution (Ex. P/7) dated 16-6-91 the appellant-defendant retired from the firm with effect from 31-3-1991 and the respondent-plaintiff became the sole proprietor of the firm from 1-4-1991. On 23-7-1991 (Ex. P/8)some of the amounts to be paid to the appellant as a result of the dissolution were settled in the presence of one Basant Kumar who also acted as a guarantor on behalf of the appellant-defendant. Thereafter, the respondent-plaintiff filed a suit for accounts and for recovery of a sum of Rs. 27,731. 71 with interest against the appellant-defendant and Basant Kumar Agrawal, who was impleaded as defendant No. 2.

( 3 ) THE appellant-defendant initially filed a counter-claim on 21-11-94 for accounts and for his share on dissolution and in addition prayed that the plaintiffs suit for a sum of Rs. 27,732. 71 be dismissed. However, subsequently the counter-claim was amended on 29-3-2000 and a relief of a decree of Rs. 3,72,000. 00 with interest at the rate of 24% from 1-4-91 was incorporated. It was alleged by the appellant-defendant in the counter-claim that subsequent to the dissolution of the firm vide the deed dated 16-6-91 and pending finalization of accounts, both the partners had agreed in the presence of Basant Kumar Agrawal on 23-7-91 that the respondent/plaintiff shall pay a sum of Rs. 1,50,000. 00 to the appellant/defendant against the book value of the pump, tanker and other stocks apart from the sum that would be found due to the appellant-defendant on finalization of accounts. It was also agreed that a sum of Rs. 75,000. 00 deposited in the name of rameshwar, father of the respondent-plaintiff, would also be paid to the appellant-defendant. It is alleged that admittedly the accounts of the firm were finalized as per the Chartered Accountant's Report dated 13-10-1991 in which a sum of Rs. 2,97,725. 24 was shown as due to the appellant-defendant. As the respondent-plaintiff did not pay this sum of Rs. 2,97,725. 24 as well as the agreed sum of Rs. 75,000. 00 standing in the name of Rameshwar to the appellant-defendant he was constrained to file the counterclaim.

( 4 ) THE Court below by the impugned judgment and decree dated 16-7-2001 has dismissed both the suit as well as the counter-claim. The respondent-plaintiff has not challenged the dismissal of his suit while the appellant -defendant has filed the present appeal against rejection of his counterclaim. The Court below by the impugned judgment has dismissed the counter-claim of the appellant-defendant only on the ground that the same was beyond the period of limitation prescribed by Article 5 of the Act as the counter-claim was filed on 21 -11 -94 while admittedly the firm was dissolved with effect from 31-3-91 i. e. beyond the period of three years from the date of dissolution of the partnership.

( 5 ) THE appellant-defendant has assailed the judgment and decree on the ground that the case of the appellant-defendant does not fall within the purview of Article 5 of the Act but in fact falls under Article 26 of the Limitation act. As the accounts had been settled between the parties by the interim agreement between them dated 23-7-91 Ex. P/8 according to which the respondent-plaintiff had admittedly agreed to pay the remaining amount till 30-4-1992, therefore the limitation of three years as prescribed under Article 26 of the Limitation Act would start running from 30-4-92 under Article 26 of the Act and not from the date of dissolution under Article 5 of the Act