IMPORTANT POINTS
(1) Payment to amount of acknowledgement of a debt to extended the limitation, the same should be in the writing of person making the payment or duly authorized agent.
(2) Merely because a cash credit facility has been extended which at any given time may show some credit in favour of the person to whom such facility has been granted will not make the cash credit facility a mutual dealing between the bank and the borrower. Appeal dismissed.

Deepak Gupta, J.—The short question which arises in this appeal is whether the suit filed by the plaintiff was within limitation or not?

2. Briefly stated the facts of the case are that the defendant No. 1, Sh. Shashi Kant Joshi who is a proprietor of defendant No. 2-M/s. Joshi Coal Company was given the facility of cash credit limit by the plaintiff Bank. This facility was extended to the defendants on their request and the limit was fixed at Rs.30,000. The father of defendants Nos. 3(a) and 3(b) who was the original defendant No.3 stood guarantee for repayment of the aforesaid amount. The facility was granted on the condition that the outstanding balance would carry interest @ 18% per annum to be charged on monthly basis. It is also proved on record that this cash credit facility was enhanced from Rs. 30,000 to Rs.70,000 and after enhancement also, the defendant No. 3 stood guarantee for repayment of the amount. Since the amount was not repaid within time, the plaintiff filed suit for the recovery of

Rs. 63,102 alongwith cost and future interest which was decreed by the learned Trial Court vide judgment and decree dated 27.5.1993.

3. Thereafter, an appeal was filed by the defendants. The sole point urged in the appeal was that the suit was not within limitation. The appeal was accepted by the learned District Judge, Shimla, and the suit of the plaintiff was dismissed on this short ground.

4. I have heard Sh. J.L. Kashyap, learned Counsel for the Bank and Sh. K.D. Sood, Ms. Devyani Sharma and Sh. Neeraj Gupta, learned Counsel for the respondents.

5. It has been strongly contended by Sh. J.L. Kashyap that Article 1 of the Limitation Act is applicable to a cash credit facility. He submits that allegations regarding the acknowledgment of the debt by part payment of the debt within the period of limitation were specifically made in para 6 of the plaint and according to him, there is no specific denial to the allegation and, therefore, it should be presumed that the allegations made by the plaintiff have been admitted. On the other hand, learned Counsel for the respondents have supported the judgment of the learned Lower Appellate Court.

6. As far as the first point is concerned, Article 1 of the Limitation Act is applicable when the claim is for the balance due on a mutual, open and current account where there have been reciprocal demands between the parties. The limitation in such an eventuality is three years and shall begin from the close of the year in which the last item admitted or proved is entered in the account. In support of his contention, Sh. Kashyap has placed reliance on a judgment of the learned Single Judge of the Punjab and Haryana High Court in State Bank of India v.

M/s Kashmir Art Printing Press, Sirsa and others, AIR 1981(68) P&H 188, wherein it was held as follows:

“Where a person who was allowed the benefit of Cash Credit Account had been withdrawing and repaying amounts upto the limit of Rs.5,000 from time to time and on the debit balance, interest was accruing, the limitation would be that provided under Article 1 of the 1963 Limitation Act. According to Article 1, the limitation is three years, which starts from the close of the year in which the last item admitted or proved is entered in the account, such year to be computed as in the account; meaning thereby that the year in which the last entry is made would be excluded in computing the period of limitation and thereafter i.e. from the following January, the limitation of three years would start.”

7. On the other hand, the learned Counsel for the respondents rely upon two judgments of this Court but it is only necessary to make reference to the judgment of a Division Bench of this Court in M/s Roshan Lal Kuthiala and Anr. v. Raja Rana Yogendra Chandra and Ors., AIR 1996 H.P. 14 wherein it was held as follows:

“An account is mutual, open and current when it is an account be two parties, having mutual dealings which is running or current that is,