M W PRADHAN Vs. PANCHAL ENGINEERING WORKS

JUDGEMENT

(1.) THIS appeal arises out of a suit filed by the Court Receiver of a firm called Prabhat Trading Company against the defendant for the recovery of a sum of Rs. 7,000/- and odd due at the foot of the accounts. The Prabhat Trading Company (hereinafter referred to as the plaintiff-firm) was a firm carrying on business at Bombay in the sale and purchase of papaer and engineering goods. The defendant was firm carrying on business as iron and brass founders at Ahmedabad. Among other things they were manufacturing lathe machines. The defendant-firm was placing others with the plaintff-firm for the supply of engineering goods. In the same way, the plaintff-firm was also placing orders with the defendant-firm for the supply of the products of their factory. There was an account opened in the name of the defendant-firm in the plaintiff-firm, and entries were made in this account as transactions took place. The last entry made in the account with the plaintiff-firm was on 17-6-1950. It is common ground that the accounting year ran from Divali to Divali and during the relevant year viz. , 1949-50, 9-11-50 would be the closing date of the accounting year. Disputes started between the partners of the plaintiff-firm and on 24-7-50 one of the partners filed a suit for dissolution of the firm on the Original Side of this Court (No. 1001 of 1950 ). On 18-8-1950 the Court Receiver had been appointed as receiver to manage the property of the firm and to realise the assets. On 20-4-50 the Court Receiver wrote a letter (Ex. B collectively) to the defendant-firm stating that a suit for dissolution of the partnership was pending in the High Court of Bombay and that he was appointed as receiver for collecting the assets and that it was noticed that a sum of Rs. 18,000/- and odd was due at the foot of accounts from the defendant-firm. He called upon the defendant-firm to make that payment good and thereafter action in case opf its failure to pay the amount. The defendant-firm gave a reply on 27-4-51 stating that the balance shown by the plaintiff-firm against the defendant-firm was not true and contending inter alia that a big sum was due from the plaintiff to the defendant on account of delivery of nineteen lathe machines not being takne in pursuance of a contract between the parties. The defendant, therefore, called upon the plaintiff to settle the account and accept delivery of the remaining nineteen lathe machines. The Receiver, therefore, filed a suit for the recovery of the balance due to the plaintiff-firm at foot of accounts. The plaintiff-firm alleged that there were mutual dealing between the parties sine May 1945 in respect of the goods supplied from time to time by the plaintiff to the defendant, and the goods supplied by the defendant to the plaintiff from time to time. The plaintiff averred that the account continued to be mutual, open and current till the date of the suit. At Paragraph (7), the plaintiff referred to the correspondence that ensued between the Receiver and the defendant. It is not neceswsary to set out the details of that correspondence at this stage of the discussion.

(2.) THE defendant-firm put in its written statement and resisted the plaintiff's claim on several grounds. It denied that the account between the parties was mutual, open and current. Alternatively, it contended that assuming that the account was mutual, open and current, the same ceased to continue as such on the dissolution of the plaintiff's partnership. At paragraph (12) of the written statement, the defentand gave details of the set-off, which it claimed from the plaintiff. At paragraph (16), it referred to the internal disputes between the members of the plaintiff-firm and stated:-

(3.) APPROPRIATE issues were framed, but the trial Court chose to treat issues Nos. 1 to 3 as preliminary issues. These issues ran as follows:- (1) Whether there was a mutual, open and current account between the parites before the suit was filed? (2) Whether the suit is barred by the law of limitation? (3) Whether the partnership firm of Messrs Prabhat Trading Co. , was disolved on 20th June 1950 or on 24th July 1950?".