SHIEV GOWDA Vs. CSFERNANDEZ

JUDGEMENT

(1.) The main question raised in this appeal is whether the suit is for the balance due on a mutual, open and current account, and whether there have been reciprocal demands between the parties within the meaning of Art. 85 of the Second Schedule to the Limitation Act. If so, the defendant's plea of limitation fails. If not, the plaintiffs are not entitled to recover in respect of items in the account prior in date to three years before the institution of the suit.

(2.) The District Judge held that Art. 85 applied and the suit was not barred by limitation, apparently on the ground that the accounts had been open and running for many years. He does not seem to have considered the question with reference to the words of the article "where there have been reciprocal demands between the patties." The oral evidence affords little assistance as to the course of business between the parties and we have to rely in the main on the plaintiffs accounts. The plaintiffs are merchants and the defendants are coffee- planters, and the plaintiffs accounts show that from the year 1893 the plaintiffs had been financing the defendants and the defendants had been sending consignments of coffee to the plaintiffs. In April 1893 a sum of Rs. 4,000 was advanced by the plaintiffs and the account for 1893-94 (Exhibit V) states that a document was executed for this amount. During 1893 further advances were made by the plaintiffs and sundry payments amounted to Rs. 10,700. In January 1894 a consignment of coffee was received by the plaintiffs from the defendants and other consignments were received later. These consignments were sold by the plaintiffs and the defendants were credited with the sale proceeds with interest. A balance was struck in May 1894, the defendants being debited with interest on the moneys paid by the plaintiffs and also with what was termed "commission." This was not really commission but an amount calculated at Rs. 2 per candy, every Rs. 1,000 advanced being taken as the equivalent of thirty candies in respect of advances made before any coffee was received by the plaintiffs and every Rs. 1,000 being taken as the equivalent of 10 candies in respect of advances made subsequently. The higher rate is described in paragraph 4 of the plaint as damages for the defendants default in not supplying the full quantity of coffee, in other words, for not keeping the plaintiffs fully secured in respect of advances made by them to the defendants and on their behalf. The accounts for 1895-96 (Exhibit IV) and 1896-97 (Exhibit III) show that business was continued on the same lines. In June 1896, the defendants made a cash payment of Rs. 13,000 and the balance against them was reduced to Rs. 5,500 (Exhibit II). In May 1897, the balance was Rs. 5,545 and odd and on this the plaintiffs claimed to charge interest at 15 per cent. In November, 1899, the balance shown in the plaintiffs account (Exhibit A) was Rs. 7,500 and odd and this is the amount for which the suit was brought. I am of opinion that, having regard to the course of business, so far as it can be ascertained from the plaintiffs accounts, the relation between the defendants and plaintiffs was not that of seller and buyer as regards the coffee consigned to the plaintiffs, nor that of principal and agent in respect of coffee consigned to the plaintiffs nor that of principal agent in respect of the coffee sold by plaintiffs - see Musamat Phool Koomaree Bibee V/s. Woonkar Pershad Rustoly (1867) 7 W.R. 67 at p. 70 but that the contract between the parties was, as would seem to be suggested in paragraph 4 of the plaint and in the concluding portion of paragraph 6 of the learned Judge's judgment that the plaintiffs should finance the defendants, and that defendants should keep the plaintiffs secured in respect of the advances made by the plaintiffs on their behalf b; consigning to them coffee of a value equal to the amount of their indebtedness being given credit for the proceeds of the coffee as and when sold by the plaintiffs, and that if they failed to do this they should make the further payment which is called commission but which is really payment by way of damages. I do not think it can be said that this is a case in which there are independent obligations on both tides - see the judgment of Holloway J. in Hirada Basappa V/s. Gadigi Muddappa (1871) 6 M.H.C.R. 142. No doubt if at an time the sale proceeds of the coffee had exceeded the amount c the defendants indebtedness, the plaintiffs would have bee accountable for the balance as money received for the use of the defendants. But this, in my opinion, does not in itself make the account mutual or give rise to reciprocal demands. I think the case falls within the principle of the decisions in Horgopol Premsukdas V/s. Abdul Khan Haji Mahomed (1872) 9 B.H.C.R. 429 (where certain jewels were sold by the plaintiffs on the defendants behalf and the defendants credited with the proceeds) and Velu Pillai V/s. Ghose Mahomed (1894) I.L.R. 17 M. 293. Ganesh V/s. Gyanu (1898) I.L.R. 22 B., 606, where the dealings consisted of loans on both sides and the parties were also partners, shares being debited and credited in the accounts, is clearly distinguishable on the facts. I accept the general principle laid down in the American Cyclopaedia of Law and Procedure, Vol. XXV, p. 1, 125 as applicable to the article in question under the Indian Limitation Act :--"As a general rule payments made on account by one party and credited by the other, whether in money or in goods, do not render the accounts mutual so as to defer the operation of the statute to the date of the last item, etc." lam of opinion, though the mater is not free from difficulty, that the case before us does not come within the Art. 85 of the Second Schedule to the Limitation Act and that the plea of limitation must be upheld.

(3.) The plaintiffs are only entitled to recover in respect of transactions which took place within three years prior to the institution of the suit and an account must be taken on this basis. Mr. K. Srinivasa Iyengar intimated that if the plea of limitation was upheld he would not press the point that the second defendant and defendants Nos. 3 to 8 did not form a joint family or the plea of discharge. The decree against the defendants Nos. 1 to 8 on the amount (if any) found to be due will be limited to the share of the family property. In the court below, the plaintiffs will have proportionate costs on the amount (if any found due on the taking of the accounts. Ayling J.