Source: http://www.rishabhdara.com/sc/view.php?case=916
Timestamp: 2019-11-18 17:16:24
Document Index: 1772813

Matched Legal Cases: ['art.\t115', 'art. 85', 'art. 115', 'art. 115', 'art. 115', 'art. 85', 'art. 115', 'art. 115']

THE HINDUSTAN FOREST COMPANY versus LAL CHAND & ORS
1959 AIR 1349	1960 SCR (1) 563
THE HINDUSTAN FOREST COMPANY V. LAL CHAND & ORS [1959] RD-SC 103 (19 August 1959)
19/08/1959 SARKAR, A.K.
CITATION: 1959 AIR 1349	1960 SCR (1) 563
Limitation-Mutual account--Reciprocal demands-Contract	for supply of goods-Delivery of goods and	payments, whether independent obligations-Jammu and Kashmir Limitation Act, 1995 (Jammu and Kashmir IX of 1995), art.	115-Indian Limitation Act, 1908 (9 of 1908), art. 85.
Under a contract for the sale of goods, the buyer paid an advance amount towards the price of the goods to be supplied and various quantities of goods were thereafter delivered by the sellers. The buyer from time to time made various other payments towards the price of the goods after they had	been delivered. The last delivery of goods was made on June	23, 1947, and the suit was brought on October 10, 1950, by	the sellers	for the balance of	the price due	for goods delivered. The sellers pleaded that the suit	was within time and relied on art. 115 Of the	Jammu	and Kashmir Limitation Act under which the period of limitation was	six years for a suit " for the balance due on a mutual, open and current	account, where there have been	reciprocal demands between the parties.
564 Held, that art. 115 was not applicable to the case as there was no	mutual account based on reciprocal demands.	The payment made by the buyer after deliveries had been given to it were in discharge of the obligations to pay the price due on account of these deliveries; the amount paid in advance was paid under the contract in discharge of obligations to arise ; none	of such payments created an	independent obligation in the sellers towards the buyer.
Tea Financing	Syndicate Ltd.	v. Chandrakamal Bazbaruah, (1930) I.L.R. 58 Cal. 649, approved.
Appeal from the judgment and decree dated 4th Jeth 2011,	of the Jammu and Kashmir High Court in Appeal No. 1 of 2009, arising	out of the judgment and decree dated the 2nd Magh 2008, of the said High Court in original suit No. 40	of 2007.
S.K. Kapur and N. H. Hingorani, for the appellant. Bhawani Lal and K. P. Gupta, for the respondents. 1959.	August 19.
The Judgment of the Court was delivered by SARKAR J.-This appeal arises out of a suit filed in the High Court of Jammu and Kashmir for recovery of price of goods sold and delivered. The only point involved	in it	is whether	the suit was governed by art. 115 of the Jammu	and Kashmir	Limitation Act. The courts below have	held,	and this has not been disputed in this appeal, that if that article did not apply, the suit would fail on the ground of limitation.
Sometime	in November 1946, the parties entered into	an agreement in writing for the supply by	the sellers, the respondents, to the buyer, the appellant, of 5,000 maunds of maize, 500 maunds of wheat and 100 maunds of Dal at	the rates and times specified. The agreement stated that on the date it had been made the buyer had paid to the sellers	Rs.
3,000 and had agreed to pay a further sum of	Rs. 10,000 within ten or twelve days as advance and the balance due for the price of goods delivered, after the expiry of every month.	It is admitted that the said sum of Rs. 10,000 was later paid by the buyer to the sellers.
565 Various quantities of goods were thereafter delivered by the sellers to the buyer and though such deliveries had not been made strictly at the times specified in the contract, they had been accepted by the buyer.	The buyer in its turn made various	payments towards the price of the goods delivered but not month by month and had not further paid it in full.
The last delivery of goods was made on June 23,	1947,	and the suit was brought on October 10, 1950, for the balance of the price due.
----------------------------------------------------------- Description of suit Period of Limitation Time from which period begins to run ------------------------------------------------------------ For the balance due Six years	The close of the on a mutual open and	which the last current account, wh-	item admitted or ere there have been	proved is entered reciprocal demands	in the account;
between the parties	such year to be computed as in the account.
If the article applied the suit would be clearly within time as the last item found to have been entered in the account was on June 23, 1947. The only question argued at the	bar is whether the account between the parties was mutual.
The question what is a mutual account, has been	considered by the	courts frequently and the test to determine it is well settled. The case of the Tea Financing Syndicate Ltd.
v. Chandrakamal Bezbaruah (1) may be referred to. There a company had been (1) (1930) I.L.R. 58 Cal, 649.
72 566 advancing monies by way of loans to the proprietor of a	tea estate and the	proprietor had been sending tea to	the company	for sale and realisation of the price.	In a suit brought	by the company against the proprietor of the	tea estate for recovery of the balance of	the advances made after giving credit for the price realised from the sale	of tea, the question arose as to whether the case was one	of reciprocal demands resulting in the account between	the parties being mutual so as to be governed by art. 85 of	the Indian Limitation Act.	Rankin, C.J., laid down at p.	668 the test ,to be applied for deciding the question in these words:
" There can, I think, be no doubt that the requirement	of reciprocal demands involves, as all the Indian	cases have decided	following Halloway, A.C.J., transactions on each side creating independent obligations on the other and	not merely transactions which create obligations on	one side, those on the other being merely complete or partial discharges of such obligations.	It is further	clear that goods as well as money may be sent by way of payment.	We have therefore to see whether under the deed the tea, sent by the defendant to the plaintiff for sale, was sent merely by way of discharge of the defendant's debt or	whether	it was sent in the course of dealings designed to create a credit to the defendant as the owner of the tea sold, which credit when brought into the account would operate by way of set-off to reduce the defendant's liability." The observation of Rankin, C.J., has never been dissented from in	our courts and we think it lays down the	law correctly. The learned Judges of the appellate bench of the High Court also appear to have applied the same test as that laid down by Rankin,	C.J. They however came to	the conclusion that the account between' the parties was mutual for the following reasons:
" The point then reduces itself to the fact that	the defendant company had advanced a certain amount of money to the plaintiffs for the supply of grains.	This excludes the, question of monthly 567 payments	being made to the plaintiffs. The	plaintiffs having received	a certain amount of money, they became debtors	to the defendant company to this extent, and when the supplies exceeded	Rs. 13,000 the	defendant company became debtors to the plaintiff and later on when again	the plaintiff 's supplies exceeded the amount paid to them,	the defendants again became the debtors. This would show that there were reciprocity of dealings and transactions on each side creating independent obligations on the other." The reasoning is clearly erroneous. On the facts stated	by the learned Judges there was no reciprocity of dealings;
there were no independent obligations.	What in fact	had happened	was that the	sellers had undertaken to make delivery	of goods and the buyer had agreed to pay for them and had in part made the payment in advance. There can	be no question that in -so far as the payments had	been made after the goods had been delivered, they had been made towards	the price due.	Such payments were in discharge	of the obligation created in the buyer by the deliveries made to it to pay the price of the goods delivered and did	not create any obligation on the sellers in favour of the buyer.
The learned Judges do not appear to have taken	a contrary view of the result of these payments.
The learned Judges however held that the payment of	Rs.
13,000 by the buyer in advance before delivery had started, made the sellers the debtor of the buyer and had created an obligation on the sellers in favour of	the buyer. This apparently was the reason which led them to the	view that there were reciprocal demands and that the transactions	had created	independent obligations on each of the parties.
This view is unfounded.	The sum of Rs. 13,000 had been paid as and	by way of advance payment of price of goods to be delivered. It was paid in discharge of obligations to arise under the contract, It was paid under the terms of	the contract	which was to buy goods and pay for them. It	did not itself create any obligation on the sellers in favour of the buyer; it was not intended to be and did not amount	to an independent transac- 568 tion detached from the rest of the contract. The sellers were under an	obligation to deliver the goods but that obligation arose from the contract and not from the payment of the advance alone. If the sellers had failed to deliver goods, they would have been liable to	refund	the monies advanced	on account of the price and might also	have been liable in damages, but such liability would then have arisen from the contract and not from the fact of the advances having been made. Apart from such failure, the buyer could not recover the monies paid in advance.	No question has, however,	been raised as to any default on the part of	the sellers	to deliver goods. This case therefore involved	no reciprocity of	demands. Article 115	of the	Jammu	and Kashmir Limitation Act cannot be applied to the suit.
The learned Judges appear also to have taken the view that since the goods were not delivered at the times fixed in the contract, and the prices due were not paid at the end of the months, the parties clearly indicated their intention not to abide by the contract.	We are unable to agree	with this view. Such conduct only indicated that the parties	had extended	the time fixed under the contract for delivery	of the goods and	payment	of price, leaving the contract otherwise unaffected.
The learned Judges also observed that the contract did	not provide how the	amount advanced was to be adjusted. But it seems clear that when the contract provided that the advance was towards the price to become due, as the learned Judges themselves held, it followed by necessary implication that the advance had to be adjusted against the price when	it became due. So there was a provision in the contract	for adjusting the advance.
We think it fit also to observe that it is somewhat curious that any question as to the application of art. 115 was allowed	to be raised.	The applicability of that article depends	on special facts. No such facts appear in	the -plaint.	There	is no hint there that the account	was mutual.	We feel sure that if the attention of the learned Judges of the High Court had been 569 drawn to this aspect of the matter, they would not have permitted any question as to art. 115 being raised, and	the parties would have saved considerable costs thereby.
We therefore come to the conclusion that the appeal must	be allowed.	The judgment and I order of the learned Judges of the appellate bench of the High Court are set	aside	and those of the learned Single Judge of the High	Court are restored. The appellant will be entitled to the costs	in this Court and of the hearing of the appeal before the High Court.