Chunnilal vs Ghanshyamdas And Ors.

on 15 September, 1970

Rajasthan High Court

Chunnilal vs Ghanshyamdas And Ors. on 15 September, 1970
Equivalent citations: AIR 1971 Raj 286, 1970 (3) WLN 792
Author: C Lodha
Bench: C Lodha
JUDGMENT C.M. Lodha, J.
1. This is a defendant's second appeal arising out of a money suit.
2. Briefly stated, the case of the plaintiff-respondent Ghanshyamdas is that defendants Nos. 1 to 3
Chunilal. Nemichand and Mitha Lal were working as commission agents in partnership under the
name and style of firm. Jairoop Chunnilal at Jodhpur in connection with sale and purchase of gold
and silver bars and Ganeshmal defendant No. 4 transacted business in sold and silver through the
agency of defendants Nos. 1 to 3 in Section 2001 and Section 2002. It was further alleged in the
plaint that Ganesh Mal had also money dealings with defendants Nos. 1 to 3 who used to maintain
accounts of all the dealings of Ganeshmal of cash as well as of gold and silver. It was averred that on
Srawan Bad 9, Section 2002, Ranulal the Munim of firm Jairoop Chunnilal sent an account to
Ganeshmal marked Ex. 1 showing an amount of Rs. 29,780/14/3 to the credit of Ganeshmal and Rs.
22,422/12/6 on the debit side. Thus according to this account a sum of Rs. 73555/1/9 was due to
Ganeshmal from the appellant towards which Rs. 1,000/- were paid later on by
defendant-respondent Nemichand to Ganeshmal through a Hundi and thus a sum of Rs. 6358/1/9
remained outstanding in favour of Ganeshmal against the defendant-appellant. The plaintiff's case
is that this debt was assigned by Ganeshmal to him by a deed of assignment dated Chet Sudi. 7
Section 2006, notice of which was also given to the defendants Nos. 1 to 3. The plaintiff, therefore,
filed the present suit in the Court of Civil Judge. Jodhpur on 26-7-1951 against the firm Jairoop
Chunnilal through its partners defendants Nos. 1 to 3 for recovery of Rupees 6358/1/9 as principal
and Rs. 2352/14/3 as interest, total Rs. 8711/-. The assignor of the debt viz. Ganeshmal was also
impleaded as a defendant in the suit and it was prayed that in case it is held that defendants Nos. 1
to 3 are not liable for the suit amount a decree for the same be passed against Ganeshmal.
3. The defendants Nemichand, Mithalal and Ganeshmal did not appear in spite of service, and
consequently they were proceeded against ex parte. The appellant Chunnilal filed his written
statement and denied the plaintiff's suit. He admitted that defendants Nos. 1 to 3 used to carry on
business as 'Adativa' in partnership in gold and silver under the name. Firm Jairoop Chunnilal in
Section 2001 and closed the same on Asad Sudi 15. Section 2002. However, he denied knowledge
about Ganeshmal's doing any business through firm Jairoop Chunnilal and pleaded ignorance as to
the amounts deposited by Ganeshmal and the resultant profits and losses in the alleged transactions
of gold and silver. He denied that Ranulal had any authority as Munim to sign accounts on behalf of
Firm Jairoop Chunnilal and that any amount was due to Ganeshmal from the said firm. He also
pleaded that the account Ex. 1 cannot be the basis of the suit and in any case the suit is barred by
limitation. He took certain other pleas but it is not necessary to refer to them as they are not being
relied upon now.

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Chunnilal vs Ghanshyamdas And Ors. on 15 September, 1970

4. After recording the evidence produced by the parties, the learned Civil Judge, Jodhpur by his
judgment dated 8-5-1958 decreed the plaintiff's claim for the principal sum Rs. 6358/1/9 and also
awarded pendente lite and future interest on this amount, but rejected the plaintiff's claim for
interest prior to the date of the suit.
5. Aggrieved by the judgment and decree of the trial court Chunnilal filed appeal in the Court of
District Judge, Jodhpur and the plaintiff also filed cross-objection for interest upto the date of the
suit. The learned District Judge dismissed the appeal as well as the cross-objection. Consequently,
the defendant Chunnilal has come in second appeal to this Court, and the plaintiff has also filed
cross-objection regarding interest upto the date of the suit.
6. Learned counsel for the appellant has urged only the following points in support of the appeal:
(1) The account Ex. 1 is a mere acknowledgment which cannot form the basis of the suit.
(2) Ranulal, who has signed the account Ex. 1 had no authority to do so on behalf of the
defendant-firm Jairoop Chunnilal and consequently the defendants Nos. 1 to 3 are not bound by the
same.
(3) The learned District Judge has erred in law in applying Article 62 of the Marwar Limitation Act
(which was in force at the relevant time). Article 89 is the only appropriate Article applicable to the
facts and circumstances of the case, and since this Article prescribes a period of three years, the suit
is beyond limitation, and must be dismissed as such.
(4) The plaintiff has failed to prove that the defendant Ganeshmal transacted business in gold and
silver in the agency of defendants Nos. 1 to 3, as a result of which the suit amount remained due to
defendant No. 4 from defendants Nos. 1 to 3.
(5) In any case the plaintiff has failed to prove that the Samwat Year used to change from Kartik
Sudi 1, in the account books of defendants Nos. 1 to 3, and consequently the suit would be beyond
limitation even If six years' period is applied.
7. I would first take up points Nos. 1 and 4 as in my opinion they can be conveniently disposed of
together. The lower court has held that Ex. 1 is not an account stated inasmuch as no balance has
been struck in it. This position is not contested by any of the parties. In Tarachand v. Mst. Dhapu,
1957 Raj LW 365 (AIR 1957 Raj 110) it was held that:
"Striking of a balance is essential for a real "account stated" because unless that is done, it cannot be
said that the defendant agreed to set off his payments towards the earlier items of the plaintiff or
that he had admitted that a certain sum was due from him and to pay the same."
8. Learned counsel for the respondent, however, submits that there is an unconditional promise
contained in Ex. 1 to pay the amount. It is stated therein that the amount due on the account will be
paid in instalments. The contention of the learned counsel is that even though Ex. 1 is not an
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Chunnilal vs Ghanshyamdas And Ors. on 15 September, 1970

'account stated' yet it is an acknowledgment containing an unconditional promise to pay, and

therefore, the suit can be based on it. In the alternative he has submitted that the plaintiff has not
based his suit merely on Ex. 1 but has alleged in para No. 7 of the plaint that the cause of action
arose when transactions took place between the defendant No. 4 Ganeshmal and the firm Jairoop
Chunnilal from Section 2002 Srawan Bad 9 to Section 2006 Chet Sudi 7. In this connection he has
invited my attention to issue No. 1, which reads as under:
"1. Whether defendant No. 4 transacted the business of silver bars, gold Mohars and cash in the
'adat' of the firm of defendants Nos. 1 to 3 and Rupees 6352/1/9 remained due against defendants
Nos. 1 to 3 in that business."
9. It is also argued on behalf of the plaintiff-respondent that the defendant had not raised any such
specific plea in the written statement that the suit cannot be based on Ex. 1. and the only objection
in this connection was that Ex. 1 was a mere acknowledgment and hence not admissible in evidence
being unstamped, which was the subject matter of issue No. 7.
10. I have considered the rival contentions of the parties. In Jeevrai v. Lalchand. AIR 1969 Raj 192
(FB) it was held (per majority) that an acknowledgment if it implied a promise to pay can give rise to
a fresh cause of action, and can be made the basis of a suit It was observed that a mere
acknowledgment in order to form the basis of a suit must be an agreement under which the
defendant has to pay a particular sum of money to the plaintiff. A distinction was however, brought
out between an acknowledgment under Section 19 of the Limitation Act 1908 which may be
unilateral transaction and a document bilateral in nature, Bhandari J. (Tyagi J., agreeing with him)
observed as follows:
"I do not mean to say that in all cases an unconditional acknowledgment could form the basis of the
suit. As I have already pointed out in the opening part of my judgment that an acknowledgement
under Section 19 may be a unilateral act and such an acknowledgment may not be sufficient to form
the basis of the suit. Unless there are bilateral acts which give rise to an agreement enforceable at
law under the provisions of the Indian Contract Act, there can be no question of a unilateral
transaction forming the basis of a suit."
11. In the present case the document Ex. 1 undoubtedly evidences a unilateral act of the defendants
Nos. 1 to 3. It is not a bilateral document. It is an account sent by the defendants Nos. 1 to 3 to
Ganeshmal agreeing to pay what may be due. Ex. 1 does not contain a promise to pay any amount in
express terms. It is only an acknowledgment by a unilateral act of the defendants and according to
the majority view expressed in Jeevrajs case AIR 1969 Raj 192 (FB) (supra), it cannot form the basis
of their suit.
12. However, while deciding issue No. 1 the trial court has found on the basis of the evidence of P. W.
1 Ganeshmal. P. W. 3 Kedarnath, and P. W. 5 Ghanshyam, and the previous accounts Ex. 6 & Ex. 7
corroborated by the letters Ex. 8. Ex. 10, Ex. 11. Ex. 13 and Ex. 14 to Ex. 17 that the defendant
Ganeshmal did business of sale and purchase of gold and silver bars through the firm of the
defendants Nos. 1 to 3 as a result of which a sum of Rs. 6358/1/9 remained outstanding against the
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Chunnilal vs Ghanshyamdas And Ors. on 15 September, 1970

defendants' firm Jairoop Chunnilal. This finding was not assailed before the learned District Judge,
and all that was contended before him in this connection was that Ex. 1 was merely an
acknowledgment. Even in this Court the learned counsel for the appellant made no attempt to show
how the finding arrived at by the learned trial court that the amount of Rs. 6358/1/9 was due to
Ganeshmal from defendants Nos. 1 to 3 is erroneous? The defendants Nos. 1 to 3 have not produced
their account books. I am consequently of the opinion that the suit is not based on Ex. 1 alone and
that the plaintiff has succeeded in proving that the defendant No. 4 Ganeshmal did business of sale
and purchase of gold and silver bars through the agency of the defendants Nos. 1 to 3 as a result of
which a sum of Rs. 6358/1/9 remained outstanding against the defendants Nos. 1 to 3.
13. The next contention that Ranulal had no authority on behalf of defendants Nos. 1 to 3 to sign the
account Ex. 1 involves a pure finding of fact based on pure appreciation of evidence. It is in the
evidence of Ganeshmal, Shrigopal, Kedarnath and Jugal Kishore that Ranulal was working as a
Munim and Karinda at the firm of Jairoop Chunnilal. The only argument advanced by the learned
counsel for the appellant in this connection is that there is no evidence to show that Ranulal had
executed similar other documents. In my opinion the contention raised on behalf of the appellant in
this connection has no substance in view of the overwhelming evidence produced from the side of
the plaintiff that Ranulal was acting as a Munim and Karinda at the defendants firm, and had
authority to send the accounts, signed by him on their behalf.
14. This brings me to the question of limitation. It has been strenuously argued on behalf of the
appellant that Article 89 of the Marwar Limitation Act which prescribes a period of three years
applies in the present case. Article 89 reads as under:-"89. By a principal against his agent for movable property received by the latter and not accounted
for :
Three years.
When the account is, during the continuance of the agency, demanded and refused or, where no
such demand is made, when the agency terminates."
It is submitted that the view of the learned District Judge that this Article applies only to a suit in
which accounts have to be taken and since in the present case the accounts had already been
rendered by the agent, this Article has no application, is erroneous. It is argued that the phrase
movable property used in Article 89 includes money. In support of his contention the learned
counsel for the appellant has relied on Md. Amirul Islam v. Md. Abdul Hamid, AIR 1934 Cal 238;
Kashiram v. Santokhbai, AIR 1958 Madh Pra 91 and Thomman Thresia v. Pothen Chacko, AIR 1957
Ker 155.
15. On the other hand learned counsel for the respondent has placed strong reliance on Jasrai v.
Devichand. ILR (1952) 2 Raj 459 in support of his contention that Article 89 has no application. It
has also been argued on behalf of the respondent that the appropriate Article applicable to the
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Chunnilal vs Ghanshyamdas And Ors. on 15 September, 1970

present case is Article 85, which runs as under:

"85. For the balance due on a mutual open and current account where there have been reciprocal
demands between the parties.
six years.
The close of the year in which the last item admitted or proved is entered in the accounts such year
to be computed as ia the account."
In the alternative he submits that even if the case is taken to be covered by Article 62 the suit would
be within limitation. It may be necessary to mention here that under the Marwar Limitation Act
which governs the present case the limitation under Articles 62 and 85 is six years, whereas the
limitation under Article 89 is three years and that accounts for the anxiety of the appellant to bring
the case within the purview of Article 89 so that he may succeed in defeating the plaintiff's claim on
the ground of limitation.
16. In AIR 1934 Cal 238 it was observed that the term 'movable property' in Article 89 includes
money and therefore Article 89 applies to the suit for the recovery of money received by the agent on
behalf of the principal and not accounted for. Certain rulings were referred to in that case in support
of the contention that Article 89 is only applicable when the suit is for accounts. But the learned
Judges of the Calcutta High Court observed that Article 89 also applies to a claim for a balance of
account, but there is no reason to suppose that it is limited only to suits for account.
17. In AIR 1958 Madh Pra 91 it was observed that from the language of Article 89 it is manifest that
its applicability is not confined to suits for accounts and that it is applicable for the recovery of any
movable property which has been received by the agent and which has not been accounted for.
18. In AIR 1957 Ker 155 the plaintiff had entrusted to the defendant a sum of money for negotiating
and obtaining for him a sale from 'K' and on settlement of terms of the sale the defendant was to pay
the amount entrusted as an advance towards the sale consideration. The defendant failed to do the
same and therefore the plaintiff took the sale from 'K' direct and paid the entire amount of
consideration. Consequently, the plaintiff sued the defendant for recovery of the amount entrusted
within three years from the date of execution of the sale deed in his favour. The question was
whether the suit was barred bv limitation? It was held that the legal relationship between the
plaintiff and defendant was one of principal and agent and not merely of two persons one of whom
has received money belonging to the other, and therefore Article 62 did not apply. It was further
held that the retention of the money by the defendant without accounting for it would be either
neglect or misconduct on the part of the agent, and therefore, Article 90 of the Limitation Act was
applicable. The learned Judge also observed that Article 89 would also apply to such a case. The
applicability of Article 89 was opposed on the ground that the suit contemplated in the first column
of this Article is a suit for movable property. This argument was repelled on the ground that the
term 'movable property' would include money also. In conclusion the learned Judge held that the
period of limitation would be the same whether Article 89 or Article 90 is applied. It may be
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Chunnilal vs Ghanshyamdas And Ors. on 15 September, 1970

observed that in this case there was no discussion on the point whether Article 89 applied to suits
for accounts only.
19. Learned counsel for the respondent placed strong reliance on the following observation in a
Bench decision of this Court ILK (1952) 2 Raj 459:
"In our opinion, the ratio decidendi of the cases is that Article 89 would apply where the suit is by
the principal against his agent not only for accounts but also for recovery of money based on the
accounts."
20. In the present case it will be noticed that the suit is neither for accounts, nor for recovery of
money based on the accounts, the plaintiff has nowhere prayed for taking accounts and as sued for a
specific sum found to be due from the defendants. A perusal of the plaint would show that there is
no prayer for rendition of accounts. The plaintiff has not challenged the correctness of the account
Ex. 1 sent by the defendant to Ganeshmal. Put in other words, the plaintiff's case is that Ganeshmal
was entitled to recover the excess amount which he had paid to the defendants Nos. 1 to 3 of what
was due to him from them. Thus in view of the clear pronouncement made in ILR (1952) 2 Raj 459 I
am of the opinion that Article 88 has no application to the present case.
21. Learned counsel for the respondent has urged that the suit would be governed by Article 85 of
the Marwar Limitation Act. In support of his contention he has placed reliance on Phoolchand v.
Tarachand, ILR (1955) 2 Raj 462 where the defendant carried on business of gold and silver through
the agency of the plaintiff, who was his commission agent and who was to credit to the defendant
with the profits earned by him and debit to him the losses suffered, and the profit and losses were
intended to serve as set off against each other, it was held that it was not a case of single contractual
relationship like that of a borrower and a lender, but it was a case of dual contractual relationship
between the parties, and consequently, the suit filed by the commission agent against his principal
on such an account is governed by Article 85.
22. The law seems to be well settled that where the dealings between the parties disclose two
contractual relationships between them, there may arise demands in favour of each side against the
other. The real test to see whether there have been reciprocal demands in any particular case is to
find out whether there is a dual contractual relationship between the parties. In the present case, it
appears that prior to Ex. 1 the defendant had sent the account Ex. 6 to Ganeshmal which showed Rs.
5809/15/3 to the credit of Ganeshmal and Rupees 4578/3/6 were debited to him. Prior to Ex. 6 the
defendants had sent letter Ex. 7 containing their accounts with Ganeshanal according to which the
accounts between them stood cleared up. Ex. 1 further shows that two amounts of Rupees 5000/and Rs. 13000/- were remitted to the defendants on Jeth Sudi 12, Section 2002. A close scrutiny of
the account Ex. 1 further shows that on account of the advance of Rs. 18,000/- bv Ganeshmal on
Jeth Sudi 12, there stood a considerable balance in favour of Ganeshmal and thereafter certain
amounts were debited to him on account of losses incurred by Ganeshmal in the transactions
carried out by him through the agency of the defendants Nos. 1 to 3. In view of this state of accounts
it would not be incorrect to say that the dealings between the parties disclosed a dual contractual
relationship and there had been reciprocal demands. I am fortified in this view by the pleadings of
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Chunnilal vs Ghanshyamdas And Ors. on 15 September, 1970

the parties. In para No 2 of the plaint, it is stated that Ganeshmal had money dealings with firm
Jairoop Chunnilal and also did business In gold and silver in the latter's 'adat' (agency). The
defendant Chunnilal has not denied this fact, specifically in his written statement but has stated in
reply to this para that he has no knowledge what transactions in gold and silver had been done by
Ganeshmal in the 'adat' of Firm Jairoop Chunnilal and how much money he had advanced in cash to
the said firm and what were the profits and losses of Ganeshmal? In his statement as a witness of
the plaintiff. P. W. 1 Ganeshmal has also stated that he had money dealings with the defendant's
firm Jairoop Chunnilal and also entered into transactions for sale and purchase of gold and silver
bars through the aaency of the said firm. The defendant Chunnilal (appellant) has however deposed
in his statement that he does not know Ganeshmal at all and he had not seen any Khata of
Ganeshmal in the account books of Firm Jairoop Chunnilal. The defendants Nos. 1 to 3 have
suppressed the account books of their firm and Chunnilal has stated that the same were lost by
defendant Mithalal. But he is not able to state when they were lost. In his cross-examination he
further states that they were lost at the Railway Station of Bombay but he was not present there at
that time. Mithalal has not come in the witness-box. The irresistible conclusion that flows from the
pleadings and evidence of the parties is that there was a dual contractual relationship between
Ganeshmal and Firm Jairoop Chunnilal one as principal and agent and the other as lender and
borrower.
23. The phraseology of Article 85 is wide and comprehensive and does not exclude from its purview
the case of a principal and an agent between whom a mutual, open and current account may exist.
From the nature of the transactions carried on between the defendants Nos. 1 to 3 and Ganeshmal, it
appears that Ganeshmal was advancing money to the defendants Nos. 1 to 3 and the defendants
Nos. 1 to 3 were carrying on transactions on behalf of Ganeshmal as the letter's 'Adatiya.' In this
view of the matter. Article 85 applies to the present case and the suit is within time as the period
prescribed under this Article is 6 years from the close of the year in which the last item is admittedly
entered in the account according to the change of Samwat in the defendant's account books, namely
from Kartik Sudi 1.
24. The learned District Judge has held that Article 62 of the Limitation Act applies to the case even
though he has given no reasons in support of his finding and has merely contented himself by saying
that at least he has no doubt in this respect. This sort of dealing with a point of law by the learned
District Judge is far from satisfactory. Article 62 of the Marwar Limitation Act runs as under:
"62. For money payable
Six
When
the
by the defendant to
years,
money
is
the plaintiff for
received."
money received by
the defendant for
the plaintiff's use:

25. It may be noticed that in the present case Ganeshmal had paid Rupees 18,000/- to the
defendants on Jeth Sudi 12, Section 2002 (vide Ex. 1) and the latter was bound to pay back so much
portion of this money which remained due to Ganeshmal after adjusting the accounts, and after
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Chunnilal vs Ghanshyamdas And Ors. on 15 September, 1970

deducting all legitimate expenses and allowances admissible to the defendants Nos. 1 to 3 as the
agents of Ganeshmal. The third column of Article 62 mentions the starting point for limitation as
the date when the monev is received. In the present case it cannot be said that the liability of the
defendants to return Rs. 18,000/- or a portion thereof accrued when this amount was received
them. On the other hand this liability arose only when the accounts between the parties had been
finally closed In this view of the matter. Article 62 is not an appropriate Article to be applied to the
present case, and in my view as discussed above the present case is governed by Article 85,
according to which the suit is undoubtedly within limitation.
26. Now. It remains to consider the last submission made on behalf of the appellant, viz., whether
the plaintiff has succeeded in establishing that the Samwat Year in the defendants' Bahies changes
on Kartik Sudi 1? The defendant appellant Chunnilal has admitted in his statement on oath in clear
terms that in the account books of the Firm Jairoop Chunnilal the Samwat Year used to start from
Kartik Sudi 1. Learned counsel for the appellant has, however, urged that no such allegation Was
made by the plaintiff in the plaint. It may be pointed out that when defendant No. 1 in his written
statement pleaded that the firm Jairoop Chunnilal had closed its business on Asad Sudi 15, Section
2002, the plaintiff in his replication stated in clear terms that in the Bahies of the firm Jairoop
Chunnilal the Samwat Year used to be changed on Kartik Sudi 1. Thus this part of the case set up by
the plaintiff was admitted by the appellant Chunnilal in his own statement. Consequently, the
appellant cannot be allowed to argue against his own admission. This point is completely devoid of
force and is to be stated only to be rejected.
27. The result is that I do not find any force in this appeal and dismiss it with costs.
28. Coming to the cross-objection, it is urged by the counsel for the respondent-plaintiff that the
plaintiff should have been allowed interest upto the date of the suit. In para No. 6 of the plaint the
plaintiff has claimed Rs. 2352/14/3 as interest upto the date of the suit on the basis of contract as
well as usage. There is no evidence in support of this assertion except the statement of P. W. 1
Ganeshmal which has not been relied upon by the courts below and has also been found to be wholly
insufficient. The fact that the plaintiff has based his claim for interest on contract as well as usage,
itself weakens his case. I am also in agreement with the lower court that neither contract nor usage
for payment of interest is proved. Consequently, I dismiss the cross-objection with costs.
29. The net result is that the appeal as well as cross-objection are dismissed with costs.

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