- (1.) THIS case comes before us on a reference made by a learned Single Judge of this Court. The only question involved is that of limitation and it arises in the following circumstances :
(2.) THE plaintiff-respondent Mt. Dhapu brought a money suit for Rs. 485/- on the basis of a Khata Ex. P-1 which is set out below : Bhai Tarachand Manrupji ro Khato 1992 ra Po Sud 11. Rs. 1003/-S. 2000 ra Po Sud 1 tak Ha 800/-S. 1992 miti Poh 11 Rokar Rs. 800 akhre : Tara-chndji ra 1000)/- S. Sd/-Tarachand. 1992 ra Poh Vad 13 su lagakar 2000 ka Pol: Sud 1 tak parchuni upariya tumar chadva Su jama kina Jalchandji. Ramcharan huva 1in miti Su lagay aj tak ra raju. 576/-S. 2000 ka Poh Sud 1 tak ha : Tarachadji bhare ra S. 2000 ke Poh Sud 1 tak bhara c 1003/- Ex hazar teen. Sd/-1376/-Tere sau chhiyantar. Tarachand. Sd/- Tarachand Manrupji, One of the grounds on which the suit was contested by the defendants appellants was that Ex. P-l merely contained an acknowledgment of the correctness of account and, therefore, the claim could not be founded on such an acknowledgment. It was further urged that the Khata did not fall within the ambit of the term "account stated" since no balance was struck, that Article 64 of the Indian Limitation Act did not therefore apply and that since more than six years had elapsed on the date of the account since the original amount of Rs. 800/- was advanced, the suit was beyond limitation. This argument did not find favour with the trial Court and so the suit was decreed. The defendants went in appeal and urged the same ground before the District Judge, Pali, but they were not successful. They have, therefore, filed a second appeal to this Court. When the case came for hearing before a learned Single Judge of this Court, it was again urged by the appellants' learned counsel that Ex. P-l was not an "account stated" because no balance was struck. Learned Judge has remarked that the parties did not produce "any direct authority before him, that the point raised was not free from difficulty and so he has referred the case for decision by a Division Bench. Thus the only point which arises for determination before this Court is whether Ex. P-1 can be said to be an "account stated". It is obvious from a perusal of Ex. P-1 that the original amount, which was lent to the defendant Tarachand, was Rs. 800/- on Pos Sud 11, Samwat 1992. Thereafter, there was no entry in this Khata till Pos Sud 1 Samwat 2000. It is common ground between the parties that the period of limitation under the Marwar Limitation Act was six years and that, period had expired long before other entries were made in this Khata on Pos Sud 1 Samwat 2000. Therefore, unless it is held that Ex. P-l is an "account stated", the suit would be clearly beyond limitation. Learned counsel for the appellant has urged that Tarachand appellant had simply signed the debit and credit entries on Pos Sud 1 Samwat 2000 in order to admit the correctness of the items on either side, but no balance was struck by him and he had not admitted his liability to pay any specific amount and, therefore, the said document does not come within the ambit of the term "account stated". Learned counsel for the respondent, on the other hand, has contended that the account clearly showed how much balance was payable by the appellant to the respondent and that the mere fact that balance was not struck does not take out Ex. P-1 from the term "account stated". We have given due consideration to the arguments advanced before us by learned counsel for both the parties and we think that the striking of a balance is an essential ingredient of the term ''account stated" and if it is not done, the account cannot be called "account stated'' as understood in law. To support this view we may first refer to Article 64 of the Indian Limitation Act which deals with "account stated" and which runs as follows: " 64. For money payable to the plaintiff for money found to be due from the defendant to the plaintiff on account stated between them". It is clear from the language of this Article that in an "account stated", money should be found to be due from the defendant to the plaintiff. Now, the money can be found to be due only when the items on one side are set-off against the items on the other side and a balance is struck. In Wharton's Law Lexicon (Fourteenth Edition) at page 14, ''account stated" is shown to mean as follows : " An account stated is the admission of a balance due from one party to another, and that balance being due there is a debt; the statement of the account and the admission of the balance implies a promise in law to pay it. " Thus, according to the meaning given above of the term "account stated", there should first be a statement of account between the parties and an admission of a balance due from one party to another. Chitty's treatise on the Law of Contracts says as follows about "account stated" at page 115 : " Wherever there is an admission by one party against whom another has a money claim, that there is a balance due from him to the other, there arises from such admission a quasi contract, which affords a distinct cause of action to pay the balance on request, as upon "account stated". An admission is essential for instance, the mere acceptance without comment of a tradesman's bill is not enough. It is not necessary in order to support a claim upon an account stated to show the nature of the original debt or to prove the specific items constituting the account. But it must appear that at the time of the accounting certain claims existed, of and concerning which an account was stated, that a balance was then struck and agreed upon, and that the defendant admitted that a certain sum was then due from him as a debt". In Siqueria v. Noronha, AIR 1934 PC 144 (A) and Bishun Chand v. Girdhari Lal, AIR 1934 PC 147 (B), which are leading cases on "ac-count stated" we find that a balance was struck in both of them. In the latter case, it was observed by their Lordships that "the essence of an account stated is not the character of the items on one side or the other, but the fact that there are cross items of account and that the parties mutually agree the several amounts of each and, by treating the items so agreed on the one side as discharging the items on the other side pro tanto, go on to agree that the balance only is payable". We further find that in the case of Ashby v. James & Co. , (1843) 11 M & W 542 (C), to which reference has been made by their Lordships in AIR 1934 PC 147 (B), the defendant had struck a balance. In that case it was observed by Baron Alderson as follows : " The truth is, that the going through an account, with items on both sides, and striking a balance, converts the set-off into payments; the going through an account where there are items on one side only, as was the case in Smith v. Forty, (1829) 4 Car & P 126 CD) does not alter the situation of the parties at all, or constitute any new consideration. Here the striking of a balance between the parties is evidence of an agreement that the items of the defendant's account shall be set-off against the earlier items of the plaintiff's, leaving the case unaffected either by the Statute of Limitation or the set-off". Learned counsel for the respondent has not been able to refer to a single case where it might have been held that even without striking a balance, an account can come within the purview of the term "account stated". In our opinion, 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. It is one thing for a defendant to admit the correctness of certain items on debit and credit sides of his account with the plaintiff, and it is a different thing for him to acknowledge adjustment of accounts or to admit his liability to pay a certain amount. It happens in many cases, as it appears in the present case that certain items of the plaintiff's account are not recoverable because of the bar of limitation. If the defendant strikes the balance after going through his account with the plaintiff, then it means that he has set-off his payments towards the plaintiff's items and he has promised to pay the said balance but if the balance is not struck, then it cannot be said that he had agreed to set-off the payments towards particular items of the plaintiff unless there is something further in the account to indicate his intention. The absence of the striking of balance on the other hand indicates that there was some sort of disagreement between the parties or some hitch on account of which the defendant did not agree to pay a particular sum. If all the items are agreed upon, then in the normal course, there should be no hesitation in deducting the smaller amount from the larger one and showing the balance payable by one party to the other. A plaintiff who bases his suit on accounts, can always recover those amounts which are within limitation. The advantage of basing a suit on "account stated" is that the period of limitation begins to run from the date on which the defendant admits his liability to pay the balance even though some items in the account may be time-barred. In that case, the defendant cannot be heard to say that certain items of the plaintiff's account were time-barred and that the account should, therefore, be reopened. For all these reasons, we think that the striking of balance is an essential ingredient of "account stated". In the present case, it appears that the appellant Tarachand put his signature on both the debit and the credit side in order to show that he admitted the correctness of what was stated above, but he purposely did not strike the balance either because there were some more items in dispute between the parties about which they could not agree or there were some other reasons best known to the parties. We, therefore, think that Ex. P-l is not an "account stated" and the respondent's claim is time-barred.
(3.) WE allow the appeal, set aside the decrees of the Courts below and dismiss the suit. The appellant will receive costs in this Court only. .;