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Civil Appeal No.27 of 1987, decided on 7th May, 1988.

(On appeal from the Judgment of the High Court dated 8 1 1987 in Civil Appeal No. 13 of 1985).

To succeed in rejection of an action, it is enjoined upon the party seeking dismissal of suit by limitation to prove that the action was beyond time and this would depend upon the nature of an action and circumstances on which it rests.

Term "mutual, open current account" Scope. [Words and phrases].

In its ordinary sense, "current account" is an open, running or unsettled account between the parties. An "open account" is that which is yet to be finally settled, adjusted or closed and it is still running or open to future adjustment, settlement or liquidation. The term "mutual account" is used for assessments comprising mutual or reciprocal credits between the parties.

Black"s Law Dictionary ref.

Term "mutual, open current account" Meaning.

Black"s Law Dictionary ref.

Art.85 Suit for recovery of amount advanced as over draft facility by a Bank to its Customer Limitation Mutual, open current account Amount in dispute became due by failure of defendant to adjust it against the over draft facilities availed by him from time to time Statement of account produced in evidence by Bank contained numerous entries showing deposits and withdrawal by defendant Case being that of reciprocal credits, Art.85, Limitation Act, 1908 was squarely applicable Where in order to succeed, plaintiff was to bring its action before expiry of limitation of 3 years and this was not done, the plaintiff, held, had to suffer for the negligence in not bringing the action within statutory period.

S.19 Acknowledgement Words "before expiration of the period prescribed for a suit" in S.19 Connotation Application of S.19 Condition precedent, that an acknowledgement must be made within the period of limitation prescribed for the action sought to be enforced has to be fulfilled. [Words and phrases].

Section 19 of the Limitation Act, 1908 computes limitation in cases where an acknowledgement of liability has been made in writing signed by the party against whom the right is claimed, prior to expiry of limitation. In order to invoke the provisions of section 19, the condition precedent, that an acknowledgement must be made within the period of limitation prescribed for the action sought to be enforced, has to be fulfilled. When an acknowledgement is made after expiry of period of limitation it does not help to extend the limitation by computation of the period already lapsed. Reference to words "before expiration of the period prescribed for a suit" is proof of the fact that legislature was alive to the importance of situation that it was not fair and equitable to make alive a time barred claim by introduction of exception described in section 19. Therefore, the section was framed in language which permitted computation of period by virtue of acknowledgement of liability when such acknowledgement was made before the expiration of period prescribed for the suit or application in respect of any property or right.

Raja Muhammad Hanif for Appellant.

Sh. Abdul Aziz for Respondent.

Date of hearing: 7th May, 1988.

The proposition raised here in the appeal pertains to limitation, for suit for recovery of amount advanced as over draft facility by a Bank to its customer.

2. Safdar Ali Khan, defendant respondent, opened his current account No.539 with the appellant (Bank) in its main branch Office Muzaffarabad City by a deposit of Rs.150 on February 15, 1972. He availed the over draft facility in the sum of Rs.314 on the same day. The facility provided to the defendant was availed frequently and the last transaction was made between the parties on April 17, 1973 when the defendant respondent received a sum of Rs.660 through a cheque from the plaintiff (Bank). There was no more transaction thereafter. The plaintiff (Bank) secured from the defendant respondent confirmation of debit balance on December 31, 1978. On failure to adjust the debit balance a legal notice was given through counsel on April 20, 1981 and ultimately the suit was brought on May 23, 1981.

3. The defendant respondent in his written statement admitted opening of the account with the plaintiff (Bank) but denied the liability including the acknowledgement of debit balance dated December 31, 1978 and execution of security bond. He pleaded limitation and alleged that the suit being beyond time was not maintainable. According to the finding of the trial Court the debit balance in tile sum of Rs.23,207.80, as claimed by the plaintiff, was proved against the defendant respondent but it dismissed the suit on the ground of limitation. In appeal, the learned Judge in the High Court upheld the finding and dismissed the appeal. We are called upon to resolve the point of limitation in aforesaid situation.

4. To succeed in rejection of an action it is enjoined upon the party seeking dismissal of suit by limitation to prove that the action was beyond time. But this would depend upon the nature of an action and the circumstances on which it rests. In present case, it is agreed between the parties that the amount sought to be realised is due to non adjustment of debit balance accrued by over draft facilities availed by defendant from the plaintiff (Bank). In view of the nature of transaction leading to litigation, the plea of defendantrespondent has been that Article 85 of the Limitation Act is attracted in the case. The amount became due against mutual, open current account, as such, in order to succeed, it was necessary for plaintiff to bring his suit within three years from the last day of the year when the last item was proved to have entered in the account.

5. To determine the point at issue, it is relevant to appreciate the meaning and scope of term, "mutual, open current account".

In its ordinary sense, "current account" is an open, running or unsettled account between the parties. An "open account" is that which is yet to be finally settled, adjusted or closed and it is still running or open to future adjustment, settlement or liquidation. The term "mutual account" is described in Black"s Law Dictionary, as under:

"The term mutual account is used for assessments comprising mutual or reciprocal credits between the parties."

6. The aforesaid construction of the term mutual, open current account, obviously helps to hold that in present case it is only Article 85 which applies squarely. This is so as the parties expressly averred in their pleadings that amount in dispute became due by failure of defendant to adjust it against the over draft facilities availed by him from time to time. The statement of account produced in evidence by the plaintiff (Bank) contains numerous entries showing, deposits and withdrawals made by defendant. It is admittedly a case of reciprocal credits.

7. Mr. Muhammad Hanif, the learned counsel for the appellant, contended that defendant pledged his immovable property with the bank, as token security and money was advanced as a charge on that property. In this view of the matter, Article 132 was attracted in the case. The contention is not sustainable. The fact of the matter is otherwise. We have already analysed the factual aspect of the case. But in order to make it further clear, we would like to observe that immovable property described in one of the documents, relied upon by the bank, is not pledged or hypothecated against; loan. Actually the document dated October 11, 1972 relating to over draft facility in the sum of Rs.3,000 confining to a period of six months, contains description of assets, including a house, agricultural land and investment in running business of defendant. That was just to show that he was a man of adequate means; as such eligible to avail the over draft facility. It has never been the case of plaintiff (Bank) that the amount was a charge on the immovable property. The pleadings of plaintiff (Bank) are enough to reflect fallacy of argument.

8. In Robert Cotton Associates Ltd. Khanewal v. Khan Karam Hussain Khan and two others P L D 1972 S C 109 on analysing the scope of Article 85 the meaning and scope of term "Mutual, open current Account" was construed, as under:

"It would be so if the account is continuous or current uninterrupted or unclosed by settlement or otherwise and consists of a series of transactions. The limitation does not run in case of such account against any item where the account continues to be open and current, but as soon as an account ceases to be open, it becomes an account stated and immediately payable. Even where a balance is found to have been struck, the account can still be treated as open and current where it does not appear to have been finally closed and advances and receipts are to be found thereafter. The judicial test with regard to mutual accounts has been laid down by stating that there must be mutual dealings between the parties in the sense that both come under a liability to each other."------------"All that is necessary to be proved for the application of Article 85 is that there should be an open current account between two persons consisting of mutual items of debit and credit in the course of dealings between them, the credits to be made as such and not in discharge of the one sided debt. The credit and debit transactions need not necessarily give rise to independent obligations, nor need the balance shift from one side to the other at any stage of the dealings. So long as there is a possibility of the shifting of the balances from one side to the other, mutuality of transactions is maintained."

9. It is the case of plaintiff that last payment was made on April 17, 1973. This item was entered in the statement of account and beyond that no transaction took place between the parties. Following the provisions of Article 85 the year 1973 when the last item of over draft facility was entered in the account is to be computed. Therefore, the limitation would commence w.e.f. January 1, 1974. the period of limitation is obviously 3 years. In order to succeed it was enjoined upon the plaintiff (Bank) to bring its action before the expiry of limitation of 3 years i.e. December 31, 1976. This is not done. Therefore, the plaintiff has to suffer for the negligence in not bringing the action within the statutory period.

10. Mr. Muhammad Hanif, invited our attention to acknowledgement of debit balance dated December, 31, 1978 and contended that in presence of acknowledgement, fresh limitation shall start from that day and on that the suit was within time. It is undenying the fact that the acknowledgement of debit balance, which has been denied by" the defendant, even if it is accepted as proved, it was made after the expiry of limitation. Section 19 of Limitation Act computes limitation in cases where an acknowledgement of liability has been made in writing signed by the party against whom the right is claimed, prior to expiry of limitation. In order to invoke the provisions of section 19 the condition precedent, that an acknowledgement must be made within the period of limitation prescribed for the action sought to be enforced, has to be fulfilled. When an acknowledgement is made after expiry of period of limitation it does not help to extend the limitation by computation of the period already lapsed. Reference to words "before expiration of the period prescribed for a suit, is proof of the fact that legislature was alive to the importance of situation that it was not fair and equitable to make alive a time barred claim by introduction of exception described in section 19. Therefore, the section was framed in language which permitted computation of period by virtue of acknowledgment of liability when such acknowledgement was made before the expiration of period prescribed for the suit or application in respect of any property or right. In present case acknowledgement date, December 31, 1978, even if accepted to have been made by defendant customer, does not help the plaintiff (Bank) to seek computation of period w.e.f. December 31, 1976 to December 31, 1978. The objection is, therefore, not sustained.

We do not find any defect in the finding of trial Court and the High Court, as the law on the point of limitation was properly propounded. There is no force in the appeal. It is, therefore, dismissed.

M.B.A. /222/S.C.A. Appeal dismissed.

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