Travancore Mica Co. Ltd. vs Kell and Huxford Chambers

T.K. Joseph, J.—The Travancore Mica Company Ltd., the Defendant in the case, has preferred this appeal. The Plaintiff is a merchant carrying on business at Madras. He used to export to England mica produced by the Defendant in order that the same may be sold at London. The Defendant used to receive sums of money from the Plaintiff which were recouped by the Plaintiff on receipt of the sale proceeds.

A suit was instituted in the Civil Court at Madras by the Plaintiff for recovering the (sic) due from the Defendant under such transactions and a decree was obtained ex parte. The suit from which this appeal arises was filed in the District Court of Trivandrum originally as one on a foreign Judgment. The suit was dismissed by the trial Court but on appeal the High Court of Tra-vancore granted leave to the Plaintiff to amend the plaint so as to convert it into a suit on accounts.

The plaint was accordingly amended and the Plaintiff sought recovery of a Sum of Rs. 4014-7-11 including interest. The Defendant resisted the suit. It is unnecssary to refer to all the contentions except the following which alone were pressed in appeal.

These were, that the account between the parties was not mutual, open and currant, that the suit was barred by limitation, that the acknowledgment relied on by the Plaintiff were not valid, that the amended plaint had to be treated as a fresh suit on accounts instituted on me date of the amendment, that a sum of 35 pounds had to be credited in the accounts, this being the difference between the proper price which would have been realised by sale of the mica in different lots according to the grades and the actual price realised by sale of the same in one lot and that interest claimed by the Plaintiff was not allowable.

These points were decided against the Defendant by the trial Court and the Plaintiff was given a decree.

The first point urged in appeal was that the suit was barred by limitation. It was contended that the transactions between the parties was not in the nature of an account, mutual, open and current and that each transaction was to be treated as an advance of money on the security of the goods sent for export. There is no substance in this contention.

The question of mutual, open and current accounts has been considered by this Court in - ''Abubaker Oomerkutty v. I.S. and C. Machado'' AIR 1953 TC 391 (A). It was hold that the following principles could be considered as well-settled.

that an account is open when the balance is not struck or though struck is not accepted or acknowledged to be correct;

that a shifting balance though a test of mutuality is nothing more than a test and that an account is mutual so long as the transactions on each side create independent obligations, on the other, and

that a running or continuous account is nn account current.

The account in this case satisfies all the requirements of a mutual, open end current account. Independent obligations were created by the transactions in question and the account admittedly was open and current. It is seen from Ext. D a letter from the Defendant to the Plaintiff that advances were not always made when goods were sent by the Defendant.

We therefore accept the finding of the trial Court on this point but this finding alone will not save the suit from the bar of limitation and the Plaintiff therefore relies on the acknowledgment of liability contained in Ext. D-11. E-5 and E-3. Even if D-11 contains a valid acknowledgment it is not of much use, since it is dated 1-12-1941 and the suit is filed only on 20-12-1944 i.e., more than three years after the date of Ex. D 11. Ex. E5 is the next acknowledgment on which the Plaintiff placed reliance.

This is a reply sent by the Defendant to the lawyer''s notice demanding. payment of the plaint claim. Ext. E5 is dated 16-9-1942. The following passage occurs in Ext. E5.

If the outstandings on the transactions between the Travancore Mica Co., and Mr. K.H. Chambers have pot been settled, it is due to the fact that Mr. Chambers has not cared to give us the proper accounts and also has failed to safeguard our interest which he, as an agent, is bound to do. By his not exercising proper care and by his not following the usual practice of the trade we have been damnified to the extent of Rs. 2430 which he has to make good to us.

Further we will not be liable for any expenditure which Mr. Chamber; says he has in- curred on our behalf but for which he has not sent, us vouchers. We are not liable also for interest, as interest was not stipulated. As the transaction is between the Travancore Mica Co., and Mr. Chambers, the Managing Director has no personal liability and he repudiates all such liability. The balance of the money found due to Mr. Chambers, we are ready to pay.

It was thus stated in Ext. E5 that the outstandings due to the Plaintiff remained unpaid, as proper accounts were not sent and us the Plaintiff caused loss to the Defendant to the extent of Rs. 2430 by deviating from the normal trade practice in the sale of mica. It was also stated that the Defendant was willing to pay the balance of the money found due to the Plaintiff on a proper settlement of accounts.

Shri Krislinanwamy Iyengar, the learned Counsel for the Appellant, contended that the admission did not relate to the whole amount claimed by the Plaintiff but was limited to the balance after crediting the sum claimed, by Defendant as damages and that the whole claim could not be saved from the bar of limitation. We are unable to accept this argument. The letter Ext. E5 has to be read as a whole.

The lawyer''s notice in reply to which Ext. E5 was sent is Ext. E4. The claim in Ext. E4 was for the balance due on account. The suit ''no doubt was framed as one for a definite sum of money but it was really one for the amount due on accounts and the reply was that the accounts had to be settled.

The Defendant did not deny that the amount claimed was due but the position taken up by him was that he had a counter-claim in respect of the loss caused by the irregular sale of mica. Ext. E5 therefore constitutes a valid acknowledgment. - S. Sundararamiah and Others Vs. T. Venkatasubbiah and Others, is a decision in point. Since Ext. E5 constitutes a valid acknowledgment, a suit filed within three years of that date is not barred by limitation.

It was also contended that the date of the institution of the suit was to be taken as the date on which the amendment was made and that such date was beyond three years ''from the date of the acknowledgment. The argument was that when a new cause of action was brought in by the amendment of the plaint, the date of the amended plaint should be taken as the date of suit in respect of the new cause of action so brought in.

The application for amendment was made by the Plaintiff on 1-7-1121 and it was dismissed by the trial Court. As the suit also was dismissed the Plaintiff preferred an appeal to the High Court of Travancore and in disposing of the appeal the amendment was allowed. The following passage is extracted from the judgment of the High Court in that case:

On 1-7-1121 the Plaintiff filed an application for amending the plaint so as to make it a suit on the original cause of action. The Court below refused this prayer on insufficient grounds. When the amendments of pleading are necessary for the purpose of determining the real question in dispute, this Court has been liberal in granting applications for amendment, particularly when such amendments will only promote interests of justice and will not materially alter the nature of the suits.

In the circumstances of the case we allow the application of the Plaintiff for amendment of the plaint as prayed for.

This shows that the proposed amendment ''was freated by the High Court as one for determining the real question in dispute and it was held to be an amendment which would not alter the nature of the suit. In view of this, it is not open for the Defendant to contend that the amendment introduced a fresh cause of action. The learned Counsel for the Appellant brought to our notice a decision of the Travancore High Court in --''Thommen Kurien v. Kesava Kammath Rama Kammath'' 3 SUD 218 (C):

It was held in that case that when a distinct cause of action was introduced by amendment of the plaint the date of amendment had to be treated as the date of institution of the suit in respect of the new cause of action. It is seen from the judgment that their Lordships did not think it proper to rest their decision on this proposition alone, observing that even if this was not law there were other grounds for supporting their decision.

We are unable to accept this as a correct proposition of law. If the Court allows an amendment of the plaint even after the expiry of the period of limitation on the new cause at action the amended suit will still be deemed to have been presented on the date when the original plaint was filed.

Normally an amendment which deprises the opposite party of a right acquired by Limation may not be allowed but it is a matter for the Court to consider at the time of passing orders on the application for amendment and if the same is allowed, the date of suit for (sic)the period of limitation is still the date of the original plaint.

See - ''Barkat Unnissa v. Muhammed Asad Ali 17 All 288 (D). - ''New Fleming (SIC) and Weaving Co. v. Kessowji'' 9 Bom 373'' (E) and - ''Ram Lal v. Harrison'' 2 All 832 (F). We are not inclined to follow the decision in 3 SUD 273 (O) even if it applies to the facts of the case.'' The plea of limitation must therefore fail.

The second point raised relates to the question whether the Defendant was entered to get credit for 6350/- as the price of (sic) sent by S.S. Clan, Ronald. The amount credied was only 315 pounds. The defence case was that different grades of mica were to be sold in separate lots and that by the sale of the (sic)consignment in one lot, a lower price was (sic).

Even assuming that there was a (sic) that the mica was to be sold in such separate lots there is no evidence to show that such a sale would have realised a sum of 350 pounds or anything higher than what was actually realised. The Defendant has not proved the prlce of the different grades on the date of the sale. It has to be remembered that the sale was effected to London at a time during the last Word War when France had fallen and London was (sic) heavlly boinbed.

The possibility of loss might have been covered by insuring tbe goods but the (sic) adduced by the Plaintiff that the(sic)very unsteady at that time, has to be(sic) The Defendant has not succeeded in proving that definite instructions had been given to the Plaintiff that the consignment of mica should be sold only in different lots according to the various nndes. Thus in either view of the case, the defence must fail on this point.

The third and the last ground related to the amount allowed as interest by the lower Court. Interest was allowed at 9 per cent per(sic) on the principal sum from 31-12-1941. The Plaintiff did not state in the plaint the basis on which the claim for interest was made. No contract or custom was alleged or proved entitling the Plaintiff to claim interest for the period before the institution of the suit.

The Defendant specifically raised this question in para 4(m) of his written statement. Even through the Plaintiff filed a replication in answer to the written statement there was only a broad statement that the contentions in the various clauses of para 4 of the written statement were denied. No reasons are given by the lower Court for awarding interest at 9 per cent from 31-12- 1941.

In these circumstances we are unable to accept the decree relating to the grant of interest before the date of suit. The Plaintiff-Respondent has filed a memorandum of cross-objections stating that the interest allowed from 31-12-1941 has not been included in the decree. What is seen from the decree is that instead of providing interest from 31-12-1941, interest from 31-12-1951 was awarded.

It is obviously a clerical error but the question is whether the Plaintiff is entitled to get interest before the date of the plaint. In our opinion such interest was wrongly allowed in the absence of a plea and proof of the Plaintiff''s right to get the same.

We hold that the Plaintiff is entitled to get interest on the principal sum of Rs. 2559-7-2, only from the date of the plaint and that at 6 per cent per annum.

In the result, in modification of the decree of the Court below it is decreed that the Plaintiff1 will recover from the Defendant a sum of Rs. 2559-7-2 together with interest thereon ''from the date of plaint i.e. 6-5-1120 till the date of the lower Court''s decree at 6 per cent per annum and thereafter on the aggregate amount at the same rate.

Though the Plaintiff has raised a ground tlmt instead of awarding him one-half of the costs the whole costs should have been allowed, he has not paid court-fee on the same and we therefore confirm the decree of the lower Court relating to costs. However, the figure entered as costs in the decree is clearly wrong.

This should be rectified in preparing this Court''s decree. The decree of the lower Court regarding costs is confirmed. The parties will get proportionate costs in this Court. The memorandum of cross-objection is dismissed.