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Issues Involved:
1. Law of Limitation 2. Account Stated 3. Mutual Account 4. Settlement of Account 5. Statute-Barred Items Detailed Analysis: 1. Law of Limitation: The appeal involves a significant question regarding the law of limitation. The appellants, who are moneylenders, had been lending money to the respondents for twenty-five years at an interest rate of 10 annas per cent per month. The suit was brought based on an account stated, evidenced by ledger entries. The respondents argued that they had neither contracted any debt nor made any payments within three years from the date of the suit's institution (17th August 1927). The Subordinate Judge accepted the appellants' evidence, finding a settlement of account on 26th September 1925, making the balance a new debt carrying future interest. The High Court of Allahabad reversed this, ruling that the transactions were unilateral and did not satisfy the "accounts stated" requirement under Article 64, Limitation Act, 1908. 2. Account Stated: The High Court of Allahabad held that the term "account stated" cannot apply to a money-lending transaction where one party lends and the other repays, as these are unilateral transactions without mutual accounts. They referenced several cases to support this view, including Raj Narain Rao v. Ram Sarup and Jamun v. Nand Lal, which emphasized that an "account stated" involves cross-claims set off against each other, resulting in a balance. The Privy Council, however, found that the essence of an account stated is the mutual agreement of several amounts and the balance payable, irrespective of the character of items. 3. Mutual Account: The High Court's interpretation was that mutual accounts require reciprocal claims or demands, which were absent in the present case. The Privy Council disagreed, stating that the mutual agreement of accounts, even if consisting of unilateral transactions like loans and repayments, can constitute an account stated. They referenced English cases, including Laycock v. Pickles and Siqueira v. Noronha, to illustrate that mutual accounts can involve unilateral transactions if the parties agree on the balance. 4. Settlement of Account: The Privy Council emphasized that a settlement of account involves mutual agreement on the amounts and the balance payable, creating a new debt and cause of action. They cited Ashby v. James and Foster v. Allanson to support the principle that a settled account is binding and can include statute-barred items. The Subordinate Judge's finding of a settlement on 26th September 1925 was upheld, as it created a new debt carrying future interest. 5. Statute-Barred Items: The authorities show that a settled account can include statute-barred items, making the settlement binding. The Privy Council noted that it remains undecided whether an account consisting entirely of statute-barred items would be upheld, but in the present case, it was unclear if all items were statute-barred. The burden was on the respondents to challenge the validity of the settled account, which they failed to do. Conclusion: The Privy Council concluded that the settlement between the appellants and respondents, as found by the Subordinate Judge, should be upheld. This renders the High Court's ruling incorrect, and the appeal was allowed with costs. The decree of the Subordinate Judge was restored, affirming the validity of the account stated and the new debt created by the settlement.
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