TIME LIMIT FOR SUITS (OPEN AND CURRENT ACCOUNT)
1. Suit for recovery of the balance due on a mutual open and current account can be fled within three years of the financial year in which the last item or entry in the books of account is admitted or proved – Article 1 of the Limitation Act.
Illustration:-
(i) Where ‘A’ realizes rent of the property of ‘B’ and independently defrays from his own pocket, the expenses of ‘B’ each party has demands against the other and that article would apply.
(ii) Where a customer of a bank is allowed to overdraw his current account and the account is sometimes in credit and sometimes in debit, it is a mutual account and a suit by the bank to recover the balance due to it, is governed by this Article.
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TIME LIMIT FOR SUITS (AGENCY)
Suit against an agent of a particular description styled a ‘factor’, i.e., an agent who is entrusted in the possession of goods for sale on account of the principal, can be filed within three years from the time when the account is demanded and refused; or when the agency terminates – Article 2 of the Limitation Act.
Suit by a principal against his agent for movable property including money received by the agent which is not accounted for, can be filled within three years from the date on which the account is demanded and refused; or when the agency terminates.
All suits by principals against agents for neglect or misconduct in the conduct of the business of the agency, can be filed within three years from the day when the neglect or misconduct becomes known to the principal/plaintiff.
Suit for an account and a share of the profits of a dissolved partnership can be filed within three years from the date of dissolution of the partnership.