PETITIONER: RAM JANKI DEVI & ANR. Vs. RESPONDENT: M/S. JUGGILAL KAMLAPAT DATE OF JUDGMENT28/01/1971 BENCH: RAY, A.N. BENCH: RAY, A.N. MITTER, G.K. CITATION: 1971 AIR 2551 1971 SCR (3) 573 ACT: Deposit and Loan-Difference between-Tests-Demand for part of loan whether starts limitation. HEADNOTE: Two groups known as the Singhania group and the Gupta Group were partners in M/s. India Supplies. Both were also interested in-the business of Lakshmi Ratan Cotton Mills. In the present litigation the Gupta group was represented by the appellants and the Singhania group by the respondent. In the year 1942 Lakshmi Rattan Cotton Mills was the creditor of M/s. India Supplies for the approximate sum of Rs. 4,00,000. Lakshmi Ratan Cotton Mills was a debtor to the respondent for the approximate sum of Rs. 400,000. Lakshmi Ratan Cotton Mills demanded the sum of Rs. 4,00,000 from India Supplies. India Supplies could not repay Lakshmi Ratan Cotton Mills. Thereafter India Supplies proposed that the respondent should deposit a sum of Rs. 4,00,000 with India Supplies to wipe out the indebtedness of the India Supplies to Lakshmi Ratan Cotton Mills. The respondent accepted the 'said proposal and thereafter a letter dated 29, September 1942 was written by the head of the Gupta group on behalf of India Supplies to the respondent recording the agreement that "a sum of Rs. 4,00,000 should be debited to India Supplies as deposit at the usual rate of interest as agreed upon." The respondent was to place to the credit of Lakshmi Ratan Cotton Mills a sum of Rs. 4,00,000 in its account with the respondent thus reducing the indebtedness of Lakshmi Ratan Cotton Mills from Rs. 9,00,000 to Rs. 5,00,000. Disputes and differences arose between the two groups thereafter. In 1944 there was an arbitration award. The Sing Hanias went out of both India Supplies and Lakshmi Ratan Cotton Mills, and the Gupta group carried on both the businesses. The present suit was, filed by the respondent in 1953. The claim was based on the aforesaid deposit of Rs. 4,00,000. The suit though originally filed in the court of the Civil Judge, Kanpur was tried by the Allahabad High Court in its original jurisdiction. The suit was decreed in favour of the respondent. With certificate appeal was filed in this Court. The questions for consideration were : (i) whether the money was deposited under an agreement and payable on demand so that limitation would commence from the date of demand within three years of which it was filed, or whether it was a loan made on 30th December 1942 in respect of which the suit was barred under Art. 59 by limitation, the same not having been filed within three years from the date of the loan; (ii) whether there was a demand for a part of the amount in 1943 and therefore limitation would start from that date. HELD: (i) The amount was a deposit and not a loan. The case of a deposit is something more than a mere loan of money. It will depend on the facts of each case whether the transaction is clothed with the character of a deposit of money. The surrounding circumstances, the relationship and character of the transaction and the manner in which the parties treated the transaction will throw light on the true form of the transaction. [577 H] 574 V.E, A. Annamalai Chettiar & Anr. v. S. V. V. S. Veerappa Chettiar, A.I.R. 1956 S.C. 12 and Nawab Major Sir Mohammad Akbar Khan v. Attar Singh & Ors., 63 I.A. 279, referred to. Some of the partners of the appellant and the respondent in the year 1942 were common. It would be more explicable and natural course of events that monies would be kept in deposit with the appellant in order to enable them to have financial accommodation without immediate worry of repayment. The mere fact that money in specie was not paid would not be destructive of the case of deposit. The respondent acted as bankers. The way in which the respondent made entries in the pass-book of the appellant was consistent with the roznamcha, khata and nakalbahi books. It was not a case of the respondent giving loan to the appellant for the obvious reason that the history of the transaction between the appellant and Lakshmi Cotton Mills showed that the appellant had to be put on a footing of financial stability by giving the appellant the use of the sum of Rs. 4,00,000 for a long time. The absence of any negotiable instrument was significant. A hundi or a promissory note would have been consistent with the case of a loan. The relationship between the parties the surrounding circumstances at the time of the transaction, the pecuniary position of the appellant were all overwhelming features to corroborate the oral as well as the documentary evidence of the respondent that the amount was deposited with the appellant. [580 E-H] The arbitration award in the dispute between the parties gave directions on the basis that there were advances between the parties which were in the nature of deposit and were not covered by the award., [581 A-B] In contemporarious documents the appellant never said that it was a case of advancing loan. The non-production of the appellant's accounts coupled with the appellant's staying away from the witness box indicated the inherent infirmities of the appellant's case. [581 D] (ii)There is a consensus among the High Courts that there must be an unqualified demand for the whole sum before the limitation can start in case of demand for return of the amount deposited. Further, a demand in the year 1943 for a part of the amount would not be effective because there were common partners in the firms of respondent and the appellant. 1581 E-G] Jogendranath Chakerbutty v. Dinkar Ram, A.I.R. 1921 Cal. 644, Motigauri v. Naranji, A.I.R. 1927 Bom. 362 and Subbaih Chetty & Ors. The appeal must accordingly be dismissed. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2151 of 1966.
Appeal from the judgment and order dated August 3, 1965 of
the Allahabad High Court in Original Suit No. I of 1964.
S. V. Gupte and J., P. Gopal, for the appellants.
A. K. Sen, Rameshwar Nath and Swaranjit Sodhi, for the
respondent.
575
The Judgment of Court was delivered by
Ray, J.-This is an appeal by certificate from the judgment
and decree dated 3 August, 1965 of the High Court of
Allahabad decreeing the, respondents suit for the sum of Rs.
4,11,367.92.
The respondent filed the suit on 16 May, 1953 against the
appellant for the recovery of Rs. 4,11,367.92 with interest
and costs.
The respondent’s case in short was that the respondent on 30
September, 1942 deposited a sum of Rs. 4,00,000 with M/s
India Supplies whereof the appellants were the partners on
the condition that interest would be payable @ 7/9 per cent
per month and that the respondent would be entitled to
withdraw the deposit on demand.
The suit was filed in the court of the First Civil Judge,
Kanpur. The evidence was concluded before the Civil Judge,
Kanpur. Thereafter by an order dated 12 May, 1964 of the
High Court at Allahabad the suit was transferred to the High
Court in its original ,civil jurisdiction. The High Court
heard the suit and on 3 August, 1965 decreed the suit in
favour of the respondent.
At the trial the issues were first whether the respondent
deposit ed the sum of Rs. 4,00,000 with the appellant and
secondly whether the suit was barred by time.
The entire controversy in the suit is whether it was a case
where money was deposited under an agreement and that it was
payable on demand or whether it was a case of an ordinary
loan of Rs. 4,00.000. The respondent contended that Article
60 of the Indian Limitation Act, 1908 was the relevant
Article because if was a case of money deposited under an
agreement that it was payable on demand and therefore the
limitation would commence from the date of demand and the
suit was filed within three years from the demand. The
rival contention of the appellant was that it was money lent
under an agreement that it was payable on demand and the
loan was made on 30 December, 1942 and therefore the suit
not having been filed within 3 years from the date of the
loan under Article 59 was barred by limitation.
In the year 1942 Kailashpat Singhania and Pushpa Devi wife
of Lakshmipat Singhania were partners of India Supplies
along with the defendants. Defendant Ram Janki Devi is the
wife of Ram Ratan Gupta and the other defendant Lal Ram
Gopal Gupta is a brother of Ram Ratan Gupta and married
Padampat Singhania’s sister’s daughter. The Singhania group
and the Gupta
576
group were the partners of India Supplies. The Singhania
and the Gupta groups were also both interested in the
business of Lakshmi Ratan Cotton Mills, The evidence on
behalf of the respondent is that Lakshmi Rattan Cotton Mills
a limited Company acted as financiers and bankers of India
Supplies. In the year 1942, Lakshmi Ratan Cotton Mills was
the creditor of M/s. India Supplies for the approximate sum
of Rs. 4,00,000. Lakshmi Ratan Cotton Mills was a debtor to
the respondent for the approximate sum of Rs. 4,00,000.
Lakshmi Ratan Cotton Mills demanded the sum of Rs. 4,00,000
from India Supplies. India Supplies could not repay Lakshmi
Ratan Cotton Mills. Thereafter India Supplies proposed that
the respondent should deposit a sum of Rs. 4,00,000 with
India Supplies to wipe out the indebtedness of India
Supplies to Lakshmi Ratan Cotton Mills. The respondent
accepted the said proposal and thereafter a letter dated 29
September, 1942 was written by Ram Ratan Gupta head of the
Gupta group on behalf of India Supplies to the respondent
recording the agreement that “a sum of Rs. 4,00,000 should
be debited to India Supplies as deposit at the usual rate of
interest as agreed upon”. The respondent was to place to
the credit of Lakshmi Ratan Cotton Mills a sum of Rs.
4,00,000 in its account with the respondent thus reducing
the indebtedness of Lakshmi Ratan Cotton Mills from Rs.
9,00,000 to Rs. 5,00,000. Disputes and differences arose
between the two groups thereafter. In 1944 there was an
arbitration award. The Singhanias went out of both India
Supplies and Lakshmi Ratan Cotton Mills and the Gupta groups
carried on both the businesses.
One of the books of account of the respondent, namely, the
roznamcha (daily book) under the entry 30 September, 1942
shows that according to the letter of India Supplies the sum
of Rs. 4,00,000 was deposited in the name of India Supplies.
The other books of account of the plaintiff are khata
(ledger) and nakalbahi (journal). The respondent also
relied on the pass book entry being Ex-A-4 which shows that
a sum of Rs. 4,00,000 was withdrawn on 30 September, 1942 by
the appellant from the respondent as a banker and along with
the interest from time to time the amount of Rs. 4,00,000
stood with the appellant in the deposit account. The
balance-sheet of the appellant as on 30 June, 1943 being
Ex.A-4 showed that a sum of Rs. 4,00,000 was unsecured loan
from the respondent.
Counsel on behalf of the appellant contended that the use of
the word ‘deposit by itself occurring either in the
roznamcha or in the letter dated 29 September, 1942 written
by Ram Ratan Gupta would not be decisive of the question
whether it was a case of deposit of the sum of Rs.- 4,00,000
by the respondent with the appellant under an agreement that
the same would be paid on
577
demand. At one stage in the proceedings there was a
controversy as ‘to whether Rain Ratan Gupta had authority to
bind the appellant by the letter dated 29 September, 1942.
There is evidence that Ram Ratan Gupta looked after the
business of the appellant and acted on behalf of the firm
of the appellant in ordinary mercantile transaction.
Counsel for the appellant in all fairness did not question
the authority of Ram Ratan Gupta to bind the firm of the
appellant.
It was said by counsel for the appellant that there were six
principal reasons to indicate that, it was a case of an
ordinary loan of Rs. 4,00,000 and not- an instance of the
sum of Rs. 4,00,000 being deposited by the respondent with
the appellant under an agreement that the same would be paid
on demand. The primary and pre-eminent point emphasized by
the appellant was the background of the transaction between
M/s India Supplies on the one hand and Lakshmi Ratan Cotton
Mills on the other, that moneys were lent and advanced by
Lakshmi Ratan Cotton Mills to India Supplies from time to
time and all that happened was that in place of Lakshmi
Ratan Cotton Mills the respondent became the creditor of the
firm of the appellants. There was just a substitution of
the creditor debitor relationship by substituting the
respondent in place of Lakshmi Ratan Cotton Mills as the
creditor. Secondly, it was said that there was never any
payment of money in cash and adjustment entries were made in
the books of the respondent. Thirdly, monies were not given
nationally for the convenience of the respondent banker.
Fourthly, monies were required by the appellant for his own
business because Lakshmi Ratan Cotton Mills refused to help
the appellant any more. Fifthly, Ex. A-4 the pass book
would show that it was a case of advance of Rs. 4,00,000 by
the respondent to the appellant, and finally, the appellants
were not bankers and therefore it was improbable that the
respondents who were bankers would deposit with the traders
the sum of Rs. 4,00,000.
Counsel for the appellant relied on the decision of this
Court in V. E. A. Annamalai Chettiar & Anr. v. S. V. V. S.
Veerappa Chettiar(1) in support of the proposition that the
answer to the question as to whether it was a loan or
deposit would not depend merely on the terms of the document
but had to be judged from the intention of the parties and
the circumstances of the case. That is manifestly the
correct approach.
The case of a deposit is something more than a mere loan of
money. It will depend on the facts of each case whether the
transaction is clothed with the character of a deposit of
money. The surrounding circumstances, the relationship and
character of the
(1) A.I.R. 1956. S.C. 12.
578
transaction and the manner in which parties treated the
transaction will throw light on the true form of the
transaction.
The Judicial Committee in Nawab Major Sir Mohammad Akbar
Khan v. Attar Singh & Ors. (1) spoke of the distinction bet-
ween the deposit and loan to be that the two terms were not
mutually exclusive but that a deposit not for a fixed term
did not seem to impose an immediate obligation on the
depositee to seek out the depositor and repay him.
Though,documents by themselves are not conclusive of the
question they have the evidentiary value and if they
corroborate the oral evidence the importance of the
documents is magnified. The letter Ex. A-5 bears the date
29 September, 1942 and is contemporaneous with the entire
transaction between the appellant and the respondent. The
letter was as follows:-
“Messrs. Juggilal Kamlapat Kothl, Cawnpore.
Dear Sirs,
As per my talk with Sir Padampat I shall thank you to credit
a sum of S. 4 lacs(Rupees four lacs only to the account
of Messrs Lakshmi ratan Cotton Mills Co. Ltd., and debit
the same to the account of India Supplies as
deposit at the usual rate of interest as
agreed upon by the partners of the said firm.
Thanking you,
Yours faithfully,
Sd/- R. Ratan Gupta”.
The intrinsic evidence in the letter is that the sum of Rs.
4,00,000 was debited to India Supplies as deposit. The
words “debited as deposit”, were criticised by counsel for
the appellant to be meaningless. Too much precision cannot
always be expected in regard to use of foreign language by
merchants and traders in their short memorandum. The
character of deposit is an inherent.impression in the
writing. The rozmancha refers to the letter and is
therefore corroborative of the letter and the terms thereof.
The letter further shows that the terms were agreed to by
the partners of the firm, namely, the partners of India
Supplies and of ale respondent. The respondent’s partner
Padampat Singhania gave oral evidence and substantiated the
terms of the letter and the respondent’s case. Padampat
Singhania was the person on behalf of the respondent who
carried on the negotiations. His evidence was therefore im-
portant. The appellants did not examine themselves and did
not
(1) 63 I.A. 279.
579
give any evidence challenging the oral testimony of the
respondent s partner. On the contrary, the correctness of
the, letter EX. A-5 was accepted by the appellants’ witness
Ram Ratan Gupta the author of the letter.
The roznamcha entry. was proved by Gopi Kishan Saraugi a
munim of the plaintiff. The roznalucha entry was as follows
“4,00,000 India Supply Ke nam Asoj Badi Chhat : 30-9-42
Lakshmiratan Cotton Mill Ki Chithi se apke nam mada deposit
karaya panna 2486”.
His evidence was that the books were systematically kept on
‘mahaj ani” system in connection with the business. The
witness proved the Khata, the raznamcha and the nakalbahi
entries. In cross-examination of Gopi Kishan Saraugi it
was suggested that the entry under the date 30 September,
1942 in the roznamcha was not written at the same time. The
suggestion was that there was interpolation of the words
“deposit karaya” in the roznamcha entry. In cross-
examination of Padampat Singhania questions were asked about
the rokar, khata, nakal bahi and roznamcha entries.
Padampat Singhania said that the entry of Rs. 4,00,000 was
not recorded in the daily cash book but was recorded in the
roznanicha. He also said that credit and debit entries were
made in the roznamcha, Padampat Singhania said that the
entries were made by Gopi Kishan Jaipuria who was in a dying
condition at the time the witness gave evidence.
It was suggested to Padampat Singhania that the words “de-
posit karaya” in the roznamcha entry were not written at the
same sitting. Padampat Singhania denied that, Counsel for
the appellant contended that in the absence of Gopi Kishan
Jaipuria the account books were not proved. This is
unacceptable for two reasons. First, the account books were
shown in cross-examination of Padampat Singhania and
question were asked on the same. It is not open to the
appellant to complain of lack of proof of account books when
the documents are shown to the witness in cross-examination.
Secondly, both Padampat Singhania and Gopi Kishan Saraugi
spoke of the proper maintenance and keeping of books of
account and that it was not possible to arrange the presence
of the writer of the entry. Suggestion of tampering is a
serious one. The original entries were called for from the
High Court. We had occasion to look into the originals. We
are in agreement with the High Court that the suggestion of
fabrication is utterly unmeritious. The words ‘deposit
karaya’ appear without any doubt to have been written at the
same time as the rest of the writing. It is in evidence
that the reference to the page of the panna under that entry
was written later inasmuch as the page
580
of the panna was put on when the panna was put on when the
panna book was written.
The most important documentary evidence of the appellant
namely, their book of account was not produced. These books
of the appellant would have shown how they treated the
transaction, namely, whether it was a case of deposit or
loan. The irresistible inference from the non-production of
books of the appellant would arise that they would have
supported the respondents case and that is why they were not
produced. The appellant’s contention that the background of
the transaction was mercantile loan, would be more a
conjecture than a conclusion to be arrived at. The
financial transactions between the respondent and Lakshmi
Ratan Cotton Mills were running accounts. It would, be more
consistent to hold that,by allowing India Supplies a deposit
of Rs. 4,00,000 India Supplies would be relieved of the
situation of repaying the money immediately. It is
precisely. because of the then inability of India Supplies
to repay Lakshmi Ratan Cotton Mills that the parties
resorted to the mode of having the use of the money by way
of deposit. The transaction was between the appellant, the
respondent and Lakshmi Ratan Cotton Mills. All figured in
the transaction. A more loan of Rs. 4,00,000 would not have
sufficed the needs of the appellant who were then unable to
pay the dues of Lakshmi Ratan Cotton Mills.
Some of the partners of the appellant and the respondent in
the year 1942 were common. It would be more explicable and
natural course of events that monies would be kept in
deposit with the appellant in order to enable them to have
financial accommodation without immediate worry of
repayment. The mere fact that money in specie was not paid
would not be destructive of deposit. The respondent acted
as bankers. The, way in which the respondent made entries
in the pass book of the appellant is consistent with their
roznamcha, khata and nakal bahi books. It was not a case of
the respondent giving loan to the appellant for the obvious
reason that the history of the transactions between the
appellant and Lakshmi Rantan Cotton Mills show.% that the
appellant had to be put on a footing of financial stability
by giving the appellant the use of the sum.’ of Rs. 4,00,000
for a long time. The absence of any negotiable instrument
is significant. A hundi or a promissory note would have
been consistent with the case of a loan. The relationship
between the parties; the surrounding circumstances at the
time of the transaction, the pecuniary position of the
appellant are all overwhelming features to corroborats the
oral as well as the documentary evidence of the respondent
that the amount was deposited with the appellant.
The award dated 18 January, 1944 has also a tale to tell.
There were disputes between the partners of the various
businesses in
581
which the Singhania and Gupta groups were interested. These
disputes were before the arbitrators. One of the terms in
the award was that the award in respect of Lakshmi Ratan
Cotton Mills and India Supplies “do not cover the advances
which either party or their separate firms may have made to
all or any of them or their moneys which may be in deposit
with them and they shall be payable and paid in their usual
course”. This direction, in the award shows that there were
advances which were in the nature of deposit and were not
covered by the award. The award would have evidentiary
value to show as to how the parties treated and understood
their financial dealings.
It is also significant that when the respondent demanded the
money by a letter dated 27 April 1953 (Ex. 7) the appellant
in their reply dated 5/6 May, 1953 (Ex. 6) totally denied
the claim. The respondent set out all the facts of deposit
of the money with advancing loan. The non-production of the
appellant’s accounts coupled with the appellants staying
away from the witness box indicates the inherent infirmities
in the appellant’s case.
Counsel for the appellant contended that there was a demand
for a part of the amount in the year 1943 because Padampat
Singhania said that there was demand in the month of
October, 1943 and therefore limitation would start from that
date. The view of Calcutta, Bombay and Madras High Courts
is that there must be an unqualified demand for the whole
sum before the limitation can star in case of demand for
return of the amount deposited. (See Jogendranath
Chokerbutty v. Dinkar(1) Ram Motigaur v. Naranji ( 2 ) and
Subbaih Chetty & Ors. v. Visalakshgi Achi) ( 3 ) . That is
the correct position in law. Counsel for the appellant did
not contend to the contrary in view of the consensus of
opinion of the different High Courts. It is also important
to bear in mind that a demand in the year 1943 for a part of
the amount would not be effective because there were common
partners in the firms of the respondent and the appellant.
For these reasons we are of opinion that the High Court was
correct in decreeing the suit. The appeal therefore fails
and is dismissed with costs.
G. C. Appeal
dismissed.
(1) A.I.R. 1921 Cal. 644
(2) A.I.R. 1927 Bom. 362
(3) A.I.R. 1932 Mad. 685
582
