REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8448 OF 2001

Mr.Krishna Gopal Kakani ……..Appellant

Vs.

Bank of Baroda      …….Respondent

J U D G M E N T

HARJIT SINGH BEDI,J.

1. This appeal arises out of the following facts.

2. The appellant,  Krishna Gopal  Kakani,  the proprietor of

M/s. Oriental Traders, a concern involved in the manufacture

and import of goods, obtained a letter of authority from the

Chief  Controller  of  Imports  and  Exports,  Bombay  for  the

import of raw material for the benefit of a licensee who had

been  given  an  import  licence.   The  appellant  accordingly

placed  orders  with  a  foreign  supplier  for  the  import  of

specified  goods  and  for  that  purpose  approached  the

respondent-Bank  for  opening  Letters  of  Credit  for  two

consignments.   The  bank  thereupon  opened  two  Letters  of

Credit,  one  on  24th August  1973,  and  the  other  on  21st

September  1973  on  which  he  also  deposited  10%  of  the

margin  money  of  Rs.4560/-  and  Rs.4810/-.   The  other

formalities having been completed, the Letters of Credit were

duly negotiated on 21st January 1974 and 19th March 1974.

The  consignment  arrived  in  India  on 13th March,  1974  but

despite the requests made by the appellant and his clearing

agent,  the  Bombay  Customs  refused  to  release  the  goods

without  assigning  any  reason,  though  on  enquiry  from the

Joint Chief  Controller  of Imports  and Exports,  Bombay,  the

appellant was told that the controller had no objection to the

release.  Faced with a notice from the Port Trust threatening

heavy  demurrage  charges  and apprehending  auction  of  the

goods  by  the  Trust,  the  appellant  as  a  joint-holder  of  the

property approached the Bombay High Court for orders.  The

Bank also, as joint-holder of the import licence by virtue of

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having paid the value of the import consignment,  thereafter

filed several Miscellaneous Applications before the Court and

in one matter, Miscellaneous Application No. 950/1975, the

appellant  was  also  arrayed  as  respondent  No.7.   In  this

application, it was pleaded by the Bank that the action of the

respondents  therein  in  not  releasing  the  consignments  was

unjustified  and  that  the  appellant-Bank  also  claimed  their

rights  on  the  goods  as  being  joint-holders  thereof.   The

Bombay  High Court  in its  order  dated 19th November  1975

directed as under:-

“(a)  That  respondent  No.6  do  sell  the goods  by  Public  auction  to  the  highest bidder preference to be given to the actual users  holding   Drugs  Controllers Licenses.

(b)  Respondent No.6  do deposit  the net sale   proceeds  or  the  goods  with  the Prothonotary   and  Senior  Master,  High Court, Bombay to invest the net sales in fixed  deposit  with  Bank  of  Baroda  at Bombay Office.

(c) The sale proceeds shall represent in all respects as they were the “Goods” for all purpose including for the purpose of the Lien on the said goods, if any, of the 6th respondent.

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(d) The said sale proceeds shall be held by the Prothonotary and Senior Master, High Court, Bombay subject to the rights of the parties  and  further  orders  of  the  High Court.”

3. Pursuant to the aforesaid order, the goods were sold

by  public  auction  and the  sale  proceeds  of  Rs.4,72,714.16

were deposited with the Prothonotary and Senior Master of the

Bombay High Court. Miscellaneous Application No. 950/1975

was  finally  disposed  of  by  the  Bombay  High  Court  on

3rd October, 1979 with the direction that the Bank would be

entitled to the amount deposited but would defray an amount

of Rs.8044.18 to the Bombay Port Trust towards demurrage

charges and was also liable to pay the customs duty.  In the

light of the above said directions, the Bank which had also

filed  a  civil  suit  against  the  appellant  in  Indore  on  31st

December  1976  for  the  recovery  of  Rs.1,27,282.93  with

interest,  withdrew the  same  on  3rd October  1980.    In  the

background of this development, the appellant, by a telegram

dated 19th November 1980, requested the Bank  to refund the

surplus amount  along with the margin money lying in deposit

with the Prothonotary with interest and ( as per the present

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suit) the Bank intimated that the money would be paid after

receiving orders from the Bombay Head Office.  The appellant

also wrote a letter to the Bank and also sent a reminder dated

11th November  1980  on  which  the  Bank  replied  (on  2nd

December 1980) that it was still awaiting instructions from the

higher  authorities.  It  appears  that  the  appellant  also

addressed several letters to the higher echelons in the Bank

and also met the concerned officials between the years 1980

and 1988 but to no effect and ultimately addressed a letter

dated  12th December  1988  threatening  the  Bank  with  legal

action.  It appears that in the interregnum, one R.M. Patwa,

who was also a debtor to the Bank approached the appellant

that his debts could be adjusted against the amount of the

surplus dues of the appellant lying deposited with the Bank.

The  appellant  consented  to  the  said  proposal  and  an

application was accordingly moved on 4th March 1986 in the

execution  proceedings  pertaining  to  R.M.  Patwa’s  case.   It

appears that at one stage the Bank agreed to the adjustment

but subsequently i.e., on 14th September 1990, withdrew its

consent.  The appellant thereafter filed Writ Petition No. 2840

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of  1991  before  the  Bombay  High  Court  claiming  the  same

relief as in the present suit.   The said petition was dismissed

on 25th October 1991 on the ground of delay and a Special

Leave Petition filed in this Court was also dismissed with the

observation that the remedy by way of a Writ Petition was not

a proper one in the circumstances.  In the meanwhile, in the

execution petition in R.M. Patwa’s case, the court directed that

R.M. Patwa’s debt be adjusted against the appellant’s dues.

This  order  was maintained  in a  revision petition before  the

High Court in its order dated 10th May 1995 after a statement

of accounts had been filed on 24th February 1995.  The Bank

challenged  the  order  aforementioned  in  a  Special  Leave

Petition before this Court and the appeal was duly allowed on

12th January 1996 and the order impugned was set aside.  It

is,  thereafter,  that  the  present  suit  has  been  filed  on  8th

September,  1997  and  on  the  averments  leading  to  the

question of limitation, it was pleaded that the cause of action

for filing the suit arose on 24th February 1995, when for the

first time the Bank had filed a statement of accounts in the

High Court. The appellant Bank filed its written statement on

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18th July 1998 pleading, inter-alia, that the submission of the

statement of accounts could not be said to be an admission of

the claim of the appellant/plaintiff or an acknowledgement of

the debt and as such the plea that the cause of action accrued

on the 24th February 1995 was erroneous and the suit having

been filed after 17 years from 19th November 1980 was clearly

and grossly time barred.  It was also pointed out on facts that

the appellant’s money had never been at stake except to the

extent  of  the  margin  money  and  he  was,  in  any  case,  not

entitled to the exorbitant amount claimed by him.   

4. The trial court framed seven issues on 17th August 1988;

issue No.1 being whether  the  suit  was barred by limitation

and issue No.5 as to whether the appellant was entitled to a

decree for Rs.23,54,707.58.  The appellant examined himself

as PW1 and closed his evidence.  By a judgment and decree

dated     3rd February 2000, the trial court decreed the suit for

the amount claimed along with simple interest at 11% from

the date of the suit till the date of the payment.  It was held,

inter-alia  that  the  appellant  being  the  proprietor  of  M/s.

Oriental  Traders  was entitled  to  the  surplus  amount  which

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had been deposited with the Prothonotary on account of the

auction of the goods.  The court also concluded that the Bank

was a trustee of the appellant’s money and, therefore the suit

was covered by Section 10 of the Limitation Act (hereinafter

called the “Act”), which provided for no limitation and in the

alternative the cause of action had arisen on 1st August 1997

when the demand notice had been issued by the appellant or

from the 24th February 1995 when the statement of accounts

had been submitted in the executing court in Patwa’s case.

The submission of the Bank that the limitation had expired in

the year 1992 after the passing of the order of the Bombay

High Court was rejected in view of the above findings.  The

matter was thereafter taken in first appeal before the Gujarat

High  Court  which  reversed  the  order  of  the  trial  court

observing  that  the  Bank  was  not  a  trustee  of  the  money

inasmuch that there was no deposit and the matter pertained

to a commercial transaction relating to the opening of Letters

of  Credit  and  such  transaction  could  not  be  said  to  be

relatable to a trust so as to bring the matter within Section 10

of the Act.   The court also observed that the appellant was

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aware of the directions given by the Bombay High Court in

Miscellaneous Petition No.950 of 1975 for the public auction

of the imported raw material and the deposit of the proceeds

with the Prothonotary and that this amount had indeed been

deposited with the said officer and finally released to the Bank

by the order dated 3rd October 1979 and in this view of the

matter it was not for him to plead ignorance of the aforesaid

proceedings.  It  was further opined that it would have been

appropriate that he should have raised some objection at that

stage  or  filed  another  suit  but  instead,  the  appellant  had

continued to send legal  notices  and had also  made a futile

attempt at an adjustment in the year 1990 in R.M. Patwa’s

case.   The  High  Court  also  observed  that  the  undertaking

given at one stage  by the Bank agreeing  to the adjustment

which had been subsequently withdrawn had no force as the

orders of the executing court and the High Court had been set

aside  by  the  Supreme  Court  and as  such  any undertaking

given in those proceedings was in any event nonest.  The High

Court also expressed its surprise at the fact that though the

appellant had deposited a sum of Rs. 4560.00 and Rs.4810.00

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only  as  margin  money  for  the  Letters  of  Credit,  yet  an

astronomical  amount  without  any  rational  basis  had  been

decreed by the trial court.  The court also observed that a suit

for money payable by the defendant to the plaintiff for money

received for the plaintiff’s dues lay within 3 years only from

the date of money received as per Article 24 of the Act, and in

the light of the fact that the Bombay High Court in its final

order  passed  on  3rd October  1979  in  Misc.  Application  No.

950/1975 had directed that the money should be paid to the

Bank was the date from which the 3 years period would be

deemed  to  have  commenced  and  that  this  was  also  the

appellant’s understanding as he had given a demand notice

telegraphically on 19th January 1980, confirming the same in

writing on 13th October 1980 but despite this, the suit had not

been filed within 3 years of that specific date.  The Court also

noted that in the year 1990, he had once again tried for an

adjustment of the amount in R.M. Patwa’s case and though

the offer for adjustment at one stage had been accepted by the

Bank but it would still amount to an acknowledgment to save

limitation (which would have to be within the original period of

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limitation).   The High Court further opined  that the appellant

had been associated with the matter relating to Miscellaneous

Petition No.950/1975 in the Bombay High Court and had also

admitted that he had not spent any amount with respect to

those proceedings and had not made any attempt to claim his

rights from the year 1980 to 1988 and that in any case after

the Supreme Court had dismissed his Special Leave Petition

on 10th February 1992 with the observation that the remedy

by way of a writ petition was not a proper remedy on which

the appellant had made a statement that he would file a civil

suit, the suit had not been filed within 3 years but had been

filed after more than 5 years on 8th September 1997.  The High

Court then examined the broad arguments in principle that

ordinarily a Bank should not take a plea of limitation but went

on to hold that in the light of the circumstances of the case

and  the  complete  inaction  of  the  appellant  to  pursue  his

remedies  despite  several  opportunities  before  him,  did  not

justify any special consideration.  The court finally held in the

circumstances that the suit would be governed by Articles 22

and 24 of the Act and that limitation of three years would start

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from the date of receipt of the money or 3 years from the date

when the demand had first been made.   The plea made on

behalf of the Bank with respect to the suit being barred under

the principles of res-judicata in view of the writ petition filed

by the appellant in the Bombay High Court which had been

dismissed and the Special  Leave  Petition also  dismissed  on

the ground of laches was, however, not gone into by the High

Court.  The High Court, accordingly, allowed the appeal and

set aside the order of the trial court and dismissed the suit.   

5.   Mr.  Tapan  Ray,  the  learned  senior  counsel  for  the

appellant  has  submitted  that  the  suit  was  governed  by

Section  10  of  the  Act  or  in  the  alternative,  Article  113

thereof  and  the  finding  of  the  High  Court  that  it  was

governed by the provisions of Articles 22 and 24 ibidem was

erroneous.   It has also been submitted that it was not open

to  a  Public  Sector  Undertaking  such  as  the  respondent-

Bank to take the plea of limitation as the taking of the plea

was to defeat a cause which was not only just but on the

admitted  facts  of  the  case  the  money  belonged  to  the

appellant.   The  learned  counsel  for  the  respondent  has,

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however, pointed out that Section 10 of the Act pertained to

suits against trustees and their representatives and a bare

perusal of the facts of the case would show that there was

no element of the creation of a trust and that this was not

even the case set up by the appellant at the initial stages.

It  has  also  been  pointed  out  that  Article  113,  even  if

applicable, provided for a limitation of 3 years from the time

when the right to sue  accrued  and as the appellant  had

himself  admitted  in  Writ  Petition  No.2840/1991  and  in

several  other  court  proceedings  that a demand had been

made on several occasions from the year 1980 onwards for

the payment of the amount but had not been accepted, the

right to sue would have accrued from that date and the suit

having  been  filed  in  the  year  1997  was  clearly  out  of

limitation.   It  has,  accordingly,  been pleaded  that  as the

suit was one for recovery of money simplicitor, it would be

governed by Article 22 or 24 of the Act, as had been found

by  the  High  Court.   It  has  finally  been  submitted  that

though  it  was  perhaps  not  proper  for  a  Public  Sector

Undertaking to take a plea of limitation, but in the facts of

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the  case  inasmuch  as  the  appellant  had  slept  over  the

matter  for  years  together,  all  pleas  were  open  to  the

defendant.  

6. We take  up  Mr.  Ray’s  first  argument  with  regard  to  the

applicability of Section 10 of the Act.  Section 10 reads as

under:

“Section  10.  Suits  against  trustees  and their  representatives.-  Notwithstanding anything  contained  in  the  foregoing provisions  of  this  Act,  no  suit  against  a person  in  whom  property  has  become vested in trust for any specific purpose, or against  his  legal  representatives  or assigns  (not  being  assigns  for  valuable consideration),  for  the  purpose  of following  in  his  or  their  hands  such property,  or  the  proceeds  thereof,  or  for an account of such property or proceeds, shall be barred by any length of time.”

7. A bare perusal of this section would reveal that it applies

where  a  property  had been  vested  in  trust  for  any  specific

purpose  and  for  certain  other  purposes  stipulated  in  the

provision.    We  are  of  the  opinion that  there  is  nothing to

suggest that a trust had been created merely because some

money had been deposited with the Bank at the instance of

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the Court on account of the auction of the goods and it was

not a mere deposit simplicitor.

8. Mr.  Ray has also referred us to Sections 9,10,14 and 19

of the Indian Trusts Act 1894 with respect to the creation of a

trust and drawn our particular attention to Section 88  thereof

which deals  with the question of  an advantage gained by a

fiduciary.  Section 88 is reproduced below:  

“Section  88.  Advantage  gained  by fiduciary.-  Where  a  trustee,  executor, partner,  agent,  director  of  a  company, legal advisor, or other person bound in a fiduciary character to protect the interests of another person, by availing himself  of his  character,  gains  for  himself  any pecuniary advantage, or where any person so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of such other person and thereby gains for himself a pecuniary advantage, he must hold for the  benefit  of  such  other  person  the advantage so gained.”

9. An analysis of this Section would show that the Bank, to

whom the money had been entrusted, was not in the capacity

set out in the provision itself.  The question of any fiduciary

relationship therefore arising between the two must therefore

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be ruled out.  It bears reiteration that there is no evidence to

show that any trust had been created with respect to the suit

money.   

10.  The learned counsel  has, however,  placed reliance on

Canbank  Financial  Services  Ltd  .    Vs. Custodian  &  Ors  .   

(2004)  8  SCC  355 to  contend  that  a  Banker  holding  a

customers money would do so in a fiduciary capacity  and as

such the matter would fall within section 88 and ipso facto

make Section 10 of the Act applicable.  We, however, see from

a perusal of this judgment that it related to a situation where

funds in the account of one Hiten Dalal were utilized by two

stock-brokers  to  purchase  units  in  a  Mutual  Fund  under

instructions of Hiten Dalal.   The units were handed over to

Hilen Dalal and the interest accruing thereon was handed over

to him.  It  was in this situation that the Court held that a

fiduciary relationship was created with the appellant financial

service and Dalal.  Clearly, this is not the case herein. Section

10 of the Act is, therefore, not relevant to the circumstances.   

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11. We  now  examine  Mr.  Ray’s  primary  arguments  with

regard  to  the  applicability  of  Article  113  of  the  Act.   This

Article is reproduced hereunder:

        Description of suit         Period of Limitation   Time from which period begins to run

“113. Any suit for which         Three years          When the right to sue accrues. no period of limitation is provided elsewhere in this  Schedule.

12.     A reading of this provision reveals that the time of

three years would start running from the date when the right

to sue accrues.  It  has been submitted by Mr. Ray that the

limitation would start from 24th February 1995 i.e., the date

when the accounts had been submitted by the Bank in Court.

The learned counsel for the respondent has, however,  pointed

out  that  the  appellant  had  made  his  first  demand  for  the

money due to him by a telegram dated 19th November 1980

and as the said demand had not been honoured, the period of

limitation would start from that day.  It has also been argued

that a demand had been made on several occasions thereafter

as well but no suit had been filed till the year 1997.

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13.     We have considered this argument very carefully. It

appears from the documents  on record that several  notices

etc.  had  been  issued  by  the  appellant  to  the  Bank  and  in

response to some of them, the Bank had made its reply that it

was awaiting instructions from its  Head Office.  The learned

counsel for the respondent has pointedly drawn our attention

to a registered notice dated 12th December 1988 wherein after

giving a chronology of what had happened,  it was stated in

paragraph 3 as under:

“This  is,  therefore,  finally  to  call upon you to settle my clients account by making  appropriate  payment to it within seven  days  of  the  receipt  of  this  notice else  my client  shall  be  constraint  to  file suit for account against the bank treating it  as  refusal  on the  part  of  the  bank to settle the account at the entire risk or the x x x as to costs and consequences which please note carefully.”

14. Concededly,  the suit was not filed even within 3 years

from 12th December 1988 despite the above said notice and

the suit  was,  in fact,  filed  in the year 1997.    The  learned

counsel  for  the  appellant  has,  however,  referred  us  to

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paragraphs 39 and 40 of the plaint to identify the date for the

start of limitation.    These paragraphs are reproduced below:

“Para  33.   On  24.2.1995  the  defendant Bank submitted  statement  of account  of Plaintiff  before  the  Hon’ble  High  Court therein  showing  the  credit  and  debit entries  made  by  them  in  account  of plaintiff  with  an  application  and undertaking for giving interest @ 19% on the surplus amount of the plaintiff  lying with the defendant Bank and specifically requested  to  the  Hon’ble  High  Court  to decide  the  account  as  submitted  by  the Bank  on  above  mentioned  terms  for interest on surplus.

Para 39.  That the cause of action for the present  suit  accrued  in  favour  of  the plaintiff  and  against  the  defendant  on 24.2.95  when  the  plaintiff,  as  stated  in para 32 and 33 here-in-above, for the first time  came  to  know,  through  the statement  of  account  submitted  by  the defendant  in  the  High  Court,  about  the amount  received  by  the  defendant  from sale  proceeds  of  the  goods,  and  illegal deduction  made  by  them  from  the  said amount,  therefore,  the  suit  is  within limitation.

Para 40.  That the transaction took place at Indore, the cause of action accrued at Indore and the disputed amount is lying with the defendant Bank at Indore at its Indore  Branch,  therefore,  this  suit  is within  territorial  jurisdiction  of  this Court.”  

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15.   We  are  of  the  opinion  that  the  appellant’s  plea  of

ignorance  is  clearly  untenable  in  view  of  the  documents

referred to above and even from a perusal of the proceedings

in  the  present  civil  suit.   In  his  cross-examination,  the

plaintiff-appellant has admitted that in Misc. Application No.

950/1975 he had been served a notice but had not appeared

in Court, but was fully aware that the goods had been sold

under  the  orders of  the High Court  for  Rs.4,72,714.16 and

that on 3rd October 1979, when Misc. Application 950/1975

had  been  finally  disposed  of,  he  knew  that  the  aforesaid

amount  had been  deposited  with the  Bank.   The  appellant

also  admitted  that  from 3.10.1979  to  14.3.1991,  when the

Writ  Petition  had been  filed  in the Bombay High Court,  no

steps had been taken to recover the amount though several

notices,  threatening  action  had  been  issued.  Further  even

assuming  for  a  moment  that  a  statement  of  accounts  had

been  tendered  by  the  Bank  on  24.2.1995  in  Patwa’s

proceedings, that would not amount to an acknowledgement

to save limitation, as limitation had long since expired.   

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16.     There  is  yet  another  circumstance  which  clearly

militates  against  the  case  set  up  by  the  appellant.  In

paragraphs 16, 20 to 24 of Writ Petition 2840/1991 this is

what the appellant had to say.

“16.  The  petitioner  now  requested  the Respondent  Bank  to  refund  the  surplus amount to them. In a telegram to the Branch Manager, Industrial Estate Branch, Indore on 19.1.1980,  the  petitioners  demanded  the surplus amount along with the margin money lying as a deposit with the respondent Bank.

20.  The  petitioner  wrote  letters  to  the Chairman,  Managing  Director,  General Manager,  Assistant  General  Manager  and Regional  Manager  of  the  respondents complaining  about  the  tacit  silence  and the uncooperative approach of the respondents in settling the matter of the petitioners inspite of the directions given by this Hon’ble Court.  

21.   The respondents having failed to even respond  to  all  the  letters  mentioned  in  the foregoing para No.20, the petitioner now tried to  get  succour  from  the  Reserve  Bank  of India, Under-Secretary, Government of India, Ministry of Finance, New Delhi, between June 1988 to August, 1988.

22.   The  petitioner  states  that  they approached  the  Branch  Managers  of  the Respondents on innumerable occasions from Jan.1980  to  August,  1988  but  regretfully these officers of the Respondents failed to give any  information regarding  the  appropriation

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of  the said amount or the surplus payable to the petitioner, or any statement of account.

23.    Finally the petitioners by their advocate called upon the Respondents by their letter of 12.12.1988 to settle the petitioners’ account or  face  legal  action  for  illegally  withholding the  moneys  of  the  petitioner  without  any justifiable  cause  and  depriving  them of  the fruits of their business and profitability.  

24.   After  their  inaction  for  eight  years  the respondents  replied  to  the  notice  of 12.12.1988  on  15.12.1988  denying  the petitioner’s contentions and raising frivolous objections  regarding  payments  of  the legitimate dues of the petitioners and merely calling  the  petitioners  to  move  a  “Proper Court” for obtaining appropriate orders.  

17.    It  will  be  clear  from  a  perusal  of  the  aforesaid

averments  that,  taken  at  its  very  best  in  favour  of  the

appellant, his claim had been finally denied on 15th December

1988.  It must, therefore, be held that the right to sue started

from that day.  The appellant’s plea that the limitation would

deem to have started w.e.f. 24.2.1995 is therefore, on the face

of  it,  unacceptable.    It  is  further  significant  that  on  the

dismissal  of  W.P.  No.  2840/1991  on  25.10.1991  by  the

Bombay  High  Court,  the  appellant  filed  a  Special  Leave

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Petition in  this  Court.   This  petition  too  was dismissed  in-

limine on 10th February, 1992 with the following observations:

“The  Special  Leave  Petition  is dismissed.  The  remedy  by  way  of  Writ Petition  was  certainly  not  a  proper remedy.   Learned  counsel  for  the petitioner  states  that  he  wants  to  file  a suit.  We are not concerned with any such thing.  Mr. Agarwala, learned counsel for the  respondent  will  file  Vakalatnama within two days.”

18.         From a reading of the aforesaid order it transpires

that despite the statement that a civil suit would be filed, no

suit was filed within three years.  The suit was filed but in the

year 1997 i.e. beyond the period of three years.

19. This  Court  in  Mst.  Rukhmabai vs.  Lala

Laxminarayan  & Ors. AIR 1960 SC 335 has  observed  as

under:

33.  The legal  position may be  briefly  stated thus: The right to sue under Art. 120 of the Limitation  Act  accrues  when  the  defendant has clearly  and unequivocally  threatened  to infringe the right asserted by the plaintiff in the suit.  Every threat  by a party  to such a right,  however  ineffective  and  innocuous  it may be,  cannot be considered to be a clear and unequivocal threat so as to compel him to file a suit. Whether a particular threat gives rise to a compulsory cause of action depends

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upon  the  question  whether  that  threat effectively  invades  or  jeopardizes  the  said right.  

34.  The  facts  relevant  to  the  question  of limitation in the present case may be briefly restated:  The  trust  deed  was  executed  in 1916.  The  suit  house  was  constructed  in 1920. If,  as we have held, the trust deed as well as the construction of the building were for  the  benefit  of  the  family,  its  execution could  not  constitute  any  invasion  of  the plaintiff's  right.  Till  1926,  the  plaintiff's father, Ratanlal was residing in that house. In 1928 when Daga challenged the trust deed, the  family  compromised  the  matter  and salvaged the house. From 1936 onwards the plaintiff has been residing in the suit house. It is conceded that he had knowledge of the litigation  between  Rukhmabai  and Chandanlal  claiming the property under the trust  deed;  but,  for  that  suit  he  was  not  a party  and the  decision  in that  litigation  did not  in  any  way  bind  him  or  affect  his possession of the house. But in execution of the  decree,  the  Commissioner  appointed  by the Court came to the premises on February 13, 1937, to take measurements of the house for  effecting  partition  of  the  property,  when the plaintiff raised objection, and thereafter in 1940, filed the suit. From the aforesaid facts, it is manifest that the plaintiff's right to the property was not effectively threatened by the appellant  till  the  Commissioner  came  to divide  the  property.  It  was  only  then  there was an effectual threat to his right to the suit property  and  the  suit  was  filed  within  six years thereafter. We, therefore, hold that the suit was within time.

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Applying the aforesaid principle, it would be clear as per the

appellant’s own showing that there had been a denial of the

appellant’s  claim on several occasions before  15th December

1988, but unequivocally on the 15th of December 1988.  This

judgment  was  followed  subsequently  in  M.V.S.  Manikayala

Rao vs. M.Narasimhaswami & Ors.  AIR 1966 SC 470.   It

bears  notice  that  Article  120  of  the  Limitation  Act  of  1908

largely corresponds to Article 113 of the Act, with the period of

limitation now being reduced from six to three years.

20. We  are,  therefore,  of  the  opinion  that  Mr.  Ray’s

primary  argument  with  regard  to  Article  113,  does  not

advance the case of the appellant.  In the face of the above

undeniable facts, the large number of judgments cited by the

learned  counsel  for  the  parties  with  regard  to  the  date  on

which the cause of action would accrue need not be examined.

21. Mr.  Ray  has  also  submitted  that  it  would  be

inappropriate  for  a  Public  Sector  Undertaking  such  as  the

respondent-Bank to raise a plea of limitation especially when

the amount was due to the appellant.  In this connection, the

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learned  counsel  has  cited  The  Madras  Port  Trust  vs.

Hymanshu International AIR 1979 SC 1144 and UCO Bank

vs. Hem Chandra Sarkar  AIR 1990 SC 1329.  The learned

counsel  for  the  respondent  has,  however,  argued  that  no

proper calculation with respect to the amount that had been

decreed,  had  been  made  and  whereas  the  appellant  had

deposited in all less than Rs.10,000/- towards margin money

in the year 1979, there was no basis for decreeing the suit as

claimed for a sum of about  Rs.24 Lakhs.  It  has also been

submitted that the appellant had threatened to initiate legal

proceedings  from  the  year  1980  onwards  and  had  actually

gone  to  court  on  several  occasions  and  had  remained

unsuccessful up to the Supreme Court in the year 1992 but

had filed the suit in the year 1997 and as such the Bank was

justified in taking the plea of limitation in the facts of the case.

We find merit in this argument.   In Madras Port Trust’s case

(supra) the  suit  had  been  decreed  in  favour  of  the  private

party in the sum of Rs.4838.87 and special  leave had been

granted by this Court subject to the payment of the aforesaid

amount irrespective of the result of the appeal, the more so as

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the  claim  of  the  private  party  had  been  supported  by  the

Government Department concerned and it is in that situation

that the Supreme Court made the observation that a plea of

limitation  should  not  be  raised.   In  the  UCO Bank’s  case

(supra),  the  appellant  Bank  had  received  the  price  of  the

goods from the  opposite  party  but  had failed  to deliver  the

goods thereafter.  This fact had been virtually admitted by the

representative  of  the Bank and in that  backdrop this court

observed that it was not open to the Bank to contend that it

was not called upon to return the goods or in the alternative to

pay an equivalent as price to the plaintiff and it was observed

(Para 17) that:  

“We  may  also  state  that  in  practice Bankers  do  not  set  up  the  statute  of limitations  against  their  customers  or their legal representatives, and we see no reason  why  this  case  should  be  an exception to that practice.”

22. The facts of the case before us are starkly different,

as  would  be  seen  from  what  has  been  narrated  above.

Significantly  also,  the  appellant,  though  a  party  to  the

proceedings  in  Miscellaneous  Application  No.  950  of  1975,

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did  not  put  in  appearance,  nor  shared  the  expenses  (as

admitted  by  him  in  his  evidence),  but  he  wants  to  take

advantage of the situation now created.  In this background

the Bank was fully justified in taking the plea of limitation.

We, therefore, find no merit in this appeal.  It is accordingly

dismissed.

…………………………..J. (TARUN CHATTERJEE)

…………………………..J. (HARJIT SINGH BEDI)

New Delhi, Dated: September  30, 2008

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