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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

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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.

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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

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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

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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

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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

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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

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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