IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOMAS P.JOSEPH MONDAY, THE 4TH JANUARY 2010 / 14TH POUSHA 1931 RSA.No. 695 of 2009() --------------------- AS.18/2008 of SUB COURT, PERUMBAVOOR OS.210/2004 of MUNSIFF COURT, PERUMBAVOOR .................... APPELLANTS/APPELLANTS/DEFENDANTS 1 & 2 ---------------------------------------------------------- 1. DIKSON ELIAS, S/O.M.C.ELIAS, AGED 43 YEARS, MECKAMALIYIL HOUSE, THALAPUNCHAYIL, WITHIN METHALA POSTAL BOUNDARY, ASAMANNUR VILLAGE, KUNNATHUNADU TALUK. 2. SHEEBA, W/O.DIKSON ELIAS, AGED 41 YEARS, MECKAMALIYIL HOUSE, THALAPUNCHAYIL, WITHIN METHALA POSTAL BOUNDARY, ASAMANNUR VILLAGE, KUNNATHUNADU TALUK. BY ADV. SRI.B.GOPAKUMAR SMT.CHINCY GOPAKUMAR RESPONDENT: RESPONDENT/PLAINTIFF ----------------------------------- M.V.JACOB @ YACOB, S/O.VARGHESE, AGED 72 YEARS, MUTHUKKATTU HOUSE, RAYAMANGALAM KARA, RAYAMANGALAM VILLAGE, KUNNATHUNADU TALUK. ADV. SRI.R.D.SHENOY, SENIOR ADVOCATE SRI.GEORGE VARGHESE KIZHAKKAMBALAM SRI.V.RAJENDRAN (PERUMBAVOOR) THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 04/01/2010, ALONG WITH R.S.A.Nos. 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770 AND 771 of 2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: THOMAS P JOSEPH, J. ---------------------------------------- R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 --------------------------------------- Dated this 04th day of January, 2010 JUDGMENT These appeals are at the instance of defendant Nos. 1 and 2, husband and wife who successively lost in the courts below. Respondent/plaintiff, himself a private financier claimed to have deposited various amounts with M/s. Meckamaliyil Financiers, Nellikuzhi said to be a proprietary concern of appellant No.1 on various dates and which according to the respondent was payable on demand with interest at the rate of 18% per annum. According to the respondent, after the deposits were made there was love lost between him and appellant No.1 which resulted in registration of some criminal cases. In the year 2004, respondent demanded payment of the amount with interest at the rate of 18% per annum. Notices were replied by appellant No.1 contending that there was neither any deposit nor any agreement to pay interest. Alleging that the various amounts are payable to the respondent and that to defeat the claim of respondent, appellant No.1 has fraudulently transferred the property scheduled in the plaint and belonging to him to his wife, appellant No.2 without consideration, respondent filed suits for recovery of the various amounts with interest at the rate of 18% per annum and charged upon R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 2 the schedule property. The suits were resisted by the appellants on various grounds. They denied that there was any such deposit or agreement to pay interest at the rate of 18% per annum. They contended that the suits at any rate are barred by limitation since the alleged deposits were made during 1990-1995 but, the suits are filed only in the year 2004. They denied that the transfer made by appellant No.1 in favour of appellant No.2 is fraudulent or intended to defeat the creditors. Trial court tried the suits jointly, found that deposits were made by the respondent in the proprietary concern of appellant No.1, the latter is bound to pay the said amounts with interest at the rate of 12% per annum from the date of respective deposit till the date of decree and thereafter with interest at the rate of 6% per annum till realisation. It also found that the transfer made by appellant No.1 in favour of appellant No.2 is fraudulent and intended to defeat the creditors. Accordingly, respondent was given a decree for realisation of the various amounts with interest as above stated, charged on the schedule property. First appellate court has confirmed the various findings entered by the trial court and dismissed the appeals and hence this second appeal. 2. The following substantial questions of law are framed for consideration: R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 3 (i) Could the document marked as fixed deposit receipts, on the face of it be treated as fixed deposit receipts issued by a banker for money received considering its nomenclature, non mentioning of the interest and maturity date? (ii) Whether it is article 21 or 22 of the Limitation Act (for short, “the Act”) that apply to the suits in question? (iii) What is the rate of interest payable by appellant No.1 if the deposit receipts are silent about the rate of interest payable or, due date is not shown, or, the term of deposit is not mentioned? 3. It is argued by learned counsel for appellants that the finding of the courts below that documents marked as if it were fixed deposit receipts cannot be treated so considering its nomenclature, absence of date of maturity and since rate of interest is not fixed therein. It is also contended by learned counsel that trial court was not legally correct in awarding interest from the date of the respective deposits till the date of suit and at any rate at the rate of 12% per annum. It is further contended that the courts below ought to have found, on the facts of the case that article 21 of the Act applied in which case the suits are hopelessly barred by the law of limitation. R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 4 Yet another contention is that the finding that transfer of schedule property to appellant No.2 is fraudulent is not sustainable. Learned counsel for respondent per contra, contended that there could be deposit of money even without an understanding or agreement to pay interest and in case the period of deposit is not mentioned the amount is payable on demand. According to the learned counsel transactions in these cases are fixed deposits not for any specific period but payable on demand and hence appellant No.1 was bound to pay the amount as per the demand contained in the respective notices issued to him. It is also contended by learned counsel that it is incorrect to say that there was no agreement to pay interest but, it was only that there was no agreement between the parties regarding the rate of interest payable which the court is competent to fix having regard to the nature of the transactions, intention of the parties in making the deposit and all other relevant circumstances. According to the learned counsel, there is no reason to interfere with the findings of fact entered by the courts below. 4. I shall first refer to the question raised whether the documents purporting to be fixed deposit receipts could be treated as such. Exts.A1, A8, A13, A18, A23, A28, A33, A38, A43, A48, A53, A58, A63, A68, A73 and A78 are the respective receipts which according to R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 5 the respondent are fixed deposit receipts issued to him by appellant No.1 on his depositing various amounts referred to therein on the respective dates mentioned therein. The receipts say that the sum referred to therein is received by appellant No.1 as proprietor of M/s.Meckmaliyil Financiers from the respondent and further says, “ as a notice of deposit repayable ....... ................ months . days After notice with interest at the rate of ...................... per annum.” Though the appellants denied that there was any such transactions between appellant No.1 and respondent and that the receipts above referred are not signed by appellant No.1, trial court found referring to various documents produced in evidence including Ext.X1, the file relating to the financing business allegedly carried on by M/s. Mackmaliyil Financiers that there is no reason to disbelieve the evidence of the respondent regarding the transactions. First appellate court has confirmed that finding of the trial court. That is a finding of fact entered by the courts below on the evidence and involve no substantial question of law. Thus, it is proved that respondent had deposited the various amounts referred to in the fixed deposit receipts stated above, with appellant No.1 who, the evidence shows was R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 6 running a private financing institution during the relevant time. A deposit has to be distinguished from a loan. A loan, on payment becomes money of the borrower while, a deposit continues to be money of the depositor payable either on attaining maturity or, on demand (see Sarada Amma Vs. Kerala Varma Kochaniyan Thampuran (1983 KLT 248). In this case there is no case for the parties that the transaction amounted to a loan. On the other hand the exhibits referred to above indicate that it is a case of deposit of various amounts. A deposit not for any fixed period is liable to be paid on demand (see Elampallor Trust Vs. Kamalakshy Amm (1989 (1) KLT 484). Going by the tenure of the documents which are marked in evidence and referred to above it leaves me in no doubt that they are fixed deposit receipts issued by appellant No.1 in favour of the respondent for money received on the respective dates. The mere fact that date of maturity or rate of interest payable is not mentioned do not take the document out of the purview of a fixed deposit receipt. The substantial question of law framed in that regard is answered accordingly. 5. So far as the issue regarding limitation is concerned, learned counsel for appellants would rely on article 21 of the Act learned counsel for respondent argues that it is article 22 which R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 7 applied. I found that the transaction amounted to a fixed deposit on the respective dates. Article 21 of the Act deals with limitation for suits for recovery of money lent under an agreement that it shall be payable on demand. The period of limitation for such suits begin to run from the day loan is advanced. Article 22 says that period of limitation will begin to run from the day the demand is made. That article deals with the money deposited under agreement that it shall be payable on demand. In these cases I stated that as the fixed deposit receipts do not mention the due dates on which the amount is payable, it is payable on demand. In Elampallor Trust Vs. Kamalakshy Amm (supra) it has been held that when the deposit is not for any specific period, the period of limitation starts from the date of demand. In these cases, the demand is as per notices issued in the year 2004. The suits are also filed in the year 2004. Learned counsel for appellants would give emphasis to the averments in paragraph 8 of the plaint where according to the learned counsel it is stated even at the time when appellant No.1 had stopped his private financing business there was a demand for payment of the amount by the respondent and hence, the period of limitation should run, even if Article 22 applied from the date of such demand. Learned counsel would submit that evidence on record would show that appellant No.1 R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 8 stopped financing business on 31-03-1997 and hence the demand referred to in paragraph 8 of the plaint must have been by or around 31-03-1997. 6. What is pleaded in paragraph 8 of the plaint is only that at the time appellant No.1 stopped his private financing business, he had promised respondent to pay the amount on demand. Paragraph 8 of the plaint does not say that there was any demand made by the respondent at the time appellant No.1 stopped the private financing business. As per the averments in the plaint and the evidence of respondent as PW1, demand for payment of the amount comes only in the year 2004. Therefore from the averments in paragraph 8 of the plaint I am unable to accept the contention of learned counsel for appellants that there was a demand at the time appellant No.1 stopped his business on 31-03-1997 and hence the suit filed in the year 2004 is barred by limitation. Moreover the evidence of PW1 is that it is only towards the end of 2003 that he learnt that appellant No.1 stopped his financing business. The courts below in the circumstances rightly found that period of limitation for the suits began to run from the day demand was made for payment of the amount in the year 2004, Article 22 of the Act applied and hence, suits are not barred by law of limitation. The substantial question of law framed is answered R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 9 accordingly. 7. Then the question is whether there was any agreement to pay interest and assuming so, what is the rate of interest payable. Learned counsel for appellants would submit relying on the exhibits above referred (fixed deposit receipts) that there was no agreement to pay interest as is evident from the fact that the column in the fixed deposit receipts for rate of interest remain blank. It is also the argument of learned counsel that if there was no agreement to pay interest, no statutory provision required appellant No.1 to pay interest on the amount deposited till date of suit and hence interest was not payable till date of suit. It is also argued by learned counsel that respondent also is engaged in the private financing business and on the facts and circumstances of the case equity also does not demand award of interest from the date of deposit till date of suit. Learned counsel for respondent per contra would contend that going by the fixed deposit receipts, there was an agreement to pay interest though rate of interest was not decided upon or agreed to between the parties and hence the column for rate of interest was left blank. Learned counsel has invited my attention to pages 297 and 298 of Tanon on Banking Law and Practices. It is also contended by learned counsel that there is only an outright denial of the transaction in the written R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 10 statement filed by the appellants, there is no alternative contention that in case there was a deposit of money as pleaded by respondent there was no agreement for payment of interest. The further argument is that there is no contention in these second appeals that no interest was payable from date of deposit till date of suit and only the rate of interest challenged. 8. The fixed deposit receipts referred supra read as under: “Received from Mr/Mrs. M.V.Jacob........................ Rupees .............................. (amount specified) as a notice of deposit repayable .......................... months days after notice with interest at the rate of ................ per annum.” According to the learned counsel for respondent if there was no agreement to pay interest from date deposit, the printed matter in the F.D receipts regarding payment of interest would have been scored off. Learned counsel for appellants have a contention that even as per the above description, interest is payable only from the date of demand notice. But, that argument appears to me as not acceptable. In these second appeals I do not find any challenge to the award of interest from date of deposit till date of decree. What is contended is only that courts below went wrong in awarding a higher rate of interest (12%) when the column regarding rate of interest in the fixed deposit receipts R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 11 remain blank. In Tanon's Banking Law and Practice at page 297 it is stated that “Customers usually keep their money as fixed deposits with banks with a view to earning interest. Appellant No.1 who is found to have been running a private financing business and was in the habit of receiving deposits as Ext.X1 reveals may have been conscious of that practice in banking business and hence has not challenged the award of interest from the date of deposit till date of suit but has raised his grievance on the rate of interest awarded.” Hence only the rate of interest awarded till date of decree requires to be considered in these appeals. Question is whether courts below are justified in awarding interest at the rate of 12% per annum from the date of the deposit till date of decree. In holding so the courts below have not adverted to the rate of interest payable on fixed deposits by banking institutions. Having regard to the relevant facts and circumstances including rate of interest payable on fixed deposits and having heard counsel on both sides I am satisfied that rate of interest fixed by courts below is excessive and that rate of interest payable from the date of respective deposit till date of decree can be fixed as 7.5% per annum. There is however no reason to interfere with the R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 12 interest awarded from the date of decree till realisation. The substantial question of law raised in this regard is answered accordingly. 9. It is contended that courts below went wrong in holding that the transfer of suit property by appellant No.1 to appellant No.2 is fraudulent and erroneous. According to appellant No.1, he transferred the property to appellant No.2, his wife in the year 2000 and 2001 to discharge the liability on account of certain amounts being entrusted to him on her behalf at the time of their marriage years back being appropriated by him. Concededly at the time of transfer no consideration has passed. What is referred to in the assignment deeds is past consideration. It is admitted that appellants live, dine and sleep under the same roof. Even as per evidence appellant No.1 stopped the financing business on 30-03-1997. The impugned transactions are in 2000 and 2001. Appellants are staying in the house in the said property even now. Appellant No.1 has no case that he has any other assets. It is in the above circumstances that courts below concluded in favour of fraudulent transfer. That is a finding based on evidence and involves no substantial question of law. 10. But it is seen that the trial court has granted a decree charged on the suit property in favour of the respondent. It is not the R.S.A.Nos.695, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 769, 770, 771 of 2009 13 case of respondent that as per the agreement any charge was created on the suit property belonging to appellant No.1. No statutory provision also enables respondent to get charge on the suit property. Therefore charge created on the suit property cannot be sustained and is liable to be set aside. Resultantly these appeals are allowed in part and, the judgment and decree under challenge are modified as follows. (i) The rate of interest payable on the amount of fixed deposits in these cases from the date of respective deposit till date of decree is modified as 7.5% per annum. (ii) Decree of the courts below to the extent that charge is created over the suit property for the amount decreed is set aside. In other respects the appeals will stand dismissed. Parties shall suffer their respective costs in these appeals. THOMAS P JOSEPH, JUDGE Sbna/