RAM JANKI DEVI & ANR. v.

M/S. JUGGILAL KAMLAPAT

January 28, 1971

[G. K. MITTER AND A. N. RAY, JJ.]

Deposit and Loan-Difference between-Tests-Demand for part of loan whether sftlrts limitation.

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 GJpta 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 Ml 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. Thereafte\' 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 respon<Jent 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 SJ!pplies 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 resiondent was to place to the credit of Lakshmi Ratan Cotton Mills a sum o . Rs. 4,00,000 in its account with tho respondent thus reducing the indeb dness 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 group earned 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 Cvil Judge, Kanpur w.as tried by the Allahabad High Court in its original jurisdiction. The suit was decreed in favour of the respondent. With certificate appeal was filed {n this Court. The stions for consideration \Vere ; (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 Wlls 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 therefare 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 lQiln of money.

It will aepend 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 partfos treated the transaction will throw light on the true form of the transaction. !577 HJ

574 SUPllEME COUllT REPOR; I'S

[1971} 3 S.C.R..

V. E. A. Annamalai Chettiar & Anr. v. S. V. Y. S. Veerappa Chettlar, A.LR. 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 wel"e common. It would be more explicable and na(Jlfal course of events that monies would be ke, Pt in deposit with the appellant in order to enable them to have financ1al accommodation without immediate worry of repayment. 1be mere fact that money in specie was not paid wou Id not be destructive of the case of deposit. The r<; spondent acted as bankers. The way in 'which the respondent made entries in the pass-book of the appellant was consistent with. the roznamcha, f!hata and nakalbahi books. It was \lot a .case of the respondent giving loan to the appellant for the obvious reason .tbat the histdry of the . transaction between the appellant and LakshmtCotton Mills showed that the appellant had to be put on a footing of financial: stability by giving the appellanHhe use of the sum of Rs. 4,00,000 for a jong time. The absence of aµy negotiable instrument was significant, A hundi Or a11(omissory note would. have been consistent with the case o! a loan. . The :relationship between the parties the Sll!l'OUDding circumstances at. the time Qf die transaction, the pecuniary position of the appellant were 118 overwhelming features to corroborate the oral ·•s 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-BJ

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 fr0111 the witness box mdicated the inherent infirmities cf the appellant's case. [581 DJ

(ii) There is a consensus among the High Cotirts 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 amou11t would not be effective because there were common partners in the firms of respondent and the appellant; ·

(581 E.-GJ

Jogendranath Chakerbutty v. Dinkar RGm,

A.LR. 1921 Cal. 644, Motigauri v. Naran; i; A.LR. 1927 Born. 362 and Subbalh "Chetty & Ors ..

v. Visalakshi Achi, A.l.R. 1932 Mad. 685, referred to,

The 1 appeal must accordingly be dismissed.

CIVIL APPELLATE JURISDICRION: Civil Appeal No. 2151 of G 1966. ~

Appeal from the judgment and order dated August 3, 1965 of the Allahabad High Coun in Original Suit No. 1of1964.

S. V. Gupte aiid /, P. Gopal, for the appellants.

A. 'K. Sen, Rameshwar Nath and Swaraniit Sodhi, for the

respondnt.

.JAN"1 DEVI V • .JUOOILAL (Ray,/,) 575

The Judgment of Ille Court was delivered by

Ray, J.,..-This is an appeal by certificate from the judgment and.decree jl.ated 3 August, 1965 of the High Court of Allahabad decreeing the respolldent's suit for the suui 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 J:espondent 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 @..,'J, flf I'll~ cent per month and that the respondent would be entitled to withdraw the deposit on . demand. 1..

The suit was filed in the court of the First Civil Ju4ge. Kanpur. .

The evidence was concluded before the Civil. Juil&C, Kanpur. 'J;'hereafter by an order dated 12 May, l~ of tlie•l[@'Court lit Allahabad the suit was transferred to the HigheQurtiiimiginal civil jurisdiction. The High Court heard the suit and'bn:$August,. 1965 decreed the suit in favour of the respondent. · !, ·

. . .. . . .· . ·:·'."r /< At the trial the issues were first whether the respondent deposit•.·:.'.,'.·,,, ed the sum. of Rs. 4,00,000 ith the appellant l\lld secondly w~.l.~,, th er the suit was barrec! by time. · oi

The entire controversy in the suit is whether it was a case whece money was deposited under an agreement and that it was payable on demand or whether Jt was a case of an ordinary loan of Rs. 4~00.000. The respondent contended that Article 60 of the r Indian Limitation Act, 1908 was the relevant Article because it 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 de- Gi mand 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 De\li wife of Lakshrnipat Singhania were partners of. India Suppl\es 'along with the defendants. Defendant Ram Janki Devi is the wife of H 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

group were the partners of India Supplies.

The Singhania and the Gupta groups were also bQtb interested in the business of Lakshmi Ratan Cotton Mills. T&e evidence on behalf of the respondent is that Lakshmi Rattan Cotton Mills a limited Company acted as financiers ®d 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 B 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 c to Lakshmi Ratan Cotton Mills.

The respondent accepted the said proposal and thereafter a letter dated 29 September, J 942 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 rafil of interest as agreed upon". The respondept 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 re, ducing _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 rozuamcha (daily ];>ook) 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 lndil\ 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 occurr4tg eiter in the roznamcha or in the letter dated 29 September, 1942 wntten 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

appt'llant under an agreement that the same would be paid on

A demand. At one stage in the proceedings there was a controversy as '(O whether Ram Ratan Gupta had authority to bind the appell:mt by the letter dated 29 Sepmber, 1942. There i> 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 B 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 backgJ'OUnd 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 aU 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 thei books of the respondent. Thirdly, monies were not given notionally 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 deciion of this Court in V. E. A. Annama/ai Chettiar & Anr, v. S. V. V. S. Veerappa Chettiar(') in support of the proposition that the answer to ihe question as to whether it was a loan or deposit would not deoend merely on the terms of the document but had to be judged from !he intentfon of the parties and the circumstances of the case. That 1s 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 clothed with the character of a deposit of money. The surrounding circumstances, the relationship and character of the

(1) A.T.ll, 195H.C 12

transaction and the manner in which parties treated the .trans- A • action 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 between 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 B seem to impose an immediate obligation on the deposiee to seek <>ut the depositor and repay him.

Though documentil bl' themselves are not conclusive of the question thy have th~ 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 con- C temporaneous with the entire transaction between the appellant and the respondnt. The letter was as follows :-

"Messrs. Juggilal Kam!apat Koth!, Cawnpore.

Dear Sirs, D

As per my talk with Sir Padampat !shall thank you to credit a sum of Rs. 4 lacs (Rupees four lacs only) to the account of Messrs Lakshmirafan 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.

E ..

Thanking you, Yours faithfully,

Sd/- R. Ra'1n Gupta".

The intrinsic evidence in the letter is that the sum of Rs. 4,00,000 F 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 expeced in. regard to use of foreign language by merchants and traders m their short memorandum. The character of deposit is an inherent impression in the writing. The rozmancha rbfers to the letter and is therefore G corroborative of the letter and the terms threof. The letter further shows that the terms were agreed to by the partners of the firm namely, the partners of India Supplies and of She respondent.

The' respondent's partner Padampat Singhania gave oral evidence and substantiated the terms of the letter and the respqndenfs case.

Padampat Singhania was the person. on ehalf of the respond.ent H who carried on the negotiations. H1sev1dence was therefore llllportant. The appellants did not examine themselves and did not

(I) 63 I.A. 279.

JANK! DEVI V. JUGGJLAL (Ray, J.) 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 roznamcha 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 deposiot karaya panna 2486"

His evidence was that the books wer~ systematically kept on 'mahajani' system in connection with the business. The witness proved the Khata, the raznamcha and the nakalbahi entries. In cross-exanrination of Gop_i 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 roznamcha. 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 "deposit karaya" in the roznamcha entry were not written at the same sitting. Padampat Singhania denied that, Counsel for the appel- . lant contended that in the absence of Gopi Kishan Jaipuria the F 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 G Kishan Saraugi spoke of the proper maintenance and keeping of books of account and that it was not possible 1lo 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 H any doubt to have been written at the same time as the rest of thti writing. It is in evidence that the reference to the page of th¢ panna under that entry was written later inasmuch as the page

of the panna was put on when the panna was put on when the A panna book was writte!l.

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 infffence from the non-production of books of the appellant would arise that they would have supported the respondents caS!l 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 conjectu_re 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 :, Ccause 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 E natl1ral course of events that monies would be kept in deposit with the appellant in order toenable them to have financial ac.commodation without immediate worry of repay!Ilnt. The mere fact t)lat money in specie was not paid would not be destructive of deposit The respondent acted as bankers.

The way in which t.he respondent made entries in the pass ook of the appellant is F consistent with thdr 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 shows that the appellant.hat! to be j:¥1t 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 G or a promissory note would have been consistent with the case of a loan.

The relationship between the P?rt.ies, the surrounding circumstances at the time of the transaction, the pecuniary position of the appellant are all overwhelming feafures 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

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 awlird 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 t!hat 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 aII the facts of deposit of the money with the appellant.

The a12peIIant never said that it was a case of advancing loan. The non-production of the appellant's accounts coupled with the appellan~ staying away from the witness box indicates the inherent infirmities in the appellant's case.

Counsel for the appellant conten<IP.d 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, 194! 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 Motigauri v. Naranji( 2 ) an.d Subbaih Chetty & Ors. v. Visillakshi A chi) (8). That is th~ correct position in law. Counsel for the appellant did not contend to the contrary in view of the comensus of op!nion. of the, different Hig_h Courts. It is also important to bear m mmd that a demand iri the year 1943 for a part of the amount wouid not be effective because there were common partners in the firms of the respondent and the appellant.

For .these reaons we ar~ of opinion that the High Court was correct m decreemg the smt.

The appeal therefore fails and is dismissed with costs.

G.C.

(1) A.1.R. 1921 Cal. 6A4

(2) A.LR. 1927 Bom. 362

(3) A.l.R. 1932 Mad. 685

Appeal dismissed: