Mohanan, S/o Velayudhan v. M/s A.V.J. Builders (P) Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR** ## **&** ## **THE HONOURABLE MRS. JUSTICE C.S. SUDHA** **MONDAY, THE 21[ST] DAY OF MARCH 2022 / 30TH PHALGUNA, 1943** ## **RFA NO. 690 OF 2013** **AGAINST THE JUDGMENT & DECREE IN OS 159/2009 OF SUB COURT, PERUMBAVOOR** ## **APPELLANT/DEFENDANT:** **MOHANAN, S/O.VELAYUDHAN, PATHRAMALI HOUSE, MARIKKAR ROAD, PERUMBAVOOR.** **BY ADVS.SRI.S.VINOD BHAT SRI.LEGITH T.KOTTAKKAL** ## **RESPONDENT/PLAINTIFF:** **M/S.A.V.J.BUILDERS (P) LTD., P.M.C.XVIII 187-C, IRINGOLE P O, PERUMBAVOOR, ERNAKULAM DISTRICT- PIN 683 548, REPRESENTED BY ITS MANAGING DIRECTOR.** ## **REPRESENTATIVE OF THE RESPONDENT COMPANY IS SUBSTITUTED AS** **'M/S.A.V.J.BUILDERS (P) LTD., P.M.C.XVIII 187-C, IRINGOLE P O, PERUMBAVOOR, ERNAKULAM DISTRICT- PIN 683 548, REPRESENTED BY VINEETHA ASHOK'** **AS PER ORDER DATED 21.03.2022 IN I.A.No.1 of 2022** **BY ADVS.P.K.BALAKRISHNAN NAIR N.K.SUBRAMANIAN N.C.MOHANAN ABRAHAM MATHAN ATHUL TOM** **THIS REGULAR FIRST APPEAL HAVING COME UP FOR HEARING ON 14.03.2022, THE COURT ON 21.03.2022 DELIVERED THE FOLLOWING:** 2 ## **R.F.A. No.690 of 2013** ## **P.B. SURESH KUMAR & C.S. SUDHA, JJ.** ## **-----------------------------------------------** ## **R.F.A. No.690 of 2013** ## **-----------------------------------------------** **Dated this the 21[st] day of March, 2022** ## **JUDGMENT** ## **C.S. Sudha, J.** This is an appeal against the judgment and decree dated 05.01.2013 in O.S.No.159 of 2009 on the file of the Subordinate Judge's Court, Perumbavoor. The suit for specific movable property and realisation of rent for its usage, has been decreed by the court below. Aggrieved, the defendant has filed this appeal. The plaintiff is the respondent herein. The parties in this appeal will be referred to as described in the suit. 2. The brief facts of the case - the plaintiff, a Private Company, is carrying on the business of contract works of the PWD. The Company was floated by C.V.Jayadas, as the Managing Director and Vineetha Ashok as Director. The plaintiff had availed a loan of ₹40 lakhs for the purchase of a machine used for tarring/asphalting roads. The 3 ## **R.F.A. No.690 of 2013** machine was hypothecated to the bank from which the loan was availed. Contrary to expectations, the plaintiff Company was unable to make sufficient profits and so repayment of the loan came to be defaulted. When the plaintiff Company fell into difficulty, Vineetha Ashok and her husband vanished from the scene. The defendant, a friend of Vineetha Ashok, is a registered Government Contractor doing tarring works of the National Highway. He did not have the necessary machinery for asphalting the roads. Hence, on the request of the defendant, in May 2001 the machine was given by the plaintiff to the former to be returned on demand for a daily rent of ₹25,000/-. When the plaintiff demanded the rent from the defendant during May 2001, the latter informed him that Vineetha Ashok had sold the machinery to him and that she had absconded after accepting the sale consideration. The machine belongs to the company and hence Vineetha Ashok, a Director, had no authority to sell it to the defendant. As Vineetha Ashok was not available in station till July 2006, the plaintiff was unable to ascertain the truth from her relating to the claim made by the defendant that he had purchased the machinery from 4 ## **R.F.A. No.690 of 2013** her. Later on, in July 2006 when Vineetha Ashok and her husband returned, the plaintiff made enquires and then came to know that the machinery had never been sold the to the defendant. Vineetha Ashok, thereafter lodged a complaint before the police for the return of the machinery and also for arrears of hire charges. The defendant then claiming to have purchased the machine, produced a sale agreement alleged to have been executed by the plaintiff in his favour. Neither the plaintiff Company nor its Managing Director had ever sold the machinery which had been hypothecated to the bank from where the loan had been availed. No sale agreement as claimed by the defendant was ever executed and the document relied on by the defendant is a forged and fabricated one. Hence, the suit for return of the machinery or in the alternative for ₹40 lakhs, the price of the machinery. The plaintiff also claimed rent at the rate of ₹25,000/- per day from May 2001 with interest at the rate of 18.5% per annum, which claim he limited to ₹50 lakhs. 3. The defendant filed written statement admitting the fact that the plaintiff was initially the owner of the machinery. According to 5 ## **R.F.A. No.690 of 2013** the defendant, the plaintiff as per sale agreement dated 31.07.2000 sold the machinery to him. The defendant denied the allegation in the plaint that the machinery had been rented out to him. He also contended that on 06.01.2007 he had sold the machinery to one C.K. Rajan and hence the original documents relating to the machinery are in the possession of the said person and that the defendant is only in possession of copies of the same. After the sale of the machinery to the aforesaid C.K.Rajan, the defendant has ceased to be the owner of the machinery and he has no right over the same. As the plaintiff has no right over the property, he is not entitled to the reliefs prayed for, contended the defendant. 4. On completion of pleadings, necessary issues were raised by the court below. PWs1 and 2 were examined and Exts.A1 to A11 were marked on behalf of the plaintiff. DWs 1 and 2 were examined and Exts.B1 to B5 were marked on the side of the defendant. The court below after considering the oral and documentary evidence and hearing both sides, decreed the suit. 5. Heard Shri. Vinod Bhat, the learned counsel for the 6 ## **R.F.A. No.690 of 2013** appellant/defendant and Shri.P.K.Balakrishnan Nair, the learned counsel for the respondent/plaintiff. 6. It was submitted by the learned counsel for the defendant, that the court below has granted reliefs more than what the plaintiff had sought for. Not only has the court granted the relief for return of the machinery, but also a sum of ₹34,66,840/- being the cost of the machinery with interest, has been granted. Though the suit was clearly barred by limitation, the court below totally misdirected itself in arriving at a conclusion to the contrary. The learned counsel has also challenged the judgment on merits. _Per contra_ , the learned counsel for the plaintiff defended the judgment of the court below and submitted that there is no infirmity whatsoever in the findings of the court below. 7. The points that arise for consideration in this appeal are: - (i) Is the suit is barred by limitation? - (ii) Has the plaintiff succeeded in establishing the plaint claim? (iii) Has the defendant discharged the onus of establishing 7 ## **R.F.A. No.690 of 2013** his case that the machinery had been purchased by him from the plaintiff? - (iv) Is there any infirmity in the findings of the court below calling for an interference? 8. **Point No.(i)** : According to the plaintiff, the relevant provision of the Limitation Act applicable to the facts of the case is Article - 70, which case has been accepted by the court below. Article 70 reads- |**_Description of_**<br>**_suit_**|**_Period of limitation_**|**_Time from which_**<br>**_period begins to run_**| |---|---|---| |_To_<br>_recover_<br>_movable property_<br>_deposited_<br>_or_<br>_pawned from a_<br>_depository_<br>_or_<br>_pawnee._|_Three years_|_The date of refusal_<br>_after demand._| According to the court below, the subject matter involved being a movable property, its entrustment with the defendant cannot be considered to be a lease as contemplated under Section 105 of the Transfer of Property Act. On the other hand, it is an entrustment of the machinery by the plaintiff to 8 ## **R.F.A. No.690 of 2013** the defendant and hence it has all the characteristics of a bailment as defined under Section 148 of the Contract Act. Referring to Section 172 of the Contract Act, the court held that the bailment was with a promise to pay hire charges and therefore the period of limitation for recovery of the machinery falls under Article 70 of the Limitation Act. Further, Ext.A3 lawyer notice dated 06.02.2008 has been issued by the plaintiff to the defendant demanding the return of the machinery. Before the issuance of Ext.A3 lawyer notice, Vineetha Ashok, the other Director of the plaintiffCompany had filed a complaint before the Magistrate Court concerned alleging breach of trust and cheating. So, the court below found that filing of the private complaint can be treated as a demand for return of the machinery and if so considered, the limitation would commence in the year 2006. The present suit has been instituted on 28.06.2008 and therefore the court below held that the suit has been filed within the period of limitation. This finding of the court below is challenged by the learned counsel for the defendant, who submitted that it is not Article 70 that is applicable but it is Article 68 that is applicable. In support of their 9 ## **R.F.A. No.690 of 2013** respective contentions, the following decisions were relied on. **Hiralal Ghose v. Lal Behary Ghose – 1973 ILR (2) Calcutta 584; Dhian Singh Sobha Singh v. Union of India - AIR 1958 SC 274** (by the plaintiff) and **State of Madhyapradesh v. Shyam Kishore Agrawal – 1975 MPLJ 87 ; Ayodhya Prasad v. Chhedila - AIR 2000 Madhya Pradesh 184** (by the defendant). ## 9. Section 148 of the Contract Act, reads: _“_ _**148. 'Bailment', 'bailor' and 'bailee' defined** . - A 'bailment' is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the “bailor". The person to whom they are delivered is called the "bailee"._ 10. In general, any person is to be considered as a bailee who otherwise than as a servant, either receives possession of a thing from another or consents to receive or hold possession of a thing for another upon an undertaking with the other person either to keep and return or deliver to him the specific thing or to (convey and) apply the specific thing according to the directions antecedent or future of the other 10 ## **R.F.A. No.690 of 2013** person. ( **M/s.Rasiklal Kantilal and Co. v. Board of Trustee of Port of Bombay - AIR 2017 SC 1283** ). Bailment is established when there is delivery of goods by one person to another for some purpose upon a contract that they shall when the purpose is accomplished, be returned or disposed according to the direction of the person who delivers the goods. It is the duty of the bailee to deal with the goods according to the direction of the bailor. 11. Here we refer to the decision in **Dhian Singh** ( _supra_ ) relied on by the plaintiff. In the said case the appellants, the owners of two motor trucks, entered into an agreement for the hiring out of the trucks to the respondent for imparting tuition to the military personnel. `17/- per day per truck was stipulated as the hire and the agreement was terminable on one month's notice by either side. The respondent did not return the trucks to the appellants nor did it pay any hire charges. The respondent took up the position that the amount of hire had been paid and the trucks had been delivered to a third party, who was alleged to have been a partner of the appellants and thus entitled to receive the said payment and the 11 ## **R.F.A. No.690 of 2013** delivery of the trucks in question. The appellants controverted the said position and claimed that the respondent was liable to pay the hire money as well as return the trucks to them. In the plaint, the cause of action was stated to be the failure of the respondent to pay hire money and the non delivery of the trucks to the appellants by reason of they having been wrongfully delivered by the respondent to a third party. The appellants claimed return of the trucks or their value as on the date of the decree. The Apex Court considering the nature of transaction between the parties held that it was a case of bailment. It was held that the respondent, as the bailee of the two trucks, was bound to return the same to the appellants on the termination of the bailment. Based on this decision, it can be concluded that the relationship between the parties herein is that of a bailor and bailee. Therefore the finding of the court below that the transaction is a bailment as contemplated under Section 148 of the Contract Act is correct. 12. Having understood the nature of the transaction between the parties, now the question is which is the relevant provision of the Limitation Act that is applicable. The plaintiff relies on **Hiralal Ghose** 12 ## **R.F.A. No.690 of 2013** ( _supra) in_ support of his argument that Article 70 is applicable. In the said case the plaintiff, the owner of two lathe machines, at the request of the defendant gave the machines on condition that they would be returned as and when demanded by the plaintiff. Later on when the plaintiff demanded the machines back, the defendant refused to return them and hence the suit was filed claiming damages for unlawful detention of the two machines or in the alternative for compensation, in case the machines were found to be not in working condition. The question of limitation, _inter alia_ came up for consideration in the case. The Calcutta High Court held that it is Article 145 of the Limitation Act, 1908 (which more or less corresponds to Article 70 of the present Act) that is applicable. It was held that the term 'deposit' used in Article 145 means - where one man's property is handed over by him to another, the latter becomes a depository of it. Therefore it was concluded that it is Article 145 that is applicable. On the other hand, the defendant contends that it is Article 68 that is applicable and to substantiate the same, he relies on **Shyam Kishore** ( _supra_ ) and **Ayodhya Prasad** ( _supra_ ). **Ayodhya Prasad** ( _supra_ ) was a case in which the 13 ## **R.F.A. No.690 of 2013** plaintiff therein alleged that his boring machine had been wrongfully detained by the defendant and so he claimed damages. The cause of action in the said case was held to have arisen when the machine was wrongfully detained by the defendant and so applying Article 69 of the present Limitation Act, it was held that the suit ought to have been filed within three years from the date on which the property was wrongfully taken by the defendant. In **Shyam Kishore** ( _supra_ ), the term 'conversion' has been explained as – a person is guilty of conversion if he without lawful justification deprives a person of his goods by delivering them to someone else so as to change the possession. 13. Section 172 of the Contract Act defines 'pledge', 'pawner', and 'pawnee'. It reads- _"The bailment of goods as security for payment of debt or performance of a promise is called ‘pledge’. The bailor is in this case called the 'pawnor'. The bailee is called ‘pawnee’._ Thus, it is clear that pledge is only a form of bailment and all pledges are bailment. In the instant case, the bailment was not a security for payment of debt or performance of a promise. On the other hand, going by the 14 ## **R.F.A. No.690 of 2013** dictum in **Dhian Singh** ( _supra_ ) it is a case of bailment pure and simple as contemplated under Section 148 of the Contract Act. Therefore the suit in this case cannot be one 'to recover movable property deposited or pawned from a depository or pawnee' as contemplated under Article 70. 14. Article 68 reads - |14.<br>Article 68|reads -|| |---|---|---| |_Description of suit_|_Period of limitation_|_Time from which_<br>_period begins to run_| |**_68._**_For specific movable_<br>_property lost, or acquired_<br>_by theft, or dishonest_<br>_misappropriation_<br>_or_<br>_conversion._|_Three years_|_When the person_<br>_having the right to_<br>_possession of the_<br>_property first learn in_<br>_whosepossession it is._| The present case cannot be a case 'for specific movable property lost or acquired by theft or dishonest misappropriation'. But it can come under the description – 'for specific immovable property acquired by conversion' as contemplated under Article 68. The Honourable Supreme Court in **Dhian Singh** ( _supra_ ) explained the concept of 'conversion' and 'wrongful detention' of property of another. It was held that conversion is an act of wilful interference, without lawful justification, with any chattel in a manner inconsistent with the right of another, whereby that other is deprived of the use and possession of it. If a carrier or bailee wrongfully 15 ## **R.F.A. No.690 of 2013** and mistakenly delivers the chattel to the wrong person or refuses to deliver it to the right person, he can be sued for conversion. Every person is guilty of a conversion, who without lawful justification deprives a person of his goods by delivering them to some one else so as to change the possession. The cause of action in conversion is based on an unequivocal act of ownership by the defendant over goods of the plaintiff without any authority or right in that behalf. The act must be an unequivocal act of ownership, i.e., an act such as acquiring, dealing with, or disposing of the goods, which is consistent only with the rights of an owner as distinct from the equivocal acts of one who is entrusted with the custody or handling or carriage of goods. A demand and refusal is not, therefore, itself a conversion, but it may be evidence of a prior conversion. The cause of action in wrongful detention of property is based on a wrongful withholding of the plaintiff's goods. If such a defendant, without any right so to do, withholds the goods from the plaintiff after the plaintiff has demanded their return, he is, for such time as he so withholds them, guilty of wrongful detention. This is the tort of which a bailee or finder is 16 ## **R.F.A. No.690 of 2013** guilty who is in possession of the goods and fails to deliver them up within a reasonable time after demand, though it may also, in the case of a bailee, be a breach of contract. If the bailee or finder subsequently disposes of the goods, he is guilty of conversion, but the wrongful detention then comes to an end and is swallowed up in the conversion. 15. As relied earlier, the specific case of the plaintiff is that the machine was rented out to the defendant in May, 2001 for a rent of `25,000/- per day. When the plaintiff demanded the rent in the same month, i.e., May 2001, the defendant refused to pay the same and claimed ownership over the machinery. The moment the defendant denied the title of the plaintiff, claimed ownership and refused payment of the rent, the cause of action for the plaintiff had arisen. According to the plaintiff, the cause of action did not arise then, because in May 2001, he had only demanded rent and not the return of the machine. The machine was claimed only when Ext.A3 lawyer notice was issued on 06.02.2008. The suit has been filed on 27/06/2008 and so the suit is well within the period of limitation, argues the plaintiff. 17 ## **R.F.A. No.690 of 2013** 16. We are unable to agree to this argument advanced on behalf of the plaintiff because as referred to earlier, even according to the plaintiff, the defendant asserted ownership over the property and refused to return the machinery or pay hire charges in May 2001 itself. Therefore the cause of action had certainly arisen. 17. Going by the dictum in **Dhian Singh** ( _supra_ ) when the defendant denied the title of the plaintiff, asserted ownership and refused the demand of the plaintiff for rent, a case of conversion as contemplated under Article 68 has been made out. As per Article 68, in case of conversion, the suit must be filed within 3 years from the date on which the person is having the right to possession of the property first learns in whose possession it is. It is doubtful whether this description is applicable to the facts of the present case. In our opinion the appropriate provision applicable is Article 69 as per which a suit for specific movable property has to be filed within 3 years from the date on which the property has been wrongfully taken. Here, based on the plaint allegation, though the initial taking over possession of the machinery by the defendant was 18 ## **R.F.A. No.690 of 2013** lawful, the moment the defendant denied the plaintiff's title, asserted his ownership and continued with the possession of the machinery, it can only be taken that the property was 'wrongfully taken' as contemplated under Article 69. 18. Now even assuming that it is Article 70 that is applicable as argued on behalf of the plaintiff, even then the suit should have been filed within 3 years from the date of refusal after demand. Here it is true that as per the case pleaded in the plaint, the plaintiff demanded the rent in May, 2001. The defendant not only refused payment, but also denied/disputed the plaintiff's title over the property and asserted ownership over the same. Hence the cause of action had certainly arisen in May 2001 and so the finding to the contrary by the court below is wrong. Therefore we find that the suit filed on 27/06/2008 was clearly barred by limitation. Point answered accordingly. 19. **Point no. (ii) to (iv)** : In the light of the finding under point no.(i), these points do not arise for consideration. However, as the court below has considered these aspects also, we are considering the 19 ## **R.F.A. No.690 of 2013** same. The plaintiff relies on Ext.A2, A7, A10 and A11 to establish his title/ownership over the machinery in question. The fact that the plaintiff was the owner of the machinery is admitted by the defendant also. To Ext.A3 lawyer notice, the defendant has sent Ext.A4 reply in which he denied the plaintiff's title over the machinery. According to the defendant, he had entered into a joint venture agreement dated 15.12.1999 with the plaintiff for the purpose of executing a contract work. After completion of the said work, the accounts were settled between the parties and the machinery in question was sold by the plaintiff to the defendant for a sum of ₹25 lakhs. The machinery was transferred to the defendant towards settling the amounts due to the defendant. Thus, he claimed to have acquired title over the machinery in question. 20. Ext.A4 reply notice is dated 04.03.2008. If the defendant is to be believed, he had sold the machinery to one C.K.Rajan on 06.01.2007, which is apparently before the issuance of Ext.A4 reply notice. However, this story that he had assigned the machinery to C.K.Rajan, is conspicuously absent in Ext.A4 reply notice. In the written 20 ## **R.F.A. No.690 of 2013** statement the defendant takes up a specific contention that he had sold the machinery to C.K.Rajan. The court below found that though the defendant had raised such a contention, he failed to produce the documents to substantiate the same. The plaintiff before the court below had filed I.A.No.1407/2011 for sending the sale agreement alleged to have been executed by the plaintiff and relied on by the defendant to substantiate his case of ownership over the machinery, for expert opinion. But, the defendant had only produced the photocopies of the documents relied on by him. Therefore, the plaintiff filed I.A.No.1455/2011 for directing the defendant to produce the original of the documents relied on by him. This application was allowed by the court below and the defendant was directed to produce the said documents or to file an affidavit. However, the defendant neither produced the documents nor filed an affidavit and therefore the court below relying on the dictum in **Ismail Pillai Mohammed Haneefa v. Mohammedali Vaidyan Ibrahim Kunju Vaidyan, AIR 2007 Kerala 276** drew an adverse inference against the defendant. 21 ## **R.F.A. No.690 of 2013** 21. Now the question that arises is on whom did the burden lie to produce the documents relating to the machinery in question. Sections 101 and 103 of the Evidence Act are relevant here. They read - ## “ _101._ _**Burden of proof**_ _Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person.”_ ## _“103._ _**Burden of proof as to particular fact**_ _The burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.”_ 22. The burden to prove the case pleaded in the plaint, no doubt, is on the plaintiff. The plaintiff cannot succeed on the weakness of the case set up by the defendant. Burden of proof arises before evidence is adduced in the case. When both parties have adduced evidence, the doctrine of burden of proof pales into insignificance ( **Smt.Rebti Devi v.** **Ram Dutt, AIR 1998 SC 310** ) and the parties will have to prove their respective contentions as contemplated under Section 103 of the Evidence 22 ## **R.F.A. No.690 of 2013** Act. Here, the plaintiff relies on Ext.A2, A7, A10 and A11 to establish his title over the property. The fact that the plaintiff is the owner of the machinery is also admitted. Defendant claims to have purchased the property from the plaintiff as per a sale agreement. He has examined DW2, the scribe, who is supposed to have prepared the sale agreement. When documents relating to the machinery was very much available with C.K.Rajan, the defendant ought to have taken steps to produce the same and establish his case. That duty has not been discharged by the defendant. That being the position, the contention that the defendant is the owner of the property, has not been established. 23. As the plaintiff is found to be the owner, the machinery will certainly have to go back to the plaintiff or the defendant will have to pay the cost of the machinery to the plaintiff. The case of the plaintiff that the machinery was given on hire for a daily rent of ` 25,000/- is not supported by any evidence. Though the plaintiff has succeeded in establishing that he is the owner of the property and that he is entitled to get the machinery back, the relief cannot be granted in the light of the 23 ## **R.F.A. No.690 of 2013** findings under point no.(i). Points answered accordingly. In the result, the appeal is allowed. The judgment and decree of the court below are set aside and the suit is dismissed as it is barred by limitation. The parties shall suffer their respective costs. All interlocutory applications, pending if any, shall stand disposed of. Sd/- **P.B. SURESH KUMAR, JUDGE.** Sd/- sd/- **C.S. SUDHA, JUDGE.** STK