Selin and others v Mutual Financiers & Money Lenders (P) Ltd. and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE P.BHAVADASAN** **MONDAY, THE 31ST OCTOBER 2011 / 9TH KARTHIKA 1933** **AS.No. 489 of 1998(B)** - **-------------------------------** **OS.877/1992 OF PRINCIPAL SUB COURT, THRISSUR** **....................** ## **APPELLANTS/PLAINTIFFS:** - **---------------------------------------** **1. SELIN, C/O.C.V. SUNNY, PAVIZHAM JEWELLERS, CROSS-CUT ROAD, GANDHIPURAM, COIMBATORE.** **2. C.V. SUNNY, PAVIZHAM JEWELLERS, CROSS-CUT ROAD, GANDHIPURAM, COIMBATORE.** **3. JOSY, PAVIZHAM JEWELLERS, M.M. ALI ROAD, KOZHIKODE.** **4. JOBY, PAVIZHAM JEWELLERS, B.G. ROAD, PALAKKAD.** **5. ALEX, FINE JEWELLERS, RUWI, RUWI, MUSCAT.** **6. LINSY, W/O.PALLAN THOMAS, PALLEN HOUSE, PALLIKULAM ROAD, TRICHUR.** **7. DARLY, W/O.JOHN, PAVIZHAM HOUSE, KURIACHIRA, TRICHUR.** **8. JESSY, W/O.GEORGE, THALIYATH RUWI, MUSCAT, REPRESENTED BY POWER OF ATTORNEY HOLDER JOSY. (APPELLANT NO.3 HEREIN).** **9. MRS.JAYA, W/O.DR.KURAIN THOMAS, KOOTHAPPILLI HOUSE, MADUMOOLA, VAZHAPPILLY, CHANGANASSERY.** **10. MRS.SHEEJA, W/O.BOBBY MANUAL, KURUPPAMADAM HOUSE, VAZHAKKULAM P.O., VIA. MOOVATTUPUZHA.** - **BY ADV. SRI.T.M.CHANDRAN, SMT.K.R.MANJULA.** ## **AS.No. 489 of 1998(B)** ## **RESPONDENTS/DEFENDANTS:** ## **----------------------------------------------** **1. MUTUAL FINANCIERS & MONEY LENDERS (P) LTD., REG. NO.2704, KOTTAPADI, TRICHUR DISTRICT.** - ***2. M. MADHAVAN NAIR, PUTHUSSERY HOUSE, POOKODE, P.O. KOTTAPADI, TRICHUR DISTRICT. *(DIED)** - **ADDL. RESPONDENTS 3 TO 13 IMPLEADED** **3. MR.ACHUTHAN NAIR, S/O.MADHAVAN NAIR (LATE), PUTHUSSERY HOUSE, VYDHYARAJ OUSHADHASALA, ANAKKOTTA ROAD, MAMMIYOOR, VIA. CHAVAKKAD, THRISSUR DISTRICT.** **4. SMT.VASUMATHI, D/O.MADHAVAN NAIR, PUTHUSSERI HOUSE, NEAR POOKODE PANCHAYAT OFFICE, KOTTAPPADI, VIA. GURUVAYOOR.** **5. SMT.MALATHI, D/O.MADHAVAN NAIR, JAYASHREE NILAYAM, ETTONAM, KARUKAPUTHOOR, VIA. WADAKKANCHERRY, TRICHUR DISTRICT.** **6. SATHI, D/O.MADHAVAN NAIR, PUTHUSSERI HOUSE, NEAR POOKKODE PANCHAYAT OFFICE, KOTTAPPADI, VIA. GURUVAYOOR.** **7. NANDINI, D/O.MADHAVAN NAIR, PUTHUSSERI HOUSE, NEAR POOKKODE PANCHAYAT OFFICE, KOTTAPPADI, VIA. GURUVAYOOR.** **8. NANDANAN, S/O.MADHAVAN NAIR, PUTHUSSERI HOUSE, NEAR POOKKODE PANCHAYAT OFFICE, KOTTAPPADI, VIA. GURUVAYOOR.** **9. MADHU, S/O.MADHAVAN NAIR, PUTHUSSERI HOUSE, NEAR POOKKODE PANCHAYAT OFFICE, KOTTAPPADI, VIA. GURUVAYOOR.** **10. MURALEEDHARAN, S/O.MADHAVAN NAIR, PUTHUSSERI HOUSE, NEAR POOKKODE PANCHAYAT OFFICE, KOTTAPPADI, VIA. GURUVAYOOR.** **11. THANKAM, W/O.LATE VIJAYAN, JAYASREE NILAYAM, ETTONAM, KARUKAPUTHOOR, VADAKKANCHERRY (VIA), THRISSUR DISTRICT.** ## **AS.No. 489 of 1998(B)** **12. BINU, AGED ABOUT 15 YEARS, S/O. LATE VIJAYAN, NOW REPRESENTED BY ADDL. RESPONDENT NO.11 THANKAM, (MOTHER AND GUARDIAN), W/O.LATE VIJAYAN, JAYASREE NILAYAM, ETTONAM, KARUPAPUTHOOR, VADAKKANCHERRY (VIA), THRISSUR DISTRICT.** **13. ANU, AGED ABOUT 13 YEARS, S/O.LATE VIJAYAN, NOW REPRESENTED BY ADDL. RESPONDENT NO.11 THANKAM, (MOTHER AND GUARDIAN), W/O.LATE VIJAYAN, JAYASREE NILAYAM, ETTONAM, KARUPAPUTHOOR, VADAKKANCHERRY (VIA.), THRISSUR DISTRICT.** - **LEGAL HEIRS OF DECEASED R2 ARE IMPLEADED AS ADDITIONAL RESPONDENTS 3 TO 13 AS PER ORDER DATED 13/10/2011 IN I.A.2014/2009.** **R1 BY ADV. SRI.B.K.PURUSHOTHAMAN. ADDL. R3 BY ADV. SRI.RAJIT, SRI.RANJIT BABU. ADDL. R4 TO R6 & R8 TO R10 BY ADV. SRI.N.P.SAMUEL, SRI.B.K.GOPALAKRISHNAN.** **THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 31/10/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **rs** ## **P.BHAVADASAN, J.** **- - - - - - - - - - - - - - - - - - - -** A.S.No. 489 of 1998 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 31[st ] day of October, 2011 ## **J U D G M E N T** The plaintiffs who were non-suited by the court below are the appellants. 2. The short case of the plaintiffs was that the 1[st] defendant company which was a money lending concern had accepted the deposit evidenced by Exts.A1 and A2 from the second defendant. The 2[nd] defendant endorsed the receipts in favour of the predecessor in interest of the plaintiffs namely Varghese. Varghese died on 09.02.1992. Thereafter the plaintiffs issued Ext.A3 notice to the defendants calling upon them to pay the amount. The defendants sent Exts.A5 and A4 replies respectively denying their liability. It has therefore become necessary for the plaintiffs to institute a suit for the recovery of amounts covered by Ext.A1 and A2. 3. The 1[st] defendant resisted the suit by pointing out that the amounts covered by the receipt No.195 A/c 294 :2: ## A.S.No. 489 of 1998 and 196 A/c 295 which are Exts.A1 and A2 were closed on 05.09.1988 and the principle sum along with the interest was paid to the 2[nd] defendant who issued receipts for the same. They denied their liability to the plaintiffs paying the amount on the basis of Exts.A1 and A2. 4. The 2[nd] defendant resisted the suit by pointing out that he had not endorsed the receipts produced by the plaintiffs and he is not liable for any amount. It is pointed out by him that the deposits made by him in the 1[st] defendant company were received by him with interest. According to him he had lost the receipts and the deceased Varghese somehow obtained them. He denied any transactions with late Varghese and pointed out that endorsement seen on Exts.A1 and A2 were not made by him. It is also contended that the suit is barred by limitation. He therefore prayed for a dismissal of the suit. 5. On the basis of above pleadings issues were raised. The evidence consists of the testimony of PW1 and :3: ## A.S.No. 489 of 1998 documents marked as Exts.A1 and A2 from the side of the plaintiffs. The defendants had DW1 and 2 examined and documents B1 to B8(b) marked. 6. The court below found that the claim of the second defendant that the deposit receipts namely Exts.A1 and A2 were lost from his house and somehow Varghese had come into the possession of the same cannot be believed. In another words it was accepted that the Exts.A1 and A2 have been validly endorsed in favour of Varghese. 7. The court below relied on the decision reported in Kashinath Sankarappa Wani V. New Akot Cotton Ginning Press Co. Ltd [AIR 1958 SC 437] and came to the conclusion that the suit is barred by limitation. It is also found that since the claim was regarding a debt and as the legal heirs did not produce succession certificate they were not entitled to reliefs. On the basis of these two grounds the suit was dismissed. 8. The questions that arise for consideration are:- 1. whether the finding of the court below that the suit is :4: A.S.No. 489 of 1998 barred by limitation is justified? 2. Whether the court below is justified in dismissing the suit for the non-production of succession certificates? ## **Issue No:1** 9. The learned counsel appearing for the appellant pointed out that the finding of the court below based on Kashinath Sankarappa Wani V. New Akot Cotton Ginning Press Co. Ltd [AIR 1958 SC 437] that the suit is barred by limitation is unfounded. It is very clear from the pleadings and evidence on record that the amount that were handed over by the 2[nd] defendant to the 1[st] defendant were in the nature of a deposit and if that be so, Article 22 of the Limitation Act,1963 is attracted to the facts of the case. The period of limitation begins to run from the date of demand. The date of demand in the case on hand is as per Ext.A3 and therefore time begins only from that date. Accordingly it is pointed out that there is a finding of the court below based on Kashinath Sankarappa Wani V. New Akot Cotton Ginning :5: ## A.S.No. 489 of 1998 Press Co. Ltd [AIR 1958 SC 437] is unjustified. In support of his contention that the suit is not barred by limitation, the learned counsel relied on the decision reported in V.E.A. Annamalai Chettiar and another V. S.V.V.S Veerappa Chettiar and others [AIR 1956 SC 12) and Memom Abdul Karim Haji Tayab, Central Cutlery Stores, Veraval V. Deputy Custodian Genreral, New Delhi [AIR 1964 SC 1256], ELAMPALLOR TRUST V.KAMALAKSHY AMMA [1989 (1) KLT 484]. 10. The learned counsel appearing for the respondent No.1 and additional respondent contended that the facts of the case reported in Kashinath Sankarappa Wani V. New Akot Cotton Ginning Press Co. Ltd [AIR 1958 SC 437] compare well with the facts of the present case and that the lower court was justified in coming to the conclusion that the suit was barred by limitation. The due date is clearly shown in the receipt and there is nothing to show that the party could extend the time by postponing the demand. According :6: ## A.S.No. 489 of 1998 to the learned counsel the amount became payable on the due date shown on the receipt and the time begins from the said date. Viewed from that angle it is pointed out that finding of the court below that the suit is barred by limitation is justified. 11. It is difficult to accept the contention of the respondents in this regard. A perusal of Exts.A1 and A2 clearly indicate that it is in the nature of a deposit and the same is payable on demand. It is true that 05.09.1988 is shown as the due date for the amount received from the depositor. 12. The lower court found that the endorsements found on the reverse side of Exts.A1 and A2 were infact made by the 2[nd] defendant and the transfer fell within the ambit of Section 130 of the Transfer of Property Act. The findings seems to be just and proper. 13. A contention was raised on behalf of the 2[nd] defendant that going by the endorsement on the reverse side of the Exts.A1 and A2 what is transferred is the rights the 2[nd] **==> picture [14 x 9] intentionally omitted <==** A.S.No. 489 of 1998 defendant had at the relevant point of time. the evidence show that at the relevant point of time he had already received the amounts and there was nothing due to him so that the endorsement has no value. 14. The above argument is without foundation. Varghese who was shown Exts.A1 and A2 were unaware that the second defendant had received the amount and nothing could be gathered those deposit receipts. Endorsement revealed that the consideration has been received and the transfer has been made. 15. When the original receipts are handed over to Varghese there is no reason to believe that he did not have subsisting rights over the amounts covered by Exts.A1 and A2. 16. Coming back to the question of limitation it is true that the decision reported in Kashinath Sankarappa Wani V. New Akot Cotton Ginning Press Co. Ltd [AIR 1958 SC 437] it was held that the time begins to run from the due date. That :8: ## A.S.No. 489 of 1998 was a case where the deposit was received on a particular date and a particular date was shown as the due date. There was specific endorsement that on the due date onwards interest will seize to run. It is in this context it was held as follows:- The only question which arises for our consieration in this appeal is whether the appellant's suit was barred by limitation. The appellant, in the first instance, relied upon the deposit reciept which was passed by the company in his favour on January 15, 1940 This receipt (Ex.P-1) evidenced a deposit of Rs.79,519-12-9 for 12 months from August 1, 1939, to July 31, 1940 and the amount at the foot thereof became due and payable by the respondent to him on July 31, 1940. The appellant, however, sought to extent the commencement of the period of limitation to May 17, 1941, on the ground that moneis, the subject matter of that deposit receipt, where payabel to him on demand, that such demand was made by him on May 17, 1941, and that therefore, that was the date for the commencement of the period of limitation. No express agreement in this behalf could be proved by him nor could an agreeement be implied from the course of delaings between him and the company for the period of 25 years during which the dealings continued between the parties. As a matter of fact, such an agreement, either express or implied was negatived by the very terms of the deposit receipt which, apart from mentioning that the monies were received by the company as deposit for 12 months from August 1, 1939, to July 31, 1940 contained on the reverse a note that interest would cease on due date. This was sufficient to establish that the amount due at the :9: A.S.No. 489 of 1998 foot of the deposit receipt became due and payable on the due date mentioned therein and that there was no question of the amount being payable at any time thereafter on demand being made in this behalf by the creditor. The course of delaings between the parties also negatived any such agreeement because it appears from the record that such deposit reciepts were passed by the company in his favour from time to time,each of such receipts being for a fixed period in the same terms as the deposit receipt in question and the receipts containing similar notes on the reverse that interest would cease on due date. Both the Courts below were therefore right in coming to the conclusion that there ws no agreement of the kind put forward by the appellant that the monies due at the foot of the deposit receipt in question were re-payable on demand and that monies due at the foot thereof became due and payable by the company to him on 31[st] July 1940. 17. It is contended before this Court that Article 22 has application towards the facts of the case. Article 22 of the Limitation Act reads as follows:- For money deposited under an agreement that it shall be payable on demand, including money of a customer in the hands of his banker so payable Three years When the demand is made 18. R.Mithra in his Book **'** Commentaries On Limitation Act' at page 609 refers the distinction between the loan and deposit. The author considers the question whether when a due date is specified in the receipt, does the limitation begin :10: A.S.No. 489 of 1998 ## from that date? At page 615 under note 10 paragragh 2 it is observed as follows:- This article recognises the implied condition as to demand which is inherent in the relation of a banker with whom money is deposited and a customer who makes the deposit. A condition as to demand on the part of a depositor-customer is necessarily implied in the transaction of deposit with a banker- depositee. This undoubtedly is the position in the case of an ordinary deposit. But is the position different in the case of a deposit for a fixed term? Decisions on this point have not been uniform. But there are appears to be good reason for holding that the essential character of the deposit need not necessarily change even if it be for a fixed term. It need not necessarily become an ordinary debt payable instantly on the expiry of the fixed period. ## 19. In the decision reported in V.E.A. Annamalai Chettiar and another V. S.V.V.S Veerappa Chettiar and others [AIR 1956 SC 12] it is held as follows:- (11)It was lastly contended that the plaintiffs' suit was barred by the Law of Limitation. The argument of the appellants in this behalf was twofold: (1) That the document being a promissory note the suit should have been filed within three years of the execution of the cadjan voucher i.e., on or before 15-8-1891, and (2) That the plaintiffs had made demands for the deposit more than three years before the institution of the suit on 13-111944. The first part of this argument cannot avail the plaintiffs in :11: ## A.S.No. 489 of 1998 view of the finding recorded above that the cadjan voucher was a receipt evidencing the deposit and was not a promissory note. The second part of the argument was based on the construction which the plaintiffs put on the receipt dated 14-11-1941 Ex.P.3 and the evidence of P.W.1. The receipt, Ext.P.3 was executed by the plaintiffs in favour of Annamalai and recited. "when we perused and demanded you for the said sums as belonging to us, both of us agreed that your moiety of the same shall be paid, according to which amount settled in full quit including interest upto date, as for your half share is Rs.17,3563-9". P.W.1 Stated in his evidence that the negotiations between the parties went on for about 8 or 10 days before this settlement. Relying upon the above the appellants contended that the demand for the deposit was made by the plantiffs in any event 8 or 10 days before 14-11-1941 and was therefore more than 3 years before the institution of the suit. This demand upon Annamalai however was not in his capacity as the karta and managing memebr of the whole joint and undivided Hindu family. A severance of joint status had been effected long prior to 1941 and Annamalai did not represent the junior branch of the family when this demdand was made upon him. He only represented the senior branch of the family and he agreed to satisfy the demand made upon him by the plaintiffs by agreeing to pay a moeity of the liability of the joint family at the foot of the deposit. The demand which was made by the plaintiff upon Annamalai was thus satisfied and no further demand upon Annamalai survied after this settlement. The only demand made by the plaintiffs upon the defendants representing the junior branch of the family was in October 1942 and thereafter as alleged by the plaintiffs in their :12: ## A.S.No. 489 of 1998 plaint. This allegation of the plaintiffs was however denied by the defendants and as the matters stood there was really no proof of any demand having been made by the plaintiffs upon the defendants for payment of their moiety of the deposit and the suit was filed by the plaintiffs against the defendants without any such demand having been made. If that was so the period of limitation had not commenced to run against the defendants and the suit against them was well within time. With regard to this contention also there were concurrent findings of fact reached by the Trial Court as well as the High Court, Viz. that no demand was made within the period prescribed under Art.60. If that was so, the suit was certainly not barred by the Law of Limitation. This contention of the appellants also therefore fails. 20. In the decision reported in Memom Abdul Karim Haji Tayab, Central Cutlery Stores, Veraval V. Deputy Custodian Genreral, New Delhi [AIR 1964 SC 1256 it was held as follows:- The next contention is that in any case treating the amount as a deposit the right to recover it had become barred and therefore the Custodian could not recover it under this section and that sub-s(3) of S.48 would not apply as it affects vested rights and is not procedural in nature and therefore could not be applied retrospectively. Some dates would be relevant in this connection. On the findings of the authorites concerned, it appears that the deposit was made sometime in January 1946. The appellants sister migrated sometimes between June to August 1949. According to the law in force in :13: ## A.S.No. 489 of 1998 that area, at the relevnant time on the time of migration of the appellant's sister she became an evacuee and her property would vest in the Custodian on such date. So her right to recover this amount from the appellant would vest in the custodian sometime between june to august 1949, if it was still alive under the law of limitation that in such cases only the remedy is barred through the right remains. Further as this was deposit, limitation would run at the earliest from the date of demand and there is no evidence that any demand was amde by the appellant's sister for the return of the money before she migrated to Pakistan. Therefore, the period of limitation had not even begun to run on the date the appeallant's sister migrated Pakistan, assuming Art.60 of the Limitation Act, No.9 of 1908 applied. Consequently the right of the appellant's sister to recover the amount vested in the Custodian and was not barred by limitation at the time when she became an evacuee. The demand was made for the first time on January 10, 1952 by the Assistant Custodian and time would run from that date, at the earliest. ## 21. In the decision reported in ELAMPALLOR TRUST V.KAMALAKSHY AMMA [1989 (1) KLT 484] it was held as follows:- Learned counsel who appeared for the appellant did not contend the non-liability of the first defendant to pay the amount, but only submitted before us that the claim is barred by limitation. Admittedly the amount is kept by the defendants as a deposit payable on demand. The relevant Article of Limitation applicable in this case is Art.22 of the Limitation Act. It runs thus:- :14: ## A.S.No. 489 of 1998 For money deposited under three years when the an agreement that it shall be demand is payable on demand, including made money of a customer in the hands of his banker so payable From the copy of the first defendant’s minutes Ext. A10 it is clear and plain that on 9-3-1980 the general body of the first defendant Trust decided to treat the loan amount received by it as a deposit and this decision was accepted by the plaintiff. True a deposit is not a bailment of specific currency to be returned in specie but would only create the relationship of debtor and creditor. It is a loan under certain conditions. The distinction which is perhaps the most significant one is that the deposit not for a fixed terms does not seem to impose an immediate obligation on the depositee to seek out the depositor and repay him. He has got the right to keep the money with him till asked for it. A demand by the depositor would therefore is a condition to create an obligation on the part of the depositee to repay the amount. It is observed in Suleman Haji Ahmed Umer v. Haji Abdulla Haji Rahimtulla (AIR. 1940 Privy Council 132) thus: “A loan and a deposit payable on demand are not mutually exclusive. A deposit of money is not confined to a bailment of specified currency to be returned in specie. As in the case of a deposit with a banker it does not necessarily involve the creation of a trust, but may involve only the creation of the relation of debtor and creditor, a loan under conditions, The distinction which is perhaps the most obvious is that the deposit not for a fixed term does not impose an immediate obligation on the depositee to seek out the depositor and repay :15: ## A.S.No. 489 of 1998 him. He is to keep the money till asked for it. A demand by the depositor would therefore be a normal condition of the obligation of the depositee to repay.” 22. Of course all these decisions qualify, pointing out that the intention of the parties play a decisive role in determining whether the transaction is loan or deposit. In the case on hand there was nothing to show that it was a loan going by the contents of on Exts.A1 and A2. 23. Written statement of 1[st] defendant is relevant in this context. The 1[st] defendant has stated in the written statement that he had taken the amounts as deposits and not as loans. It was reiterated at the time of evidence also. The question whether the transaction is loan or deposit does not arises as the 1[st] defendant has categorically stated that the amount was received as deposit. If that be so Article 22 of the Limitation Act comes into play and it is very evident that time begins from the date of demand. That being the position the period of limitation begins only from the date of Ext.A3 which is issued by the plaintiffs and the finding of the court below that the suit is barred by limitation cannot be :16: A.S.No. 489 of 1998 sustained and the findings has to be set aside. I do so. ## **Issue No.2** 24. The next question is whether the finding of the court below that the plaintiffs are not entitled to releifs for the non-production of succession certificate is justified? 25. Of course one cannot find fault with the trial court for having observed that it was necessary for the plaintiffs to produce of succession certificates. But normally it is well settled that in such cases the suit is stayed for a particular period and the legal heirs be directed to obtain and produce succession certificates before the court. No such opportunity seems to have been given to the plaintiffs in this case. Whatever that be the plaintiffs have produced succession certificates before this Court along with CMP6774/1999 in this appeal. Therefore the second ground relied on by the court below also not available to the defendants. 26. The result is that the decree of the lower court is clearly unsustainable in law and the plaintiffs are entitled to **==> picture [20 x 9] intentionally omitted <==** ## A.S.No. 489 of 1998 a decree. This appeal is allowed and the judgment and decree of the trial are set aside and a decree is passed in the following terms. 27. The plaintiffs are entitled to recover a sum of Rs,25,000/- with interest of 15% from 09.02.1987 to 09.02.1988 and thereafter at 6% from the defendants 1and 2 severally and jointly from their assets. 2. The plaintiffs will be entitled costs both in this court and in the court below. P.BHAVADASAN, JUDGE kkj