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Issues Involved:
1. Whether the decree in favor of the appellants could be sustained on the terms of the bond. 2. Whether the claim in the suit was barred by limitation. Issue-wise Detailed Analysis: 1. Terms of the Bond: - The appellants argued that the loss sustained by the Government must be proven to have occurred on or after March 6, 1940, when Lal Chand Kothari took charge of the treasury. The argument was that there was no physical checking on March 6, 1940, and hence it could not be certain whether the loss occurred during the previous incumbent's period or after March 6, 1940. This argument was rejected by the courts below and the Supreme Court, stating that in the face of the receipt executed by Lal Chand Kothari, it would not be open to him to contend that the recitals in it were incorrect. It would be his responsibility to show that it was incorrect, which he could not establish. - The appellants further contended that Lal Chand Kothari should only be liable for the deficiency in the chest with the single lock and not for the loss in the chest with the double lock. The Supreme Court rejected this argument, stating that the liability under the Bond depends on its terms. The language used in the document did not support the appellants' submission. - Lastly, it was argued that the loss in the chest with the double lock could not have occurred without the connivance of Government officials, thereby excluding the Treasurer's liability. The Supreme Court held that Lal Chand agreed to the terms of the bond, which made him liable even for embezzlement by government officers. The fixing of liability upon the employer was not unreasonable, and such vicarious liability for the negligence or misconduct of his servants is not lessened by the assistance or negligence of Government officials. 2. Limitation: - The appellants argued that the claim was barred by limitation under Article 83 of the Indian Limitation Act and that Article 149, which prescribes a 60-year period of limitation for suits by the Government, was unconstitutional as it violated Article 14 of the Constitution. The Supreme Court examined whether there was a rational basis for treating the Government differently from private individuals regarding the period within which claims might be enforced by suit. - The Supreme Court observed that statutes of limitation are designed to prevent the taking away from one what he has long considered his own and on the faith of which he plans his life, habits, and expenses. However, the Court also noted that there is a rational basis for a distinction between the claims of the State and the claims of individuals. For instance, if a claim becomes barred by limitation, the loss falls on the public, benefiting the private individual. Additionally, governmental machinery does not move as quickly as in the case of individuals, due to inter-departmental correspondence, consultations, and sanctions that take time. - The Court referenced provisions in the Civil Procedure Code that allow for reasonable time extensions for Government responses, acknowledging the inherent delays in governmental processes. The Court also cited precedents where the constitutional validity of special provisions for summary recovery of amounts due to the Government was upheld. - The Supreme Court concluded that there is a rational basis for treating the Government differently regarding the period within which claims might be enforced. The period allowed to the Government to file a suit is a matter of legislative policy and cannot be challenged under Article 14 or any other article in the Constitution. The argument that there is no rational basis for distinguishing between the claims of the Government and private individuals was rejected. Conclusion: The appeal was dismissed with costs, and the Supreme Court upheld the decree in favor of the respondent-Union of India, affirming that the terms of the bond and the special provisions for limitation in suits by the Government were valid and enforceable.
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