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Issues Involved:
1. Nature of the transaction (deposit vs. loan) 2. Authority of the company to borrow 3. Borrowing from a director 4. Limitation and acknowledgment of debt 5. Estoppel 6. Applicability of Section 14, Limitation Act Detailed Analysis: 1. Nature of the Transaction (Deposit vs. Loan) The Plaintiff claimed the amount as a deposit, while the Defendant argued it was a loan. The court noted the fine line between a deposit and a loan, emphasizing that the intention of the parties is crucial. The Plaintiff described himself as the company's banker, but the court found this characterization difficult to follow. The evidence suggested that the Plaintiff lent money to the company, which was then placed in a current account and later transferred to a fixed deposit account. The court concluded that, despite the Plaintiff's claim, the transaction was essentially a loan and not a deposit, thus not falling under Article 60 of the Limitation Act. 2. Authority of the Company to Borrow The Defendant argued that the borrowing was ultra vires (beyond the powers) of the company. The court examined the Memorandum and Articles of Association, which authorized the company to borrow money for advancing to traders. The court held that the company was indeed authorized to borrow money for this purpose. 3. Borrowing from a Director The Plaintiff, being a managing director, lent money to the company. The court referred to Ghosh's Indian Company Law, which states that a director is precluded from dealing on behalf of the company with himself unless there is full disclosure and the transaction is fair. The court found that the company could borrow from its own directors, provided there was no undue advantage taken. The transaction was deemed fair and proper. 4. Limitation and Acknowledgment of Debt The court addressed whether the suit was barred by limitation. The Plaintiff relied on Article 60, Limitation Act, which applies to deposits payable on demand. However, the court found that the fixed deposit was not payable on demand but on a fixed date, thus Article 60 did not apply. The applicable limitation period was three years from 31-7-1940, making the suit filed on 16-6-1944 prima facie time-barred. The Plaintiff argued that certain documents, including a Board resolution and balance sheets, acted as acknowledgments of debt, thereby saving limitation. The court found that the Board resolution was not an acknowledgment of liability and that the balance sheets did not operate as acknowledgments within the meaning of Section 19, Limitation Act. Therefore, the claim was barred by limitation. 5. Estoppel The Plaintiff argued estoppel, but the court rejected this, noting that the Plaintiff knew all the facts and was involved in the transactions, often acting as Chairman at meetings. 6. Applicability of Section 14, Limitation Act The Plaintiff contended that his application for liquidation under the Companies Act should save limitation under Section 14, Limitation Act. The court disagreed, stating that the cause of action in winding-up proceedings (the company's inability to pay its debts) was different from the cause of action in the suit (recovery of the debt). Additionally, the liquidation proceedings were not filed in court, and there was no proof that the cause of action was the same. Therefore, Section 14 did not apply. Conclusion: The appeal was dismissed with costs, and the cross-objection was also dismissed with costs. The court held that the transaction was a loan, the company had the authority to borrow, borrowing from a director was permissible with conditions, the claim was barred by limitation, estoppel did not apply, and Section 14, Limitation Act was not attracted.
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