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TMI Blog1960 (5) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1947, the Appellant deposited ₹ 7,000 with Messrs. 2. Abott and Davis, the architects of the Defendant No. 1. Thereafter the work was satisfactorily completed and although the Appellant demanded refund of the deposit the Defendants did not refund the amount. It appears that although under the original contract the work was to be completed by October 15, 1947, the time for completion was subsequently extended by mutual agreement between the parties and the work was in fact completed in or about October, 1948. It appears further that pending completion of the work under the contract Mr. Abott, one of the partners of Abott and Davis died. The Appellant has therefore used the Western India Theatres Ltd. and the surviving partner Mr. J. R. Davis for refund of the money with interest. 3. The defence of the Western India Theatres Ltd. (Defendant No. 1) is that there was no agreement with them for deposit of ₹ 7,000 and they had nothing to do with the deposit which was made with their architects and hence there is no cause of action against them. 4. The defence of Mr. J.R. Davis, the Defendant No. 2, inter alia is that the firm of Abott and Davis has done various con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make it quite clear that the Western India Theatres Ltd. were accepting the position that the sum of ₹ 7,000 had been deposited with their architects and the deposit had relation to the work of construction of the Elite Cinema. The Western India Theatres Ltd. did not even dispute in their reply dated August 28, 1952, the fact that the deposit was by way of earnest money. It is true that the Defendant No. 1 did not actually take part in the negotiations of the contract for the construction work, but it is quite clear that they were being represented by the architects who had been authorised to finalise the contract on their behalf. The correspondence exhibited in this case shows that quite clearly. The first letter to which reference may be made in this connection is the letter of February 28, 1947, the relevant portion whereof may be set out hereunder: You are requested to make a deposit of ₹ 7,000, as earnest money against this contract and your cheque should be forwarded to my Calcutta office A copy of the terms of agreement and appendages will be forwarded as soon as my client has signed the original. Yours faithfully, Sd. M. Ridley Abott. This letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of architects and agents of Western India Theatres Ltd. (QQ. 11 and 12). With regard to the deposit of ₹ 7,000 his evidence is that the earnest money was calculated by the architects at ₹ 7,000 and about payment it. was said that Mr. Abott with whom the Appellant had discussion would write a letter to the Appellant at Calcutta and when the Appellant would confirm it from Calcutta, then they will pay (Q. 25). He has also stated that as there was no room in the standard agreement form for payment of the earnest money it was suggested that Abott and Davis would write a letter to the Appellant and the Appellant would confirm and then pay. It is thus clear from the oral evidence which is on record and also from the correspondence that this arrangement with regard to the payment of the deposit of ₹ 7,000 by way of earnest as against the contract of construction of Elite Cinema was intended to be a part of the contract of construction work. It is also clear that the Defendant No. 1 had all along the benefit of the security deposit which was retained during the completion of the work. The amount remained in the custody of the architects as security for meeting any possi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was initially no authority in the architects to conclude an agreement with regard to the payment of deposit of ₹ 7,000, it appears to me that the two letters dated August 27, 1952 and August 28, 1952, which passed between the Appellant and the Western India Theatres Ltd. and to which reference has been made in an earlier part of the judgment, clearly showed that there bad been ratification of this agreement as to payment of deposit or the act with regard to the demand of the security deposit. It appears to me, therefore, that in the circumstances it is not open to the Western India Theatres Ltd. to disclaim liability for the amount deposited. 13. The next point that was urged on behalf of the Appellant is that in any event there is no escape from the position that Defendant No. 2, J.E. Davies is liable to refund the amount. Now, on this point, the correspondence makes it abundantly clear that it was Abott and Davis who actually received this amount and this amount was credited in their account. In the letter of February 28, 1947, already referred to, Mr. Abott was asking the Appellant company to send a cheque to the Calcutta office of the firm of Abbot and Davies. Then a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to please or to humour the architects. There is no evidence to support any such finding. The architects undertook to refund it at the applicable time. The subsequent correspondence indicates that the architects were not in a position to pay the amount at once upon demand being made for refund of the amount and so the Appellant had even offered to accept payment of the amount in instalments from the firm of the architects and the letters dated March 10, 1950, August 17, I960 and January 17, 1952, make the position clear. 17. The evidence also establishes the fact that the work was completed to the satisfaction of the Defendants and there can therefore be no question that this amount became refundable to the Appellant. Haricharan was asked specifically in question 40 whether the Defendants at any time complained of any unsatisfactory nature of work and his answer was no . His evidence further is that upon completion of the work full payment had been made to him in respect of the work done by him. The Defendant No. 2 is the person in whose custody the money was kept deposited and there can be no question that as depositary he is liable to refund the amount. The cause of actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, the person who makes the payment may enter into an agreement with the vendor that the money shall be held by the recipient as agent for both vendor and purchaser. If this is done, the person who receives it becomes a stakeholder, liable, in certain events, to return the money to the person who paid it. In the absence of such agreement, the money is paid to a person, who has not the character of stakeholder; and it follows that, when the money reaches his hand it is the same thing so far as the person who pays it is concerned as if it had reached the hands of the principal. Lord Justice A.L. Smith at p. 354 in dealing with the question of liability of Jackson made the following observations: It seems to me that as soon as it is admitted that Jackson received the money as agent for the vendor, and not as stakeholder, the matter is determined. The Plaintiff has no ground on which he can succeed in getting back the money from Jackson. He cannot sue in contract, nor in trover or detinue, for the money is not in specie or set apart in a bag, and the Plaintiff has no equitable right as against Jackson. It is said that Goulton, the vendor, stood in a fiduciary position with regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appropriate article applicable is Article 145 of the Limitation Act and if it is held that this article is not applicable, then Article 120 is the article which is applicable to this case. The contention on behalf of the Defendants is that the proper article which applies to the facts of this case is Article 115 of the Limitation Act or Article 60 of the Limitation Act. In my view there is in the facts and circumstances of this case ample scope for the application of Article 145 of the Limitation Act. It has been held that when one man's property is handed over by that man to another, the latter becomes a depositary unless there is something in the terms of the handing over which would prevent it from being treated as a person with whom it was deposited at all. Reference may be made to the decision of the Madras High Court reported in Kishtappa Chetty v. Lakshmi Amma, A.I.R. (1923) Mad. 578. This case has been followed by me in Suit No. 3105 of 1950 Jyotish Chandra Sen v. Manmatha Nath Sen and Ors. Unreported judgment of Calcutta High Court, dated 19-7-1955. Short notes in A.I.R. (1955) N.U.C. 5614. It may also be pointed out that this Madras case has been followed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be something usually a sum of money, committed to another person's charge as a pledge for the performance of some contract, in part payment of a thing purchased, etc. and a depositary is defined to be a bailee of personal property to be kept by him for the bailor without re- compense It follows, consequently, that the Defendant in the present case must be treated as a depositary within the meaning of Article 145. 25. Holmwood, J., after referring to Maclean C.J.'s judgment in the case of Administrator-General v. Kristo Kamini (1904) I.L.R. 31 Cal. 519 observed: If a man makes a deposit in specie, i.e., current coin of Queen Victoria, he is entitled within 30 years to have the equivalent of that coin in current coin of King Edward VII returned to him. This is obvious if the particular currency in which he made his deposit has been withdrawn in the meantime, and I apprehend that its non-withdrawal makes no difference whatever to the principle. The only difficulty about the application of (1907) 6 C.L.J. 535 145 is the possibility of cases arising in which a man had already served 30 years after making his deposit before retiring and applying to withdraw it, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the article applicable is Article 145 and the mere fact that the depositor demands the thing and the depositee refuses to return the same does not make Article 49 applicable to the case; and Article 145 is an article which is not controlled by Article 49. 28. In another decision of this Court Ajneswar Karmakar v. Kailash Chandra Ghose A.I.R. (1929) Cal. 143 where the Plaintiff sued for refund of certain gold and silver kept in the custody of the Defendant or in lieu thereof the price of the said gold and silver, and his case was that he had handed over the gold and silver for making some ornaments but the Defendant never made the ornaments nor returned the gold and silver, it was held that the Article that was applicable for determining the period of limitation was Article 145 and reference was made in the judgment by Duval, J., to some of the earlier Calcutta cases to which I have referred and these cases were followed. 29. The next case to which reference may be made is the case of Bibhu Bhusan Dutta v. Anadi Nath Dutt A.I.R. (1934) Cal. 87. In this case, certain Government Promissory Notes belonging to two brothers of a joint family were given as security for the service o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim is barred by limitation and Article 145 of the Limitation Act has no application to this case, followed the decision of Gentle, C.J. and Patanjali Sastri, J., Western India Oil Distributing Company Ltd. v. Rathnasabapatty A.I.R. (1948) Mad. 76. In this case Gentle, C.J., held that Article 145 applies to cases where the thing deposited is recoverable forthwith or on demand. We are unable to concur in this view as we see no justification for restricting the scope of the Article within these narrow limits. A case of deposit recoverable on demand is dealt with specifically in Article 60 of the Limitation Act. There can therefore be no reason for enacting another article like Article 145 to cover such a case and to make it overlap with Article 60. The observations of the Division Bench of the Madars High Court Gangineni Kondiah v. Gottipati Pedda Kondappa Naidu already referred to are pertient on this point, although the Court was there considering whether Article 145 or Article 49 of the Limitation Act applied to the case. The Bench presided over by Sir Arnold White, C.J. and Krishnaswami Ayyar, J., made the following observations at p. 57: Article 145 is the special article de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to each other, nor any uniform logical basis can be found in the fixation of the date from which the limitation will start running. In some of these cases the point of time from which the period of limitation will start running appears to have been fixed rather arbitrarily. In the case of Muthu Korakkai Chetty v. Madar Ammal (1921) I.L.R. 43 Mad. 185 which is a decision of a Full Bench of the Madras High Court, Sheshagiri Ayyar, J., at p. 213 in dealing with this question of construction of the articles in relation to the two columns appearing in the articles stated as follows: Therefore, in my opinion the true rule deducible from these various decisions of the Judicial Committee is this: that subject to the exemptions, exclusion, mode of computation and the excusing of delay, etc., which are all provided in the Limitation Act, the language of the third column of the First Schedule should be so interpreted as to carry out the true intention of the legislature, that is to say, by dating the cause of action from a date when the remedy is available to the party. This is a rule of construction and not a rule of law. 36. In the case of Sarat Kamini Dasi v. Nagendra Nath Pal (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Article 115 be considered as a suit for compensation for breach of any contract. It was further held in this case that when an employee makes a deposit for due performance of his duties, the deposit is in the nature of a trust and the proper article in such a case is Article 145 which provides for a greater period of limitation than Article 120. Even if Article 145 is not applied, there is no scope from the conclusion that the other article applicable to a case of this type is Article 120. 40. Reliance has been placed by Mr. Chatterjee, Learned Counsel for the Respondent No. 1, on the decision of the Judicial Committee Tricomdas Cooverji Bhoja v. Gopinath. Jiu Thakur (1916) L.R. 44 I.A. 65, 68 to show that the word compensation in Article 115 and Article 116 has a very wide connotation and it applies to both claims for unliquidated damages and claims for specific amount or a sum certain. In this case the Privy Council has laid stress on the fact that Article 116 of the Limitation Act covers cases of compensation for breach of contract which is a registered one and so whenever there is a registered contract Article 116 will apply and it will prevail over other articles i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n certain proportion. On failure of the successors of B to perform the Puja in a certain year, the successors of A sued them to recover the share on basis of Ekrarnama. It was held that the suit was governed by Article 115 and not by Section 10 or Article 120 of the Limitation Act. 41. It is quite clear that this suit that was instituted was on the basis of an Ekrarnamah, the terms of which had been broken. It was really a suit for recovery of the contribution that had been made by one party to the other and the transaction was not a deposit in the strict sense of the term, and, accordingly, Article 115 was applied. 42. Now a deposit made as security for due performance of a contract is refundable whether it is coupled with a promise or agreement to repay it or not. Even if nothing is agreed as to its repayment at the time the deposit is made, the obligation to repay arises upon the proper performance of the engagement by reason of the very nature of the transaction of deposit. If an express agreement is entered into for repayment of the deposit, the transaction still remains a deposit and its nature is not thereby altered. The essence of the cause of action for a suit for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L.J. 85 120 of the Limitation Act (p. 103). 44. It was also argued by Mr. Chatterjee that Article 60 of the Limitation Act applied to this case. His contention is that the pleading being that the deposit was repayable upon satisfactory completion of the work, it was obligatory on the depositor to make a demand after completion of the work and the limitation will run from the date of demand. It is difficult to follow why the Learned Counsel advanced this argument when his client's specific case was that no demand had at all been made upon the Respondent No. 1 at any time before suit. 45. The Learned Counsel, however, referred to a decision of the, Patna High Court (Firm Nohhlal Sarju Prasad v. Mt. Bibi Mojihan A.I.R. (1939) Pat. 281 and to the decision of my learned brother in Prohash Brothers (supra) already referred to which explains and distinguishes the Patna case. In this Patna case, the Plaintiff after the death of her father brought a suit to recover her share in money alleged to have been deposited by her father with the Defendant. The Defendant alleged that the amount in dispute represented a loan and was not a deposit and relied upon a statement made by one of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the two interrogations which this appeal is required to answer. It is a triangular fight between the building contractor on the one hand and the owner and the architect on the other. The first is the Plaintiff Appellant and the last two are the Defendants Respondents. The claim is a simple, modest claim for return of a deposit of the sum of ₹ 7,000 which the Appellant paid in the hands of the architect in connection with the construction of what is known as the Elite Cinema in Calcutta. The defence of the two Defendants is mutually destructive. It is admitted on the pleadings and on the records that the Appellant has earned the return of that money. What is disputed is who is liable to pay the sum and what is said is that whoever is liable, he is protected by limitation. 50. The owner Defendant, Western India Theatres Ltd., pleads that the amount was deposited with the architects Messrs. Abbot and Davies and it had nothing to do with that deposit. The architect Defendant pleads that the money was taken in the account of the owner Defendant, Western India Theatres Ltd., and as the architect had a claim of ₹ 6,418-8 against the owner and as the owner failed to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Defendant, Western India Theatres Ltd. on August 27, 1952, with special reference to the return of this deposit asking them to be good enough to confirm that the said sum of ₹ 7,000 was deposited as earnest money with your said architects Messrs. Abbot and Davies . The Defendant, Western India Thatres Ltd., on August 28, 1952, confirmed this fact by writing, the amount deposited by you with our architects, Messrs. Abbot and Davies is ₹ 7,000 . If the Defendant, Western India Theatres Ltd. did not know anything about payment of ₹ 7,000 to the architects at the time when it was deposited, then it would be natural to expect that it would express its surprise on receipt of this communication to say that it was not aware of such a deposit or that even if it was done, it was done without its knowledge and consent. On those facts, is cannot be disputed, in our view, that there was at least or understanding between the Plaintiff and the two Defendants in respect of this deposit. It is true that there is no clause relating to this deposit in the written contract between the Appellant and the first Defendant but the circumstances why that was not so has been exh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the deposit is entitled to have the deposit returned forthwith or on demand. In coming to that conclusion the learned Judge relied mostly and largely on the decision of Gentle, C.J. and Patanjali Sastri, J., in Western India Oil Distributing Company Ltd. v. Rathnasabapathy A.I.R. (1948) Mad. 76. That interpretion in my view is no longer open. The basis of that interpretation is that column 1 and column 3 in the Schedule to the Articles of the Limitation Act must be read together. The origin of this doctrine of reading columns 1 and 3 together lies in the English Statues of Limitation where the principle is expressly recognised in the Statutes themselves that the starting point of limitation should run from the cause of action. Somehow this English notion crept into the interpretation of the Indian Limitation Act as will be exemplified in the Full Bench decision in Mulla Veetil Seeti Kvtti v. K.M.K. Kunhi Pathumma (1917) I.L.R. 40 Mad. 1040 and the Special Bench decision in Harimohan Dalal v. Parameshwar Sahu (1929) I.L.R. 56 Cal. 61, 73. 57. That column 1 and column 3 should be read together is a wholesome principle and there may not be any quarrel over the doctrine of readi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 'any qualification either as to the character of the appeal or as to the parties to it'; the words mean just what they say. The fixation of periods of limitation must always be to some extent arbitrary, and may frequently result in hardship. But in construing such provisions equitable considerations are out of place and the strict grammatical meaning of the words is, their Lordships, think, the only safe guide. 60. In about the same time the Privy Council was saying almost the same thing in Lasa Din v. Gulab Kumar (1932) I.L.R. 7 Luck. 442, 452, 453. There the question arose under Article 132 and the question of limitation was, when the money sued for became due to enforce payment of money charged upon immoveable property. After noticing different authorities and disapproving the Calcutta decision in Sitabchand Nahar v. Hyder Malla (1897) I.L.R. 24 Cal. 281 Sir George Lowndes observed as follows: Their Lordships are not greatly oppressed by the authority of Reeves. Butcher, (1891) 2 Q.B.D. 509. It is, they think, always dangerous to apply English decisions to the construction of an Indian Act. The clause thereunder consideration differed widely from that now before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s returnable forthwith or on demand and that in relation to movable property. The unusual length of time in the second column appears even to exclude the very contemplation of such a limitation on the deposit or pawn that it should be returnable forthwith or on demand. Then again interesting questions of hardship were put forward to support the view that unless the words in the third column in Article 145 are not limited to deposits or pawn returnable forthwith or on demand, difficulties would arise in cases such as of service deposits where a man enters service by depositing a certain sum of money. It is said that if he serves for 35 years, his claim would be barred after 30 years although his service continued. There are many answer to this argument. The first answer of course is that given by the Privy Council that questions of hardship will not be allowed to enlarge or mitigate clear words of the Indian Limitation Act. Secondly, Holmwood, J. in the well known case of Lala Gobind Prasad v. Chairman, Patna Municipality (1907) 6 C.L.J. 535, 542 expressly referred to this point and said: The only difficulty about the application of Article 145 is the possibility of cases arising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from which period beings to run . It is also a well-established rule of construction of the Limitation Act that if there be two articles which may cover a case, the one more general and the other more specific, as a principle of construction the more particular or specific, article ought to be regarded as the one governing the case. This has been established by a series of decisions, such as, Lal Govind v. Chairman of the Patna Municipality (1907) 6 C.L.J. 535, Swamp Das Mondal v. Jogneswar Roy Chowdhury (1899) I.L.R. 26 Cal. 564 (F.B.) the principle laid down by the Privy Council in Mahomed Riaset Ali v. Mussumat Hasin Banu (1883) L.R. 20 IndAp 183, 192 where Sir Richard Couch at p. 159 lays down the principle that the general Article should be applied unless it is clear that the suit is within some other article. After resolving the competition between Article 183 and Article 49 by holding that neither applied Sir Richard Couch applied Article 120 and made the following observations at p. 159: This is not a suit for distributive share of property (Article 123), nor a suit for specific movable property wrongfully taken (Article 49). This latter article does not appear to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd unless superadded to that is his offer to redeem. Therefore, from that point of view, the offer to redeem it is the date from which the cause of action arises, a conclusion which goes against the interpretation put upon it by the learned trial Judge. 66. this Court therefore holds that the terminus a quo under Article 145 of the Limitation Act is the date of the deposit irrespective of the fact whether the cause of action arose on the date of the deposit or thereafter. 67. Now coming to the liability of the first Defendant, the Western India Theatres Ltd., the position can be stated in a few words. The learned trial Judge held that there was no contract as such in writing or at all between the Plaintiff-Appellant and this Defendant-Respondent. If there was no such contract, then it is difficult to understand how Article 115 was applied to defeat the Plaintiff's claim, for Article 115 proceeds on the basis of compensation for a breach of contract, express or implied. Now if there is a contract between the Plaintiff-Appellant and the first Defendant-Respondent, the question is: Does Article 115 apply and bar the Appellant's claim against the first Defendant? The case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as the Plaintiff Appellant is concerned, both the Defendants are joint depositaries? For, after all the Appellant is not interested in the internal quarrels between these two co-Defendants. It is true that it is the hand of the architect which took the money but it was for the owner and the construction of his Elite Cinema and this arrangement was subsequently at any rate ratified in writing by the two letters exchanged between the Appellant and the first Defendant dated the 27th and the 28th August 1952. If this view be correct that they are joint depositaries, then the same Article 145 applies in the case also against the first Defendant. This conclusion is also supported by the consideration that if it is not so, then the result will he that while as against the architect who was merely holding the money as a depositary or stake-holder or as agent only of the first Defendant the claim is not barred because of thirty years' limitation under Article 145, yet it is barred against the first Defendant because of three years' limitation on the ground that it was a compensation for breach of contract under Article 115. To hold the scales equally between the co-Defendants, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration also is not exhaustive. If drawing the inference as this Court is entitled to draw for the non-disclosure as pointed out, the Agent is personally liable in this case, then the plaintiff is justified in holding both the principal and the Agent liable. Section 230 of the Contract Act provides that: In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. 72. Then follows where such a contract shall be presumed to exist but those three cases there mentioned, where the presumption of contracts to the contrary would be made, are not attracted to the present facts but the opening words of Section 230 makes it quite clear that there may be a contract to the effect that an agent is personally liable. We draw that inference in this case by the deliberate non-disclosure of the contract between them that the agent in this case was personally liable. Therefore, it follows under Section 233 of the Contract Act that the Plaintiff Appellant is entitled to sue both the principal and the agent. Although it is unnecessary to refer at length to the English law on this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharge of his duties, but as quasi arbitrator he will have a duty to both parties to the contract, and provided that he discharges this latter duty honestly he will owe no responsibility to either party. 75. The same authority at pp. 398 and 399 makes it clear that forfeiture clauses sometimes contain provisions forfeiting any moneys due to the contractor at the time of the forfeiture Where the employer enters under a forfeiture clause on default of the contractor to complete, and completes, and the clause empowers him to deduct the cost of completion from all moneys due from him to the contractor, or to recover the cost of completion from the contractor, the employer is not in the position of a mortgagee in possession, all of whose acts and jealously scrutinised, but as against the contractor and those claiming under him, e.g., assignees of retention money, the employer, although he may be bound to account to the con- tractor, is allowed a discretion in the way in which he completes. Then again at p. 400 it is said building contracts in the past not infrequently contained provisions forfeiting to the building owner any moneys due to the builder at the time of ..... 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