Devarajulu Naidu (died) and Another vs Jayalakshmi Ammal and Another

Alfred Henry Lionel Leach, C.J.—This appeal arises out of a suit filed by the appellants in the City Civil Court to recover a sum of Rs.

2,200 from the first and second respondents. A decree was passed for Rs. 187-12-0 only, the balance of the claim being dismissed on the ground

that the suit to that extent was barred by the law of limitation. The question is whether Article 62 or Article 120 of the Limitation Act applies to the

case.

On the 9th January, 1931, the appellants, who are brothers, sold certain immovable properties to one Krishnaswami Naidu for Rs. 3,000 and in

part discharge of the purchase consideration Krishnaswami Naidu executed a promissory note for Rs. 1,560 in favour of the first respondent, who

is the wife of the first appellant. The husband and the wife quarrelled and she eventually left him. On the 5th November, 1931, the first respondent

fraudulently endorsed the promissory note to Dorai-swami Naidu, the father of the second respondent, who was said to have been a friend of the

family. Doraiswami Naidu sympathised with the wife in her quarrel with the husband, and it has been established that the promissory note was

endorsed to him without consideration and with the object of defeating the husband and his brother. In 1932 Doraiswami Naidu filed a suit against

Krishnaswami Naidu in the City Civil Court to recover the amount due on the promissory note and on the 19th July, 1933, he obtained a decree

for Rs. 1,653-8-0. As the result of an appeal to this Court the decree was set aside and the case remanded to the City Civil Court for the taking of

evidence. The judgment of this Court remanding the case was delivered on the 9th August, 1934. As the result of the further hearing a new decree

for Rs. 1,653-8-0 was passed on the 26th November, 1934.

The present suit was filed by the appellants on the 26th November, 1937, to recover from the first respondent and Doraiswami Naidu with

interest the Rs. 1,653-8-0 which Doraiswami Naidu had recovered from Krishnaswami Naidu. The decision that the appellants were only entitled

to Rs. 187-12-0 was based on a finding that the rest of the money had been paid to Doraiswami Naidu before the 26th November, 1934. The

principal Judge of the City Civil Court who tried the case, was of the opinion that this was a suit for money had and received and accordingly held

that Article 62 applied.

If the suit is to be regarded as a suit for money had and received, as known to the English common law, the Court below was right in limiting the

decree to the Rs. 187-12-0, which was paid after the 26th November, 1934, but we consider that the suit cannot be so regarded. The case is not

one which falls within the decisions in Mahabala Bhatta and Another Vs. Kunhanna Banta and Others and Subbanna Bhatta and Others, ,

Subbanna Bhatta v. Kunhanna Bhatta (1907) 17 M.L.J. 224 : I.L.R.1907 Mad. 298 and Shanmugha Pillai v. Minor Govindasami (1907) 17

M.L.J. 452 : ILR Mad. 459 where Article 62 of the Limitation Act was applied to claims against benamidars and therefore it is not necessary to

consider whether those cases were rightly decided, but in passing, it may be mentioned that in the unreported case of Narayana Bhatta v.

Mahabala Bhatta S.A. No. 1469 of 1901, Benson and Bhashyam Aiyangar, JJ., held that a suit against a benamidar was governed by Article 120,

and not by Article 62.

The relationship between a benamidar and the real owner is a relationship of trust. In 23 CWN 521 (Privy Council) the Privy Council held that

although he has no beneficial interest in the property or business standing in his name the benami-dar represents the real owner and is in the

position of a trustee, A trust of this nature is not an express trust within the meaning of Section 10 of the Limitation Act, as the Privy Council

pointed out in Annamalai Chettiar v. Muthukaruppan Chettiar (1930) 60 M.L.J. 1 : 1930 L.R. 58 I.A 1 : ILR 8 Rang. 645 (P.C.). It cannot be, as

Section 2 (11) expressly states that the word ''trustee'' as used in the Act does not include a benamidar. Although there is no express trust in a

benami transaction there is a trust and a person receiving the property with the knowledge of the true position will take it subject to the trust.

The appeal in Annamalai Chettiar v. Muthukaruppan Chettiar (1930) 60 M.L.J. 1 : L.R. 58 IndAp 1 : ILR 8 Rang. 645 (P.C.) arose out of a

suit for an account against the representative of a benamidar and the appellants contended that Article 62 applied to the case, but in delivering the

judgment of the judicial Committee Lord Thankerton said that Article 62 did not apply to an equitable claim against a trustee, liable to account, for

an account and ascertainment of what might be due. The Board held that the proper article was Article 120 and referred to an earlier decision, that

in (1884) L.R. 11 I.A. 59 (Privy Council) .

We consider that the judgment in (1884) L.R. 11 I.A. 59 (Privy Council) really governs the present case. There certain timber had been

entrusted by the plaintiffs to one Modhoosoodan who wrongly converted it to his own use. As the result the plaintiffs brought an action against him

and obtained a decree for Rs. 25,200. Modhoosoodan died without satisfying the decree and the plaintiffs instituted against the agent of his widow

the suit out of which the appeal to the Privy Council arose. The widow had sold through the defendant certain timber which Modhoosoodan had

not disposed of and the proceeds of this sale were in the hands of the defendant. It was contended that the suit was barred by the law of limitation

because it was a suit for money had and received and had been instituted more than three years after the defendant had obtained the money. The

Limitation Act of 1871 was then in force, but the only difference so far as this case is concerned is in the numbering of the articles. Article 62 of the

present Act corresponds to Article 60 of the old Act and Article 120 to Article 118. The Privy Council rejected the contention and the reason is to

be gathered from the following passage in the judgment:

The suit is to enforce an equitable claim on the part of the plaintiffs to follow the proceeds of their timber, and, finding them in the hands of the

defendant, to make him responsible for the amount. That does not fall either within Article No. 60 or No. 48; but comes within Article 118, as ''a

suit for which no period of limitation is provided elsewhere in the schedule'', and for suits of that nature a period of six years is the limitation.

In the present case the real claim is against the second respondent in whose hands are the moneys paid by Krishnaswami Naidu in discharge of

the promissory note. In endorsing the promissory note over to Doraiswami Naidu the first respondent wrongly converted it and as Doraiswami

Naidu took it with full knowledge of the facts he acquired no title to it. Therefore he had no right to the moneys paid by Krishnaswami Naidu in

respect of it. As the legal title to the promissory note was in the first respondent, Doraiswami Naidu must, if legal fiction is to be recognised, be

deemed to have received the moneys for her use, not for the use of the appellants. The position is analogous to the position in Gurudoss Pyne v.

Ram Narain Sahu (1884) L.R. 11 IndAp S9 : ILR 10 Cal. 860 (P.C). There is here, as there was in that case, an equitable claim and the Privy

Council has held that equitable claims do not come within Article 62, but within Article 120. The first respondent is a trustee for the appellants and

she has converted the trust property. Therefore the appellants are entitled to trace the proceeds of the property in the hands of the second

respondent. The second respondent represents Doraiswami Naidu who realised the promissory note with full knowledge of the facts.

As the suit falls within Article 120 it is in time. Consequently the appeal succeeds and the suit will be decreed with costs here and below. The

appeal was filed in forma pauperis and the second respondent will be directed to pay the court-fee to Government.