Nripendra Nath Chatterji and Others vs Arun Chandra Chatterji and Another

Rowland, J.—This is an appeal by the contesting defendants and arises out of a suit to recover money deposited by the plaintiff with the father of the defendant. The deposit, it seems, was made with the defendants'' father as a banker by entries in a pass-book. It was opened in 1906 and entries in it both of credit and withdrawal were made, the last being dated 3rd November 1907. The plaintiff was a nephew of Babu Kirti Chandra Chatterji with whom the money was deposited and it would seem that the sums are of the nature of gifts by Kirti Chandra to the plaintiff. The entries have been found by both Courts to-be genuine and the Courts have held that the claim is for money deposited within the meaning of Article 60, Limitation Act.

Under this Article the period prescribed is three years from the date of the demand It is said in the plaint that demands were made from 1st January 1936 onwards and the suit was instituted on 6th July 1936. Babu Kirti Chandra Chatterji died in 1914; and the plaintiff claims the amount of the deposit from his sons on the ground that they are in possession of his assets. Interest is-claimed at per cent. per annum simple, this amount having been entered in the pass-book in connexion with the first item of deposit.

One of the objections taken by the defendants was that except with regard to the first item of deposit, there was no agreement to pay interest. Both the Courts have held that the agreement to pay interest was intended to apply to all the items of deposit. This seems a reasonable construction and I find no substance in this particular objection.

The next point taken is that the suit should have been held to be barred by limitation. The nature of the claim was not a deposit but money lent and the Courts should have applied Article 59 and not Article 60 of the Schedule. In this connexion, reference is made to the finding of the Courts below that the plaintiff had not proved any demand for the money on 1st January 1936, or at any date prior to the institution of the suit. Nevertheless, it has been held that the suit is maintainable and a decree has been passed. It is said that one criterion to determine whether a sum of money is merely money lent or is a deposit repayable on demand, is to see whether it is money for the recovery of which the plaintiff has a cause of action independently of any demand for repayment. For the English cases on the subject, we were referred to Joachimson v. Swiss Bank Corporation (1921) 3 KB 110 where the subject is examined in some detail. In the headnote it is stated to have been decided that:

Where money is standing to the credit of a customer on current account with a banker, in the absence of a special agreement a demand by the customer is a necessary ingredient in the cause of action against the banker for money lent.

The suit was held to be not maintainable on the ground that no cause of action had accrued to the plaintiffs because no demand was made for payment. In a case from India in Mohammad Akbar Khan v. Attar Singh AIR (1986) PC 171 the distinction between a deposit and a loan was examined by Lord Atkin who said:

Was this then a loan or was it a deposit payable on demand? It should be remembered that the two terms are not mutually exclusive. A deposit of money is not confined to a bailment of specific currency to be returned in specie. As in the case of 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 seem to impose an immediate obligation on the deposite to seek out the depositor and repay him He is to keep the money till asked for it. A demand by the depositor would therefore seem to be a normal condition of the obligation of the deposite to repay.

Therefore it is contended that the plaintiff is entitled to no decree for, if this money was in the hands of the defendants as a deposit referred to in Article 60, no cause of action had accrued and if it is any other kind of debt or loan the period of limitation for institution of the suit was long barred.

The objection, it seems to me, is not fatal. We have been shown two cases, one of this Court and one of the Madras High Court, in which such an objection has not succeeded. In this Court in Baijnath v. Bihari Ram Sham Lal AIR (1933) Pat 701 the Madras decision in Narasimham v. Narayana Rao AIR (1926) Mad 66 was followed. The relevant passage which in this Court was cited from the judg-ment of the Madras case is by way of obiter dictum and the observation is that:

The making of the demand is entirely dependent upon the volition of the plaintiff and the period of limitation may be indefinitely prolonged and a suit may be instituted without even a demand being made, in which case no question of limitation arises.

The language used may require some-qualification in view of the decisions previously cited, to the effect that there must ordinarily be a demand or something that can be deemed equivalent to a demand or take the place of a demand as part of the cause of action.

But the present case seems to fall within the concluding words of Lord Atkin in Joachimson v. Swiss Bank Corporation (1921) 3 KB 110 above cited. His Lordship observed:

Finally it is perhaps unnecessary to say that the necessity for a demand may be got rid of by special contract or by waiver. A repudiation by a bank of the customer''s right to be paid any particular sum would no doubt be a waiver of any demand in respect of such sum.

From this point of view, I am of opinion that the defendants cannot simultaneously repudiate liability to pay this sum and insist that a demand previous to suit was essential to its maintainability. As to the nature of the deposit or loan this has been found by both the Courts to be a deposit falling within the terms of Article 60 which includes money of a customer in the hands of his banker so payable and I do not think we can go behind that finding.

It is however contended that although the money was perhaps a deposit in the hands of Kirti Babu, after his death the same money in the hands of his sons had changed its character, there being between them and the plaintiff a liability of a different nature from that which had existed between their father and the plaintiff. It has not been shown to us in what manner the death of Babu Kirti Chandra could or should be deemed to alter the nature of the liability to pay this sum of money. The case appears to fall within Illustration (A) to Section 40, Contract Act, and the liability in respect of this money to be entirely unchanged by Kirti Babu''s death.

Then it is suggested that though it may be held that in respect of the principal money limitation is saved, Article 60 being applicable, interest is governed by Article 63 so that the plaintiff is entitled to recover along with the principal only interest for three years last before the institution of the suit. For this reliance is placed on a decision in Makundi Kuer v. Balkishen Das (1881) 3 All 328. But that was a special case where the depositor had realized out of Court the whole of his principal as well as interest at a certain rate; but with this he was not satisfied. He claimed interest at a higher rate and he brought a suit to recover the difference between the interest which he claimed and the interest which he had been paid. The present case is not by any means on all fours with the facts of that decision.

This is more comparable with Narayan Chetty v. Suppiah Chetty AIR (1920) Mad 933, in which it was held that where money had been deposited on the understanding that interest was not to be paid out as it accrued but to be added to the principal, Article 60 would apply to the interest as well as to the principal and that both would be deemed to be deposits payable on demand. The ordinary rule is that the cause of action for recovery of principal and of interest accruing due on it is a single cause of action and where the claim is a single claim for principal and interest, I do not think that two periods of limitation will be applicable. In my view then no part of the claim in respect of interest is time barred.

In the result, I find no substance in the contentions raised in the appeal. There is a cross-objection to which I must now refer. The Munsif had decreed the claim in full including costs; but the lower Appellate Court was of opinion that as the plaintiff had failed to establish a demand antecedent to the institution of the suit, he should not recover from the defendants his costs of the suit, The result was that the Subordinate Judge modified the first Court''s decision by giving a decree for the claim but without costs and directed that the parties should bear their own costs at the appeal. This was a matter within the discretion of the lower Appellate Court with which we do not think we ought to interfere.

It was for the plaintiff to give the defendants proper notice of his demand before rushing to Court although for the reasons I have stated this did not have to prove fatal his success in the suit. I would therefore not interfere with the discretion of the lower Appellate Court in withholding the plaintiff''s costs from them. I would dismiss both the appeal and the cross-appeal with costs.

Chatterji, J.

I agree.