Subramanian Chettiar vs Kadiresan Chettiar and Others

Napier, J.—The question raised in this second appeal and in the connected Second Appeal No. 738 of 1913 is, whether certain sums

claimed by the plaintiff in each case from the defendant firm are ""money deposited"" within the meaning of Article 60 of the present Limitation Act.

The lower Appellate Court has held that they are, but we are asked to hold that there is no evidence to support that finding. The Second Appeal

No. 737 of 1913 is to recover Rs. 817-1-9 alleged to be due to the plaintiff as balance of principal and interest due in respect of two sums

deposited by him. The first amount was Rs. 550 given to the defendants on October 17th, 1905, prior to his entering their service as an assistant

which he did on March 3rd, 1906. The second sum was Rs. 526-12-0, which represents half the salary of the plaintiff for the whole three years of

his service and credited by him to himself on joining the service. No cash was taken out or returned by the plaintiff but it is proved that according

to the custom of these traders, the plaintiff was entitled to take that amount and deal with it as he wished. What he did was to leave it with the firm

and draw against it as he required money. The lower Appellate Court has found further that the agreement between the parties was that the

account of both sums should be credited with interest at the current rate and should be payable on demand. It is contended for the appellants that

the money is ""money lent"" within Article 59 and the suit is barred by limitation. Reliance is placed on Ichha Dhanji v. Natha 13 B.k 338, Dharam

Das v. Ganga Devi (1907) A.W.N. 263 and Official Assignee of Madras v. Smith 32 M.k 68. The Madras case is one of those arising out of the

Arbuthnot insolvency in which a large number of claims were made for preferential payment in respect of money in the hands of the firm. The Court

had to decide the real legal character of the transaction between the banker and his customer and for that purpose laid down the law with which I

respectfully agree--the basis of which is to be found in the two leading cases Foley v. Hill (1848) 2 H.L.C. 28; 81 R.R. 14, affirming 1 Ph. 399; 8

Jur. 347 and In re Hallett''s Estate, Knatchbull v. Hallett 13 Ch. D. 696, lately re-affirmed by the House of Lords in the Birkbeck Bank case,

Sinclair v. Brougham (1914) A.C. 398; 111 L.T. 1. The law is as follows: The true relation between a banker and his customer is that of debtor

and creditor [Foley v. Hill (1848) 2 H.L.C. 28, affirming 8 Jur. 347, but a customer who pays money to his banker under terms that they (?) are

not to use it or who authorises his banker to collect money due to him on the like terms constitutes a fiduciary relationship between himself and the

banker and is entitled to recover the amount from the general assets of the banker if the banker has committed a breach of trust, on the principle

that all other payments must be assumed to have been made out of money in the banker''s hands to which no fiduciary character attached [In re

Hallett''s Estate, Knatchbull v. Hallett 13 Ch. D. 696; 28 W.R. 732. It is contended for the appellants that on the admitted facts the present case is

not within In re Hallett''s Estate, Knatchbull v. Hallett 13 Ch. D. 696; 42 L T. 421, and further that these principles must be applied in the

construction of the Articles of the Limitation Act and that what is in law and fact a loan could not be money deposited under Article 60. This is

undoubtedly the view taken in Dharam Das v. Ganga Devi (1907) A.W.N. 263; 4 A.L.J. 628, where the Court holds on facts very similar to those

here that Article 60 is not intended to apply to a transaction which is in law a loan, and in Ichha Dhanji v. Natha 13 B.k 338, where the same

language is used with the same result.

With great deference to the learned Judges the reasoning ignores the fact that if the term ''deposit'' is legally inapplicable to a loan it is also inapt

for describing a trust of money and also that the word ''deposit'' is familiar in banking parlance as describing money held by a banker for his

customer on special terms as distinguished from current account in both which cases, however, the banker is intended to have the use of the money

and no trust arises. The contrary view is expressed in Ishur Chunder Bhaduri v. Jibun Kumari Bibi 16 C.k 25, where the Court held that Article 50

must be construed with reference to the ordinary idea of the public as to the dealing with banks and by the language used by the bankers

themselves in describing their balances held on account of customers. In a judgment which will repay careful examination the learned Judges give

good reasons for taking the view. The same view was taken by this Court in Perudevitayar Ammal v. Nammalvar Chetti 5 M.L.J. 203, a case

somewhat stronger than the Calcutta case in one respect in that the depositee was not a banker but an ordinary shopkeeper and thus the position

was much more like the present case, the only difference being that in Perundevitayar Ammal v. Nammalvar Chetti 18 M.k 390 the depositor is

not shown to have been entitled to draw against the deposit, whereas in Ishur Chunder Bhaduri v. Jibun Kumari Bibi 16 C.k 25 he did draw. All

these cases, however, are decided on the words of the Article in the Limitation Act of 1877, but the present Act has added the words ""including

money of a customer in the hands of a banker so payable."" It must be admitted that the Legislature has not yet made the matter perfectly clear but

it has definitely and, I think, intentionally used language in a non-legal sense. The money of a customer can only mean money paid in the ordinary

customary way of business. Now clearly when it passes into the banker''s hands it is not the customer''s money any longer. It becomes a debt due

from the bank. I cannot but regard this language as throwing light on the meaning to be given to the word ''deposit'', for it seems to me illogical to

treat the word ''deposit'' as inapplicable to what is in law a loan and yet be compelled to give a non-legal meaning to a phrase which is stated to be

included"" in the word ''deposit.'' We can, I think, only give full meaning to the language used in the present Article by holding that money in the

hands of a trader who is not a banker will be a deposit in circumstances such as would make it money of a customer where the depositee was a

banker. For these reasons I am of opinion that the judgment of the lower Appellate Court is right and the appeal must be dismissed with costs.

William Ayling, J.

I agree.