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Judgment
N.Y. Hanumanthappa, J.—Defendants 1 and 2 in the suit, which was filed for recovery of a sum of Rs. 31,300/- being the principal and interest tnereon due to the plaintiff-1st respondent, are the appellants in this Letters Patents Appeal.
The trial Court dismissed the plaintiff''s suit. On an appeal filed by the plaintiff in A.S. No.1244 of 1980, the learned single Judge of this Court allowed the same and decreed the suit for a sum of Rs. 27,452/- with interest at 12% from April 15, 1977 till realisation. Assailing the same, the present Letters Patent Appeal is preferred by Defendants 1 and 2.
The brief facts of the case are that � Smt. Kannegolla Santha Kumari, Kannegolla Ramachandra Rao, K.R.N.S. Lakshmana Rao, K.S. Rama Rao and Smt. Kannegolla Sarojini had formed a partnership firm under the name and style of ''M / s. Kannegolla Ramachandra Rao & Co.'', which was a registered one, and carrying on business at Eluru. Earlier, Kannegolla Ramachandra Rao was the Managing Partner. After his death, K.R.N.S. Lakshmana Rao became the Managing Partner. On 30-4-1959, Smt. Kannegolla Santha Kumari paid a sum of Rs. 6,000/- to Kannegolla Ramachandra Rao, the Managing Partner of the firm. On 14-4-1966, the said amount was transferred to the firm in the name of Smt. Kannegolla Santha Kumari. The interest accured on the principal amount used to be credited to the account of Smt. Kannegolla Santha Kumari that was maintained by the firm and the said Santha Kumari was permitted to with draw the interest accrued from time to time. Later, Kannegolla Ramachandra Rao died and the firm continued to do its business with the remaining partners i.e., Smt. Kannegolla Santha Kumari, K.R.N.S. Lakshmana Rao, K.S. Rama Rao and Smt. K. Sarojini. As on 12-5-1978, a sum of Rs. 31,309-41 was standing as debt due to be paid to Smt. K. Santha Kumari. A legal notice was issued on 12-5-1978, but there was no reply to it. Therefore, Smt. K. Santha Kumari filed O.S. No. 55/1978 on the file of Subordinate Judge''s Court, Eluru, pleading the facts narrated above. On receipt of notice, the defendants, though admitted the relationship, denied their liability on the ground that even if the claim of the plaintiff for the suit amount is genuine, the same cannot be decreed as the same is barred by time for the reason that the defendants borrowed the same as loan and for the recovery of such loans, a suit has to be filed within three years from the date of the demand. In the instant case, since the suit is not filed within that period, the same is hit by limitation. On the basis of the above pleadings, the following issues were framed by the trial Court:
Whether the 2nd defendant is the managing partner of the 1st defendant-firm?
Whether late Kannegolla Ramachandra Rao borrowed Rs. 6,000/- from the plaintiff on 30-4-1959 as alleged in the plaint?
Whether late K. Ramachandra Rao was the managing partner of M/s. Kannegolla Ramachandra Rao till his death in 1973?
Whether late Ramachandra Rao, as managing partner, opened a katha in the name of the plaintiff in the books of the firm and got the amount due from him to the plaintiff transferred to D-1 firm?
Whether the acts of the D-3 bind the other defendants?
Whether the Avalthi of debt of late K. Ramachandra Rao to D-1 firm is valid and enforceable against the defendants?
Whether the plaintiff is entitled to claim compound interest?
Whether the suit is in time?
To what relief?
On behalf of the plaintiff, the plaintiff herself was examined as P.W.1, and on behalf of the defendants none were examined, but they marked Exs. B-1 to B-16 on their behalf. On behalf of plaintiff, the registered notice issued to the defendants was marked as Ex.A-1. After scrutinising the entire evidence, the trial Court found all the issues in favour of the plaintiff viz., Smt. K. Santha Kumari, but however, did not choose to grant any relief in her favour holding that the transaction between the plaintiff and the defendants was one of loan, and the suit filed after the expiry of the period of limitation (i.e., after three years) therefore, hit by Article 21 of the Limitation Act. Various decisions of the Supreme Court and one decision of our High Court were cited before the learned trial Judge. The learned Judge placed reliance on the decisions of the Supreme Court in Ram Janki Devi and Another Vs. Juggilal Kamlapat, and V.E.A. Annamalai Chettiar and Another Vs. S.V.V.S. Veerappa Chettiar and Others, , in which the Supreme Court held thus:
"Where a transaction is a transaction of loan or deposit does not depend merely on the terms of the document but has got to be judged from the intention of the parties and of the circumstances of the case."
The trial Court further took trouble in explaining the difference between deposit and a loan by making reference to ''U.N. Mitra''s Law of Limitation'', in which the author had explained the same in the following terms:
"A deposit as distinct from a loan means a passing of money not for the convenience of the man to whom it was given, but for the benefit of the person who hands it over. The element of benefit of the person handing over the money in characteristic of a deposit. The fact that the person who receives it may have use of it is only a subsidiary consideration."
The decision of this High Court relied upon by the plaintiff, i.e., Touta Krishnaveni Atnma v. Produtoori Anjaiah (1958 (2) An.W.R. 621) was however held to be of no help to the plaintiff''s case. By so observing, the trial Court dismissed the plaintiff''s suit.
Before this Court, in the appeal filed by plaintiff in A.S. No. 1244/1980, the defendants filed their Cross-objections. The plea of the plaintiff-appellant before the learned single Judge, while attacking the judgment of the trial Judge, was that the decision of the trial Judge in holding the suit transaction as barred by limitation is bad in law. The defendants pleaded in their cross-objections that the findings arrived at by the trial Court on other issues are not correct. The learned single Judge heard both sides on the controversial point, viz., whether the suit transaction was one of ''deposit'' or ''loan''. In order to decide the issue, the learned single Judge had once again scanned through the entire evidence adduced in the trial Court, considered carefully the characteristics of the transaction and other various circumstances and found that the transaction in question was a mere deposit and not a loan. Thus, it is covered by Article 22 of the Limitation Act (new), as such the limitation starts to run from the date of service of notice viz., Ex.A-1 and so holding, reversed the Judgment of the trial Court so far as it relates to dismissing the plaintiff''s suit as barred by time. The cross-objections ended in full rejection. The learned single Judge, in order to know the difference between the deposit and loan, had referred to the same decisions which were cited before the trial Judge and drew the distinction in between the same. Aggrieved by the same, the present Letters Patent Appeal is filed.
Sri P. Ramachandra Reddy, learned Senior Advocate appearing for the appellants, attacked the Judgment and decree of the learned single Judge on several grounds and the main among them being that the learned single Judge was not right in converting the transaction as one of deposit inspite of the clear explanation of the characteristics of a deposit and a loan. In order to show that the transaction was one of loan, he brought to our notice one or two important circumstances, viz., the plaintiff giving Rs.6,000/- to Ramachandra Rao and later collecting interest from him and crediting the same to the accounts of the firm, followed by a demand on 12-6-1978. He explained that if it was not a loan, there would have been no reason for the plaintiff to make a demand for interest. He also placed reliance on the decision of the Supreme Court (2 supra) and the decision of the Privy Counci1 in AIR 1940 132 (Privy Council) wherein the Privy Council has differentiated the deposit from loan. The releyant paragraph in the said judgment is as follows:
"A loan and a deposit payable on demand are not mutually exclusive. A deposit of money is not confined to a bailment of specified currency to be returned in specie. As in the case of a 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 impose an immediate obligation on the depositee 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 be a normal condition of the obligation of the depositee to repay."
By taking support from the above decisions, the learned Counsel attempted to convince us to agree with the view taken by the trial Court and to set aside the order of the learned single Judge.
Whereas Sri T. Veerabhadrayya, learned counsel appearing for the respondent-plaintiff, contended that first of all there is no illegality or material irregularity in the Judgment of the learned single Judge for this Court to interfere under Clause 15 of the Letters Patent Appeal Act, as the conclusion reached by the learned single Judge is nothing but clear appreciation of evidence by placing reliance on the very same decision of the Supreme Court which was cited by the learned Counsel for the appellants (2 supra). He further explained how the transaction in question was not a loan but a deposit. To support this, he cited some circumstances, viz., the amount in question was given to Ramachandra Rao on 30-4-1959. The interest which used to be accrued on the said principal amount was being added to the principal amount itself. Only on 14-6-1966, the said amount was transferred in the firm accounts crediting the same to the credit of the plaintiff, and the plaintiff was permitted to withdraw the interest accrued on it from then onwards. The other partners of the firm never took an objection that the transaction in question was not a depositbuta loan. Even on receipt of the legal notice, none of the partners cared to give a reply to the said legal notice. They were never under the impression that the transaction was one of loan but they always treated the same as deposit. Had they ever thought that the transaction was a loan transaction, they would not have kept quiet for nearly 29 years. He, therefore, contended that the findings of the learned single Judge that the transaction was one of deposit are correct.
One more circumstance which was sought to be highlighted by the learned Counsel is the conduct of the defendants in not entering the witness box to prove that the transaction was not deposit as contended by the plaintiff but it was a loan. From the narration of the facts and important points that were touched by both the advocates on respective contentions and their efforts to contend that the principles laid down in some of the authorities cited earlier are applicable to their respective cases put forth, we once again gave our careful thought to understand whether the transaction in question was a deposit or a loan, as the entire controversy revolves round the said issue. Though we are not supposed to go through the evidence as the scope under Clause 15 of Letters Patent Appeal Act is very much limited, with a view to see that justice is not only done but it is seemed to be done, we have gone through the evidence and gave our careful thought to each and every circumstance explained by both the counsel and considered where those circumstances will take us.
The difference between ''deposit'' and ''loan'' is very thin and sometimes it is very difficult to differentiate between the same as was explained by the Supreme Court in Ram Janki Devio''s case (1 supra). The Supreme Court in the said decision held that it is difficult to explain the difference between these two unless the same touches some of the circumstances that necessitated the transaction. No doubt the transaction appears to be as one of ''loan'' as contended by the learned Counsel for the appellants, but the other circumstances will belie his theory in view of the conduct of his clients, first in keeping quiet for a very considerable period of time and secondly in not entering the witness box. The reason for the same is quite apparent in as much as they know that the transaction was one of deposit and not loan. Nothing prevented them to object for the demand made or should have kept silent on 14-6-1966 instead of transferring the amount plus the interest that was accrued to the credit of the plaintiff to the firm''s accounts. Further, they kept silent from 1966 onwards till 1978. This is also one of the factors which made us to believe that they were quite sure that the transaction was one of deposit. Apart from the above two circumstances, another important circumstance was the failure on the part of the defendants to reply to the legal notice issued by the plaintiff. They had chosen to resist the case of the plaintiff only when they received notices in the suit by filing a written statement. Till then, there was dead silence from their side. Further, when the plaintiff had entered the witness box to prove her claim, the defendants never cared to disprove her claim by entering the witness box. The shyness on the part of the defendants in not entering into the witness box is also one of the circumstances which had sheltered the foundation laid by Mr. Ramachandra Reddy, the learned Counsel, in support of his contention.
The reasoning given by the learned single Judge that the transaction was one of ''deposit'' and not ''loan'' and the claim was not barred by limitation as it attracted Article 22 of the Limitation Act, is just and proper and there is no infirmity or illegality in the order of the learned single Judge so that we can interfere under Clause 15 of the Letters Patent Appeal Act. Hence, this appeal is dismissed. The order of the learned single Judge is maintained. In the circumstances, no costs.