LexMR. KRISHNA GOPAL KAKANI versus BANK OF BARODA
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1· ·\-,. ~- [2008] 13 S.C.R. 1191 MR. KRISHNA GOPAL KAKANI A V. BANK OF BARODA (Civil Appeal No. 8448 of 2001) .. SEPTEMBER 30, 2008 B [TARUN CHATTERJEE AND HARJIT SINGH BEDI, JJ;] Limitation Act, 1963 - ss. 10 and 113 - Limitation for filing suit for recovery of money against Bank - Bank issuing Letter of Credit - Margin money deposited by the creditor - c On failure of payment by the creditor, consignments 'of the creditor put to auction as per direction of Court and payment made to the Bank - Creditor claiming the surplus amount - Bank taking plea of limitation - Trial Court decreeing the suit • holding that Bank being the trustee of the due money of the D creditor, no limitation applicable by virtue ofs. 10 - High Court reversing judgment of Trial Court - On appeal creditor taking plea that s. 10 or in the alternative Article 113 applicable - Held: s. 10 not applicable as creation of trust in respect of the suit money not proved - Suit is barred by limitation even by E applying Article 113 as the suit was not filed within three years from the dates when cause of action arose - In the facts of the case, Bank was justified in taking plea. of limitation - Trusts Act, 1882 - s. 88 . .. Respondent-Bank opened two Letters of Credits for F two consignments at the instance of the appellant. The appellant deposited margin money for the same, which was less than Rs. 10,000/-. The consignment was not re- leased by the Customs Authorities. Appellant received notice from Port Trust for imposition of demurrage G charges. Appellant approached High court. Respondent- .. Bank as a joint-holder of the import licence, filed an appli- cation (Application No. 950 of 1975) claiming its right on the goods as a joint-holder. High Court directed to sell 1191 H 1192 SUPREME COURT REPORTS [2008] 13 S.C.R. A the goods in public auction. Pursuant thereto, the sale proceeds of the goods were deposited with the Protho- notary of the High Court. Thereafter the application was disposed of with direction to the Bank to pay the demur- rage charges and customs duty. B Thereafter appellant demanded the Bank to refund the surplus amount alongwith the margin money lying with the Prothonotary with interest. He gave a legal no- tice dated 12.12.1988 to initiate legal proceeding on fail- ure of payment of the same. On 15.12.1988, the Bank de- e nied the claim. In the meantime there was a negotiation with another debtor of the Bank to adjust his debts against the sur- plus dues of the appellant. The Bank initially agreed for 0 the adjustment, but subsequently in 1990 withdrew its consent. Appellant thereafter filed a writ petition claiming the relief which was dismissed upto Supreme Court. Therein, in 1991, the appellant stated that it would file a suit. In the E meantime Court's direction to adjust the debt of another debtor against the appellant's dues was also set aside by Supreme Court. Appellant filed present suit seeking decree for Rs. 23,54,707/58, in September, 1997 stating therein interalia F · that cause of action arose on 24.2.1995 when the Bank for the first time filed a statement of Accounts in the High Court in the proceedings of another debtor. Trial Court decreed the suit holding that the Bank was a trustee of the appellant's money and hence suit was covered by s. G 10 of Limitation Act and thus not barred by limitation. High court reversed the order of the trial court. Hence the present appeal. Appellant contended that the suit was governed by H s. 10 of Limitation Act and in the alternative it was gov- • MR. KRISHNA GOPAL KAKANI v. BANK OF BARODA 1193 erned by Article 113 of the Limitation Act and not by Ar- A ticles 22 and 24 as held by High Court; and that it was not open to a Bank to take plea of limitation to defeat a cause which on admitted facts, was just. Dismissing the appeal, the court . 8 HELD: 1.1 Section 10 of Limitation Act applies where a property had been vested in trust for any specific pur- pose and for certain other purposes stipulated in the pro- vision. In the present case, there is nothing to suggest that a trust had been created merely because some c money had been deposited with the Bank at the instance of the Court on account of the auction of the goods and it was not a mere deposit simplicitor. An analysis .of Sec- tion 88 of Trusts Act would also show that the Bank, to whom the money had been entrusted, was not in the ca- 0 pa
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