Judgment

RAY, J.:- This is an appeal by certificate from the judgment and decree dated 3 August, 1965 of the High Court of Allahabad decreeing the respondent s suit for the sum of Rupees 4,11,367.92.

2. The respondent filed the suit on 16 May, 1953 against the appellant for the recovery of Rupees 4,11,367.92 with interest and costs.

3. The respondent s case in short was that the respondent on 30 September, 1942 deposited a sum of Rupees 4,00,000 with M/s. India Supplies whereof the appellants were the partners on the condition that interest would be payable @ 7/9 per cent. per month and that the respondent would be entitled to withdraw the deposit on demand.

4. The suit was filed in the Court of the First Civil Judge, Kanpur. The evidence was concluded before the Civil Judge, Kanpur. Thereafter by an order dated 12 May, 1964 of the High Court at Allahabad the suit was transferred to the High Court in its original Civil jurisdiction. The High Court heard the suit and on 3 August,1965 decreed the suit in favour of the respondent.

5. At the trial the issues were first whether the respondent deposited the sum of Rupees 4,00,000 with the appellant and secondly whether the suit was barred by time.

6. The entire controversy in the suit is whether it was a case where money was deposited under an agreement and that it was payable on demand or whether it was a case of an ordinary loan of Rs. 4,00,000. The respondent contended that Article. 60 of the Indian Limitation Act, 1908 was the relevant Article because it was a case of money deposited under an agreement that it was payable on demand and therefore the limitation would commence from the date of demand and the suit was filed within three years from the demand. The rival contention of the appellant was that it was money lent under an agreement that it was payable on demand and the loan was made on 30 December, 1942 and therefore the suit not having been filed within 3 years from the date of the loan under Article 59 was barred by limitation.

7. In the year 1942 Kailashpat Singhania and Pushpa Devi wife of Lakshmipat Singhania were partners of India Supplies along with the defendants. Defendant Ram Janki Devi is the wife of Ram Ratan Gupta and the other defendant Lal Ram Gopal Gupta is a brother of Ram Ratan Gupta and married Padampat Singhania s sister s daughter. The Singhania group and the Gupta group were the partners of India Supplies. The Singhania and the Gupta groups were also both interested in the business of Lakshmi Ratan Cotton Mills. The evidence on behalf of the respondent is that Lakshmi Ratan Cotton Mills a limited Company acted as financiers and bankers of India, Supplies. In the year 1942, Lakshmi Ratan Cotton Mills was the creditor of M/s. India Supplies for the approximate sum of Rupees 4,00,000. Lakshmi Ratan Cotton Mills was a debtor to the respondent for the approximate sum of Rupees 4,00,000/-. Lakshmi Ratan Cotton Mills demanded the Sum of Rupees 4,00,000 from India Supplies. India Supplies could not repay Lakshmi Ratan Cotton Mills. Thereafter India Supplies proposed that the respondent should deposit a sum of Rupees 4,00,000 with India Supplies to wipe out the indebtedness of India Supplies to Lakshmi Ratan Cotton Mills. The respondent accepted the said proposal and thereafter a letter dated 29 September, 1942 was written by Ram Ratan Gupta head of the Gupta group on behalf of India Supplies to the respondent recording the agreement that "a sum of Rupees 4,00,000 should be debited to India Supplies as deposit at the usual rate of interest as agreed, upon." The respondent was to place to the credit of Lakshmi Ratan Cotton Mills a sum of Rupees 4,00,000 in its account with the respondent thus reducing the indebtedness of Lakshmi Ratan Cotton Mills from Rupees 9,00,000 to Rupees 5,00,000. Disputes and differences arose between the two groups thereafter. In 1944 there was an arbitration award. The Singhanias went out of both India Supplies and Lakshmi Ratan Cotton Mill