2008 Supreme(SC) 1458

2008(8) Supreme 166
SUPREME COURT OF INDIA
Tarun Chatterjee and Harjit Singh Bedi, JJ.
Mr.Krishna Gopal Kakani — Appellant
versus
Bank of Baroda — Respondent
Civil Appeal No. 8448 of 2001
Decided on : 30-09-2008

IMPORTANT POINT
A trust is not created by mere deposit of some money with a Bank at the instance of the Court on account of the auction of the goods. Section 10, Limitation Act and section 88, Trust Act do not get attracted.

Headnote:(a) Limitation Act, 1961 – Section 10 – A trust is not created by mere deposit of some money with a Bank at the instance of the Court on account of the auction of the goods – The provisions of section 10 do not get attracted in such case. (Para 7)

        (b) Indian Trusts Act 1894 – Section 88 – By mere deposit of some money with a Bank at the instance of the Court on account of the auction of the goods does not create a fiduciary relationship – Section 88 does not apply. (Para 9)

        (2004) 8 SCC 355 – Distinguished.

        (c) Limitation Act, 1961 – Article 113 – Limitation would start from the date when the claim was finally and unequivocally denied. (Para 17)

        AIR 1960 SC 335; AIR 1966 SC 470 – Relied upon.

        (d) Limitation Act, 1961 – Article 113 – The appellant neither putting up appearance in the proceedings nor sharing the expenses thereof – Bank was fully justified in taking the plea of limitation. (Para 22)

        AIR 1979 SC 1144; AIR 1990 SC 1329 – Distinguished.

       Facts of the case :

        1. The appellant, Krishna Gopal Kakani, the proprietor of M/s. Oriental Traders, a concern involved in the manufacture and import of goods, obtained a letter of authority from the Chief Controller of Imports and Exports, Bombay for the import of raw material for the benefit of a licensee who had been given an import licence.

        2. The appellant accordingly placed orders with a foreign supplier for the import of specified goods and for that purpose approached the respondent-Bank for opening Letters of Credit for two consignments. The bank thereupon opened two Letters of Credit on which he also deposited 10% of the margin money of Rs.4560/- and Rs.4810/-. The other formalities having been completed, the Letters of Credit were duly negotiated on 21st January 1974 and 19th March 1974.

        3. The consignment arrived in India on 13th March, 1974 but despite the requests made by the appellant and his clearing agent, the Bombay Customs refused to release the goods without assigning any reason.

        4. Faced with a notice from the Port Trust threatening heavy demurrage charges and apprehending auction of the goods by the Trust, the appellant as a joint-holder of the property approached the Bombay High Court for orders. The Bank also, as joint-holder of the import licence by virtue of having paid the value of the import consignment, thereafter filed several Miscellaneous Applications before the Court claiming their rights on the goods as being joint-holders thereof.

        5. Pursuant to the order of the High court, the goods were sold by public auction and the sale proceeds of Rs.4,72,714.16 were deposited with the Prothonotary and Senior Master of the Bombay High Court. The Court finally directed that the Bank would be entitled to the amount deposited but would defray an amount of Rs.8044.18 to the Bombay Port Trust towards demurrage charges and was also liable to pay the customs duty.

        6. The appellant requested the Bank to refund the surplus amount along with the margin money lying in deposit with the Prothonotary with interest and the Bank intimated that the money would be paid after receiving orders from the Bombay Head Office but to no avail.

        7. In the interregnum, one R.M. Patwa, who was also a debtor to the Bank approached the appellant that his debts could be adjusted against the amount of the surplus dues of the appellant lying deposited with the Bank. The appellant consented to the said proposal and an application was accordingly moved on 4th March 1986 in the execution proceedings pertaining to R.M. Patwa’s case.

        8. The appellant thereafter filed Writ Petition before the Bombay High Court claiming the same relief as in the present suit. The said petition was dismissed on 25th October 1991 on the ground of delay and a Special Leave Petition filed in this Court was also dismissed. In the meanwhile, in the execution petition in R.M. Patwa’s case, the court directed that R.M. Patwa’s debt be adjusted against the appellant’s dues.

        9. This order was maintained in a revision petition before the High Court. The Bank’s appeal thereagainst was duly allowed and the order impugned was set aside.

        10. It is, thereafter, that the present suit has been filed. The trial court decreed the suit for the amount claimed along with simple interest at 11% from the date of the suit till the date of the payment. It was held, inter-alia that the appellant being the proprietor of M/s. Oriental Traders was entitled to the surplus amount which had been deposited with the Prothonotary on account of the auction of the goods.

        11. The court also concluded that the Bank was a trustee of the appellant’s money and, therefore the suit was covered by Section 10 of the Limitation Act, which provided for no limitation and in the alternative the cause of action had arisen on 1st August 1997 when the demand notice had been issued by the appellant or from the 24th February 1995 when the statement of accounts had been submitted in the executing court in Patwa’s case.

        12. The Gujarat High Court reversed the order of the trial court, allowed the appeal and dismissed the suit.

       Finding of the Court :

        There is no infirmity in the impugned judgment. Appeal is without merit.

       Result : Appeal dismissed.