The central legal point established in the judgment is the interpretation of the Companies Act provisions, the fiduciary duty of directors, and the application of limitation provisions in determining the nature of the transaction and the authority of the company to borrow money.

1. This is a Plaintiffs appeal in a suit for recovery of Rs. 1,03,988 being Rupees 79,519-12-9 principal and Rs. 24,468-4-0 interest on a deposit which the Plaintiff made with the Defendant.

2. The Defendant is a Ginning and Pressing Factory. According to the Plaintiff the company was obliged to finance cotton traders who sent their cotton to the factory for ginning and pressing, otherwise it was not possible to get their custom. In order to do this the company had to borrow money. This money was borrowed from the Plaintiff, among others, and the Plaintiff sues for the amount which he says is due to him. The Plaintiff asserts that the company had the authority to borrow for the purpose aforesaid. The borrowing was made under the following circumstances.

3. The Plaintiff acted as the company's banker and lent the company money from time to time. The money so lent was placed by the company in a current account and later transferred to a fixed deposit account. These deposits were cashed in or renewed from time to time. The latest, on which the suit is based, was for the sum set out above and was made on 15-1-1940. It is evidenced by a fixed deposit receipt Ex. P-1.

4. We find this difficult to follow. If the Plaintiff was the company's banker then either the Plaintiff would lend money to the company as and when desired or, he would keep the company's money with him in his bank for the convenience of the company. If it was a case of the company keeping its money with the Plaintiff then the deposit would be by the company and not the Plaintiff, and the person entitled to sue for its return would be the company. If the deposit was made with money borrowed by the company from the Plaintiff then the Plaintiff's right would be to recover his loan. On the other hand, if the Plaintiff were depositing money with the company normally the company would be in the position of banker and not the Plaintiff. It is not easy to see how the Plaintiff was placing money with the company in fixed deposit in his capacity as a banker. The Plaintiff might be described as the Defendant's financier but hardly as its banker.

5. It is evident from P.W. 1, Thombre that the moneys lent by the Plaintiff from time to time actually passed hands and were kept with the Defendant and not with the Plaintiff. He says he sometimes accompanied the secretary of the company when he went of the Plaintiff for taking the money borrowed by him and tells us:

The secretary used to agree with the Plaintiff when borrowing money from him to pay back the amount on demand. The amounts borrowed from the Plaintiff used to be credited either into the current accounts or in the deposit account.... With respect to the amounts deposited in the 'deposit accounts' the Plaintiff had to make a demand after the general meeting and then if the funds were available he used to be paid off and if they were not available a fresh deposit receipt used to be passed to him by the company.

The Plaintiff also admits as P.W. 3 that ''all the loans given by me to the company were advanced in cash by me.''

6. In the circumstances we find it difficult to see where the relation of banker and customer comes in if the Plaintiff was the banker as he says he was in his plaint. We feel the Plaintiff has taken up this position to try to bring his case within Article 60, Limitation Act. However, even if the Plaintiff was not a banker that would not necessarily preclude him from being a depositee within the meaning of Article 60, Limitation Act, if the transaction was really of that nature.

7. Exhibit P-1 purports to be a deposit receipt and if the parties deliberately chose to consider their transaction a deposit and not a loan then we would find it difficult to hold that it was not intended to be a deposit. It is true that ''the mere use of the term deposit cannot alter the substance of the transaction'', (U.N. Mitra's Law of Limitation and Prescription, 6th Edn., vol. II, p. 1202), but as the dividing line between