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Shah Amrutlal Shantilal Shah Firm and ors. Vs. Madhyavarti Sahakari Hatamag Vinkar Singh Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial;Limitation
CourtMumbai High Court
Decided On
Case NumberA.F.O.D. No. 433 of 1969
Judge
Reported inAIR1977Bom431; 1977MhLJ842
ActsLimitation Act, 1963 - Schedule - Articles 14, 70 and 113
AppellantShah Amrutlal Shantilal Shah Firm and ors.
RespondentMadhyavarti Sahakari Hatamag Vinkar Singh Ltd. and anr.
Appellant AdvocateK.J. Abhyankar, Adv.
Respondent AdvocateS.G. Mandrekar and ;A.V. Datar, Advs.
Excerpt:
.....remained in deposit till notice of 7-7-1965 as per exhibit 72 was duly served and the liability to return the goods was first denied as per exhibit 74. thereafter the cause for recovery of the goods would properly arise and that too upon the repudiation evidenced by exhibit 74 and from that date the suit would be well within time. upon this, the liability that arises against the person receiving in deposit these goods is obvious--to make good the value which is already ascertained or to return the goods. the term 'deposit' has clearly a wide meaning. 21. therefore, applying article 70 and article 113 of the limitation act, the cause of action arose only after the refusal or repudiation was communicated by the plaintiff to the defendant and the suit is well within time from that..........the latter to hold the goods of the former in deposit till the same are appropriated by him by its sale or return the goods not so appropriated on any event with its already fixed value. primarily, the transaction is that of deposit for sale by others and not sale itself. therefore the money would become due only when the goods are so sold or appropriated and either the account or the return of the goods so deposited is sought by one factor from another.14. in the present case the finding relates to the period of supply between 1959 and 1961 as far as the first transaction is concerned. as against this, several payments have been made from time to time presumably as and when the goods were sold by the defendants. eventually, the goods remained in deposit till notice of 7-7-1965 as per.....
Judgment:

1. The appeal Is filed by the original defendants Nos. 1, 2 and 3. The Cross-Objections are filed by the plaintiff. Plaintiff, which is a registered Co-operative Society, filed the present suit against defendant No. 1, a registered firm and defendants Nos. 2, 3 and 4, styling them to be the partners of that firm, either for the recovery of 1191 Sarees or in the alternative for its price Rs. 10,260/- Briefly stated, the plaintiff's case was that defendant No. 1 firm were supplied Sarees during the period from 5th December 1959 to 28th January 1964 under a practice called 'Sanjaiti' supply. It was the practice that Sarees were to remain with the defendants in deposit and price was to be paid for the Sarees as the same were sold and defendants were at liberty to return the remaining unsold Sarees. Out of the stock so supplied, it had been the case of the plaintiff that 1191 Sarees were in deposit with defendants and that defendants were liable to return the same or pay the price thereof. After serving a notice produced at Ex. 72 and replied by the defendant as per Ex. 74, the present suit was filed.

2. The defence had been that defendant No. 4 was not the partner of defendant No. 1. It only consists of the other two defendants being defendants Nos. 2 and 3. Though the dealings are admitted with the plaintiff, the basis of Sanjaiti is denied. Defendants pleaded that in fact the supply had been under two different transactions, one covering the period 5-10-1959 to 30-3-1961 and another distinct transaction from 23-9-1963 to 28-1-1964. For the second period, according to the defendants, everything was paid and there was nothing due for which the defendants could be held liable.

3. The trial Court found in favour of the plaintiff substantially with regard to the period of 5-10-1959 to 13-3-1961 and holding further that the plea raised by the defendants that defendant No. 1 had not received the goods of three Sanjaiti notes of dates 10-12-1959, 6-1-1960 and 1-2-1960 was untrue and found that the balance of Sarees for this period with the defendants is 910 Sarees which the defendants are liable to return or pay to the plaintiff for the same. As to the second period between 23-9-63 and 20-10-64, it substantially accepted the defence that it was an independent transaction and recorded a finding that defendants had paid for the supply of these Sarees numbering 281 out of the second period. Taking into account this payment, the Sarees which remained with the defendants worked to 910 and their liability has accordingly been worked out.

4. In the appeal, the first part of the finding and the eventual liability of the defendants is questioned while in the cross-objections the second part of the finding relating to the second period is questioned.

5. Upon careful consideration of the submissions on both sides it appears thatthere is neither merit in the appeal nor in the cross-objections.

6. Mr. Abhyankar in support of the appeal urged that upon the finding of the learned Judge that there were two distinct transactions the claim based on the first transaction would be barred by limitation and the answer given by the learned trial Judge to the bar of limitation because of the payment of the bill by the defendants on 28th August 1965 as evidenced by Exhibit 165 is unsustainable at law. The learned Counsel submitted that to the first part of the transaction Article 14 of the Limitation Act, 1963, would be attracted for this was a case of sale and the suit filed on 29-7-1966 for recovery of the amount of the price would be barred by limitation. As to the nature of the transaction, the learned Counsel submits that for all purposes that is deemed to be a sale between the plaintiff and the defendants the property in goods passing in favour of the purchaser, payment of price being deferred till the contingency of appropriating the goods is reached. He submits that the appreciation of the learned Judge on facts too is unsustainable.

7. In support of the cross-objections Mr. Mandrekar urged that there is a patent error committed by the learned Judge in treating the second part of the transaction as separate and then holding that the balance has to be worked out on the basis of the payments made for 281 Sarees during the second period. The appropriation of the payments made and found by the learned Judge is thus disputed.

8. Turning to the evidence, the transaction of the so-called first period, which ranged between 5-10-1959 to 13-3-1961 is evidenced apart from the oral testimony of witnesses examined on behalf of the plaintiff being P. W. 1 Balgonda (Exhibit 49) and P. W. 2 Ilahi Husen Maindargi (Ex. 50), by the documents styled as Sanjaiti chits ranging from Ex. 77 to Ex. 107, out of which only few are in dispute. These documents indicate that it was a sort of note or Tippan of the goods given in Sanjaiti. It mentions that to the defendant No. 1-firm the goods are sent as per specification and also it mentions the rate of the said goods. It further mentions the items sent under each note. It is significant that this is the note of despatch of the goods and it does not raise by itself nor demand by itself any price from the addressee of the goods itself. At the foot of each document there appears to be a signature on behalf of the defendant No. 1-firm indicating that the goods have been so received for the defendant No. 1-firm. Thus, these notes, which are several in number, indicate despatch of items of Sarees sent to the defendant No. 1 for the purpose of sale and pot by itself evidence any sale in favour of the defendant. In one of the documents it is called a delivery note (Exhibit 87).

9. Thus, these documents do not help the defence by themselves that any sale was effected by the parties,

10. Now, the word 'Sanjaiti' or 'Sanjaiti' indicates taking of a' article of merchandise without ascertaining the price and with liberty to retain or| return it. (See Molesworth's Marathi-, English Dictionary page 810). This appears to be the recognised commercial connotation operative as a practice under which the goods are removed from one shop and are deposited in another, not under any sale but under an arrangement that the recipient of these goods will be at liberty to sell those goods or return the same if the same were not so sold.

11. Apart from the usual commercial connotation of the word 'Sanjaiti' used in these several notes, the evidence and the conduct of the parties clearly indicate that this was merely the supply of goods by which the plaintiff-Co-operative Society used to despatch the sarees and the defendant used to accept the same in deposit with a view to sell them and with liberty to return the same. Defendant, however, accepted to pay the stated price mentioned in the note in case of appropriation of the goods by sale. The evidence of Balgonda (Exhibit 49) indicates that this is how the goods were supplied. So is the evidence of Ilahi Husen Maindargi (Exhibit 50), who was in the service of the plaintiff. The negative denials with regard to this practice as spoken to by the defendants' witness Shantilal Manikchand (Exhibit 64) indicates that by Sanjaiti basis the practice meant was that the plaintiff was to keep the sarees for sale with the defendants and the defendants were to sell them or to return the unsold sarees to the plaintiff. Looking to the several documents and the long standing practice between the parties, this evidence indicates that the sarees were supplied by the plaintiff-Co-operative Society to the defendants on Sanjaiti basis and not on the basis of sale.

12. Coming to the case of the defendants that under three Sanjaiti Notes goodswere not received, except the word of Manikchand and his reliance on his own account books, there is hardly any material. These notes admittedly appear to have been made in the course of dealings between the parties during the first period and further properly proved being the copies retained by the plaintiff in his custody after the supply of the originals thereof to the defendants. The persons admittedly shown to have received the goods under the notes were in the employment of the defendant-firm by name Mr. Jokhe and Mr. Joshi. Defendant has not examined either of them. Looking to these facts it cannot be said that the finding recorded by the learned Judge that under these notes goods were sO supplied is, in any way; erroneous. After all, when the parties lead evidence and the same is appreciated by the trial Court and there being no error in that appreciation, such questions are not entertainable even at the stage of the first appeal. Finding with regard to the Sanjaiti notes is supportable by the evidence led by the plaintiff and there is hardly any material on which defence can rely to indicate that in fact no goods were supplied under any of these notes.

13. It is not possible to accept the submission of the learned Counsel that to the claim of the plaintiff based and proved of the kind of Sanjaiti notes, Article 14 of the Limitation Act should be applied and each separate transaction should be viewed as if it was in independent sale. To attract that Article, there must be a sale at price and then the time would run from the date of the delivery of the goods so sold whereunder property would pass to vendor. The commercial practice of Sanjaiti supply of goods does not bring about sale upon delivery nor goods pass to the accepter under it extinguishing the title of that despatcher. As noted it is a special commercial mode and though some of the factors alive to sale are present, it does not bring about that result. Upon the evidence what results under this practice is supply and deposit of goods by one trader to another with liberty to the latter to appropriate the goods by selling it and return the unsold goods. For all purposes, the relations between these traders under the Sanjaiti system would be that of a factor and factor with an obligation on the latter to hold the goods of the former in deposit till the same are appropriated by him by its sale or return the goods not so appropriated on any event with Its already fixed value. Primarily, the transaction is that of deposit for sale by others and not sale itself. Therefore the money would become due only when the goods are so sold or appropriated and either the account or the return of the goods so deposited is sought by one factor from another.

14. In the present case the finding relates to the period of supply between 1959 and 1961 as far as the first transaction is concerned. As against this, several payments have been made from time to time presumably as and when the goods were sold by the defendants. Eventually, the goods remained in deposit till notice of 7-7-1965 as per Exhibit 72 was duly served and the liability to return the goods was first denied as per Exhibit 74. Thereafter the cause for recovery of the goods would properly arise and that too upon the repudiation evidenced by Exhibit 74 and from that date the suit would be well within time.

15. Another answer found out by the learned Judge on the basis of part payment of the outstanding dues or outstanding price appears to be incorrectly reached. The learned Judge presumably was having in his mind that this was a case of continuous mutual account between the parties. In 1961 certain liability arose and the plaintiff had made a part payment towards that liability. Therefore he treated that the suit was within limitation. It is difficult to endorse as correct this approach or reasoning. In fact, the so-called bill of 20th August 1963, which is signed by Mr. Jokhe is not a payment by the defendants to the plaintiff; but it is a mere bill raising the debit against the defendants and is an act of the plaintiff of adjusting the amount of Rs. 1516/- in the account of the defendants out of the advances with the plaintiff. Surely, that would not be a payment by the defendant for the purposes of saving the limitation. Had the transaction been of pure sale between the parties, this type of dealing and adjustment would not have saved the limitation for the purpose of the plaintif's claim.

16. Provisions regarding the limitation as applicable to causes provided by the Limitation Act, 1963, have to be applied in the spirit of fairness and justice. Effort should be to sustain the right and remedy of the party or the suite. The construction that will tend to subserve this purpose as against the construction that will limit or take away the right has alwaysbeen judicially preferred, (See Umia-ehankar Lakhmiram v. Chhotalal ilr(1877) Bom 1&, Collector of Broach v. Rajaram Laldas ilr(1883) Bom 542, Chunilal v. Dahyabhai ilr(1907) Bom 14, P.N. Films Ltd. v. Overseas Films Corporation Ltd., : AIR1958Bom10 ).

17. For application of this rule ever attendant upon the principle of limitation, firstly the controversy between the parties should be properly ascertained particularly with regard to the cause set up by the plaintiff for adjudication. It is on that cause that the law of limitation operates. In the present controversy as indicated above, the agreement between the parties is termed as 'Sanjaiti' or 'Sanjaiti' end it postulates a commercial relationship wherein the goods or articles of specified value are despatched or deposited with another with liberty to sell or to return the goods as unsold. Two types of relations spring forth from this arrangement. Firstly, the accepter of the goods or the commercial articles accepts it in deposit having ascertained its value. The transaction of sale thereafter is not the concern of the sender of the goods but it is the whole and entire transaction of that of the latter, i.e., the recipient of the goods. The despatch and delivery lend to a deposit of the goods, the property in which is specifically retained by the dispatcher and sender, for he has a right to get returned those goods or the cost already ascertained. No doubt, this first part of the transaction cannot be strictly called the deposit for the depositor is merely interested in getting the pre-ascertained value of the goods so deposited and not always the corpus of the goods itself. The relationship brought about by this arrangement can suitably be termed as a quasi-trust or a quasi-deposit of the goods. Lexicographically it may be called deposit of commercial articles with liberty to sell or deal with the articles at the choice and risk of other, the right to recall or return always being alive. Upon this, the liability that arises against the person receiving in deposit these goods is obvious--to make good the value which is already ascertained or to return the goods. In either case, the refusal either to pay the value or to return the goods despatched and deposited would give rise to a cause of action for the purpose of a civil suit.

18. Having noticed these basic constituents of the transaction, it is easy to turn to the Articles that may govern the cause of the person who despatched and deposited the goods for the purpose of other's sale.

19. Three Articles loom large for appropriate consideration. Article 55 which is a residuary Article operating upon the causes of action on contract and its breach, will help the suite seeking compensation for breach of the terms of such a contract when the contract itself is broken or when the breach of that contract occurs or when the contract itself ceases and a suit within three years from those dates will be within limitation. Had the present suit been only for the purpose of compensation on the basis of Sanjaiti contract, in that seeking to recover the value of the goods so supplied, it would have been possible to find out when the defendants committed the breach of the said contract and to count time within three years. But it appears, appropriate Article to apply is Article 70 or the residuary Article 113 to the present types of causes of action. Article 70 deals with the recovery of the moveable property deposited and the time runs from the date of refusal after demand. If the goods are despatched and deposited under the stated understanding or arrangement wherein in case the deposited goods are sold, the depositee would be liable to return the goods so deposited, makes it clear that though this may not be the strict case of deposit and return of the goods in corpus, this Article should govern the rights of the parties. As stated above, it is implicit in the arrangement between the parties that in case of sale, which is permitted by express agreement, the value already ascertained would be payable in lieu of the goods or otherwise the goods themselves would be returned in the same condition. The term 'movable property deposited' in Article 70 is wide enough to include such type of transaction. The term 'deposit' has clearly a wide meaning. (See Lala Gobind v. Chairman of Patna Municipality (1907) 6 Cal LJ 535 and Balakrishnudu v. Narayanaswamy ILR 37 Mad 175 : AIR 1914 Mad 51 and as far as the goods are concerned, wherein the right to recall the goods in specie or return the goods in specie remains intact under the Sanjaiti transaction, there does not appear to be, any impediment in covering the cause by| applying Article 70 of the Limitation Act.

20. Even assuming that Article 70 does, not apply under the arrangement and agreement between the parties in cases of present type of transactions, the matter will squarely fall in the residuary Article 113 and the right to sue for return of'the goods so sent under the Sanjaiti transactions would accrue to the plaintiff upon refusal to follow the obligations by the person receiving the goods.

21. Therefore, applying Article 70 and Article 113 of the Limitation Act, the cause of action arose only after the refusal or repudiation was communicated by the plaintiff to the defendant and the suit is well within time from that repudiation or refusal.

22. Thus, as the real transaction between the parties is that of deposit of goods for the purposes of appropriation by the defendants, the liability always arising at the time of appropriation and further there being a liability to return the goods unsold, it could only be said that during the period the goods are in deposit the liability remains and it is only when the liability is liquidated, the costs for the return of the goods or payment of its price would arise. As stated above, it is only by reply Exhibit 74 that the cause arose and suit was filed for the recovery of the goods. The property which the plaintiff was entitled to recover was proceeded against well within time.

23. Upon these findings the appeal must fail and the same is accordingly dismissed.

24. Turning to the cross-objections, it is difficult to take any other view of the matter. For the purpose of recording the finding with regard to 281 sarees, there was enough material before Court including the account books and entries therein produced by the defendants. No doubt, in the cross-examination of Manikchand some effort was made to indicate that the accounts were not maintained from day to day and reflected items were clubbed together for over a period. But that is no reason to take any other view of the matter. Between the period there had been seven Sanjaiti notes and admittedly as against five price was duly received. That left the consideration of 266 sarees and the price thereof. On the side of the plaintiff there is clear omission to show any bill and the plaintiff's witness Balgonda (Exhibit 40) clearly admits that for the items of the supply of 11th December 1963 and 20th January 1964 no bills are available. As against this, the evidence of Ilahi shows that the price for 15 sarees must have been received by cheque amounting to Rs. 191.12 and the balance by the cheque for Rs. 2747.67. The passing of these cheques has been spoken to by the defendants' witness Manikchand. Hig word supported by the fact of the passing of the cheques has been accepted by the learned trial Judge. Under such circumstances, the grievance made in the cross-objections cannot be upheld and the same cross-objections too are rejected. 25. In the result, the present appeal as well as the cross-objections would stand rejected. Parties to bear their own costs,

25. Appeal dismissed.


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