Skip to content


The Central Warehousing Corporation Vs. Central Bank of India Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAndhra Pradesh High Court
Decided On
Case NumberC.C.C. Appeal No. 70 of 1969
Judge
Reported inAIR1974AP8
ActsIndian Contract Act, 1872 - Sections 161; Limitation Act, 1963 - Schedule - Articles 70 and 113; Hyderabad Area Warehouses Rules, 1959 - Rule 16
AppellantThe Central Warehousing Corporation
RespondentCentral Bank of India Ltd. and anr.
Appellant AdvocateG. Ramachandra Rao and ;J.K. Hiranandani, Advs.
Respondent AdvocateR. Vaidvanadhan, Adv.
Excerpt:
.....both for the purposes of the limitation act as well as the indian contract act. admittedly, the present suit was filed within a period of five years from the date of the new act, the suit being filed on 19-7-1966. hence, there is no merit in this submission of the appellant judged from any angle or applying any test, we are satisfied that the present suit is well within the period of limitation governing the present cause of action. this contention of the appellant must therefore fail. it is well-supplied in the course of the trial. it is well-settled that to substantiate the plea of fraud, there must be specific allegations in that regard and the failure to do so is fatal. hence, this plea must fail even on this sole ground. it is well settled that a necessary party is one without..........1st defendant for the recovery of the amount of rs. 54.311-13 p. borrowed by him on account from time to time from it (plaintiff-bank). the plaintiff, being the endorsee of the warehouse receipts issued by the 2nd defendant, is also competent to use the value of the goods covered by the receipts. the cause of action for the suit against the 1st defendant is the original debt due on account. as the amount sought to be recovered in the suit is one and the same, the present suit against the defendants 1 and 2 has been filed.8. it is true that the pleading in this regard is not very specific. it could have been drafted in a better manner. however, it cannot be said that the basis for the claim of the plaintiff against the 2nd defendant is not indicated therein. as seen from the averments.....
Judgment:

Kondaiah, J.

1. This appeal by the Central Warehousing Corporation, the 2nd defendant, is directed against the judgment and decree, passed against it and in favour of the Central Bank of India in O.S. No. 14 of 1966 by the Chief Judge. City Civil Court, Hyderabad at Secundrabad for the recovery of a sum, of Rs. 54,311-13 p. with interest at 6 % from 1-7-1966.

2. The Central Bank of India Ltd., the 1st respondent herein, claimed the suit amount against the 1st defendant. Gali Krishnamurthi who borrowed certain sums of money on cash Credit Kev Loan Account. The 1st defendant has edorsed several warehouse receipts including Exs.A. 53 and A. 54 obtained by him from the appellant. The claim of the plaintiff against the 1st defendant is in respect of the sums borrowed by him from the bank and in so far as the 2nd defendant is concerned, the plaintiff's claim is based on the receipts Exs. A. 53 and A, 54 given by the Warehouseman to the 1st defendant. The right to claim the value of the goods covered by Exs. A.53 and A. 54 has accrued to the plaintiff on account of the endorsements made by the depositor, the 1st defendant in its favour. The 1st defendant was ex parte in the trial court. The suit was resisted by the appellant contending inter alia that it was not maintainable for failure to issue the statutory notice, that there was no cause of action against it and that the suit was barred by limitation. The plaintiff examined its Chief Agent as P. W. I and P.Ws. 2, 3 and 4 and filed exs. A. 1 to 55 in support of its case. The 2nd defendant examined D. Ws. 1 to 4 and filed Exs. B. 1 to B. 9 to substantiate its defence. The trial court framed as many as about 9 issues. On a consideration of the entire material on record , it found in favour of the plaintiff on all the material issue and decreed the suit as prayed for. Hence, this appeal.

3. Sri Ramachandra Rao and Sri J. K. Hiranandani, the learned counsel for the appellant, passed upon us that there was no cause of action against the appellant that the suit was barred by limitation at least in so far as the claim on the basis of Ex. A.54 is concerned, that the suit is not maintainable as it failed to comply with the provisions of Rule 16 of the Hyderabad area Warehouses Rules 1959, that there was fraud committed by the 1st defendant on T. Rajagopalan, then Warehouoseman at Hyderabad. That T. Rajagopalan is a necessary party and that suit, in any event, should be dismissed. This claim of the appellant has been resisted by Mr. Vaidyanathan, the learned counsel for the plaintiff-decree holder contending inter alia that there is no merit in any of the contentions raised by the appellant and the Court below has rightly decreed the suit against the defendants 1 and 2.

4. On the facts and in the circumstances and upon the respective contentions of the parties, the following questions arise for determination:

1. Whether there was cause of action against the 2nd defendant for the suit as framed by the respondent-plaintiff ?

2. Whether the suit was barred by limitation ?

3. Whether the suit is maintainable or is liable to be dismissed on the ground that Rule 16 of the Hyderabad Are Warehouses Rules, 1959 has not been complied with ?

4. Whether the suit is liable to be dismissed on the ground that fraud had been committed by the 1st defendant on the then Warehouoseman in obtaining Exs. A.53 and A.54 without actually depositing the goods as specified therein ?

5. Whether T. Rajagopalan is a necessary or proper party to the suit ?

5 We shall take up the questions seriatim.

6. The contention of Mr. Hiranandini pertaining to cause of action against his client is three-fold:

(I) that no cause of action had accrued to the plaintiff to sue the 2nd defendant for the recovery of the amount due and payable to it by the 1st defendant on account.

(ii) that the plea as evident from paragraph 10 of the plaint is defective and therefore, the suit in so far as the 2nd defendant is concerned, must be dismissed; and

(iii) that in any event, the claim against the 2nd defendant should be restricted to the loss as per the value of the contents of the two receipts Exs. A.53 and A.54 but not more than that.

7. Admittedly, the plaintiff-bank is entitled to use the 1st defendant for the recovery of the amount of Rs. 54.311-13 p. borrowed by him on account from time to time from it (plaintiff-bank). the plaintiff, being the endorsee of the warehouse receipts issued by the 2nd defendant, is also competent to use the value of the goods covered by the receipts. The cause of action for the suit against the 1st defendant is the original debt due on account. As the amount sought to be recovered in the suit is one and the same, the present suit against the defendants 1 and 2 has been filed.

8. It is true that the pleading in this regard is not very specific. It could have been drafted in a better manner. However, it cannot be said that the basis for the claim of the plaintiff against the 2nd defendant is not indicated therein. As seen from the averments in paragraph 10 of the plaint, the second defendant is sought to be made liable for the amount due and payable by the 1st defendant to the plaintiff-bank on the basis of the Warehouse receipts issued by the werehouonseman of the appellant, which have been endorsed in favour of the plaintiff by the depositor, the 1st defendant. The sum and substance of the pleading is that what the 1st defendant could have recovered from the 2nd defendant on the foot of Exs. A.53 and A.54 is sought to be recovered by the plaintiff-bank by virtue of its being the endorsee of these receipts. Admittedly, the 2nd defendant is liable to be sued for the recovery of the value of the goods covered by Ex. A.53 and A.54. The transferee of those receipts would certainly be entitled to recover the same as he steps into the shoes of his transferor. The plaintiff can recover the amounts due and payable by the 1st defendant as per the accounts maintained by it. The plaintiff is also entitled to proceed against the 2nd defendant for the debt due and payable by the 1st defendant and recover that amount by virtue of its being the transferee of Exs. A.53 and A.54. Admittedly, the plaintiff is entitled to file a single suit against the defendant 1 and 2. It is not permissible in this case to file different suits against the defendants 1 and 2 as the amount sought to be recovered is one and the same.

9. That apart, the 2nd defendant has in no way been prejudiced by the present suit. It is not the case of the plaintiff that the 2nd defendant is liable to pay more than the value of the goods deposited with it pursuant to Exs. A.53 and A.54. The value of the goods under Exs. A.53 and A.54 would come to more than Rs. 60,000/- and the claim being only Rs.54,000 and odd. it cannot be said that the 2nd defendant is in any way prejudiced.

10. There is yet another formidable impediment in the appellant succeeding in respect of this plea. Even assuming that there is some defect in the pleadings of the plaintiff, it was open to the appellant to specifically ask for further particulars under 6, Rule 5 read with Order 11 of the Code of the Civil Procedure. The allegations, in the written statement do not disclose any such objection being specifically stated. There is no issue in this regard. We may point out that the particulars required of could have been ascertained from P. W. 4 when he was in the box. There is no evidence adduced by the appellant in this regard. Further, this was not argued before the trial court not any specific ground in this regard has been taken in this appeal. The question being one of fact and allow it is not permissible for the appellant to raise the same at the time of the hearing of the appeal of the first time. As pointed out earlier, even if it is permissible, the result will not alter. We are satisfied on merits that in substance, though not in form, the claim of the plaintiff against the 2nd defendant is based only on the receipts Exs. A.53 and A.54 issued by its employee and there is no prejudice actually caused to the appellant. In the circumstances, we must hold that there is no merit in this submission of the appellant. For the reasons stated, we answer the question No. 1 in the affirmative and against the appellant.

11. We shall now turn to the question of limitation. the crux of this point is whether it is Article 113, as urged by the appellant, or Art. 70 of the new Limitation Act (36 of 1963), as contended by the respondent, that is applicable to the present case.

12. In order to appreciate the respective conditions of the parties. It is profitable to notice the provisions of Articles 70 and 113 of the new Limitation Act. which read as follows:

(Contd. on col 2)Description of suit Period of Time from which period begins Limitation to run.70. 'To recover movable property The date of refusaldeposited or pawned from a Three years after depository or pawnee demand.'113 ' any suit for which no period Three years When the right of limitation is provided to sue accrues.'elsewhere in this schedule

13. The period of limitation prescribed under Article 70 of the new Limitation Act is three years from the date of refusal after demand. Article 70 corresponds to Article 145 of the old Limitation Act (9 of 1908) where under the period of limitation was 30 years. The term 'movable property' has not been defined under the Indian Lomitation Act. Hence, the expression 'movable property' has to be interpreted as having the same meaning which has been given in the General Clauses Act, 1897. Clause (36) of Section 3 of the General Clauses Act, 1897 defines 'movable property' as 'property of every description, except immovable property.' 'Immovable property' is defined under clause (26). It takes in 'land, benefits to arise out of land and things attached to the earth, or permanently fastened to the earth' . Indisputably money is not immovable property. Hence, we can safely hold that money is movable property within the meaning of its definition given in Section 3(36) of the General Clauses Act, 1897. We may also state that a Division Bench of the Madras High Court in Pichu Vadiar v. Secy. of State for India in Council, ILR 40 Mad 767 = (AIR 1918 PC 1111) has held that the expression 'movable property' included money both for the purposes of the Limitation Act as well as the Indian Contract Act. In Asghar Ali Khan v. Khushad Ali Khan (1902) ILR 24 All 27 (PC) the Judicial Committee had ruled that 'movable property' indicated in Article 89 of the Limitation Act, 1877 included money. The same view has been reiterated by the Madras High Court in Ahilyamba Chatram v. R. Subramania : AIR1954Mad101 . A Division Bench of the Calcutta High Court also took the same view in Gangahari Chakrabarti v. Nabin Chandra Banikya, 34 Ind Cas 959 - (AIR 1916 Cal 869). Therein it was held that the suit for the return of the gold delivered to goldsmith to make ornaments or for the recovery of its value was maintainable and it was Art. 145 of the Indian Limitation Act, 1908 that governed the suit. We may add that Narasimham J. (as he then was), in Union of India v. Vazir Sultan and Sons : AIR1966AP218 has held that it is Article 145 of the Indian Limitation Act, 1908 that is applicable to a suit filed for recovery of deposits of money. We are in entire agreement with the view expressed by the Madras High Court and the Calcutta High Court. When once it is held that Article 145 of the old Limitation Act is applicable to the present case, the period of limitation for filing the present suit would be five years after 1-1-1964.

14. Even assuming for the sake of argument that it is Article 113 of the new Limitation Act, but not Article 70, that is applicable to the present case. We shall examine the legal position. The suit having been filed on 19-7-1966, i.e., beyond three years from the date of the issuance of the receipt Ex. A.54, on 1-7-1963, must be held to be barred by limitation. The new Limitation Act came into force on 1-1-1964 though it was enacted on October, 5, 1963. The cause of action for the suit claim in so far as the 2nd defendant is concerned, had arisen on 1-7-1963 and 31-7-1963 when the receipts Exs. A. 53 and A.54 had been issued by the appellant's warehouseman to the 1st defendant. On 1-7-1963 and 31-7-1963 when the cause of action for the present suit had arisen, it is the provisions of the old Limitation Act (9 of 1908) that were applicable to the present case . The relevant article corresponding to Article 113 of the present Act, was Article 120 where under the period limitation was 6 years from the date when the right to sue accrued. The present corresponding Article 113 provides for a period of only three years. Where the period of limitation provided under the old Limitation Act is shortened under the present Act, the provisions of Sec. 30 of the present Act would come into play, Section 30 of the Limitation Act (36 of 1963) states that the period of limitation would be five years after the commencement of the Act where the period prescribed under the old Act was more than the period prescribed under the new Act. Admittedly, the present suit was filed within a period of five years from the date of the new Act, the suit being filed on 19-7-1966. Hence, there is no merit in this submission of the appellant Judged from any angle or applying any test, we are satisfied that the present suit is well within the period of limitation governing the present cause of action.

15. The next question that falls for decision is whether the suit is liable to be dismissed for the non-compliance of Rule 16 of the Hyderabad Area Warehouses Rules, 1959 as urged by the appellant. To appreciate this plea, it is profitable to read this rule 16 :

'Notice of loss or damage to goods : If at the time of taking delivery of the goods stored in the depositor finds that the goods are lost or damaged, he shall give a notice in writing to the warehouseman with full particulars of the loss or damage within 72 hours of delivery. A copy of such notice shall also be sent to the prescribed authority. No claim against the Warehouseman shall be valid if the notice of loss or damage has not been given by the depositor in time. Similar notice of claim for damages shall be given to the warehouseman by the depositor in case the depositor comes to know of the loss or damage while the goods are stored in the warehouse.'

16. This rule consists of two parts. The first part applies to a case where it is found that the goods are lost or damaged at the time of taking delivery of the goods stored. The latter part is attracted when the depositor comes to know of he loss or damages while the goods are stored in the warehouse. Under this rule, the depositor comes to know of the loss or damage while the goods are stored in the warehouse. Under this rule, the depositor is required to issue a notice in writing to the Warehouseman with full particulars of the loss or damage within 72 hours of the delivery referred to in the first portion of this rule or the knowledge of the loss or damage specified in the latter part. The notice contemplated under this rule must be given within 72 hours may be. Admittedly the delivery of the goods in the instant case took place before the District Collector from 11-12-1964 to 2-1-1965. Neither the depositor nor the plaintiff-bank, the transferee of the receipts, sought to take delivery of the goods covered by these two receipts. It is the District Collector who went to take delivery of the same. In this view, the notice issued by the plaintiff under Ex. A. 7 on 12-12-1964 to the 2nd defendant in this regard cannot be stated to be out of time. Admittedly it was within 24 hours after the commencement of the process of taking delivery. Strictly speaking, the delivery was still going on. It was completed only 2-1-1965. The 72 hours contemplated under rule 16 must be construed to be 72 hours after 2.1.1965 i.e., the date of completion of the delivery. Hence, it cannot be said that rule 16 has not been complied with in the instant case. There is sufficient compliance of the rule. The further submission of Mr. Ramchandra Rao is that admittedly no copy of the notice as required by this rule has been sent to the District Agricultural Officer. That is so. However, we have to see whether that requirement is mandatory. Rule 16 contemplates giving an opportunity to the Warehouseman for verifying the particulars of loss or damage stated to have been caused in his warehouse and to meet the demand or case of the depositor. A copy of the notice was intended to the District Agricultural Officer which is the prescribed authority to enable him to have a comprehensive knowledge about the stocks of the goods specified therein. On a careful reading of the provisions of rule 16, we are of the view that it is not mandatory but only directory. The mere fact that it is stated that no claim against the warehouseman can be valid if the notice is not given in time, will no destroy the right accrued to the depositor or in any event, to the receipts, if they are otherwise entitled. The mere fact that the term 'depositor' takes in the transferee of the receipts would not in any way alter the character of this rule is sufficient compliance of the same. It is made more to protect the interests of the Corporation and afford a fair and reasonable opportunity to meet the case of the depositor or transferee, as the case may be, pertaining to the loss or damage of the goods stored in the warehouse.

17. The further contention of Mr. Ramachandra Rao that the bank was aware of the loss or damage while the goods are stored in the warehouse, cannot be given effect to. There is no positive evidence or material worth mentioned to prove such loss or damage of the goods stored by the depositor under Exs. A.53 and A.54 during the period of storage. There might have been some information to the bank agent about some discrepancies and malpractices being practised in the warehouse. Except such vague information and suspicion, it cannot be said that the bank agent had specific knowledge about the actual loss or damage of the goods pertaining to these two receipts. We may state that no goods in fact as per Exs. A. 53 and A.54 were found in the warehouse when the District Collector sought to take delivery of the same. This contention of the appellant must therefore fail. For all the reasons, my answer to question No. 3 is that the suit is maintainable.

18. We shall next continue whether there was any fraud in obtaining the receipts Exs. A53 and A.54 by the 1st defendant from the appellant. This plea must be rejected for reasons more than one. Firstly, there is no specific pleading. No particulars of the fraud committed by the 1st defendant upon the Warehouseman have been specifically stated in the written statement, nor were they supplied in the course of the trial. It is well-supplied in the course of the trial. It is well-settled that to substantiate the plea of fraud, there must be specific allegations in that regard and the failure to do so is fatal. That apart, admittedly there is no evidence worth mentioning in this regard. It is not the case of the appellant that any goods specified in Exs. A.53 and A.54 were found at the time of delivery. The person who was in charge of the warehouse at the relevant time was one Rajagopalan. Nor has any evidence worth mentioning been adduced by the appellant in this refard. Hence, this plea must fail even on this sole ground. We cannot infer that simply because no goods could be traced or found at the time of the delivery in the Warehouse, no goods at all were deposited as per Exs. A.53 and A.54 . There may be so many reasons for not finding the goods at the time of the delivery even if they were taken delivery of at the time of the issuance of Exs. A.53 and A.54 have been issued by the then Warehouseman. They are in proper form. There is no defect in those receipts. Hence, we have to presume that those receipts must have been issued in the normal due course of business and they are true and valid. The burden is on the appellant to show that they have not been issued in due course of business and they have been fraudulently obtained by the 1st defendant. The person who issued those receipts was competent to issue the same. Hence, there is no merit in this objection of the appellant. Question No. 4 is, therefore, answered in the negative and against the appellant.

19. We shall now proceed to examine whether T. Rajagopalan is a necessary party as claimed by the appellant. It is well settled that a necessary party is one without whom the suit necessary party is one without whom the suit cannot go on. Admittedly the plaintiff is not seeking for any relief against Rajagopalan. He is only an employee of the appellant. The appellant is the necessary party. Rajagopalan need not made a party to the suit as the plaintiff can certainly make the appellant liable for what all has been done by its employee, Rajagopalan. It cannot also be said that he is a proper party without whom there cannot be a proper and effective adjudication of all the rights of the parties in the suit. Hence, we are satisfied that he is neither a necessary party nor a proper party to the present suit and without him, the suit certainly can be decided and the rights of the parties can be validly and effectively adjudicated upon.

20. The submission of the appellant that Rajagopalan had acted outside the scope of his authority in issuing the receipts cannot be accepted. As pointed out earlier, he was the competent authority to issue the receipts. Whether he had actually verified each bag of the goods deposited under Exs. A.53 and A.54 or not is not the concern of the depositor. It was the duty of the employee of the appellant to examine all the bags if necessary or only some of them and satisfy himself whether the goods as per the representation of the depositor were supplied. If he commits any mistake or negligently issues the receipts, the depositor cannot be blamed. It is only the appellant that should blame itself for appointing such employee. It can take appropriate action against such employees for their negligent acts but cannot plead any immunity from the recovery of the value of the goods covered by the receipts issued by its employee who was authorised by it to issue the same. The appellant is also estopped from contending that he is not liable for the acts of commission or omission of its employee, Rajagopalan or any other Warehouseman. On the authority conferred by the appellant on Rajagopalan, the then Warehouseman at Hyderabad, the 1st defendant had approached him for arranging the deposit of the goods and obtained Exs. A.53 and A.54 in the due course of business. As stated before us, the Warehouseman at Hyderabad need not await the instructions of the head office at New Delhi for the issuance of the warehouse receipts. It is within his competence to issue the same after proper verification. In the circumstances , we are satisfied that there is no merit in this claim of the appellant. For all these reasons, we must hold that the appeal must fail.

21. In the result, the appeal is dismissed with costs.

22. Appeal dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //