1. This appeal has been preferred by the defendant against the judgment and decree of the Senior Subordinate Judge, Jullundur, dated March 30, 1962.
2. The facts giving rise to the present appeal are that an amount of Rupees 20,097/14/- was deposited in Fixed Deposit vide receipt No. 916/54/47, dated July 11, 1947, in favour of Karamjit Singh, minor deceased, son of Shri Jagtar Singh through Smt. Iqbal Kaur widow of Shri Ajit Singh of Chak No. 132/R. B., Sahuwalia, district Lyallpur, with the Hindustan Commercial Bank Ltd., Jullundur City, hereinafter referred to as the Bank, for a period of twelve months. The amount carried interest at the rate of 2 3/4% per cent, per annum. Karamjit Singh thereafter died. Jagtar Singh plaintiff obtained a succession certificate for the said amount and interest from the Court on January 20, 1951. Smt. Iqbal Kaur instituted a suit on January 24, 1951, in the Court of Subordinate Judge 1st Class, Jullundur, against the plaintiffs, the Bank and the Punjab National Bank Ltd., Jullundur City, with whom another amount of Rupees 17,150/- had been deposited in Fixed Deposit vide receipt dated February 17, 1947, in the name of Karamjit Singh minor-deceased, stating that she was the owner of those amounts and Karamjit Singh was merely a benamidar and prayed for permanent injunction restraining Jagtar Singh plaintiff to realise the amounts, and the Bank and the Punjab National Bank Ltd. from making the payments to him. She filed an application in that suit for temporary injunction on January 24, 1951, with a prayer that Jagtar Singh plaintiff be restrained from realising the amount from the Bank and the Punjab National Bank Ltd., and that the Bank and the Punjab National Bank Ltd. be restrained from making the payments to him during pendency of the suit. The amount remained with the Bank till decision of the suit which was dismissed on August 18, 1958. In that suit, it was declared that the succession certificate had been rightly granted to the plaintiff and Smt. Iqbal Kaur had nothing to do with that amount. The plaintiff thus became entitled to recover the amount from the Bank for which he served a notice on December 1, 1959, demanding the amount with interest thereon. The Bank showed its readiness to make payment of the Fixed deposit amount of Rupees 20,097/14/- in full and final payment of the claim, but stated that the Bank was not liable to pay interest for the period during which the litigation between the parties remained pending in the Court, and that the plaintiff was entitled to claim from the party who had filed a suit against him. Ultimately, the defendant Bank paid an amount of Rupees 20,097/14 as principal and Rs. 522.67 as interest from July 11, 1947 to July 11, 1948, without prejudice to the right of the plaintiff to institute a suit for recovery of the interest due to the plaintiff from the Bank on the principal amount. The plaintiff is entitled to recover the following amounts on account of interest from the Bank:--
(1) Rs. 5,638.69 on account of interest on the deposit of Rupees 20,097/14/- from July 11, 1948 to August 18, 1959, at the rate of 2 3/4 per cent per annum.
(2) Rs. 1,861.31 on account of interest on the aforesaid amount from August 18, 1959 to March 7, 1961, at rate of 6 per cent per annum.
The plaintiff further prayed that future interest at the rate of 6 per cent per annum be granted to him from the date of institution of the suit till the realisation of the decretal amount. The Bank contested the suit pleading that the amount covered by the succession certificate was Rupees 20,000/- only, so far as the Bank was concerned. It further pleaded that it had already made payment of Rupees 20,097/14/- as principal and Rupees 552.67 as interest for one year after the dismissal of the suit filed by Smt. Iqbal Kaur, that the defendant was always ready and prepared to pay the said amount to the plaintiff, that he plaintiff was not entitled to demand over-due interest on the entitled to demand over-due interest on the Fixed Deposit receipt which had become a demand deposit and consequently ceased to carry any interest and that the claim of the plaintiff to an amount of Rupees 5,638.69 by way to damages was totally incorrect. It was also pleaded by the Bank that there was no implied agreement between the parties to pay the over-due interest or to pay any amount as damages, and that if the plaintiff was held to be entitled to interest from December 1, 1959, when the demand for interest was made for the first time, he was only entitled to interest at the rate of 1 1/2 per cent, per annum till February 21, 1961. The Bank also stated that the suit was barred by limitation. On the pleadings of the parties, the trial Court framed the following issues:--
1. Whether the suit is within limitation ?
2. Whether the plaintiff is entitled to recover interest on the amount deposited from 11th July, 1948 to 18th August, 1959 If so, as what rate?
3. Whether the plaintiff is also entitled to claim interest at the rate of 6 per cent per annum from 18th August, 1959, to the date of the institution of the suit?
3. The trial Court held that the suit was within limitation and that the plaintiff was entitled to recover interest at the rate of 2 3/4 per cent, per annum from 11-7-1948 to 18-8-1959 and at the rate of 6 per cent, per annum from August 18, 1959 to the date of institution of the suit. Consequently, it decreed the suit of the plaintiff for Rupees 7,450.59 with proportionate costs.
The Bank has come up in the appeal against the judgment and decree of the trial Court to this Court.
4. The first contention of the learned counsel for the appellant is that suit was clearly barred by limitation and the learned trial Court has erred in holding that it is within time. He submits that the present case is governed either by Article 59 or Article 63 of the Indian Limitation Act, 1908, hereinafter referred to as 'the Act' and not by Article 60. In order to appreciate the argument it is necessary to give a few admitted facts of the case. Fixed Deposit Receipt, Exhibit P-5, was issued by the Bank of Rupees 20,097/14/- on July 11, 1947, for a period of one year in the name of Karamjit Singh minor who died before maturity thereof. Jagtar Singh made an application for succession certificate for the aforesaid amount on March 23, 1948, which was granted to him on January 20, 1951, vied Exhibit P-6, wherein an amount of Rs. 20,000/- has been mentioned, as debt to be recoverable from the Hindustan Commercial Bank, Branch Jullundur. It is further stated in it that he is entitled to collect the above debt and to receive interest. Thereafter, Iqbal Kaur instituted a suit on January 24, 1951, for a declaration to the effect that the amounts of Fixed Deposit Receipts No. 3924 for Rupees 17,150/- dated February 17, 1947, issued by the Punjab National Bank Ltd., and No. 916 for Rs. 20,097/14/- dated July 11, 1947, issued by the Hindustan Commercial Bank Ltd., standing in the name of Karamjit Singh minor belong to her and she is a real owner thereof, that Karamjit Singh minor was a benamidar, that Jagtar Singh was not entitled to the same as heir of Karamjit Singh minor and that he should be restrained from realising the said amounts from Banks. During pendency of the suit an application dated October 11, 1951. Exhibit P-9, was filed by Jagtar Singh stating that Iqbal Kaur plaintiff had obtained a temporary injunction to the effect that the amount of Rupees 20,097/14/- be not paid to him and thus the amount was lying in the Bank. Therefore, he was suffering the loss of interest. In the circumstances, he prayed, that the amount be summoned in the Court and invested in Government securities which yield interest at the rate of 3 1/2 per cent so that there may not be loss of interest in future. A similar application, Exhibit P-8, was filed by him again on November 14, 1952. The Court passed an order on January 22, 1953(Exhibit P-4), as follows:--
'Notice to issue to defendant No. 5 to the effect that Punjab National Bank Ltd., holding another fixed deposit has agreed to pay interest in future on the amount lying there and so defendant No. 5 should also agree to pay interest, and in case it does not agree, the amount should be deposited in this Court by 6-2-53. Plaintiff was to appear as a witness today. A medical certificate showing that she is ill has been put in. She should appear as a witness on that date. Plaintiff should pay Rupees 20/- as costs of today's adjournment.'
The application came up before the Subordinate Judge on February 6, 1953, and he ordered that the Manager of defendant No. 5 Bank should put in a reply to the notice sent to defendant No. 5. It was also mentioned in the order that it was stated by the manager that the instructions of his head office were to be awaited till the next date of hearing. The amount was not deposited by the Bank. No order was passed subsequently by the Court on the applications. The suit filed by Iqbal Kaur plaintiff was dismissed on August 18, 1959. The plaintiff gave a notice, Exhibit D-1, dated August 22, 1959, to make the manager of the money within a week, otherwise he would be put to an irreparable loss. He also stated therein that he had been granted the succession certificate and the suit filed by Iqbal Kaur had been dismissed by the Civil Court. He served another notice, Exhibit P-10, dated December 1, 1959, to the Bank through a lawyer, in which it was stated that the Bank had illegally withheld the money and that he was entitled to damages at the rate and Rupees 50/- per day from the date of decision of the case. The Bank, on February 21, 1961, paid Rs. 20,097/14/- as principal, and Rupees 552.67 as interest without prejudice to the claim of the plaintiff regarding interest, payment of which was disputed by the Bank.
5. It will also be necessary for deciding the point of limitation to reproducer Articles 59, 60 and 63 of the Act, which are as follows:--
Description of Suit Period of limitation Time from which period begins to run 59. For money lent under an agreement that it shall be payable on demand. Three years. When the loan is made. 60. For money deposited under an agreement that it shall be payable on demand, including money of a customer in the hands of his banker so payable. Three years. When the demand is made. 63. For money payable for interest becomes upon money due from the defendant to the plaintiff. Three years. When the interest becomes due. Article 59 is applicable to loans and the period of limitation runs from the date when the loan is made. In case the money is a deposit under an agreement that it shall be payable on demand, then Article 60 applies and the limitation starts from the date when a demand is made for payment. Article 63 applies to the cases in which there is an express promise to pay interest independently of the principal, and not to those cases where interest is accessory to the loan. In the present case, the amount was deposited with the Bank for a fixed period and in order to find out whether it remains a deposit or becomes a loan after the expiry of the fixed period, we have to fall back upon the intention of the parties and the implied agreement. It has been observed by a Division Bench of the Lahore High Court presided over by Tek Chand, J. in Gulab Rai Gujar Mal v. Sandhi, AIR 1934 Lah 42, that in order to make Article 60 applicable, it is not necessary that the agreement to pay the amount due on demand must be express', provisions are attracted even if the agreement is to be 'implied' from the course of dealings between the parties or the other circumstances of the case. I am respectfully in agreement with the observations of the learned Bench.
6. In order to find out the intention of the parties and implied agreement, we have to revert to the pleadings and the evidence. In the written statement in Para 2 of the preliminary objections, it has been stated by the Bank that the fixed deposit of Rupees 20,097/14/- in the name of Karamjit Singh minor deceased with the Bank matured on July 18, 1948, and the plaintiff is not entitled to an interest after the said date. It is further stated the thereafter it became a demand deposit. The Bank examined its Agent. D.W. 1 Parkash Chand, as its witness. He deposited that after the maturity of a fixed deposit the amount becomes a demand deposit and accordingly no interest is allowed on the fixed deposit amount. The statement of the Agent and the plea taken by the Bank clearly show that even the Bank had been treating the amount deposited in the Fixed Deposit as a demand deposit after the expiry of the period for which it was deposited. It cannot be said in the circumstances that after the expiry of one year, the relationship of the plaintiff with the Bank became that of a creditor and debtor, and the amount became a loan. The relationship of depositor and depositee will continue between them. The case of a Banker is different from that of an individual. It has been seen that sometimes the amounts after the expiry of the period for which they are deposited in the Bank remain there for long years. Such amounts are normally treated by the Banks as payable on demand. In Halsbury's Laws of England, Third Edition, Volume 24, at page 217, it has been stated as under:--
'If money is paid into a bank on deposit account, the statute does not run against an action to recover it until demand is made for its return. Similarly, in the case of money on current account, the statute does not run, in the absence of special contract or waiver, until after demand for payment as a demand, either by the issue of a writ or otherwise, is an essential ingredient in the cause of action against the banker for money lent.'
A similar matter came up before the Lahore High Court in Ram Rakha Mal v. Harnarain Ram Chand. AIR 1936 Lah 587. In that case, a minor was left without a natural a guardian. His property consisting of Rs. 800/- was collected by six persons and deposited with the defendants in their names on be-half of the minor. It was stipulated in the document evidencing the deposit that the money would not be withdrawn for three years and after that period it could be drawn by the six persons jointly, that interest would be paid periodically in the meantime, and that if an amount upto Rs. 100/- was required for the minor, it would be withdrawn by these specified depositors. After the expiry of three years from the date of deposit, the minor assigned the deposit to the plaintiff who instituted a suit for recovery thereof. The only question which arose in the suit was whether the suit was barred by time. The trial Court dismissed the suit. In first appeal the decree was modified and the suit was decreed against one of the defendants. The plaintiff went up in second appeal in the High Court of Lahore. It was observed by a learned Single Judge that where money is deposited with a Banker in the absence of anything to the contrary, an implied agreement to pay on demand must be presumed, and a suit for such amount within three years of such demand is within time. The matter went up before a Letters Patent Bench in Gurcharan Das v. Ram Rakha Mal, AIR 1937 Lah 81. The learned Bench affirmed the view of the learned Single Judge.
7. A similar matter came up before Patna High Court in Firm Nokhlal Sarju Prasad v. Mt. Bibi Mojihan, AIR 1939 Pat 261, wherein Fazl Ali, J., (as he then was) observed that after the expiry of the fixed period, the amount deposited was to be deemed payable on demand by the depositor and the claim for recovery of the money was governed by Article 60. The same view has been taken by the Division Bench of Jammu and Kashmir High Court in the Jammu and Kashmir Bank v. Nirmala Devi, AIR 1959 J and K 85, where it was observed,--
'Article 60 recognizes the implied condition as to demand which is inherent in the relation of a banker with whom money is deposited and a customer who makes the deposit. A condition as to demand on the part of the a depositor customer is necessarily implied in the transaction of deposit with a banker depositee. This undoubtedly is the position in the case of an ordinary deposit. There appears to be good reason for holding that the essential character of the deposit as a deposit need not necessarily change even if it be for a fixed term. It need not necessarily become an ordinary debt payable instantly on the expiry of the fixed period. In the large majority of the cases the question will turn on the intention of the parties as can be gathered from their conduct, the surrounding circumstances and the practice of the particular banker. Mere expiry of the term fixed is, therefore, not decisive of the question whether the amount is held in deposit as one payable on demand. If the practice of a particular banker is to treat a time-expired deposit as an ordinary debt falling under Article 59 one would reasonably except him to find out the creditor-depositor and repay the amount. He would at least issue a notice to the depositor informing him that the period of the deposit has expired and that money is due to him. The absence of any such intimation to the depositor will be a circumstance indicating the intention of the banker to treat the amount as a deposit payable on demand, after the expiry of the period fixed. And if we find the depositor also allowing the money to be held by the banker for long years after the expiry of the term fixed, the intention on his part to treat the deposit as one payable on demand can legitimately be inferred. The period of limitation will begin to run only from the date of the demand by the depositors.'
8. Mr. N. K. Sodhi, learned Counsel for the appellant has vehemently urged that after the expiry of the period of one year, relationship between the depositor and the Bank became that of a creditor and debtor, and Article 59 would be applicable for recovering the amount of deposit. He has placed reliance on Bank of Upper India Ltd. v. Arif Husain, AIR 1931 All 59(2), where it was observed that Article 60 does not apply to a suit for recovery of money deposited under an agreement that it shall be payable at a specified time. That case is distinguishable as it was not held therein as to which Article will be applicable. He has then referred to Kashinath Sankarappa Wani v. New Akot Cotton Ginning and Pressing Co., Ltd., AIR 1958 SC 437. That case is also distinguishable. In that case, the plaintiff claimed to be a banker of the company with whom the money was deposited for a fixed term. On the fixed Deposit Receipt, a note had also been given that interest will cease on due date. In those circumstances, their Lordships observed that the limitation for recovery of the amount started from the date when the amount became due and not from the date of alleged demand. In my view, the Bank cannot derive any benefit from the aforesaid observations. There is another circumstance which also supports the respondent, and it is this that the Bank did not refuse to pay the principal and interest for one year, though a period of more than 13 years had expired. All the aforesaid facts clearly show that after the expiry of the period for which the amount was deposited, it was treated as a deposit and not loan. In the circumstances, Article 60 is applicable to recover such an amount and not Art. 59.
9. The next question that arises for determination is whether Article 63 will be applicable for recovering the amount in dispute or not. In the present case, no independent contract for recovering the amount of interest has either been pleaded or proved. In my view, Article 63 will be applicable only in such cases in which there is an independent contract to recover the interest and the same is not treated as an accessory to the principal amount. It is clear from the language employed in Articles 59 to 63. Normally, the claim to interest stands or falls on the ground of limitation if the claim for principal is within limitation, or barred by limitation. It has been held in Valia Tamburatti v. Veera Rayan, (1876-78) ILR 1 Mad 228, that when the principal demand is lost by prescription, actions for all sums of interest in arrears are barred with the principal, even when these would (primarily) arise at a very recent time. The general law is that interest is accessory to the loan and can be recovered with the principal. Thus, if a suit can be instituted for principal, then, then interest can also be recovered if the same is accessory to it. In this view I am fortified by Nripendra Nath Chatterji v. Arun Chandra Chatterji, AIR 1940 Pat 129. It was observed in that case that the ordinary rule is that the cause of action for the recovery of principal and interest accruing due on it is a single cause of action and where the claim is a single claim for principal and interest, and is within time, no part of the interest can become time-barred. On the same principle, it can be said that if principal becomes unrealisable, interest thereon also cannot be realised.
10. In the present case, as has already been said above, the claim for recovery of the principal would have been within limitation as the amount was claimed by the plaintiff-respondent for the first time in August, 1959, when he served the notice dated August 22, 1959, Exhibit D-1. The present suit was instituted on March 7, 1961. Thus from the date of demand, it was filed within three years. The suit for recovery of the principal, if it had not been paid, would have been within limitation on the date of institution of the present suit. As I am of the view that the interest claimed in the present case is accessory to the principal amount, therefore, it cannot be held that the present suit is barred by limitation. I, therefore, affirm the finding of the trial Court that the suit is within limitation.
11. The learned counsel for the respondent has also placed reliance on Section 15 of the Act which says that in computing the period of limitation prescribed for any suit or application for the execution of a decree, the institution or execution of which has been stayed by injunction or order, the time of the continuance of the injunction of order, the day on which it was issued or made, and the day on which it was withdrawn, shall be excluded. As I have already held that the suit is within limitation, I do not intend to deal with the argument of the learned counsel for the respondent.
12. The next contention of the learned counsel for the appellant is that the interest that has been paid to the respondent is excessive. He further submits that the respondent was not entitled to interest at the rate of 2 3/4 per cent, from 11th Oct., 1951, to 18th Aug., 1959, and 6 per cent, per annum from August 18, 1959 to March 7, 1961, the date of institution of the suit. I regret my inability to agree to the said contention of the learned counsel for the appellant Bank. The Court had ordered the Bank to deposit the amount in the Court for its investment in the securities which could yield interest at the rate of 31/2 per cent, per annum. The plaintiff-respondent has claimed interest at the rate of 23/4 per cent, per annum for that period. It was the option of the appellant either to pay interest to the respondent or to deposit the amount in Court. The Bank, for the reasons best known to it, did not choose to deposit the amount in Court. Thus, the respondent has clearly suffered a loss of interest. He has claimed interest for that period at the rate of 2 3/4 per cent, per annum which, in my view, is not excessive, as he could get higher rate of interest by investing that amount in the Government securities. After decision of the suit, he served the Bank with a notice dated August 28, 1959, Exhibit D-1, stating that the Bank could not legally withhold the money for which succession certificate had been granted to him and that he would be put to an irreparable loss. Thereafter, on December 1, 1959, he served another notice. Exhibit P-10, in which he specifically stated that the Bank would be liable to pay damages at the rate of Rs. 50/- per day. Interest can be allowed by the Courts on the grounds of equity, justice and good conscience. It has been held in Ditt Mal Bhagat Ram v. Mela Ram, 153 Ind Cas 119 = (AIR 1934 Lah 664(1)) that the Interest Act is not exhaustive and the Court can award interest on principles of equity, justice and good conscience. In a Division Bench judgment of this Court in Sat Parkash L. Tara Chand v. Dr. Bodh Raj L. Bhagwan Das Khatri. AIR 1958 Punj 111, the order of the trial Court granting interest for wrongly withholding the money for a considerable time was upheld. In the present case, the trial Court in its discretion granted interest at the rate of 6 per cent, per annum to the plaintiff-respondent from August 18, 1959 to March 7, 1961. I do not find sufficient reasons for interfering with the discretion exercised by the trial Court in awarding the interest at the said rate. I, therefore, do not find force in this contention also of the learned counsel for the appellant and reject the same. He then submits that the appellant is not entitled to interest at the rate of 23/4 per cent, per annum from July 11, 1948 to October 11, 1951 when the first application was made by the plaintiff-respondent to the Court that the amount in dispute be sent for from the Bank and invested in Government securities bearing interest at the rate of 31/2 per cent, per annum. He further submits that at the most the respondent was entitled to interest at the rate of 11/2 per cent, per annum which the Bank could pay to others. He has referred to the statement of the Agent wherein he stated that the maximum rate of interest that could be allowed was 11/2 per cent, per annum. The Bank did not illegally retain the amount from the date of maturity of the receipt till the date, that is October 11, 1951. There is force in this contention of the learned counsel for the appellant. The plaintiff-respondent, in my view, is not entitled to interest at more than 11/2 per cent, per annum from July 11, 1948 to October 11, 1951. The amount of interest at the rate of 11/2 per cent per annum comes to Rupees 980/- for the said period, whereas he has been paid Rs. 1797/-. Thus he has been paid Rs. 817/- in excess.
13. For the reasons recorded above, I partly accept the appeal to the extent indicated above and accordingly decree the suit of the plaintiff-respondent for Rs. 6633.59. In the circumstances of the case, I make no order as to costs of the appeal.
14. Order accordingly.