M.K. Chawla, J.
(1) In a Suit for recovery of Rs. 8,10,000 the case set up by the plaintiff M/s. Ansal Properties and Industries Pvt. Ltd. in brief is, that the plaintiff company is carrying on the business of real estate and development and paper manufacturing in Delhi, having its registered office at Ansal Bhawan, Kasturba Gandhi Marg, New Delhi; that Shri Sushil Ansal is the Managing Director of the plaintiff company and is authorised to file the present suit against the defendant, M/s. Reliance International Corporation Pvt. Ltd.; that the plaintiff company had decided to purchase a second-hand paper machine and in that connection got in touch with one M/s. Overseas Market Incorporation, New York (hereinafter called the foreign company) for the said purpose; that after negotiations it was agreed between the plaintiff company and the said foreign company that the plaintiff will buy a second-hand machine belonging to the foreign company at a price of U.S. $ 2,75,000, subject to the plaintiff company obtaining the capital goods clearance from the Government of India and completion of other formalities enabling the necessary foreign exchange loan to be sanctioned, obtain the import license and only thereafter enable it to open a letter of credit so that the. plaintiff company could import the said machine; that it was also understood and agreed that if the capital goods clearance was conditional, the condition imposed must be complied with so that the import license is obtained and later on agreed upon to enable the import of the said second hand machine; that in order to ensure the said foreign company about the bonafides of the plaintiff company to purchase the said second hand paper machine and the timely payments it was also agreed and understood that the plaintiff company will from time to time deposit certain amounts with the defendant company which was held out to be an associate company of the said foreign company; that the amounts to be deposited with the defendant company were to be equivalent to the Installment to be paid to the foreign company in U.S. Dollars; that the Schedule of payment to the foreign company was as follows :
(A) U. S. $ 25,000 to be paid after the Capital Goods Clearance is received from the Government of India; (b) U.S. $ 25,000 three months after Capital Goods Clearance is obtained; (e) U.S. $ 40,000 after three months of item (b); (d) U.S. $ 40,000 after three months of item (e); (e) U.S. $ 40,000 after three months of item (d).
That it was also agreed and understood and in any case necessarily implied that in case the capital goods clearance was given conditionally and the condition could not be fulfillled because of non-release of the foreign exchange, import license or if the agreement fell through for any other reason etc., the defendant company would refund the amounts deposited with it on demand by the plaintiff company; that it was also agreed, understood and in any case necessarily implied that in case the transaction was carried through the amount so deposited will be reel funded on demand with interest at the market rate; that it was also agreed that the plaintiff company will pay interest @ 18% per annum to the foreign company, on delayed payments; that some of the terms thus agreed and understood are also mentioned in the letter dated 6-1-1976 from the foreign company which has been accepted by the plaintiff company and the foreign company as modified; that the defendant company accepted the deposits of Rs. 2,00,000 on 13-4-1976 and a sum of Rs. 2,50,000.00 on 24-9-1976 subject to the terms agreed, understood or necessarily implied between the plaintiff company and the foreign company; that despite the best efforts of the plaintiff company the Government of India did not give un-conditional goods clearance, since the same was subjected to the foreign exchange loan being obtained from I.C.I.C.I./ I.F.C.I; that the said financial institutions refused to give the required foreign exchange loan for the import of a second-hand machinery unless and until the inspection report certifying the soundness of the machine was' furnished; that the foreign company obstructed the issuance of inspection report for paper machine through the National Industrial Development Corporation and also did not permit the plaintiff agency's representative. Dr. R. L. Bhargava to inspect and certify the machine, as a result of which the plaintiff failed to get the foreign exchange and the import license; that the second-hand paper machine could not be imported; that the said foreign company was duly informed about the various developments as well as the non-grant of loan by the financial institutions; that the plaintiff company was served with a notice dated 4-6-1977 on behalf of the said foreign company terminating the agreement unilaterally to buy the second hand paper machine; that the plaintiff company had not discontinued its efforts to obtain the foreign exchange loan and the import license; However, as the plaintiff company did not succeed in obtaining the import license because of the foreign company cancelling the agreement and the non-issuance of satisfactory inspection report, the plaintiff company had to give up its efforts in that direction; that the amount of Rs. 4,50,000.00 continues to remain deposited with the defendant company in pursuance of the agreement referred to above; that the plaintiff company called upon the defendant company to refund the above said amount with interest thereon by letter dated 23-10-1980 a copy of which was also forwarded to the foreign company; that the said letter of demand has not only remained unanswered but no action in pursuance thereto has been taken nor the amount claimed has been refunded Along with interest. Hence the present suit praying for a decree in the sum of Rs. 4,50,000.00 as principal and Rs. 3,60,000.00 as interest thereon @ 18% per annum.
(2) In the written statement the defendant took preliminary objections inter alias alleging that the suit as filed is barred by time; that there exists no privity of contract between the plaintiff and the defendant and as such they have no cause of action against the defendant; that the suit has not been properly instituted and that Shri Sushil Ansal has no authority to sign or verify the present proceedings. On merita the defendants took the stand that the agreement as contained in the communication dated 6-1-1976 addressed to the plaintiff by the foreign company was duly confirmed, agreed and accepted by the plaintiff provided as under and inter alias contained therein; that the total price of the machine was U.S. Dollars 2,75,000 F.O.B. U.S.A. port; that the freight from U.S.A. to Bombay was to be paid by the plaintiff Along with the Installments referred to in the said letter; that the balance of U.S. Dollars 1,05.000 was to be paid by the plaintiff on the shipping of the consignment from the U.S.A. and presenting the necessary Ocean Bill of Lading, invoice and packing list etc.; that as per the agreement the plaintiff was to open an irrevocable letter of credit in favor of the foreign company as soon as the capital goods clearance was received by the plaintiff; that the capital goods clearance in the standard form was in fact received by the plaintiff vide Government letter dated 11-3-1976 and a copy thereof was sent to the foreign company by the plaintiff vide their letter dated 11-6-76; that the allegation that the agreement was subject to the plaintiff obtaining the capital goods clearance from the Government of India and completion of other formalities enabling the necessary foreign exchange loan to be sanctioned and obtaining the import license and the letter of credit was to be opened thereafter are false; that it was agreed that in case of any delay in opening the letter of credit as stipulated or making payments to the foreign company as mentioned in the agreement the equivalent of
(3) In the replication the plaintiff controverter the pleas raised by the defendants in their written statement and reiterated the facts as stated in the plaint.
(4) On the pleadings of the parties the following issues were framed :
1. Has the suit been instituted on behalf of the plaintiff company by a duly authorised person, and is the plaint signed and verified by such person ?
2. Was there a privity of contract between the parties?
3. If issue No. 2 is not proved, is the plaintiff otherwise entitled to claim the amount of Rs. 4,50,000.00 Along with the interest from the defendant ?
4. In what circumstances, and on what terms and conditions, the plaintiff deposited the amount of Rs. 4.50,0001- with the defendant ?
5. Has the plaintiff been performing his part of the contract and was the breach thereof committed by the defendant (Issue objected to).
6. Is the suit within time 7 (Onus objected to).
7. Is the plaintiff entitled to interest If so, at what rate and to what extent ?
In support of their case the plaintiff examined Shri S. C. Jain, the Executive Director of the plaintiff company besides producing Shri R. K. Mehra, from the Ministry of Industries. The defendants only cared to produce Shri V. C. Gupta, an Export Executive of the defendant company.
(5) I have heard the arguments of the learned counsel for the parties and with their help have gone through the record and have given by thoughtful consideration to the matter involved. My findings on the issues are as follows : Issue No. 1 :
(6) The plaint as well as the verification bear the signatures of Shri Sushil Ansal, Managing Director of the plaintiff company. According to Public Witness 1, Shri S. C. Jain. Shri Sushil Ansal at the time of the filing of the suit was the Managing Director. He also proved on record the copy of the resolution dated 26-5-1982 by which the Board of Directors of the plaintiff company in their meeting held on 17-9-1975 authorised Shri Sushil Ansal to Institute the present suit for nnd on behalf of the plaintiff company against the defendant. This resolution Ex. P-7 is signed by Shri V. S. Aggarwal, Secretary of the plaintiff Company. Shri Jain brought Along with him the original Minute Book and proved the signatures of Shri Chiranji Lal, the then Chairman of the plaintiff company. According to Public Witness I. Shri Chiranji Lal as since expired while Shri V. S. Aggarwal has left the service of the plaintiff company. Shri Jain also identified the signatures of Shri Sushil Amal on the plaint, verification and the power of attorney executed in favor of their counsel as he has been him writing and signing during the course of his official duties.
(7) The contention of the learned counsel for the defendant is that Sushil Ansal, who happened to be present in Delhi has not been produced and as such his authority to institute the present suit and his signatures having not been duly proved by any cogent evidence, the suit must be held to have not been instituted by a duly authorised person. This objection on the face of it is without any substance. Under the provisions of Order 29 Rule 1 Civil Procedure Code a plaint on behalf of a company may under this Rule be signed and verified either by the Secretary or by a Director of the Company or by any other Principal Officer of the company. It is not disputed that Shri Sushil Ansal at the relevant time was the managing director of the plaintiff company. Section 47 of the Indian Evidence Act describes the various methods of proving the handwriting of a person and if this provision is read Along with the Section 67 a reasonable inference can be drawn that the signatures of a person on a document may be proved either by examining the pe:son in whose presence the signatures were so affixed or else by examining another person who is acquainted with the handwriting of the executant of the document and is able to prove his signatures of his own. As already observed Public Witness 1, Shri S. C. Jain, who is the Executive Director of the plaintiff company has identified the signatures of Shri Sushil Ansal on the plaint and the verification. Even otherwise the minute book containing the resolution of the Board of Directors of the plaintiff company has been produced from the proper custody and the signatures of the Chairman on the resolution therein have also been proved by Public Witness I who is conversant with his handwriting. The book under these circumstances can certainly be held to be an evidence of the passing of a resolution. All these facts taken together leave no doubt in my mind that Shri Sushil Ansal has been proved to be an authorised person to seen and present the suit or behalf of the plaintiff company. This issue is, thereforee, decided in favor of the plaintiff. Issues No.2 and 3 :
(8) According to the averments in the plaint, the plaintiff company decided to purchase a second hand paper machine. They got in touch with (me M/s. Overseas Market Incorporation at New York for the said purpose. After negotiations the foreign company agreed to sell the secondhand paper machine on the terms and conditions incorporated in their latter Ex. P-1 dated January 6, 1976. This is the only document which requires going into for deciding the points under issue. At this stage it will be relevant to incorporate few of the terms and conditions; The total price for the machine was agreed to U.S. $ 2,75,000 Fob U.S.A. Port, and the freight from U.S.A. to Bombay was agreed to be paid by the plaintiff ! The plaintiff was required to make the payments' in the following Installments :
(A) U.S. $ 25,000 will be paid after the capital goods clearance is received from the Government of India; (b) U.S. $ 25,000 three months after Capital Goods Clearance is obtained; (e) U.S. $ 40,000 after three months of item (B); (d) U.S. $ 40,000 after three months of Item (C); (e) U.S. $ 40,000 after three months of Item (D).
The balance amount of $ 1,05,000 was to be paid by the plaintiff on the shipping of the consignment from U.S.A. and presenting the necessary Ocean Bill of Lading, invoice, packing list etc. The other conditions which were laid down in this letter by the foreign company read as under :
'YOU will be opening an irrevocable Letter of Credit in our favor for the amount of U.S.$ 2,75,000 as soon as the Capital Goods Clearance is received by you. In case there is any delay in opening of this Letter of Credit or making payments to us as mentioned above, you confirm that equivalent of above amount in Indian Rupees will be paid on the due dates to our associate company in India i.e. Reliance International Corpn. Pvt. Ltd., New Delhi and this amount will be kept only with this company until the final payments are made by you in U.S. Dollars as per our understanding. This payment in Indian Rupees will be made at the prevalent exchange rate of the Reserve Bank of India on due dates of such payment. In case of any delay in payment, interest @ 18% per annum will be payable on such delays and adequate compensation will be paid by you for any inconvenience caused. In the meantime, you will take all steps necessary to eliminate such delay so as to be able to make the payment to us in Dollars. As soon as the payment in Dollars is made to us, our associated company in India will refund you the amounts deposited with them .... .'.
(9) In pursuance of the said agreement, as per the allegation of the plaintiff, a sum of Rs. 2,00,0001- was deposited with the defendant company on 13-4-1976. Similarly another sum of Rs. 2,50,0001- was deposited with the defendant company on 24-9-1976. It is the further case of the plaintiff that despite their best efforts they could not obtain the capital goods clearance from the Government of India and they preferred to file the present suit for the recovery of the sum of Rs. 4,50,0001- Along with interest and costs etc.
(10) The contention of the learned counsel for the defendant is that there was no privity of contract between the parties and the plaintiff cannot come round and ask for the refund of this amount. In order to satisfy the condition the plaintiff, according to the learned counsel, has to satisfy two requirements. The first being that the person who sues/is sued must be party to the con- tract and secondly there must be some consideration flowing from the contract. In this case the learned counsel contends that there was no consideration for the defendant nor at any time they ag- reed to pay the said amount to the plaintiff. They only kept the amount as an associate company of the foreign buyer. This amount could only be returned after the plaintiff had made the full payment of the second hand paper machine to the foreign buyer in U.S. dollars and this condition having not been complied with the plaintiff has no cause of action to ask for the return of this amount. Learned counsel for the does not agree with any of the submission of the learned counsel for the defendants. He not only realise upon the contents of Ex. P-1 but also refers to the subsequent correspondence exchanged between the parties leading to the inference that a sum of Rs. 4,50,000.00 was kept with the defendant as a deposit, which was meant to be returned on the completion of the contract or its falling through for some unforeseen reasons. To determine the rival contentions of the parties one has to carefully peruse and interpret the document Ex. P-1. Two things arise for consideration. The first being as to what is the nature of the money which has been deposited with the defendant. It is neither an earnest nor can it be said to be an advance. The second question which is to be examined is as to what are the passable lights of the foreign company over this amount. The oral as well as documentary evidence led by the parties on record prima facie goes to show that it was a deposit as per Ex.P-1 and the defendant also considered it to be so. To reach this conclusion one has only to peruse few of the letters exchanged between the parties. The defendants vide their letter Ex. P-3 dated 15-4-1976 thanked the plaintiff for sending a sum of Rs. 2,00,0001- through a cheque towards the payment, in accordance with the agreement for the import of second hand machinery from U.S.A. In this letter the defendant also asked for the payment of the balance amount. Subsequently the defendants again required the plaintiff to make the second Installment of U.S. Dollars 25,000 or the equivalent Indian Rupee by their letter Ex. P-6 dated August 23. 1976. Along with this letter they enclosed the statement of accounts as on 23-8-1976 Another statement of account as on 30-10-1976 was also forwarded to the plaintiff. As this statement of account contained the interest calculated @ 18 per cent on the unpaid amount the plaintiff objected to the charging of interest by their letter, copy of which is Ex P-14 dated September 7, 1976. The defendants then modified their statement of account and forwarded the same to the plaintiff vide Ex. P-2 but left the question of the payment of interest to be decided at a later stage. The receipt of the amount in dispute is admitted by the defendants in their written statement. The correspondence exchanged between the parties referred to above goes to show that the defendants acted on the agreement and asked for the remaining instalmets. This by itself will go to show that there was privity of contract between the plaintiff and the defendants. It is not disputed that in case the plaintiff had fulfillled the conditions as per the agreement Ex. P-1. the defendants were duty bound to refund this, amount. As to whether the plaintiff performed its part of the contract is a question which will be dealt with while deciding subsequent issues. But at this stage it is only relevant to note that these payments in rupee could not have been made to the foreign company straightaway in view of the restrictions contained in Section 9 of the Foreign Exchange Regulations Act, The defendants otherwise could not have received this amount as an agent of the foreign company. It was in fact an independent contract or we cancel it as an implied contract wherein the defendants were asked to keep this amount and refund the same as and when the conditions of the contract are fulfillled. Certainly this amount was not meant to be paid to the foreign company. Learned counsel for the plaintiff in support of his submissions relied upon a judgment reported as United Commercial Bank G V. Okara Grain Buyers Syndicate and other; : 3SCR396 . In this case Government of undivided Punjab appointed the Syndicate to buy grain on their behalf in connection with grain procurement scheme. For due performance of the conditions of the scheme the respondents were required to deposit an amount with a recognised bank which was done in this case. The fixed deposit receipt was in the account of District Magistrate, Montgomry. As a result of the partition the respondents could not complete the procurement and after migration to India they asked for the refund of the amount of the fixed deposit. During the course of the Judgment it was held that the Bank was liable to return the amount to the respondents and the deposit receipt gave rise to no contractual obligation in favor of the District Magistrate nor was the Bank a trustee for that officer. The District Magistrate was also held in law not to constitute the owner of the money deposited by the respondents. In the case in hand the money so deposited with the defendant was not meant to be paid to the foreign company and they having acted upon the agreement Ex. P-1. now cannot come round and allege that there was no privity of contract between the defendant and the plaintiff. The plaintiff always remains the owner of the money and certainly has the right to ask for its refund. There is no reason why the defendant be allowed to keep this amount. It is a well established principle of law that an action for money paid and received is a practical and useful instrument to prevent unjust enrichment. The law also implies an obligation on the defendants to repay the money which is an unjust benefit. In the present case the evidence establishes that the parties intended to pay the interest @ 18 per cent either on the delayed payments or for the illegal retention of the amount. As a result of the above discussion Issues No. 2 and 3 are decided in favor of the plaintiff. Issue NO. 4 & 5 :
(11) Paragraphs 2, 3, 4 & 5 of the plaint mention the details of the circumstances under which the plaintiff company deposited the amounts. Public Witness 1, Shri S. C. Jain, while appearing for the plaintiff was specifically asked to explain the circumstances under which the money was deposited with the respondent. His answer to this question is relevant, which reads as under :
'THE transaction for the import of the second hand paper plant was as a result of a meeting which was held in the office of Mr. M. M. Sehgal at Asaf Ah Road in which besides myself, Mr. M. M. Sehgal and Mr. Sushil Ansal were present. In that meeting the terms were settled which were drafted and sent the same to Mr. M. M. Sehgal for confirmation. As Mr. Sehgal did not confirm those minutes, another meeting was held in which Mr. Sehgal forwarded us his own draft for the terms for the import of the paper plant. The amount of Rs. 4,50,000.00 in consequence of those terms was deposited with the defendant to assure the seller Co. that the plaintiffs were serious in importing the said paper plant and for timely payment, in accordance with that settlement. There was also an understanding that the money deposited with the defendant shall be refunded in case the approval of the Government of India was not forthcoming or any other condition as a result of which the contract may not mature. The parties had also reached an understanding that as Mr. Sehgal was asking 18 per cent interest for the delayed payments the defendants would also pay the same rate of interest on refund of the said amount.'
The defense raised in the written statement by the defendants for refusing to refund the amount so deposited is that as per the agreement the plaintiff after having obtained the capital goods clearance from the Government of India vide their letter Ex. R-1 dated 11-3-1976 contravened its solemn obligation as contained in the agreement in not opening the irrevocable letter of credit in favor of the foreign company and also by not making the payments as stipulated. It is also alleged that the obtaining of foreign exchange or loan from the financial institutions was not stipulated in the agreement and the plaintiff's reference to the said allegations is not only irrelevant but an after thought. The learned counsel also places reliance on the statement of Public Witness 2, Shri R. K. Mehra, a Senior Economic Investigator from the Ministry of Industries wherein he specifically deposed that their Ministry was only concerned about the giving of the approval which in this case was unconditionally given. This defense is not substantiated from any oral or documentary evidence. The alleged letter dated 11-3-1976 of the Government of India by which the alleged approval to import the second hand paper plant was given cannot be said to be unconditional. The bare perusal of the letter shows that the Government of India approved the import of a second hand paper plant valued at U.S. Dollars 3,30,000 subject to the plaintiffs obtaining the necessary foreign exchange loan from the ICICI/IFCI. By this letter the plaintiffs were also advised to approach the financial institutions under advice to the C.C.I.E. and the Deputy Economic Advisor of the Ministry of Civil Supplies, for a foreign exchange loan for which the formal loan application with the institutions be filed within a period of 3 months from the date of this letter failing which this letter of approval will be deemed to have been withdrawn. It was also advised that on receipt of the communication from the financial institutions sanctioning the foreign exchange loan the defendant may approach the C.C. I. & E. with a copy of the letter from the institutions for the. issue of the import license. In compliance with the said directions the plaintiffs did approach the financial institutions for the loan. The learned counsel for the defendants was very eager to know the steps which the plaintiff company took to comply with their part of the obligations in the agreement and in answer to the said query Shri Jain gave the complete reply by stating that,
'OUR agreement was to open a letter of credit on receipt of clearance to import the plant from the Government of India, but we never got this clearance. We-got a conditional approval and the condition was that we were to obtain foreign exchange from the financial institutions. We approached them. They were not entertaining the applications for import of second hand paper plant any longer. We approached the Government of India to allow us some credit from Gca or foreign exchange credit or loan available with them. The Government of India asked us to get our plant certified by an Engineer of I.C.I.C.I. but the foreign company ultimately came in the way and did not cooperate with us in this matter. With the result that we could not get the survey report and the Government of India would not naturally consider our application for foreign exchange loan to us without Imposing as to what the machine we were importing was worthwhile and was it in the interest of the country's industrial development and was not mere junk. The foreign company did not cooperate and that was the reason the whole thing failed. The plaintiff company did every thing possible for the import of the paper plant. We did not pay the Installments as per Ex. P-1. The question did not arise as we never got the capital goods clearance from the Government of India'.
Later on Shri Jain continued staling that the foreign company in fact put obstructions in the inspection of the paper plant when they refused to allow the engineers of National Industrial Development Corporation to inspect the plant. This part of the statement of Public Witness 1 finds corroboration from the correspondence which was exchanged between the parties and forms part of the present record. On the issuance of the approval letter by the department of Industrial Development, Ministry of Industries and Supplies, Government of India a copy of the same appears to have been sent to the office of the Chief Controller of Imports and Exports The Controller in turn wrote a letter to the plaintiff on 7-4-1976 (Ex.P-9) requiring them to furnish the information (documents to enable their office to consider the application for the issue. of import license for U.S. Dollars 3,30,000. One of the documents mentioned in this letter is the letter in original from I.C.I.C.I. Bombay/I.F.C. New Delhi agreeing to sanction in their favor foreign exchange loan for the said amount. The plaintiff in their letter dated 15-5-1976 (Ex.P-10) not only thanked the Government of India for permitting them to import the second hand machinery from U.S.A. but requested them for accommodation for the arrangement of foreign exchange available from G.C.A. or foreign exchange credits or loan available to Government of India under any aid programme, as during the course of the discussions with ICICI officials in person the defendants have been informed that they are not considering any application for foreign exchange loan for the import of second band paper machinery. The Government of India then advised the plaintiff that the second hand paper plant sought to be imported should begot inspected by an Engineer of I.C.I. C.I. or NIDC. According to Public Witness 1, Shri Jain I.C.I.C.I. declined to undertake this job while the National Development Corporation agreed to inspect the plant provided they were given the job on consultancy for the setting up of the plant. Subsequently the plaintiff came to know that the machinery which they intended to import was exactly similar to the plant which Sehgal Papers were importing and the plant had already been inspected by the Engineers of NIDC in the Capacity of consultants for Sehgal Papers. The plaintiff then approached the NIDC who agreed to release the inspection report provided Sehgal Papers have no objection. As per the statement of Public Witness 1, Shri Jain, Shri M.M. Sehgal was the Managing Director of Sehgal Papers as well as that of the defendant company and was also the President of the foreign company. Shri Sehgal when approached, agreed to get the inspection report released by giving his no objection, but inspire of repeated requests Shri Sehgal did not furnish the no objection certificate resulting in the non-delivery of the inspection report by the NIDC. As a result of this the plaintiff's application for foreign exchange loan became infructuous. The statement of Shri Jain in this regard finds corroboration from the receipt of the letter dated 1.3.1977 (Ex.P-8) from the Senior Engineer of N.I.D.C. informing that they had rot. yet received no objection letter from M/s. Sehgal Papers Limited regarding the issuance of the inspection report on the second hand paper machine. All these facts go to show that the plaintiff has been successful in narrating the circumstances under which they deposited the amount of Rs. 4,50,000.00 with the defendant and also showing their bonafide in performing their part of the contract for the import of second hand paper plant. Both these issues are, thereforee, decided in favor of the plaintiff. Issue No. 6
(12) In para No. 13 of the plaint the plaintiff tried to bring the suit within limitation on the basis of the issuance of a letter of demand of the defendants dated 23-10-1980. The suit having been filed in the year 1981, -according to the learned counsel. is within limitation. The contention of the learned counsel for the defendant on the other hand is that in order to bring the case within the ambit of Article 22 of the Limitation Act the plaintiff is required to prove that the money was deposited under an agreement and the plaintiff raised a demand. This pre-condition being not there the provisions of Article 22 will not be attracted. The learned counsel further submits that in the present case Article 55 of the Limitation Act will apply as the plaintiff having committed the breach of the contract and the defendant having repudiated the same as far back as 4-6-1977, the present suit must be held to be barred by time.
(13) Before the contentions of the learned counsel for the parties E are considered few dates have to be kept in mind. The execution of the so-called agreement (Ex. P-1) is dated 6-1-1976. The plaintiff in order to comply with the requirement of the said agreement deposited a sum of Rs. 2,00,000 on 13-4-1976 with the defendant company. The second Installment of Rs. 2,50,000 was paid on 24-9-1976. According to the plaintiff they asked for the refund of this amount by their letter dated 23-10-1980 (Ex.P-11). As per the allegation of the defendant the contract in question was rescinded by the foreign company when it served the plaintiff with a notice dated 4-6-1977. copy of which is Ex. P-5. In order to determine as to which of the Article of the Limitation Act will apply to the facts of the present case one has to carefully examine these articles. Under Article 22 the period of limitation will start from the date when the demand is made for the money deposited under an agreement, that it shall be payable on demand including money of a customer in the hand of his banker so payable. Under the provisions of Article 55, the limitation of 3 years will start running when the contract is broken or when the breach in respect of which the suit is instituted occurs, in a suit for compensation for the breach of any contract 'express or implied', not specifically provided for. Another article which can be attracted to the facts of the present case is Article 70 of the Limitation Act. Under this article a suit for recovery of movable property deposited or pawned from a depository or pawnee can be filed within a period of 3 years, from the date of the refusal after demand. Under this article the words 'movable property' would include money or other things capable of being replaced.
(14) It is true that the burden of proving that a particular transaction was one of deposit is undoubtedly on the person alleging the same, but the answer to the question whether that burden has or has not been discharged, must depend on the facts and circumstances of each case. The true test to determine whether a particular transaction is one of loan or of deposit is to ascertain whether the money paid or deposited was in thr nature of an advance of loan so as to create the relationship of creditor and debtor between the parties or was merely a deposit without bringing into existence such a relationship. It is no body's case that the money paid to the defendant was in the nature of a loan or an advance. It was cannot be said to be an earnest money for the due performance of a contract. While deciding issue No. 2 I have already observed that the plaintiff deposited the sum of Rs. 4,50,000 with the defendants in pursuance of the agreement between the foreign company and the plaintiff. In pursuance of the said agreement the defendant also acted upon the same by insisting on the plaintiff to make the balance payment. This amount as per Ex.P-1was to be refunded to the plaintiff as soon as the price of the second hand paper machine was paid in U.S. Dollars to the foreign company. The said contract having been frustrated for no fault of the plaintiff, the defendant admittedly having received the amount was under an obligation to return the same on demand to the plaintiff. As per their letter Ex.P-l1 the present suit having been filed within a period of 3 years cannot be said to be barred by limitation. In the agreement, Ex. P-1 there was no clause for the forfeiture of the amount in case the plaintiff failed to perform his part of the contract. At the most the defendant could ask for the payment of interest in case of any delay in the payment of any of the Installments. Under these circumstances there was no question of the defendants appropriating the amount of Rs. 4,50,000 towards the alleged damages and loss which have not even been proved to have been suffered by the foreign company. Till today the foreign company has neither asked the payment of this amount from the defendant nor have they instructed them to forfeit this amount towards the alleged repudiation of the contract by the plaintiff or their having suffered any damages. The defendants having admitted the deposit of this amount by the plaintiff and the plaintiff having asked for the refund of this amount, the present suit under these circumstances must be held to have been filed within limitation. This issue, thereforee, is decided in favor of the plaintiff and against the defendants. Issue NO. 7
(15) In view of my findings under Issue No. 3 the plaintiff is also held entitled to the interest. If the Overseas Buyer could ask for the payment of interest @ 28 per cent per annum for any delay in the payment of any of the Installments, there is no reason why the plaintiff be not allowed the same rate of interest for keeping this huge amount with the defendant without any reason. Further morel the plaintiff has also led oral evidence that an understanding was reached between Mr. Ansal and Mr. Sehgal for the payment of interest @ 18 per cent on the refund of the amount so deposited with the defendant, which statement stands unrebutted. Under these circumstances I hold that the plaintiff is entitled to interest at the rate of 18 per cent per annum. The issue is decided accordingly. Relief
(16) As a result of the above discussion I hereby grant the plaintiff a decree for a sum of Rs. 8,10,000 with costs and future interest @ 18 per cent per annum from the date of the filing of the suit till realisation. Decree sheet be prepared accordingly.