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State of Rajasthan Vs. Firm Anand Construction Co., Mandi - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtRajasthan High Court
Decided On
Case NumberFirst Appeal No. 32 of 1968
Judge
Reported inAIR1972Raj101; 1971(4)WLN481; 1971(4)WLN495
ActsLimitation Act, 1963 - Schedule - Articles 18, 22, 24, 55 and 113
AppellantState of Rajasthan
RespondentFirm Anand Construction Co., Mandi
Appellant Advocate Murlidhar Purohit, Dy. Government Adv.
Respondent Advocate Sagarmal Mehta, Adv.
DispositionAppeal dismissed
Cases ReferredG. D. and Co. v. W. I. Theatres
Excerpt:
limitation act, 1908 - article 120--refund of security deposit--held, period of limitation is six years and runs from the date of completion of work.; in a suit for refund of security deposit, the essence of the cause of action is not the breach of the contract to repay it as the amount of security deposit is refundable by its very nature after the completion of the contract. even if no time is specified for the refund of the security deposit, it is implicit that the obligation to pay refund arises as soon as the contract is completed.; the engineer in-charge has deposed that the amount of security deposit was refundable six months after the completion of the contract, but no such period is fixed in the agreement and in its absence the time will begin to run from the date of the..........97 of the act of 1908 applies and in the absence of any specific article application to the suit article 120 applies.13. the same view was taken by the bombay high court in shankar v. state, air 1970 bom 8. it was held there that:'where money is deposited by way of security for the due performance of a contract or otherwise under the terms of a contract and is refundable after the completion of the contract, article 62 isnot applicable to the suit for refund as the money was not received by the defendant for the plaintiff's use. the right to refund did not arise immediately on receipt by the defendant. the suit not being a suit against a depository or pawnee to recover movable property deposited or pawned, article 145 also would not be applicable. such suit would be governed by.....
Judgment:

C.B. Bhargava, J.

1. This is an appeal by the State of Rajasthan against the judgment and decree dated 31st March 1967, of the District Judge Kota by which plaintiff's suit was decreed for a sum of Rs. 10940/-.

2. The only point which has beencanvassed on behalf of the appellant isthat the suit of the plaintiff was barred by limitation. Learned Deputy Government Advocate contends that the suit is governed by Article 18 of the Limitation Act of 1963 and having been filed after the expiry of three years from the date of the completion of the work was beyond time.

3. Plaintiff respondent was given a contract for terrazzo and cement flooring in the Maharao Bhim Singh Hospital Kota on 25th February. 1957, and for the construction of a road inside the same hospital on 30th March, 1957 at an estimated cost of Rs. 96,119 and Rs. 15,238/- respectively. In terms of the agreement, the plaintiff was required to deposit security and if it was not deposited in advance, it was provided that 10 per cent, shall be deducted from his bills. Clause 1 (b) of the agreement provides that : the persons whose tender may be accepted that is the contractor shall permit Government at the time of making any payment to him for work done under the contracts to deduct such sum as will (with the earnest money deposited by him) amount to per cent of all money so payable, such deductions to be held by Government by way of security deposit. Plaintiff's case is that he completed the work to the entire satisfaction of the Engineer in-charge on 27th January, 1958. The State deducted the amount equal to 10 per cent, on his running bills as his security deposit for due performance of the contract to the extent of Rs. 10,580/-. In spite of repeated demands, this amount for security deposit was not refunded to the plaintiff.' The plaintiff served a notice under Sec. 80 Civil Procedure Code on 14th November, 1963, but still the amount was not paid. So he had to institute the present suit for the refund of Rs. 10580/- plus Rs. 3636/-as interest on the said amount at the rate of 6 per cent, per annum.

4. The suit was contested in the lower court and the learned District Judge after making deduction of Rupees 1385.52 which was due from the plaintiff passed a decree for Rs. 9194.48 plus Rs. 1745.52 as interest pendente lite. The learned District Judge without any objection on the part of the appellant held that the suit was governed by Article 120 of the Limitation Act of 1908.

5. Learned Deputy Government Advocate says that the appropriate article applicable is Article 18 of the Limitation Act of 1963 and even if Article 18 does not apply, either Article 22, 24 or 55 would apply to the case. It is contended that the plaintiff's running bills were for the price of work done and the amount deducted by the Govern-ment from those bills will also retain the same character irrespective of the fact that the said amount is held by the Government by way of security deposit. In my view, the contention is not sound.

6. It may be true that the running bills submitted by the contractor are for price for work done and the money in his hands will have the same character. But after the Government makes a deduction of 10 per cent, from the amount of the running bills and holds it by way of security deposit, its nature will be of a security deposit as if the amount was deposited in advance. 'The agreement provides two alternatives for the contractor. He may pay the security deposit in advance or he may permit the Government to deduct 10 per cent, from the running bills. The character of deposit in both these cases will be identical and if Article 18 cannot apply to cases for the refund of security deposit paid in advance, it cannot also apply to the amount deducted from the running bills held by the Government as security deposit. In the hands of the contractor, the amount would certainly be for the price of the work done but when after the deductions tt is held by the Government by way of security deposit, it would assume a different character.

7. Learned Deputy Government Advocate placed reliance upon two bench decisions of this Court in Bha-wani Shanker v. State, AIR 1970 Rai 268 and Tej Singh v. State of Rajasthan, 1971 Weekly Law (N) Part 2, p. 28. Both the cases related to the recovery of money for the work done by the plaintiff for the defendant and so Article 56 of the Limitation Act of 1908 was held to be applicable. None of these cases was for the recovery of the security deposit. These two cases are, therefore, quite distinguishable.

8. Article 24 can also have no application because the money was not received by the defendant for the plaintiff's use. The right to refund did not arise immediately on receipt of money by the defendant. The right to claim refund of the security deposit only accrues after the completion of the contract.

9. Article 22 applies to money deposited under an agreement that it shall be payable on demand. The security deposit is not payable on demand and, therefore, Article 22 has also no application.

10. Article 55 applies to suits for compensation for the breach of any contract, express or implied not hereinafter specifically provided for. In a suit for refund of security deposit, the essenceof the cause of action is not the breach of the contract to repay it as the amount of security deposit is refundable by its very nature after the completion of the contract. Even if no time is specified for the refund of the security deposit, it is implicit that the obligation to pay refund arises as soon as the contract is completed. Learned counsel in this connection has referred to Mohammed Dalil Khan v. State of Andhra Pradesh, AIR 1963 Andh Pra 216. In that case it was not decided as to which Article of the Limitation Act would apply to a suit for return of the security deposit though it was observed that having regard to the date of the cancellation and institution of the suit, the claim of the plaintiff would be barred by limitation, The contract was cancelled on 15-3-1951 and the suit was instituted on 8-10-1955 which means that the period of three years was held to be applicable to such cases. But there is no discussion of the matter in that case as regards the application of any specific Article to such cases. In my view, none of these Arti-cles is applicable and so it is Article 113 of the Act of 1963, which is a general one and applies to suits to which no other Article of Limitation Act applies. that would apply.

11. In Nasiruddin v. Abdullah Mian, 1959 Raj LW 317 where a tenant had deposited money with the landlord as a security for the due fulfilment of the stipulation to do all repairs which may be necessary at the termination of the lease, and that if the tenant did not do so, the landlord would be entitled to do it and deduct the cost out of the said deposit, the suit was filed for the refund of the deposit and it was held that as there was no specific article applicable to the case of this nature, Article 120 of the Limitation Act of 1908 would apply. Reliance was placed on Upendra Lal Mukhopadhya v. The Collector of Rajshaye, (1886) ILR 12 Cal 113.

12. In Harij Gram Panchayat t. Thakkar Lakhiram Ramji, AIR 1962 Guj 14 it was held that in a suit brought for the refund of deposit by way of security for the due performance of the contract neither Article 62 nor Article 60 nor Article 97 of the Act of 1908 applies and in the absence of any specific Article application to the suit Article 120 applies.

13. The same view was taken by the Bombay High Court in Shankar v. State, AIR 1970 Bom 8. It was held there that:

'Where money is deposited by way of security for the due performance of a contract or otherwise under the terms of a contract and is refundable after the completion of the contract, Article 62 isnot applicable to the suit for refund as the money was not received by the defendant for the plaintiff's use. The right to refund did not arise immediately on receipt by the defendant. The suit not being a suit against a depository or pawnee to recover movable property deposited or pawned, Article 145 also would not be applicable. Such suit would be governed by the residuary Article 120.'

The Calcutta High Court in G. D. and Co. v. W. I. Theatres, (1961) 65 Cal WN 504 came to the decision that to such suits Article 146 of the Indian Limitation Act of 1908 would be applicable and if for any reason, this article is not applicable, there is no doubt that Article 120 is applicable. This was also a case for the refund of the deposit made by the contractor. Bose J. In that case observed that :

'A deposit made as security for due performance of a contract is refundable whether it is coupled with a promise or agreement to repay it or not. Even if nothing is agreed as to its repayment at the time the deposit is made, the obligation to repay arises upon the proper performance of the engagement by reason of the very nature of the transaction of deposit. If an express agreement is entered into for repayment of the deposit, the transaction still remains a deposit and its nature is not thereby altered. The essence of the causes of action for a suit for refund of a deposit is not the breach of the contract to repay it, but the fact that the transaction is a deposit which by its very nature is refundable. The person who holds the deposit and the person on whose behalf or for whose benefit the deposit is held as security are liable to refund it because it is a deposit. They are both in the position of depositories. Accordingly, the article applicable is Article 145 of the Indian Limitation Act and if for any reason this article is not applicable, there is no doubt that Article 120 is applicable to the present case.'

Thus there is sufficient authority for the view I have taken in the matter. The contracts in this case were completed on 27-1-1958 and the suit has been filed within six years of that date. Although on behalf of the defendant, the Engineer incharge has deposed that the amount of security deposit was refundable six months after the completion of the contract, but no such period is fixed in the agreement and in its absence the time will begin to run from the date of the completion of the contract, But in any case the suit was instituted within six years of the completion of the contract.

14. I, therefore, do not find any force in the appeal and it is accordingly dismissed with costs.


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