1. This is a case referred by the Second Judge of the Court of Small Causes at Madras under Section 617 of the Civil Procedure Code, and the question submitted for our decision is whether the suit is governed by Article 59 of Schedule II of the Limitation Act or by Article 60.
2. So far as we have been able to gather the facts of the case from the statement of the Judge they seem to be as follows. The father of the defendants carried on business as a shopkeeper and banker, and the plaintiff's husband deposited with him certain sums of money on the distinct understanding that they were to be repaid with interest on demand. The circumstances that the depositor was a near relative of the banker and the moneys in question (which were the depositor's savings) were handed over to the banker under the advice or at the suggestion of the banker himself, seem to be mentioned by the Judge in the statement of facts, if we understand him rightly, for the purpose of showing that there was something in the nature of confidence reposed by the depositor in the banker, and that the transaction was not a simple loan, but a deposit made under special circumstances.
3. If Article 59 applies, the suit is barred, the transaction having taken place more than three years before the date of the plaint. But if the case is governed by Article 60, the suit is in time, the suit having been instituted within three years from the date of the demand.
4. For the defendant, it is urged, that the money in question is 'money lent' within the meaning of Article 59, and Ichha Dhanji v. Natha I.L.R. 13 Bom. 338 is relied on as supporting this contention. For the plaintiff it is argued that regard being had to all the circumstances of the case, the transaction should be held to be a 'deposit' falling under Article 60 as laid down in Ishur Chunder Bhaduri v. Jibun Kumari Bibi I.L.R. 16 Cal. 25.
5. We agree with the latter contention. Article 59 should be limited to cases of simple loans not falling within the class of transactions specifically provided for by Article 60. There can be no doubt that an essential distinction exists between loans pure and simple to be paid back on demand and deposits with a banker similarly repayable.
6. This distinction is noticed and recognised in Tidd v. Overell 1893 3 Ch. 154: where North, J. cites a passage from Pothier in support of his opinion, and adds that that passage equally expresses the law of England on the point under consideration. The statement of the law by Pothier runs thus:' Where a man deposits money in the hands of another, to be kept for his use, the possession of the custodee ought to be deemed the possession of the owner, until an application and refusal, or other denial of the right; for, until then, there is nothing adverse, and I conceive that, upon principle, no action should be allowed in these cases without a previous demand; consequently, that no limitation should be computed further back than such demand.' This is also in substance the view taken by Willson and O'kinealy, JJ., in Ishur Chunder Bhaduri v. Jibun Kumari Bibi I.L.R. 16 Cal. 25. The case referred to above, however, seems to be in conflict with the decision of Sargent, C. J., and Nanabhai Haridas, J., in Ichha Dhanji v. Natha I.L.R. 13 Bom. 338 decided the year before, but which does not appear to have been brought to the notice of Wilson and O'kinealy, JJ
7. The ruling in the Bombay case seems almost to imply that money deposited with a banker under an agreement that it shall be payable on demand is in point of law to be treated as money lent and not as deposited. But doubt was thrown upon a very similar proposition in Pott v. Clegg 16 M. and W. 321 by Pollock, C. B. who, referring to the facts there, observed: 'I must certainly, with considerable doubt and diffidence, confess the hesitation of my own opinion, whether there is not a special contract between the banker and his customer as to the money deposited, which distinguishes it from the ordinary case of a loan for money. It seems to me that is a question for the Jury, who ought to decide what is the liability of the banker, and whether the money deposited with him is money lent or not; I could not concur in the judgment of the rest of the Court without expressing this doubt, in which, however, they do not partake, as they are of opinion that money in the hands of a banker is merely money lent with the superadded obligation that it is to be paid when called for by the draft of the customer.' We venture to think that there is nothing in the relation between a banker and his customer to preclude full effect being given to the intention of the parties in such transactions. Of course, the mere use of the term 'deposit' cannot alter the substance of the transaction should that be otherwise proved to be different. But whether a particular transaction is a 'loan' or a deposit is clearly a question of fact to be decided upon the evidence in each case and if Ichha Dhanji v. Natha I.L.R. 13 Bom. 338 be intended to lay down a different rule, we with all deference to the learned Judges who decided that case, are unable to agree with that decision. The view taken in the Calcutta case seems to us to be more reasonable, and we accordingly hold that this case is governed by Article 60.