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Benares Bank Limited v. Ram Prasad

Allahabad High Court

Feb 5, 1930

Judgment

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Structured Summary of the Opinion (Niamatullah, J.)

Factual and Procedural Background

The opinion arises from two suits brought by the Benares Bank Limited (plaintiff-appellant) in the Munsif's Court, Benares City, seeking recovery of sums of money alleged to have been wrongfully withdrawn from depositors' savings accounts.

In the first suit (leading to Second Appeal No. 1174) the bank sued Ram Prasad, Mahadeo Prasad and Mahabali Prasad. The plaint alleged that Mahabali Prasad had only Rs. 101-3-1 to his credit but Rs. 800 were drawn in four withdrawals (Rs. 200 on 23 Jan 1924, Rs. 200 on 25 Jan 1924, Rs. 200 on 3 Feb 1924 (drawn by Mahadeo Prasad on the authority of a letter alleged to be from Mahabali Prasad) and Rs. 200 on 13 Feb 1924 by Mahabali Prasad himself). The bank claimed Rs. 698-12-11 as the amount overdrawn. Ram Prasad (the clerk in charge of savings accounts) had been convicted on 9 July 1924 of offences under Ss. 403 and 447-A, I.P.C.

The second suit (connected appeal No. 1175 of 1927) was against Ram Prasad, Harshankar Lal and Mahabali Prasad, concerning Rs. 300 allegedly drawn by Mahabali Prasad on the authority of a letter said to be from Harshankar Lal; it was alleged Ram Prasad knowingly allowed this withdrawal though Harshankar Lal had no balance.

Both suits were brought within three years of the dates of the contested withdrawals. The defendants pleaded limitation, and both lower Courts held Article 36, Schedule 1, Limitation Act (two-year residuary article) applied, and accordingly dismissed the suits. The bank appealed from those decrees.

Legal Issues Presented

Whether the suits are barred by limitation and, if so, which article of the Limitation Act governs (Article 36 providing two years versus other articles providing three years).
Whether Ram Prasad (the clerk in charge of the savings bank account) was the bank’s agent for purposes of Article 90 (principals' actions against agents for neglect or misconduct) such that Article 90's limitation period would apply.
Whether Article 48 (suits for compensation for wrongfully taking or detaining specific movable property — i.e., money) or Article 95 (suits to set aside a decree obtained by fraud, or for other relief on the ground of fraud) of the Limitation Act are applicable, each carrying a three year period.

Arguments of the Parties

Plaintiff-Appellant's Arguments

The bank alleged collusion between certain depositors and bank employees (notably Ram Prasad and Mahadeo Prasad) that resulted in wrongful withdrawals exceeding depositors' credits, causing loss to the bank.
The bank relied on Limitation Act Articles 48, 95 and 90 (each carrying three-year limitation periods) as applicable to its suits, and contended that the suits were brought within three years and therefore not barred by limitation.

Defendants' Arguments (and Lower Courts' Reasoning)

The defendants pleaded that the appropriate period of limitation was two years under Article 36, Sch. 1, Limitation Act, and that the suits were therefore barred.
The learned District Judge (and lower Courts) held Article 36 applied. The District Judge also held that Articles 89/90 would not apply against Ram Prasad because he was not the bank's agent, since his duties were described as preparing vouchers, checking balances and reporting to superiors and he had no role in actual delivery of money.
The District Judge preferred authorities from other High Courts (Calcutta and Bombay) to conclude that Article 48 did not apply to these suits.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Rameshwar Chaube v. Mata Bhikh	Authority that money is "specific moveable property" within the meaning of Article 48 (thus suits for compensation for wrongfully taking/detaining money fall under Article 48).	The Court regarded this decision as binding; it treated Rameshwar Chaube as establishing that Article 48 can govern suits seeking compensation for wrongfully taken or detained money.
Ram Lal v. Ghulam Husain	Applied Rameshwar Chaube and demonstrated that a Bench of this Court considered itself bound by the earlier pronouncement.	The Court cited Ram Lal v. Ghulam Husain to show consistency within this Court and to support the binding nature of Rameshwar Chaube on the question whether Article 48 applies.
Agandh Mohta v. Khajan Aliullah	One of the cases from other High Courts (Calcutta) offering an interpretation that led to the view that Article 48 may not apply to suits for money in the present manner.	The District Judge had followed this line of authority; the present Court rejected deviating from its own earlier rulings and did not adopt the Calcutta Court's approach in preference to the Court's own binding precedents.
Essoo Bhayaji v. The Steamship "Savitri"	One of the cases from another High Court (Bombay) whose interpretation the District Judge preferred in excluding Article 48.	The present Court noted the District Judge's reliance on such contrary precedents from other High Courts and held that subordinate Courts should not disregard this Court's rulings; the Court did not follow that interpretation.
Jaganji v. Bandan	Recent (13 Jan 1930) decision of this Court treating Rameshwar Chaube as binding.	The Court cited Jaganji v. Bandan to confirm that Rameshwar Chaube remains binding precedent within this Court and that its view should be followed unless a larger Bench rules otherwise.
Chunder Nath Chowdhry v. Tirthanand Thakoor	Held that Article 95 relates to cases where a party has been fraudulently induced into a transaction, deed or act and seeks relief from the consequences.	The Court observed there is nothing in that case to make Article 95 inapplicable here; instead, the dictum supports Article 95's applicability to fraud-based relief sought by the bank.

Court's Reasoning and Analysis

The Court's analysis proceeded in a stepwise fashion focused on which article(s) of the Limitation Act governed the bank's suits:

Identification of the residuary Article 36 (Schedule 1) as providing a two-year period "for compensation for any malfeasance, misfeasance, or nonfeasance independent of contract and not herein specially provided for." The Court noted that Article 36 is residuary and only applies if no other article is appropriate.
Consideration of Article 90 (principals' suits against agents for neglect or misconduct, three years). The Court examined whether Ram Prasad could properly be deemed the bank's agent. It summarized the District Judge's view that Ram Prasad was not the agent because his duties were confined to preparing vouchers, checking balances and reporting to superiors and he was not responsible for actual disbursements. The Court acknowledged that if the clerk had authority within the scope of his duties to facilitate withdrawals and to verify balances (i.e., to inform other officials whether a depositor had sufficient credit), then he would be the bank's agent to that extent and Article 90 would apply as against him. However, Article 90 could not cover the other defendants who were not agents.
Examination of Article 48 (three years) as to whether suits for money constitute suits "for compensation for wrongfully taking or detaining" specific movable property. The Court reviewed the District Judge's reference to rulings from other High Courts and emphasized that this Court is bound by its earlier decisions, notably Rameshwar Chaube which held money is "specific moveable property" for Article 48. The Court considered Rameshwar Chaube binding (supported by Ram Lal and Jaganji) and concluded that Article 48 is applicable if the action is for compensation for wrongfully taking or detaining money.
Consideration of Article 95 (three years) which provides for suits "to set aside a decree obtained by fraud, or for other relief on the ground of fraud." The District Judge had attempted to dismiss Article 95 by reference to Chunder Nath Chowdhry v. Tirthanand Thakoor. The Court reviewed that authority and found nothing in it making Article 95 inapplicable; on the contrary, the Court interpreted Article 95 as apt for cases where relief is sought on the ground of fraud.
Factual application: The plaintiff's plaints averred a fraud in which certain persons colluded with a bank official who failed to disclose that the sums sought exceeded depositors' balances, thereby inducing bank officials to part with money they would not otherwise have paid. The Court concluded these allegations fall within the ambit of fraud-based relief under Article 95 and also within Article 48's category of wrongful taking/detention of specific movable property (money).
Conclusion on limitation: Because Articles 48 and 95 (each providing three-year limitation periods) apply, Article 36 (two years) is not applicable. The suits, having been filed within three years from the dates of withdrawal, are therefore not barred by limitation.

Holding and Implications

Core Ruling: The decrees of the lower Courts dismissing the two suits are set aside and the cases are remanded for disposal on the merits.

Implications and direct effects:

The Court held that Article 48 and, in any case, Article 95 of Schedule 1, Limitation Act (each providing a three-year period) are applicable to these suits; Article 36 (two years) is not applicable.
Because the plaintiff-bank instituted the suits within three years of the alleged wrongful withdrawals, the actions are not barred by limitation.
The decrees of the lower Courts dismissing the suits on limitation grounds were set aside and the matters were remanded to be tried on their merits.
Costs incurred up to that point were ordered to be costs in the suits.
The opinion applies existing precedent of this Court (notably Rameshwar Chaube and Jaganji) and does not purport to lay down a new precedent beyond applying binding authorities; the Court expressly treats those earlier rulings as binding unless a larger Bench rules otherwise.

P.N/R.K

Case remanded.

Show all summary ...

Niamatullah, J.:— These two appeals arise out of two suits brought by the Benares Bank Limited, plaintiff-appellant, before the Munsif, Benares City, for recovery of certain sums of money. One of these suits was brought against (1) Ram Prasad, (2) Mahadeo Prasad and (3) Mahabali Prasad, the three defendants on the allegations that defendant 3 had a savings bank account with the plaintiff's bank; that there was collusion between him and Ram Prasad the clerk in charge of the savings bank account, and Mahadeo Prasad, another employee of the bank; and that though Mahabali Prasad had only Rs. 101-3-1 to his credit, not less than Rs. 800 were drawn, Rs. 200 on 3rd February 1924, by Mahadeo Prasad on the authority of a letter alleged to have been written by Mahabali Prasad, Rs. 200 on 23rd January 1924, Rs. 200 on 25th January 1924, and Rs. 200 on 13th February 1924, by Mahabali Prasad himself knowing that be had not enough money to his credit and that Ram Prasad the clerk in charge who was in complicity with the other two, allowed the four sums to be drawn to the detriment of the plaintiff. Ram Prasad was convicted of offences under Ss. 403 and 447-A, I.P.C on 9th July 1924, by the Sessions Judge, Benares. The plaintiff claims Rs. 698-12-11 out of the Rupees 800 drawn in the manner already stated, being the amount overdrawn in the account of Mahabali Prasad. Second Appeal No. 1174 has arisen out of this suit.

2. The other suit which has given rise to the connected appeal No. 1175 of 1927 was brought against Ram Prasad, Harshankar Lal and Mahabali Prasad on similar allegations. It relates to a sum of Rs. 300 drawn by Mahabali Prasad on the authority of a letter alleged to have been written by Harshankar Lal, another depositor in the savings bank account. Ram Prasad is alleged to have allowed the withdrawal of this sum with full knowledge that Harshankar Lal had no money to his credit in his account. If the allegations contained in the plaints of the two suits briefly stated above are true, Ram Prasad, the clerk in charge of the savings bank accounts, who has been since convicted of serious offences of forgery and falsification of accounts, was principally responsible for the fraudulent transactions to which the plaintiff's claims refer.

3. The only defence which it is necessary to take notice of at this stage is one of limitation. Both these suits were brought within three years from the dates on which the sums claimed by the plaintiff-appellant were drawn. The defendants plead that the period of limitation for the suits brought by the plaintiff-appellant on the allegations contained in the plaints is two years. Both the lower Courts have held that Article 36, Sch. 1, Lim. Act, which provides a period of two years, is applicable to the circumstances of these cases. The plaintiff bank has preferred these two appeals from the decrees of the lower Courts dismissing the two suits. A reference to the terms of Article 36 will make it clear that it is a residuary article providing a period of two years for suits:

“for compensation for any malfeasance, misfeasance, or nonfeasance independent of contract and not herein specially provided for.”

4. If, therefore, any other article is appropriate to the circumstances of the case, Article 36 cannot apply. The learned District Judge has arrived at the conclusion that this is the proper article to be applied. The articles relied on by the plaintiff-appellant before him and before us are Articles 48, 95 and 90. The learned District Judge was of opinion that Articles 89 and 90 do not apply even as against Ram Prasad, the clerk in charge of the savings bank account, as, according to him, Ram Prasad was not the agent of the bank. He has correctly defined the agent as one “who is authorized to act for his principal.” But the learned Judge is of opinion that as his duties were confined to preparing vouchers, checking the balance, and reporting for orders of his superior, the Assistant Manager, and as he had nothing to do with the actual delivery of the money he cannot be considered to be the agent of the bank. We are ??? to agree with this view. It may is that the duty of making actual disbursements was entrusted to other officials, the clerk in charge, through whom alone the money could be withdrawn and who alone could report to;he official concerned, whether a particular depositor desirous of withdrawing money had to his credit sums in excess of what he sought to withdraw. If he ??? within the scope of his own ??? which he had to exercise in transactions of that kind, it cannot be disputed that he was the agent of the ??? to that extent and if he misconducted himself in the exercise of that authority, Article 90, Lim. Act, which provides a period of three years for ??? by “principals against agents for neglect or misconduct” would be dearly applicable. Article 90, however, will not meet all the requirements of he case because the other defendants were not the agents of the plaintiff.

5. Referring to Article 48, Lim. Act, the learned District Judge has dealt with he cases of Rameshwar Chaube v. Mata Bhikh (1) and Ram Lal v. Ghulam Husain (2). Both of these cases are authority for the proposition that money is “specific moveable property” within the meaning of Article 48 and that:

“Where it has been lost, acquired by theft dishonest misappropriation or conversion, ??? for compensation for wrongfully taking or ??? the same, Article 48 will apply.”

6. It is true that in the second of the wo cases referred to, it was observed that it may be open to argument whether, suit for money could properly be considered to be a suit for “specific moveable property,” but we are bound by that decision, i.e Rameshwar Chaube v. Mata Bhikh . In the alternative the earned Judge held Article 90 to be applicable. The learned District Judge has made no attempt to distinguish, these cases, and referring to the two cases decided by other High Courts Agandh Mohta v. Khajan Aliullah (3) and Essoo Bhayaji v. The Steamship “Savitri” (4) he observes as follows:

“With all due deference to the earlier Allahabad rulings, I am of opinion that the interpretation of the Calcutta and the Bombay Courts is the correct one and I would, therefore, hold that the present suit cannot fall under Article 48.”

7. Mention of “earlier cases” would indicate that in some later case of this Court a different view has been taken. This, however, is not correct, nor has the learned Judge said so. It is not proper for a Judge subordinate to this Court to disregard its rulings which he cannot distinguish from the circumstances of the cases before him and to follow contrary opinions expressed by other High Courts. Ram Lal v. Ghulam Husain which the learned Judge has himself quoted must have made it clear to him that a Bench of this Court considered itself bound by the pronouncement of another Bench which was responsible for deciding the earliest case on the subject, viz., Rameshwar Chaube v. Mata Bhikh . We have ourselves considered the case last mentioned as binding on us as recently as 13th January 1930 in Jaganji v. Bandan (5) and consider ourselves to be bound by that view so long as a larger Bench does not rule to the contrary. If, therefore, no other article of the Limitation Act is applicable and the choice lies between Articles 36 and 48 we cannot but hold that the case is governed by Article 48, Lim. Act, in so far as it is a suit “for compensation for wrongfully taking or detaining” specific moveable property, i.e, money. But we are clearly of opinion that Article 95, Sch. 1, Lim. Act, is appropriate to the circumstances of the present case. That article provides a period of three years for a suit:

“to set aside a decree obtained by fraud, or for other relief on the ground of fraud.”

8. The learned Judge has brushed aside this article by a reference to the case of Chunder Nath Chowdhry v. Tirthanand Thakoor (6). There is nothing in that case which makes that article inapplicable to the case before us. It was held that Article 95, Lim. Act:

“has reference to cases where a party has been fraudulently induced to enter into soma transaction, execute soma deed, or do some other act and desires to be relieved from the consequences.”

9. The plaintiffs' allegations clearly amount to an averment of fraud perpetrated by certain persons in collusion with its official whose duty it was to bring it to the notice of the other officials of the bank that the sums sought to be drawn by them exceeded the amount to the credit of the depositor concerned and who for his own ends concealed that information inducing the other officials of the bank to part with the money which they would not have otherwise paid. The plaintiff seeks relief against those who were parties to the last fraud. This being so the dictum quoted above is applicable to the circumstances of the case before us, and far from being an authority to the contrary, as the learned District Judge thought, materially supports the plaintiff's case. Mention of a decree in the first part of the language of Article 95 does not, in any way, detract from the generality of the latter part thereof. The article which follows (Article 96) provides for relief on the ground of mistake just as Article 95 provides for relief on the ground of fraud.

10. For the reasons stated above we hold that Article 48, and in any case Article 95, Sch. 1, Lim. Act, both of which provide a period of three years, are applicable to the case before us and that Article 36 which provides a shorter period of two years is not applicable. The plaintiff-appellant having brought the two suits which have been dismissed by the Courts below within three years were not barred by limitation. Accordingly we set aside the decrees of the Courts below and remand the two cases for disposal on the merits. Costs incurred hitherto shall be costs in the suits.