The terms "loans" and "deposits" are not mutually exclusive terms: There are a number of common features between the two. In a sense a deposit is also a loan with this difference that is a loan with something more. Both are debts repayable. But, when the repayment is to be, in our opinion, furnishes the real point of distinction between the two concepts. A loan is repayable the minute it is incurred. But this is not so with a deposit. Either the repayment will depend upon the maturity date fixed therefor or the terms of the agreement relating to the demand, on making of which the deposit will become repayable. In other words, unlike a loan there is no immediate obligation to repay in the case of a deposit. That we think is the essence of the distinction between a loan and a deposit. This view of ours is supported by the observations of the Privy Council in 63 Id App 279: (AIR 1936 PC 171):
"The distinction which is perhaps the most obvious is that the deposit not for a fixed term does not seem to impose an immediate obligation on the deposit to seek out the depositor and repay him. He is to keep the money till asked for it. A demand by the depositor would, therefore, seem to be a nominal condition of the obligation of the depositee to repay".
Earlier the Board pointed out that in effect a deposit is a loan under conditions. Although that is the distinction between a loan and a deposit, the question in a given case whether a debt is a deposit or a loan will be one of act which will have to be decided on the facts and circumstances in each case. The use of the term "loan" and "deposit" may not in itself be conclusive though, of course, it is a circumstances which would be taken into account. What should be regarded is the cumulative effect of the evidence which bears on the character of the debt as a loan or a deposit.
Madras High Court
Abdul Hamid Sahib And Ors. vs Rahmat Bi on 3 December, 1964
Equivalent citations: AIR 1965 Mad 427, (1965) 2 MLJ 368
Bench: Veeraswami, K Kutti
(1) This appeal by the defendants arises out of a suit instituted by the respondent for recovery of Rs. 13,437-14-6 from the assets of her late husband Abdul Gaffur Sahib in the hands of the defendants. This sum was made up of four items of which Rupees 624 was claimed as mahar due to the respondent form her husband. This debt has been admitted by the defendants. The other three items are Rs. 7000, another sum of Rs. 1700 and a third sum of Rs, 4112-14-6 said to have been paid by the respondent to her late husband on 4-9-1948, 2-9-1953 and 22-4-1954, receptively. Her case was that these amounts were paid to the husband as deposits on the understanding that he might use the moneys as capital in his beedi business. Abdul Gaffur Sahib died on 12-11-1958, leaving his widow, the respondent, and the defendants as his heirs, and, it is common ground that the respondent is entitled to a quarter share and the defendants together to the remaining three-fourths. The main assets of Abdul Gaffur Sahib are stated to be a house bearing No. 126 Iqbal Street, Musalimpur, Vaniyambadi, and also a goodwill and trade name in a beedi business known as S. I. R. Beedi. The respondent claimed that the amounts due to the should be paid out these assets.
(2) The claim was resisted by the defendants. They maintained that he sum of Rs. 7000 represented the sale proceeds of a shop which though stood in the name of the respondent, in fact, belonged to Abdul Gaffur Sahib and that the other items were merely book entries and the relative entries in the account books of Abdul Gaffur Sahib were false. In any case, they urged that the suit claim was barred by limitation on the ground that the first three items were not deposits but mere loans.
(3) The learned Subordinate Judge found all the four items to be true and due form Abdul Gaffur Sahib. He also held that the first three items were in the nature of deposits and the suit was not therefore bared by limitation. The defendants having thus failed, they have appealed against the decree, the appeal being restricted only to the first three items.
(4) In our view, the finding of the Court below as to the factum of the first three items of debt is correct. Each of the three items is supported by the entries in the account books maintained by Abdul Gaffur Sahib. These entries have been proved either by the writer or a person who knows the handwriting of the writer. The respondent herself in her evidence spoke to having paid the three items into the hands of her husband. We can find no justification for the contention that the account books were not maintained in the course of business, or the entries therein were false. There is also satisfactory evidence as to the source of the respondent. The defendants, as we consider, have not succeeded in establishing that the sum of Rs. 7000 really belonged to the respondent's husband. On 1-9-1948 by a sale deed of that date the respondent and her husband jointly conveyed a shop for a consideration of Rs. 7,500. The entry in the account books showing the advance of Rs. 7000 to Abdul Gaffur Sahib is dated 4-9-1948. The respondent's evidence is that she sold certain jewels of hers and out of the proceeds she purchased the shop from her husband. Her evidence in this regard is supported by the recital in Ex. A. 25, the sale deed dated 1-9-1948. Beyond the assertion of the defendants, there is nothing to show that the sum of Rs. 7000 did not belong to the respondents.
(5) The second item also in borne out of the entry in the account books dated 2-9-1953. According the respondent she carried on a business at Perambur which she transferred to her younger brother for a sum of Rs. 3,900 out of which she paid to her husband the sum of Rs. 1,700. That sale is evidenced by Ex. A. 12 dated 30-8-1953. There is no mention in this document to support the case of the defendants that this business was owned by the respondent and the husband in common. It is true one of the witnesses of the respondent in cross examination stated that the stores belonged to her and her husband. But, we are unable to accept this statement as correct, because if it were a fact, it would undoubtedly have been mentioned in Ex. A. 13.
(6) The last item also is found entered into the account books of Abdul Gaffur Sahib. The entry is dated 26-11-1955, though the entire amount was supposed to have been advanced by 22-4-1954. It is seen form this entry that the amount was not paid in a lump but on different occasions. The respondent would say in her evidence that he amount was paid in a lump. Whether it was so or not, there is nothing to show that the sum of Rs. 4,500 was not in fact paid, whether in a lump or on different occasions, by the respondent to her husband. She would say that out of the sale proceeds under Ex. A.13, she had a balance of about Rs. 2,200 and with this sum added with other moneys with her by sale of jewels, she made up the sum of Rs. 4,500. We think that this is probable. We are therefore satisfied that the court below was right in finding that Abdul Gaffur Sahib in fact owned the three sums to the respondent.
(7) That takes us to the question of limitation. As we said, the court below considered the nature of the three items of debt to be deposits governed by Art. 60 of the Limitation Act and the suit was, therefore, within time. The contention for the appellants is that this view is wrong and that the three items were no more than loans so that the suit would be barred by limitation. The point would, therefore, turn upon the distinction between a loan and a deposit. On that question learned counsel for the appellate invited our attention to Govind Chintaman v. (The shop) Kachubhai Gulabchand, AIR 1924 Bom 28, Ammalu Amma v. Narayana Nair, ILR 51 Madf 549: (AIR 1928 Mad 509): Mohamed Akbar Khan v. Attar Sing, 63 Ind App. 279 (AIR 1936 PC 171); Kanhayalal v. Hiralal, AIR 1947 Bom 255; Naithi V. Cherian, AIR 1957 Trav-Co. 237; Annamalai v. Veerappa, (S) and Balagurumurthi v.
Chinnasami, AIR 1960 Mad 264. We do not think it necessary to refer to all of these authorities in detail.
(8) The terms "loans" and "deposits" are not mutually exclusive terms: There are a number of common features between the two. In a sense a deposit is also a loan with this difference that is a loan with something more. Both are debts repayable. But, when the repayment is to be, in our opinion, furnishes the real point of distinction between the two concepts. A loan is repayable the minute it is incurred. But this is not so with a deposit. Either the repayment will depend upon the maturity date fixed therefor or the terms of the agreement relating to the demand, on making of which the deposit will become repayable. In other words, unlike a loan there is no immediate obligation to repay in the case of a deposit. That we think is the essence of the distinction between a loan and a deposit. This view of ours is supported by the observations of the Privy Council in 63 Id App 279: (AIR 1936 PC 171):
"The distinction which is perhaps the most obvious is that the deposit not for a fixed term does not seem to impose an immediate obligation on the deposit to seek out the depositor and repay him. He is to keep the money till asked for it. A demand by the depositor would, therefore, seem to be a nominal condition of the obligation of the depositee to repay".
Earlier the Board pointed out that in effect a deposit is a loan under conditions. Although that is the distinction between a loan and a deposit, the question in a given case whether a debt is a deposit or a loan will be one of act which will have to be decided on the facts and circumstances in each case. The use of the term "loan" and "deposit" may not in itself be conclusive though, of course, it is a circumstances which would be taken into account. What should be regarded is the cumulative effect of the evidence which bears on the character of the debt as a loan or a deposit.
(9) On the facts of this case we can find no difficulty in accepting the trial Judge's finding that the three items constituted deposits. The entries relating to those items in the account books of Abdul Gaffur Sahib show that the amounts were paid by the respondent to her husband to be used by the latter as capital in his business. That would indicate that the understanding between the parties was not that he husband would be under immediate obligation the moment the sums were paid to him to repay the same. It as rather in their contemplation that the amounts might be used in the business of the husband and would only have to be repaid on demand. In fact, that is the evidence of the respondent herself. She said that her husband wanted the moneys stating that he would keep them and whenever she demanded the same, he would return the amounts.
(10) Learned counsel for the appellants urged that the fact that Abdul Gaffur Sahib needed the moneys and wanted his wife to advance the same indicted that the transactions were loans. AIR 1947 Bom 255 is relied on in support. But the point in that circumstance in itself, as we mentioned, is not conclusive on the nature of the transaction. We are satisfied in this case, on the facts we have just referred to, that the three sums constituted deposits.
(11) On that finding it follows that the suit was within time.
(12) The appeal is dismissed with costs.
(13) Appeal dismissed.
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