Holding

The suit is barred by limitation; no trust existed to invoke Section 10, and the cause of action accrued in 1988, well before the suit was filed.

Summary

Krishna Gopal Kakani, who had deposited a small margin for letters of credit with Bank of Baroda, sought the refund of surplus proceeds after the bank’s goods were auctioned and the sale proceeds were deposited with the court. After numerous notices, a failed adjustment proposal, and a dismissed writ petition, Kakani filed a civil suit in 1997 for the surplus amount. The trial court held the bank a trustee and said the suit was not barred by limitation under Section 10 of the Limitation Act. The High Court reversed, treating the suit as a simple money claim governed by Articles 22 and 24, and held it barred. The Supreme Court found no trust was created, so Section 10 did not apply, and the cause of action accrued on the first demand in 1988, making the 1997 suit well beyond the three‑year limitation period. Consequently, the bank was justified in raising the limitation defence and the appeal was dismissed.

Issues considered

The applicability of Section 10 of the Limitation Act, 1963 to the suit (i.e., whether a trust was created between the appellant and the bank).
The applicability of Article 113 of the Limitation Act, 1963 and the determination of the date when the cause of action accrued.
Whether the suit filed in 1997 is barred by the three‑year limitation period.

Legislation cited

Indian Trusts Act, 1882s. 10, s. 14, s. 19, s. 88, s. 9
Limitation Act, 1963s. 10, s. 113, s. 22, s. 24

Subjects

LimitationSection 10TrustLetter of CreditBank of BarodaSurplus proceedsIndian Trusts ActArticle 113Civil suit

Judgment

1·
·\-,.

~- [2008] 13 S.C.R. 1191

MR. KRISHNA GOPAL KAKANI A
V.
BANK OF BARODA
(Civil Appeal No. 8448 of 2001)
.. SEPTEMBER 30, 2008
B
[TARUN CHATTERJEE AND HARJIT SINGH BEDI, JJ;]

Limitation Act, 1963 - ss. 10 and 113 - Limitation for
filing suit for recovery of money against Bank - Bank issuing
Letter of Credit - Margin money deposited by the creditor - c
On failure of payment by the creditor, consignments 'of the
creditor put to auction as per direction of Court and payment
made to the Bank - Creditor claiming the surplus amount -
Bank taking plea of limitation - Trial Court decreeing the suit •
holding that Bank being the trustee of the due money of the
D
creditor, no limitation applicable by virtue ofs. 10 - High Court
reversing judgment of Trial Court - On appeal creditor taking
plea that s. 10 or in the alternative Article 113 applicable -
Held: s. 10 not applicable as creation of trust in respect of the
suit money not proved - Suit is barred by limitation even by
applying Article 113 as the suit was not filed within three years E
from the dates when cause of action arose - In the facts of the
case, Bank was justified in taking plea. of limitation - Trusts
Act, 1882 - s. 88 .
. Respondent-Bank opened two Letters of Credits for F
two consignments at the instance of the appellant. The
appellant deposited margin money for the same, which
was less than Rs. 10,000/-. The consignment was not re-
leased by the Customs Authorities. Appellant received
notice from Port Trust for imposition of demurrage
G
charges. Appellant approached High court. Respondent-
.. Bank as a joint-holder of the import licence, filed an appli-
cation (Application No. 950 of 1975) claiming its right on
the goods as a joint-holder. High Court directed to sell
1191 H
1192 SUPREME COURT REPORTS [2008] 13 S.C.R.

A the goods in public auction. Pursuant thereto, the sale
proceeds of the goods were deposited with the Protho-
notary of the High Court. Thereafter the application was
disposed of with direction to the Bank to pay the demur-
rage charges and customs duty.
B Thereafter appellant demanded the Bank to refund
the surplus amount alongwith the margin money lying
with the Prothonotary with interest. He gave a legal no-
tice dated 12.12.1988 to initiate legal proceeding on fail-
ure of payment of the same. On 15.12.1988, the Bank de-
e nied the claim.
In the meantime there was a negotiation with another
debtor of the Bank to adjust his debts against the sur-
plus dues of the appellant. The Bank initially agreed for
the adjustment, but subsequently in 1990 withdrew its
0
consent.
Appellant thereafter filed a writ petition claiming the
relief which was dismissed upto Supreme Court. Therein,
in 1991, the appellant stated that it would file a suit. In the
E meantime Court's direction to adjust the debt of another
debtor against the appellant's dues was also set aside by
Supreme Court.
Appellant filed present suit seeking decree for Rs.
23,54,707/58, in September, 1997 stating therein interalia
F · that cause of action arose on 24.2.1995 when the Bank •
for the first time filed a statement of Accounts in the High
Court in the proceedings of another debtor. Trial Court
decreed the suit holding that the Bank was a trustee of
the appellant's money and hence suit was covered by s.
G 10 of Limitation Act and thus not barred by limitation. High
court reversed the order of the trial court. Hence the
present appeal.
Appellant contended that the suit was governed by
H s. 10 of Limitation Act and in the alternative it was gov-
MR. KRISHNA GOPAL KAKANI v. BANK OF 1193
BARODA

erned by Article 113 of the Limitation Act and not by Ar- A
ticles 22 and 24 as held by High Court; and that it was not
open to a Bank to take plea of limitation to defeat a cause
which on admitted facts, was just.
Dismissing the appeal, the court .
8
HELD: 1.1 Section 10 of Limitation Act applies where
a property had been vested in trust for any specific pur-
pose and for certain other purposes stipulated in the pro-
vision. In the present case, there is nothing to suggest
that a trust had been created merely because some c
money had been deposited with the Bank at the instance
of the Court on account of the auction of the goods and it
was not a mere deposit simplicitor. An analysis .of Sec-
tion 88 of Trusts Act would also show that the Bank, to
whom the money had been entrusted, was not in the ca-
0
pacity set out in the provision itself. The question of any
fiduciary relationship therefore arising between the two,
must therefore be ruled out. There is no evidence to show
that any trust had been created with respect to the suit
money. [Paras 7 and 9] [1202,G-H; 1203,D-E]
E
Canbank Financial Services Ltd. vs. Custodian and Ors.
2004 (8) sec 355 - distinguished
1.2 The appellant's plea that the limitation would be
deemed to have started w.e.f. 24.2.1995 is unacceptable.
Section 113 of Limitation Act reveals that the time ofthree F
years would start running from the date when the right to
sue accrues. Despite a registered notice dated 12th De- .
cember 1988 wherein it was stated that if appropriate pay-
ments are not made to the Bank within seven days of the
receipt of this notice, suit would be filed for account G
against the Bank treating it as refusal on the part of the
bank to settle the account, no suit was filed within 3 years
from that date. According to appellant himself, as per his
averments in the claim petition, his claim had been finally
denied on 15th December 1988. It must, therefore, be held H
1194 SUPREME COURT REPORTS [2008] 13 S.C.R.

A that the right to sue started from that day. From a reading
of the order passed in the Special Leave Petition, it tran-
spires that despite the statement made in the Court that a
civil suit would be filed, no suit was filed within three years.
The suit was filed in the year 1997 i.e. beyond the period of
B three years. Even if assumed that a statement of accounts
"
had been tendered by the Bank on 24.2.1995 in the pro-
ceedings of another debtor, that would not amount to an
acknowledgement to save limitation, as limitation had long
since expired. [Paras 12, 13, 14, 15, 17 and 18] [1207,G;
c 1204,D; 1204,H; 1205,A-B; 1207,F-G; 1208,A-B, 1206,D]
Mst. Rukhmabai vs. Lala Laxminarayan and Ors. AIR
1960 SC 335 - relied on
M. VS. Manikayala Rao vs. M. Narasimhaswami and Ors.
AIR 1966 SC 470 - referred to
D
2. The Bank was fully justified in taking the plea of
limitation in the facts of the instant case. No proper cal-
culation with respect to the amount that had been decreed,
had been made and whereas the appellant had depos-
E ited in all, less than Rs.10,000/- towards margin money in
the year 1979, there was no basis for decreeing the suit
as claimed for a sum of about Rs. 24 Lakhs. The appel-
lant had threatened to initiate legal proceedings from the
year 1980 onwards and had actually gone to court on
F several occasions and had remained unsuccessful up to
Supreme Court in the year 1992 but had filed the suit in
the year 1997. The appellant, though a party to the pro-
ceedings in Miscellaneous Application No. 950 of 1975,
did not put in appearance, nor shared the expenses (as
admitted by him in his evidence), but he wants to take
G
advantage of the situation now created. [Paras 21 and 22]
[1211,B; 1210,A-B; 1210,H; 1211,A]
The Madras Port Trust vs. Hymanshu International AIR
1979 SC 1144; UCO Bank vs. Hem Chandra Sarkar AIR 1990
H SC 1329 - distinguished
MR. KRISHNA GOPAL KAKANI v. BANK OF 1195
BARODA

Case Law Reference A
2004 (8) sec 355 Distinguished. Para 10
AIR 1960 SC 335 Relied on. Para 18
AIR 1966 SC 470 Referred to. Para 19
AIR 1979 SC 1144 Distinguished. Para 21 B

AIR 1990 SC 1329 Distinguished. Para 21

CIVILAPPELLATE JURISDICTION: Civil Appeal No. 8448
of 2001
From the final Judgment and Order dated 23.3.2001 of
c
the High Court of Madhya Pradesh, Bench at Indore in Civil.
First Appeal No. 100 of 2000

Tapas Ray, Su.shil Kumar jain, Puneet Jain and Sarad kr.
Singhania for the Appellant. O
Pramod B. Agarwala, Praveena Gautam and Nitin Kant
Setia for the Respondents.

The Judgment of the Court was delivered by
HARJIT Slf':JGH BEDI, J. 1. This appeal arises out of the E
following facts.

2. The appellant, Krishna Gopal Kakani, the proprietor of
M/s. Oriental Traders, a concern involved in the manufacture
and import of goods, obtained a letter of authority from the Chief F
Controller of Imports and Exports, Bombay for the import of raw
material for the benefit of a licensee who had been given an
· import licence. The appellant accordingly placed orders with a
foreign supplier for the import of specified goods a.nd for that
purpose approached the respondent-Bank for opening Letters G
of Credit for two consignments. The bank thereupon opened
two Letters of Credit, one on 24th August 1973, and the other on
21•t September 1973 on which he also deposited 10% of the
margin money of Rs.4560/- and Rs.4810/-. The other formali-
ties having been completed, the Letters of Credit were duly
H
..
1196 SUPREME COURT REPORTS [2008] 13 S.C.R.

A negotiated on 21•1 January 1974 and 19th March 1974. The
consignment arrived in India on 13th March, 1974 but despite
the requests made by the appellant and his clearing agent, the
Bombay Customs refused to release the goods without assign-
ing any reason, though on enquiry from the Joint Chief Control-
B ler of Imports and Exports, Bombay, the appellant was told that
the controller had no objection to the release. Faced with a no-
tice from the Port Trust threatening heavy demurrage charges
and apprehending auction of the goods by the Trust, the appel-
lant as a joint-holder of the property approached the Bombay
c High Court for orders. The Bank also, as joint-holder of the im-
port licence by virtue of having paid the value of the import con-
signment, thereafter filed several Miscellaneous Applications
before the Court and in one matter, Miscellaneous Application
No. 950/1975, the appellant was also arrayed as respondent
~.7. In this application, it was pleaded by the B?nk that the
D
action of the respondents therein in not releasing the consign-
ments was unjustified and that the appellant-Bank also claimed
their rights on the goods as being joint-holders thereof. The
Bombay High Court in its order dated 19th November 1975 di-
rected as under:-
E
"(a) That respondent No.6 do sell the goods by Public
auction to the highest bidder preference to be given
to the actual users holding Drugs Controllers
Licenses.
F (b) Respondent No.6 do deposit the net sale proceeds
or the goods with. the Prothonotary and Senior
Master, High Court, Bombay to invest the net sales
in fixed deposit with Bank of Baroda at Bombay
Office.
G
(c) The sale proceeds shall represent iri all respects as
they were the "Goods" for all purpose including for
the purpose of the Lien on the said goods, if any, of ..
the 61h respondent.

H (d) The said sale proceeds shall .be held by the
.: ..

MR. KRISHNA GOPAL KAKANI v. BANK OF 1197
BARODA [HARJIT SINGH BEDI, J.]

Prothonotary and Senior Master, High Court, Bombay A
subject to the rights of the parties and further orders
of the High Court."

3. Pursuant to the aforesaid order, the goods were sold
by public auction and the sale proceeds of Rs.4,72, 714.16 were
deposited with the Prothonotary and Senior Master of the B
Bombay High Court. Miscellaneous Application No. 950/1975
was finally disposed of by the Bombay High Court on 3rc1 Octo-
ber, 1979 with the direction that the Bank would be entitled to
the amount deposited but would qefray an amount of
Rs.8044.18 to the Bombay Port Trust towards demurrage C
charges and was also. liable to pay the customs duty. In the light
of the above said directions, the Bank which had also filed a
civil suit against the appellant in Indore on 3pt December 1976
for the recovery of Rs.1,27,282.93 with interest, withdrew the
same on 3rc1 October 1980. 1.n the background of this develop- D
ment, the appellant, by a telegram dated 191h November 1980,
requested the Bank to refund the surplus amount along with the
margin money lying in deposit with the Prothonotary with inter-
est and ( as per the present suit) the Bank iritimated that the
money would be paid after receiving orders from the Bombay E
Head Office. The appellant also wrote a letter to the Bank and
also sent a remirider dated 11th November 1980 on which the
Bank replied (on 2"d December 1980) that it was still awaiting
instructions from the higher authorities. It appears that the ap-
pellant also addressed several letters to the higher echelons in F
·· the Bank and also met the concerned officials between the years
1980 and 1988 but to no effect and ultimately addressed a let-
ter dated 12~h December 1988 threatening the Bank with legal
action. It appears that inthe interregnum, one R.M. Patwa, who'
was also a debtor to the Bank approached the appellant that G
his debts could be adjusted against the amount of the surplus
dues of the appellant lying deposited with the Bank. The appel-
lant consented to the said proposal and an application was
accordingly moved on 4th March 1986 in the execution proceed-
ings pertaining to R.M. Patwa's case. It appears that at one H
1198 SUPREME COURT REPORTS [2008] 13 S.C.R.

A stage the Bank agreed to the adjustment but subsequently i.e.,
on 14th September 1990, withdrew its consent. The appellant
thereafter filed Writ Petition No. 2840 of 1991 before the
Bombay High Court claiming the same relief as in the present
suit. The said petition was dismissed on 25th October 1991 on
8 the ground of delay and a Special Leave Petition filed in this
Court was also dismissed with the observation that the remedy
by way of a Writ Petition was not a proper one in the circum-
stances. In the meanwhile, in the execution petition in R.M.
Patwa's case, the court directed that R.M. Patwa's debt be
C adjusted against the appellant's dues. This order was main-
tained in a revision petition before the High Court in its order
dated 1Q1h May 1995 after a statement of accounts had been
filed on 24th February 1995. The Bank challenged the order
aforementioned in a Special Leave Petition before this Court
and the appeal was duly allowed on 12th January 1996 and the
0
order impugned was set aside. It is, thereafter, that the present
suit has been filed on 8th September, 1997 and on the aver-
ments leading to the question of limitation, it was pleaded that
the cause of action for filing the suit arose on 24th February
1995, when for the first time the Bank had filed a statement of
E accounts in the High Court. The appellant Bank filed its written
statement on 18th July 1998 pleading, inter-alia, that the sub-
mission of the statement of accounts could not be said to be an
admission of the claim of the appellant/plaintiff or an
acknowledgement of the debt and as such the plea that the
F cause of action accrued on the 24th February 1995 was errone-
ous and the suit having been filed after 17 years from 19th No-
vember 1980 was clearly and grossly time barred. It was also
pointed out on facts that the appellant's money had never been
at stake except to the extent of the margin money and he was,
G in any case, not entitled to the exorbitant amount claimed by
him.
4. The trial court framed seven issues on 17th August 1988;
issue No.1 being whether the suit was barred by limitation and
H issue No.5 as to whether the appellant was entitled to a decree
MR. KRISHNA GOPAL KAKANI v. BANK OF 1199
) BARODA [HARJIT SINGH BEDI, J]

for Rs.23,54,707.58. The appellant examined himself as PW1 A
and closed his evidence. By a judgment and decree dated 3rd
February 2000, the trial court decreed the suit for the amount
claimed along with simple interest at 11 % from the date of the
suit till the date of the payment. It was held, inter-alia that the
.., appellant being the proprietor of M/s. Oriental Traders was en- B
titled to the surplus amount which had been deposited with the
Prothonotary on account of the auction of the goods. The court
also concluded that the Bank was a trustee of the appellant's
money and, therefore the suit was covered by Section 10 of the
Limitation Act (hereinafter called the "Act"), which provided for C
no limitation and in the alternative the cause of action had arisen
on 1st August 1997 when the demand notice had been issued
by the appellant or from the 241h February 1995 when the state-
ment of accounts had been submitted in the executing court in
Patwa's case. The submission of the Bank that the limitation
0
had exp.ired in the year 1992 after the passing of the order of
the Bombay High Court was rejected in view of the above find-
ings. The matter was thereafter taken in first appeal before the
Gujarat High Court which reversed the order of the trial court
observing that the Bank was not a trustee of the money inas-
much that there was no deposit and the matter pertained to a E
commercial transaction relating to the opening of Letters of
Credit and such transaction could not be said to be relatable to
a trust so as to bring the matter within Section 10 of the Act. The
court also observed that the appellant was aware of the direc-
tions given by the Bombay High Court in Miscellaneous Peti- F
tion No.950 of 1975 for the public auction of the imported raw
material and the deposit of the proceeds with the Prothonotary
and that this amount had indeed been deposited with the said
officer and finally released to the Bank by the order dated 3rd
October 1979 and in this view of the matter it was not for him to G
plead ignorance of the aforesaid proceedings. It was further
opined that it would have been appropriate that he should have
raised some objection at that stage or filed another suit but in-
stead, the appellant had continued to send legal notices and
had also made a futile attempt at an adjustment in the year 1990 H
1200 SUPREME COURT REPORTS (2008] 13 S.C.R.
.(

A in R.M. Patwa's case. The High Court also observed that the
undertaking given at one stage by the Bank agreeing to the
adjustment which had been subsequently withdrawn had no force
as the orders of the executing court and the High Court had
been set aside by the Supreme Court and as such any under-
B taking given in those proceedings was in any event nonest. The )-

High Court also expressed its surprise at the fact that though
the appellant had deposited a sum of Rs. 4560.00 and
Rs.4810.00 only as margin money for the Letters of Credit, yet
an astronomical amount without any rational basis had been
c decreed by the trial court. The court also observed that a suit
for money payable by the defendant to the plaintiff for money
received for the plaintiff's dues .lay within 3 years only from the
date of money received as per Article 24 of the Act, and in the
light of the fact that the Bombay High Court in its final order
passed on 3rd October 1979 in Misc. Application No. 950/1975
D
had directed that the money should be paid to the Bank. was
the date from which the 3 years period would be deemed to
have commenced and that this was also the appellant's under-
standing as he had given a demand notice telegraphically on
19th January 1980, confirming the same in writing on 131h Octa-
E ber 1980 but despite this, the suit had not been filed within 3
years of that specific; date. The Court also noted that in the year
1990, he had once again tried for an adjustment of the amount
in R.M. Patwa's case and though the offer for adjustment at one
stage had been accepted by the Bank but it would still amount
F to an acknowledgment to save limitation (which would have to ,..
be within the original period of limitation). The High Court fur-
ther opined that the appellant had been associated with the
matter relating to Miscellaneous Petition No.950/1975 in the
Bombay High Court and had also admitted that he had not spent
G any amount with respect to those proceedings and had not made
any attempt to claim his rights from the year 1980 to 1988 and
that in any case after the Supreme Court had dismissed his
Special Leave Petition on 101h February 1992 with the obser- -<

vation that the remedy by way of a writ petition was not a proper
H remedy on which the appellant had made a statement that he
MR. KRISHNA GOPAL KAKANI v. BANK OF 1201
) BARODA [HARJIT SINGH BEDI, J.] ··

would file a civil suit, the suit had not been filed within 3 years A
but had been filed after more than 5 years on 81h September
1997. The High Court then examined the broad arguments in
principle that ordinarily a Bank should not take a plea of limita-
tion but went on to hold that in the light of the circumstances of
the case and the complete inaction of the appellant to pursue B
his remedies despite several opportunities before him, did not
justify any special consideration. The court finally held in the
circumstances that the suit would be governed by Articles 22
·and 24 of the Act and that limitation of three years would start
from the date of receipt of the money or 3 years from the date c
when the demand had first been made. The plea made on be-
half of the Bank with respect to the suit being barred under the
principles of res-judicata in view of the writ petition filed by the
appellant in the Bombay High Court which had been dismissed
and the· Special Leave Petition also dismissed on the ground
0
of !aches was, however, not gone into by the High C0urt. The
High Court, accordingly, allowed the appeal and set aside the
order of the trial court and dismissed the suit. .
5. Mr. Tapan Ray, the learned senio"r counsei for the ap-
pellant has submitted that the suit was governed by Section 10 E
of the Act or in the alternative, Article 113 thereof and the find-
ing of the High Court that it was governed by the provisi.ons of
.Articles 22 and 24 ibidem was erroneous. It has also been sub-
mitted that it was not open to a Public Sector Undertaking ~uch
as the respondent-Bank to take the plea of limitation as the F
taking of the plea was to defeat a causE.l which was.not only just
but on the admitted facts of the case the money belonged to the
appellant. The learned counsel for the respondent has, how-
ever, pointed out that Section 10 of the Act pertained to suits
against trustees and their representatives and a bare perusal G
of the facts of the case would show that there was no element of
the creation of a trust and that this was not even the case set up
.. by the appellant at the initial stages . It has also been pointed
out that Article 113, even if applicable, provided for a limitation
of 3 years from the time when the right to sue accrued and as
H
1202 SUPREME COURT REPORTS [2008] 13 S.C.R.

A the appellant had himself admitted in Writ Petition No.2840/
1991 and in several other court proceedings that a demand
had been made on several occasions from the year 1980 on-
wards forthe payment of the amount but had not been accepted,
the right to sue would have accrued from that date and the suit
B having been filed in the year 1997 was clearly out of limitation.
It has, accordingly, been pleaded that as the suit was one for
recovery of money simplicitor, it would be governed by Article
22 or 24 of the Act, as had been found by the High Court. It has
finally been submitted that though it was perhaps not proper for
C a Public Sector Undertaking to take a plea of limitation, but in
the facts of the case inasmuch as the appellant had slept over '
the matter for years together, all pleas were open to the defen-
dant.
6. We take up Mr. Ray's first argument with regard to the
D applicability of Section 10 of the Act. Section 10 reads as un-
der:
"Section 10. Suits against trustees and their
representatives.- Notwithstanding anything contained in
the foregoing provisions of this Act, no suit against a person
E in whom property has become vested in trust for any
specific purpose, or against his legal representatives or
assigns (not being assigns for valuable consideration),
for the purpose of following in his or their hands such
property, or the proceeds thereof, or for an account of
F such property or proceeds, shall be barred by any length
of time."
7. A bare perusal of this section would reveal that it ap-
plies where a property had been vested in trust for any specific
G purpose and for certain other purposes stipulated in the provi-
sion. We are of the opinion that there is nothing to suggest that
a trust had been created merely because some money had been
deposited with the Bank at the instance of the Court on account
of the auction of the goods and it was not a mere deposit
H simplicitor.
MR KRISHNA GOPAL KAKANI v. BANK OF 1203
BARODA [HARJIT SINGH BEDI, J.]

8. Mr. Ray has also referred us to Sections 9,10,14 and A
19 of the Indian Trusts Act 1894 with respect to the creation of a
trust and drawn our particular attention to Section 88 thereof
which deals with the question of an advantage gained by a fidu-
~
ciary. Section 88 is reproduced below:
"Section 88. Advantage gained by fiduciary.- Where a B
trustee, executor, partner, agent, director of a company,
legal advisor, or other person bound in a fiduciary character
to protect the interests of another person, by availing
himself of his character, gains for himself any pecuniary
advantage; or where any person so bound enters into any c
dealings under circumstances in which his own interests
are, or may be, adverse to those of such other person and
thereby gains for himself a pecuniary advantage, he must
hold for the benefit of such other person the advantage so
~
gained." D

9. An analysis of this Section would show that the Bank, to
whom the money had been entrusted, was not in the capacity
set out in the provision itself. The question of any fiduciary rela-
tionship therefore arising between the two must therefore be
E
ruled out. It bears reiteration that there is no evidence to show
that any trust had been created with respect to the suit money.

10. The learned counsel has, however, placed reliance on
Canbank Financial Services Ltd. Vs. Custodian & Ors. (2004)
8 SCC 355 to contend that a Banker holding a customers money F
would do so in a fiduciary capacity and as such the matter would
fall within section 88 and ipso facto make Section 10 of the Act
applicable. We, however, see from a perusal of this judgment
that it related to a situation where funds in the account of one
Hiten Dalal were utilized by two stock-brokers to purchase units
G
in a Mutual Fund under instructions of Hiten Dalal. The units
were handed over to Hilen Dalal and the interest accruing
thereon was handed over to him. It was in this situation that the
Court held that a fiduciary relationship was created with the
appellant financial service and Dalal. Clearly, this is not the case
H
1204 SUPREME COURT REPORTS [2008] 13 S.C.R.

A herein. Section 10 of the Act is, therefore, not relevant to the
circumstances.

11. We now examine Mr. Ray's primary arguments with
regard to the applicability of Article 113 of the Act. This Article
is reproduced hereunder: •·
B
Description of suit Period of Limita- Time from which
tion period begins to run

"113. Any suit for Three years When the right to
which no period of sue accrues.
c limitation is pro-
vided elsewhere in
this Schedule.
12. A reading of this provision reveals that the time of three
years would start running from the date when the right to sue
D accrues. It has been submitted by Mr. Ray that the limitation
would start from 24th February 1995 i.e., the date when the ac-
counts had been submitted by the Bank in Court. The learned
counsel for the respondent has, however, pointed out that the
appellant had made his first demand for the money due to him
E by a telegram dated 19th November 1980 and as the said de-
mand had not been honoured, the period of limitation would
start from that day. It has also been argued that a demand had
been made on several occasions thereafter as well but no suit
had been filed till the year 1997.
F
13. We have considered this argument very carefully. It
appears from the documents on record that several notices etc.
had been issued by the appellant to the Bank and in response
to some of them, the Bank had made its reply that it was await-
G ing instructions from its Head Office. The learned counsel for
the respondent has pointedly drawn our attention to a regis-
tered notice dated 12'h December 1988 wherein after giving a
chronology of what had happened, it was stated in paragraph 3
as under:
H "This is, therefore, finally to call upon you to settle my
MR. KRISHNA GOPAL KAKANI v. BANK OF 1205
BARODA [HARJIT SINGH BEDI, J.]

clients account by making appropriate payment to it within A
seven days of the receipt of this notice else my client
shall be constraint to file suit for account against the .
bank treating it as re~usal on the part of the bank to settle
the account at the entire risk or the x x x as to costs and
• consequences which please note carefully." B
14. Concededly, the suit was not filed even within 3 years
from 121h December 1988 despite the above said notice and
the suit was, in fact, filed in the year 1997. The learned counsel
for the appellant has, however, referred us to paragraphs 39
and 40 of the plaint to identify the date for the start of li_mitation. c
These paragraphs are reproduced below:
"Para 33. On 24.2.1995 the defendant Bank submitted
statement of account of Plaintiff before the Hon'ble High
Court therein showing the credit and debit entries made
~ D
by them in account of plaintiff with an application and
undertaking for giving interest @ 19% on the surplus
amount of the plaintiff lying with the defendant Bank and
specifically requested to the Hon'ble High Court to decide
the account as submitted by the Bank.on above mentioned
terms for interest on surplus .. E

Para 39. That the cause of action for the present suit
accrued in favour of the plaintiff and against the defendant
on 24.2.95 when the plaintiff, as stated in para 32 and 33
... here-in-above, for the first time came to know, through the F
statement of account submitted by the defendant in the
High Court, about the amount received by the defendant
from sale proceeds of the goods, and illegal deduction
made by them from the said amount, therefore, the suit is
within limitation.
G
Para 40. That the transaction took place at Indore, the
cause of action accrued at Indore and the disputed amount
is lying with the defendant Bank at Indore at its Indore
Branch, therefore, this suit is within territorial jurisdiction
of this Court." H
1206 SUPREME COURT REPORTS [2008) 13 S.C.R. .(

A 15. We are of the opinion that the appellant's plea of igno-
ranee is clearly untenable in view of the documents referred to
above and even from a perusal of the proceedings in the present
civil suit. In his cross-examination, the plaintiff-appellant has ad-
mitted that in Misc. Application No. 950/1975 he had been
\.
B served a notice but had not appeared in Court, but was fully
aware that the goods had been sold under the orders of the
High Court for Rs.4,72,714.16 and that on 3rd October 1979,
when Misc. Application 950/1975 had been finally disposed of,
he knew that the aforesaid amount had been deposited with
c the Bank. The appellant also admitted that from 3.10.1979 to
14.3.1991, when the Writ Petition had been filed in the Bombay
High Court, no steps had been taken to recover the amount
though several notices, threatening action had been issued.
Further even assuming for a moment that a statement of ac-
D counts had been tendered by the Bank on 24.2.1995 in Patwa's ~

proceedings, that would not amount to an acknowledgement to
save limitation, as limitation had long since expired.
16. There is yet another circumstance which clearly mili-
tates against the case set up by the appellant. In paragraphs
E 16, 20 to 24 of Writ Petition 2840/1991 this is what the appel-
lant had to say.

"16. The petitioner now requested the Respondent Bank
to refund the surplus amount to them. In a telegram to the
F
Branch Manager, Industrial Estate Branch, Indore on .,
19.1.1980, the petitioners demanded the surplus amount
along with the margin money lying as a deposit with the
respondent Bank.
20. The petitioner wrote letters to the Chairman, Managing
G Director, General Manager, Assistant General Manager
and Regional Manager of the respondents complaining
about the tacit silence and the uncooperative approach of
the respondents in settling the matter of the petitioners
.
inspite of the directions given by this Hon'ble Court.
H
MR. KRISHNA GOPAL KAKANI v. BANK OF 1207
)
BARODA [HARJIT SINGH BEDI, J.]

21. The respondents having failed to even respond to all A
the letters mentioned in the foregoing para No.20, the
petitioner now tried to get succour from the Reserve Bank
of India, Under-Secretary, Government of India, Ministry of
Finance, New Delhi, between June 1988 to August, 1988.
,
~ B
22. The petitioner states that they approached the Branch
Managers of the Respondents on innumerable occasions
from Jan.1980 to August, 1988 but regretfully these officers
of the Respondents failed to give any information regarding
the appropriation of the said amount or the surplus pay~ble
to the petitioner, or any statement of account. c
23. Finally the petitioners by their advocate called upon
the Respondents by their letter of 12.12.1988 to settle the
petitioners' account or face legal action for illegally

•(
. withholding the moneys of the petitioner without any
justifiable cause arid depriving them of the fruits of their
D

business and profitability.
24. After their inaction for eight years the respondents
replied to the notice of 12. 12. 1988 on 15. 12. 1988
denying the petitioner's contentions and raising frivolous E
objections regarding payments of the legitimate dues of
the petitioners and merely calling the petitioners to move
a "Proper Court" for obtaining appropriate orders.

. 17. It will be clear from a perusal of the aforesaid averments
that, taken at its very best in favour of the appellant, his claim
F

had been finally denied on 15th December 1988. It must,
-.j
I therefore, be held that the right to sue started from that day. The
appellant's plea that the limitation would deem to have started
w.e.f. 24.2.1995 is therefore, on the face of it, unacceptable. It
G
is further significant that on the dismissal of W.P. No. 2840/
1991 on 25.10.1991 by the Bombay High Court, the appellant
filed a Special Leave Petition in this Court. This petition too
was dismissed in-limine on 1oth February, 1992 with the following
observations:
-"l H
'
1208 SUPREME COURT REPORTS [2008) 13 S.C.F<-.

A "The Special Leave Petition is dismissed. The remedy by
way of Writ Petition was certainly not a proper remedy.
Learned counsel for the petitioner states that he wants to
file a suit. We are not concerned with any such thing. Mr.
Agarwala, learned counsel for the respondent will file
B Vakalatnama within two days." '

18. From a reading of the aforesaid order it transpires
that despite the statement that a civil suit would be filed, no suit
was filed within three years. The suit was filed but in the year
1997 i.e. beyond the period of three years.
c
19. This Court in Mst. Rukhmabai vs. Lala Laxminarayan
& Ors. AIR 1960 SC 335 has observed as under:
33. The legal position may be briefly stated thus: The right
to sue under Art. 120 of the Limitation Act accrues when
D the defendant has clearly and unequivocally threatened to
infringe the right asserted by the plaintiff in the suit. Every
threat by a party to such a right, however ineffective and
innocuous it may be, cannot be considered to be a clear
and unequivocal threat so as to compel him to file a suit.
E Whether a particular threat gives rise to a compulsory
cause of action depends upon the question whether that
threat effectively invades or jeopardizes the said right.

34. The facts relevant to the question of limitation in the
present case may be briefly restated: The trust deed was
F
executed in 1916. The suit house was constructed in 1920.
If, as we have held, the trust deed as well as the construction
of the building were for the benefit of the family, its execution
could not constitute any invasion of the plaintiff's right. Till
1926, the plaintiff's father, Ratanlal was residing in that
G
house. In 1928 when Daga challenged the trust deed, the
family compromised the matter and salvaged the house.
From 1936 onwards the plaintiff has been residing in the
suit house. It is conceded that he had knowledge of the
litigation between Rukhmabai and Chandanlal claiming
H
MR. KRISHNA GOPAL KAKANI v. BANK OF 1209
BARODA [HARJIT SINGH BEDI, J]

the property under the trust deed; but, for that suit he was A
not a party and the decision in that litigation did not in any
way bind him or affect his possession of the house. But in
execution of the decree, the Commissioner appointed by
the Court came to the premises on February 13, 1937, to
take measurements of the house for effecting partition of B
the property, when the plaintiff raised objection, and
thereafter in 1940, filed the suit. From the aforesaid facts,
it is manifest that the plaintiff's right to the property was
not effectively threatened by the appellant till the
Commissioner came to divide the property. It was only c
then there was an effectual threat to his right to the suit
property and the suit was filed within six years thereafter.
We, therefore, hold that the suit was within time.

Applying the aforesaid p_rinciple, it would be clear as per
the appellant's own showing that there had been a denial of the D
appellant's claim on several occasions before 15th December
1988, but unequivocally on the 15th of December 1988. This
judgment was followed subsequently in M. VS. Manikaya/a Rao
vs. M.Narasimhaswami & Ors. AIR 1966 SC 470. It bears no-
tice that Article 120 of the Limitation Act of 1908 largely corre- E
sponds to Article 113 of the Act, with the period of limitation
now being reduced from six to three years.

20. We are, therefore, of the opinion that Mr. Ray's pri-
mary argument with regard to Article 113, does not advance F
the case of the appellant. In the face of the above undeniable
facts, the large number of judgments cited by the learned coun-
sel for the parties with regard to the date on which the cause of
action would accrue need not be examined.
21. Mr. Ray has also submitted that it would be inappro- G
priate for a Public Sector L.:ndertaking such as the respondent-
Bank to raise a plea of limitation especially when the amount
was due to the appellant. In this connection, the learned coun-
sel has cited The Madras Port Trust vs. Hymanshu Interna-
tional AIR 1979 SC 1144 and UCO Bank vs. Hem Chandra H
1210 SUPREME COURT REPORTS [2008] 13 S.C.R.

A Sarkar AIR 1990 SC 1329. The learned counsel for the respon-
dent has, however, argued that no proper calculation with re-
spect to the amount that had been decreed, had been made
and whereas the appellant had deposited in all less than
Rs.10,000/- towards margin money in the year 1979, there was
B no basis for decreeing the suit as claimed for a sum of about
Rs.24 Lakhs. It has also been submitted that the appellant had
threatened to initiate legal proceedings from the year 1980 on-
wards and had actually gone to court on several occasions and
had remained unsuccessfu.! up to the Supreme Court in the year
c 1992 but had filed the suit in the year 1997 and as such the
Bank was justified in taking the plea of limitation in the facts of
the case. We find merit in this argument. In Madras Port Trust's
case (supra) the suit had been decreed in favour of the private
party in the sum of Rs.4838.87 and special leave had been
0 granted by this Court subject to the payment of the aforesaid
amount irrespective of the result of the appeal, the more so as
the claim of the private party had been supported by the Gov-
ernment Department concerned and it is in that situation that
the Supreme Court made the observation that a plea of limita-
E tion should not be raised. In the UCO Bank's case (supra), the
appellant Bank had received the price of the goods from the
opposite party but had failed to deliver the goods thereafter.
This fact had been virtually admitted by the representative of
the Bank and in that backdrop this court observed that it was
F not open to the Bank to contend that it was not called upon to
return the goods or in the alternative to pay an equivalent as
price to the plaintiff and it was observed (Para 17) that:
"We may also state that in practice Bankers do not set up
the statute of limitations against their customers or their
G legal representatives, and we see no reason why this case
should be an exception to that practice."
22. The facts of the case before us are starkly different, as
would be seen from what has been narrated above. Significantly
also, the appellant, though a party to the proceedings in Miscel-
H

"""-·-~
)
MR. KRISHNA GOPAL KAKANI v. BANK OF 1211
BARODA [HARJIT SINGH BEDI, J.]

,laneous Application No. 950 of 1975, did not put in appear- A
ance, nor shared the expenses (as admitted by him in his evi-
dence), but he wants to take advantage of the situation now
created. In this background the Bank was fully justified in taking
the plea of limitation. We, therefore, find no merit in this appeal.
It is accordingly dismissed. B

r K.K.T. Appeal dismissed.

.

/,