Limitation Act 1908 (SCHI, 120) 1959 PLD 191 KARACHI-HIGH-COURT-SINDH


P L D 1959 (W. P.) Karachi 191


Before Qadeer‑ud‑Din Ahmad, J.


OSMAN and others‑Plaintiffs






Suit No. 979 of 1951, decided on 13th May 1958.


Madhavdas Parmanand v. Jan Muhammad Ghulam Hyder 1942 Sind 37 and Kesho Prasad v. Sarwan Mal 21 C W N 591 ref.


Date of hearing : 1st May 1958.




Osman filed a suit for the recovery of Rs. 73,000 alleged to have been paid by him to the defendant. Rs. 30,000 are alleged to have been paid by cheque and Rs. 40,000 in cash. He died on 16th June, 1953, and his two daughters and one son were brought on record as his legal representatives. They continue to be the plaintiffs. The defendant admitted the receipt of Rs. 30,000 but alleged that this was in refund of an equal amount paid by him to Osman. He denied the receipt of Rs. 40,000.


The parties agree that Osman and the defendant were close friends and that the dispute has arisen out of a transaction for purchasing a cinema formerly known as “The Parbhat Cinema” and afterwards renamed as “Nigar Cinema” situated on Wadhumal Odharam Road, Karachi.


According to the plaintiff, the defendant informed him in March 1948 that the property was for sale and proposed that the two friends should buy it jointly. The owner, viz. Vishnu Rewa Shankar Pangholi demanded four lacs of rupees as the price of the property, but as it was partly burnt, these friends considered the price to be rather high and tried to get it reduced. On the 2nd of April, 1948, the defendant is said to have informed the plaintiff that the bargain had been struck at Rs. 3,37,500 and that Rs. 1,00,000 had to be deposited with one Mr. Dastur of the Central Bank Limited, Karachi to make the agreement binding and effective. The defendant is said to have had with him Rs. 30,000 only at that time and therefore the plaintiff agreed to invest Rs. 70,000 and thus make up the deposit of one lac of rupees. The plaintiff is, therefore, said to have paid to the defendant on the 3rd April 1948 Rs. 40,000 in cash and Rs. 30,000 by cheque on the Mercantile Bank of India. One year passed, and the transaction was not completed, and news reached the plaintiff that the property had been purchased by someone else. He therefore, demanded the money back from the defendant who expressed his inability to pay on the excuse that his money was locked up in another transaction which he made for the purchase of some `iron goods’. He, therefore, requested the plaintiff to treat the amount of Rs. 70,000 payable by him as a deposit with himself. This happened in or about January 1950. The, plaintiff waited for about two years and ultimately instituted the present suit on the 24th of November, 1951.


The defendant has denied that any bargain, had been struck. His explanation is that he offered Rs. 3,37,500 to the seller who refused to consider it so long as a cheque for a lac of rupees was not produced before him. He admits that he had Rs. 30,000 only with him in cash at that time. His version is that he handed over this money to the plaintiff who passed on to him a cheque dated 18th February 1948 for one lac of rupees. Ex. 5 is said to be this cheque. In spite of this cheque the seller did not agree to sell the property for the proposed amount, and the transaction fell through. The cheque remained with the defendant. He has stated in cross‑examination “Even though the talk of the purchase of cinema was finally dropped I did not return the cheque to Usman. There was no particular reason for so doing. Nor did Usman ask for it. Between 18‑2‑48 and 3‑4‑48 I did not demand the repayment of my Rs. 30,000‑0‑0 from Usman even though the transaction had fallen through on 19‑2‑48 or on 20‑2‑48.


According to para 3 of the statement he demanded the repayment of Rs. 30,000 at some time and the plaintiff paid it by a cheque dated 3rd April, 1948. According to him Rs. 40,000 were never paid to him in cash, and thus ‘the entire claim of the plaintiff is false and vexatious and fit to be dismissed with compensatory cost.


On the pleadings of the parties, the following issues were framed by the consent of the parties :‑


(1) Did the plaintiff pay the sum of Rs. 70,000 to the defen?dant on 3‑4‑1948 as alleged in para 3 of the plaint ?


(2) (a) Was the cheque for Rs. 1,00,000 dated 18‑2‑1948 given to the defendant in the circumstances mentioned in para 3 of the written statement ?


(b) Was the cheque for Rs. 30,000 dated 3‑4‑1948 given by the plaintiff to the defendant, in repayment of defendant’s money as stated in para 3 of the written statement ?


(c) Had the defendant paid Rs, 30,000 to the plaintiff ?


(3) Is the defendant indebted to the plaintiff in the sum of Rs. 70,000 or any other sum ?


(4) To what relief, if any, is the plaintiff entitled ?


(5) Is the defendant entitled to compensatory costs ? If so, what amount ? (Para 11 of the W. S.)


The defendant was examined on commission, and two witnesses were examined on behalf of the plaintiff. The documentary evidence consists mostly of legal notices exchanged between the parties, copies of bank accounts and copies of account books of the plaintiff. The evidence of the transactions alleged by the parties is so inter‑connected that it will not be convenient to divide it for discussing the issues separately. I shall discuss the versions of the parties and then set out my conclusions with respect to each issue.


The gist of the plaintiff’s case, according to the evidence, is that the cheque dated the 18th of February 1948 for Rs. 1,00,000 was given by the plaintiff in the very beginning when this amount was not meant to be paid to the seller but was to be used merely as a token of a genuine desire of the purchasers to make a bargain. It was not meant to be cashed. In any case, it could not be cashed until an agreement for sale had been completed and therefore there was no question of the defendant paying Rs. 30,000 in cash to the plaintiff at the time of drawing this cheque. Moreover, the plaintiff himself did not have a lac of rupees in his bank account at the time of writing this cheque, as is proved by Ex. 7, dated the 14th of November, 1956, a certificate from his Bank. According to this certificate, the plaintiff and Rs. 39,848‑9‑3 only in his Bank at this time. The fact that he did not have a lac of rupees in his Bank is further supported by a writing of the deceased plaintiff at the back of an inner foil of his cheque book Ex. 18A. It is contended, that the plaintiff could not have issued a cheque for Rs. 1,00,000 if it was intended to be cashed with Rs. 39,000 only in his bank. It was merely a token cheque. If the transaction had been finalised then the parties could have made arrangement .for making the payment. The following statements of the defendant support the plaintiff :‑


“It happens in Karachi that the sellers insist on seeing the cheque before entering into the deal but it depends on the parties ……


“If he had agreed on the deal the cheque would have been given to him only after the execution of an agreement for sale.”


The version of the defendant that he paid Rs. 30,000 in cash against this token cheque of Rs. 1,00,000 is definitely weakened by these statements. As against this the allegation of the plaintiff that he latter on paid Rs. 70,000 partly in cash and partly by cheque is supported by two major circumstances. One of them is that the bank account of the defendant, Ex. 10, shows that he deposited a lac of rupees in his Bank on the 3rd of April 1948. which is the date of the cheque for Rs. 30,000 given by the plaintiff to the defendant. Ex. 10 shows that he deposited Rs. 70,000 in cash on the 3rd of April 1948 and Rs. 30,000 were credited in his account by clearing a cheque on the 5th of April 1948. The difference between the two dates have arisen because this time was required by the Bank for collecting the proceeds of the_’cheque. The defendant has stated :‑


“On the 3rd of April 1948 when Usman gave me the cheque for Rs. 30,0001 opened an account with the Central Bank or it may be that I had already an account and “I put the cheque in that account on that day. The same day. I deposited Rs.70,000 in cash in the said Bank. Mr. Dastur was Manager of the Central Bank at that time. This amount of Rs. 70,000 must have been lying in my house which I deposited. I cannot say in what deal 1 had received this amount.”


This amount of Rs. 1,00.000 which was credited in the account of the defendant was already meant for the seller, The other circum?stance which supports the case of the plaintiff is the entry in the cash book of the plaintiff. Ex. 14A. The relevant part of the entry is as follows :‑






Rs. 70,000 to the debit `of Seth Vishno Rewa Shanker. On accout of we i. e. I and Hashim Bhai, having purchased your Prabhat Cinema in partnership towards which the said amount deposited with Seth Dastoor of Central Bank.



Rs.40,000 paid in cash. Rs. 30,000 cheque No. A117815 of Mercantile Bank of India in favoure of Hashim Mohammad Ganchi per Hashim Bhai.”



The learned counsel of the plaintiff has argued that the genuineness of this entry is beyond doubt because, as stated by Zakaria, P. W.‑1, the former accountant of the plaintiff the books were regularly maintained, and because regular maintenance of the books has not been questioned by the defendant. Moreover this entry was made in 1948 when the plaintiff and the defendant were good friends and there was no reason for the plaintiff to make an erroneous entry. They were such good friends that in 1949 the defendant was appointed his arbitrator by the plaintiff in a suit filed by the step mother of the plaintiff against him. In August 1949 the shop of the plaintiff was sealed and therefore the plaintiff could not have the opportunity of tempering with the books even if he wanted to do so. The shop was opened in March 1950 but then his books were seized by the Income Tax Department who have affixed their seal on every page of his books of account. Between the unsealing of shop in March 1950 and the seizure of the books of the plaintiff by the Income Tax Department there was probably a short interval during which the books remained in the possession of the plaintiff. The plaintiff was of that time alive, but there is no suggestion that the books were tampered with or could be tampered with during this period. The relations between the parties had not deteriorated at any time before the exchange of legal notices in the latter half of, 1951. The defendant has admitted the existence of good relations until the death in 1953 of the plaintiff. His statement in examination?-in‑chief after the death of the plaintiff is as follows :‑


“God alone knows why he filed this suit against me. We were on good terms when he filed this suit against me. I was present at his funeral. I am illiterate. I have never kept any accounts nor ever produced any accounts in Income Tax Department. I keep no staff.”


In addition to the above circumstance, there is another com?paratively minor circumstance which also supports the version of the plaintiff. There is an explanation in the evidence of the plaintiff of the sources from which he paid Rs. 40,000 in cash in addition to Rs. 30,000 by cheque. Zakaria, P. W. 1 has stated that Rs. 12,000 were in the safe of the plaintiff on that day, and Rs. 28,000 were withdrawn by him from the Habib Bank, Napier Road Branch, Karachi to make up the amount of Rs. 40,000. This Bank was at a short distance from the shop of the plaintiff, and therefore, Rs. 28,000 were collected by the plaintiff, by encashing a cheque, and the cheque for Rs. 30,000 being on the Mercantile Bank was not cashed because this Bank happened to be at a distance of a mile from the plaintlff’s shop. Ex. 11, which is a statement of account of the plaintiff with the Habib Bank Limited, Napier Road” Karachi shows that on the 3rd of April 1948, the plaintiff had withdrawn Rs. 28,000 by a cheque in his own favour.


The plaintiff demanded Rs. 70,000 from the defendant through his lawyers by a notice dated the 18th September, 1951, Ex. 12. The reply of the defendant to this notice is dated the 24th of September, 1951, Ex. 6. The reply is significant and runs as follows :‑


“That our client who had multi‑dealings with your client over more than three years ago, is not in a position to recollect to have received from your client the sum of Rs. 70,000 in connection with the purchase of “Parbhat Cinema” as alleged by your client which transaction had failed long ago. It seems that your client is labouring under some wrong impression or is cleveraly distorting facts for ulterior motives.”


The forgetfulness of the defendant is remarkable. He is not so fabulously rich as to forget whether he ever received seventy thousand rupees from the plaintiff. His forgetfulness was feigned to gain time. The defence taken in the written statement is centered round the cheque of Rs. 1,00,000 dated the 18th of February, 1948, Ex. 5, and on the contention that the suit is barred by time. Mr. Dingomal, the learned counsel of the defendant, has criticised the evidence of the plaintiff to gain support to his case. The fact that a cheque for one lac was given by the plaintiff has been brought on record to introduce the defence that thirty thousand rupees were paid against it. I do not believe that the defendant paid Rs, 30 thousand in cash at the time of taking the cheque from the plaintiff. It is therefore not true that the plaintiff gave the cheque for Rs. 30 thousand to the defendant in repayment of a debt. The payment of Rs. 40,000 is supported by the circumstances of the case and corroborative evidence. The main criticism of Mr. Dingomal to the evidence of the plaintiff is that entries of the plaintiff’s books are not binding on his client and that the language of Ex. 14 A in which the payment of the entire amount is mentioned does not make his client specifically liable. It is true that the defendant is not bound by what the plaintiff wrote in his books and that if there were no other documents and circumstances which lent support to the entries, and the entries on their part corroborated them, then by themselves they could not establish the plaintiff’s case against the defendant. But in this case the proof is much better grounded. All important documents and circumstances favour the plaintiff’s version and weaken the case set up by the defendant. Mr. Dingomal’s criticism of Ex. 14‑A is that it speaks of a completed transaction by the words “having pur?chased” and refers to the seller with regard to the payment by the words “your Parbhat Cinema” and describes the manner of payment as “towards which (cinema) the said amount deposited with Seth Dastur of Central Bank”. Counsel contends that there is no reference to the defendant as the recipient of Rs. 70,000, or of the cash amount Rs. 40,000. , This argument dis?regards the fact that, admittedly the defendant was negotiating the purchase and working up to complete the sale. There is no suggestion that the seller ever contacted the plaintiff directly.


Mr. Dingomal’s last and the strongest attack on the plaintiff’s claim is based on the law of limitation. He said that the suit of the plaintiff has been framed with the consciousness of this weakness because in para 2 of the plaint, March 1948 is stated to be the month in which the proposal to purchase the property was made and in para 5 of the plaint the idea of depositing money with the defendant has been introduced. Both of these allegations have been denied in the written statement. The proposal to purchase could not have been made in March because the cheque for Rs. one lac (Ex. 5) is dated the 18th of February, 1948 and the allegation of deposit of money is false and has remained entirely unsubstantiated. There is force in these conten?tions but the question is which Article of the Limitation Act, 1908 applies and at what point of time limitation began to run ?


The cheque by which Rs. 30 thousand were paid is admittedly dated the 3rd of April, 1948 and Rs. 40 thousand are alleged to have been paid on the same day. The transaction of purchase for which the parties were working admittedly did not materialise. According to the plaintiff, he waited for a year for its completion and then came to know that the property was sold to somebody else. He demanded refund in writing by Ex. 12 dated 18‑9‑1951 and instituted the suit on 24‑11‑51.


The plaintiff’s counsel contended that Art. 60 was applicable and therefore the limitation of three years commenced to run from the date of demand i.e., 18‑9‑51 and as such the suit is within time. Art. 60 is as follows :‑


“Description of suit.

Period of limitation.???????????

Time from which period begins to run.

For money deposited under an agreement that it shall be payable on de?mand, including money of a

customer in the hands of his banker so payable.

Three years?????

When the de?mand is made.”


This Article does not apply because the plaintiff has not alleged that the money was payable to him on demand. Moreover, it is clear at this stage of the proceedings that the plaintiff has not been able to establish that the defendant retained the money with himself as a deposit. Moreover, as pointed out in Madhavdas Parmanand v. Jan Muhammad????? Ghulam Hyder (1942 Sind 37) this Article cannot be appropriately applied to a case where the plaintiff is not entitled to the money immediately on its receipt by the defendant. The plaintiff was not entitled to the money at once on paying it, without changing the nature of the transaction and introducing new factors if the cancellation of the proposal of purchase, because the object was that it should be handed over to the seller or his agent.


The counsel of defendant contended that Article 62 was applicable. The Article is as follows :‑


“Description of suit.

Period of limitation.???????????

Time from which period begins to run.

For money payable by? the defendant to the plaintiff for money received by the defendant for the plaintiff’s use.

Three years.????

When the money is re?ceived.”


This Article is not applicable because the money was not received by the defendant for the plaintiff’s use. It was paid by the plaintiff himself to the defendant for being employed towards a joint venture. The plaintiff has claimed it back on the ground that the venture failed.


The counsel of the plaintiff has suggested to more Articles. They are Article 97 and Article 89. Article 97 is as follows :‑


“Description of suit.

Period of limitation.???????????

Time from which period begins to run.

For money paid upon an Existing consideration which afterwards fails.

Three years.????

The date of the failure.


There was no “existing consideration”. The parties had the common object of purchasing a property. An object is different from consideration. When money is paid by one person to another so that with it he may achieve a certain objective, there may be implied trust or creation of an agency. In either case there may not be any consideration. There was none in this case.


Article 89 runs as follows :‑


“Description of suit.

Period of limitation.???????????

Time from which period begins to run.

By a principal against??? his agent for moveable property received by the latter and not accounted




When the account, is during the continuance

of the agency, demand?ed and refused or where no such, or demand is made, when the agency terminates.


The counsel of .the plaintiff contended that an agency was created in terms of section 182 of the Contract Act, 1872 by the employ?ment of the defendant by the plaintiff for making a bargain and representing the plaintiff in this deal with the seller of the property. The deal did involve the representation of the plaintiff partly if the defendant was negotiating the transaction partly on behalf of himself and partly on behalf of the plaintiff. There was, however, no representation of the plaintiff if the defendant did not act as an agent and was carrying the negotiations as principal to principal.


In this case the negotiations were admittedly carried on by the defendant as an agent because he took a cheque for a lac of rupees drawn by the plaintiff, (Ex. 5) and tried to strike a bargain with the seller on its basis. But this Article does not apply because from its language it is clear and, the learned Judges who decided the case Kesho Prasad v. Sarwan Mal (21 C W N 561) have pointed out that a suit contemplated by this Article is a suit in which accounts have to be rendered. There is no question of rendition of account in this suit.


No other article has been suggested as applicable by the learned counsel of the parties. It appears to be that the residuary provision, Article 120, applies to this case and the period of limitation is six years from the cause of action of the suit. The payment was made on the 3rd of April, 1948. According to para 5 of the plaint the plaintiff did not know that the transaction had failed for one year afterwards. The defendant has not denied this fact. It follows therefore and I hold, that the cause of action arose in or about April, 1949.? Demand for the refund was made by the plaintiff through a lawyer’s notice (Ex. 12) on 18th September 1951. This date (Actually 19‑9‑51) is stated in para 7 of the plaint as the date of the cause of action. This is not correct. The suit was, however, instituted on 24‑11‑1951 and is within time for purposes of Art. 120 however the time may be computed.


The result of the above discussion, in the order of the issues, is as follows :‑


The plaintiff paid Rs. 70,000 to the defendant on 3‑4‑48.


(2) (a) The cheque was not given to the defendant in the circumstances stated in para 3 of the written statement.


(b) The cheque for Rs. 30,000 dated 3‑4‑48 was not given by the plaintiff to the defendant in repayment of defendant’s money as stated in para 3 of the written statement.


(c) The defendant had not paid Rs. 30,000 to the plaintiff.


(3) The defendant is indebted to the plaintiff in the sum of Rs. 70,000.


I, therefore, decree the suit of the plaintiff for Rs. 70,000 with interest at the rate of 6% per annum from the date of the suit until realisation and costs. There is no question of the defendant getting costs under issue No. 5.

A. H.                            Suit decreed.


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