Raman Menon v. Saw Mills and Industries Ltd — 1970 DIGILAW 86 (KER)

Judgment :- 1. The defendant is the appellant and the appeal arises out of a suit filed by the plaintiff for recovery of Rs. 10,631.52 and future interest thereon from the defendant on the ground of misappropriation. 2. The plaintiff is a public limited company registered under the Companies Act having its registered office at Trichur. The Managing Agents of the plaintiff from 1946 to 1st June 1960 was M/s Udaya Agencies (Private) Limited. Ext. D12 (a) is the managing agency agreement. The defendant who was the director-in-charge of Udaya Agencies was during the currency of Ext. D12 (a) an ex-officio director in the plaintiff-company. 3. There was an attempt to wind up the plaintiff-company in Company Petition No. 7 of 1960 on the file of this Court. A receiver was appointed to manage the company on 6 31961 during the pendency of the winding up petition. The winding up petition was dismissed on 1011961 and the Board of Directors of the plaintiff-company assumed charge of the administration of the company from the receiver on 6 3 1961. Ext. D3 resolution dated 14 81958 was passed in the general meeting of the plaintiff-company. The said resolution reads: "Resolved that Sri. P. Raman Menon who is the Ex-officio Director of the Company by virtue of his being Director-in-charge of the Udaya Agencies (Private) Ltd. Managing Agent of this company be paid a remuneration of Rs. 500/per mensem with retrospective effect from 1st January 1958 subject to the approval of the Central Government." The Central Government by Ext. P4 order dated 912-1956 did not sanction the resolution with the result that the defendant became disentitled to draw any amount for his remuneration. 4. The averment in the plaint is that between 4 21959 and 31-5-1960 the defendant withdrew a sum of Rs. 8,495/-from the plaintiff-company. It is alleged by the plaintiff that Ext. P4 order was withheld from the knowledge of the Board of Directors of the plaintiff-company and the directors came to know of the same only on 6 31961. The defendant while admitting the withdrawal of the amounts contended that they were withdrawn by him because of Ext. D2 (a) resolution to reimburse him his travelling expenses incurred in connection with the business of the plaintiff. The defendant while admitting the withdrawal of the amounts contended that they were withdrawn by him because of Ext. D2 (a) resolution to reimburse him his travelling expenses incurred in connection with the business of the plaintiff. The defendant also pleaded that he is entitled to set off the amounts towards the expenses incurred by him in connection with the administration of the plaintiff-company He also paid court fee on the plea of set off. 5. The learned judge overruled the plea of the defendant that he incurred expenses from his pocket for the plaintiff and held that he is not entitled to claim reimbursement. He found that a portion of the plaint claim was barred by limitation and granted a decree for recovery of only Rs. 5295/-and interest thereon at 6% per annum from the date of decree with proportionate costs. The appeal is filed against the decree and judgment of the learned judge. The plaintiff has filed a memorandum of cross-objections for the amount disallowed by the court below. 6. On behalf of the defendant two questions were raised. The first is that even if be is not entitled to any remuneration because of Ext. D4 he is emitted to get reimbursement of the amounts spent by him because of Ext. D2 (a). In support of his claim that he spent monies for the plaintiff he relied on Exts. D9 and D10 which are merely bills submitted by him. The learned Subordinate Judge has found that the several items in Exts. D9 and D10 have not been proved. Clause.14 of Ext. D12 (a) provided that the Managing Agents shall be at liberty from time to time to retain or reimburse and pay themselves out of the moneys of the plaintiff-company all moneys expended or disbursed by them for or on behalf of the plaintiff-company. It is unlikely that the plaintiff-company would have legitimately agreed to pay anything to the defendant personally for his expenses. We therefore concur with the finding of the learned judge that the defendant is not entitled to claim anything by way of reimbursement and that he has also not proved the items is Exts. D9 and D10. 7. We shall now consider the question of limitation. The learned judge has taken the view that Art.62 of the Limitation Act applies to the case. D9 and D10. 7. We shall now consider the question of limitation. The learned judge has taken the view that Art.62 of the Limitation Act applies to the case. The said Article reads: "For money payable by the Three years When the money is defendant to the plaintiff for received." money received by the defendant for the plaintiff's use. In our view, the above Article has no application to the case before us. The suit is not for return of the amount received by the defendant for plaintiff's use. There is thus no scope for applying Art.62 of the Limitation Act. 8. The learned counsel for the defendant contended that Art.36 should govern the case. The said Article reads: "For compensation for any malfea. Two years When the malfeasance, sance, misfeasance or nonfeasance indemisfeasance or non-pendent of contract and not herein specially feasance takes place." provided for. To apply the above Article the suit should be one for compensation arising out of a tortieus act. The plaint averments will show that the suit is not one for compensation but for return of amounts alleged to have been misappropriated by the defendant. In Raja Kumar v. Fateh Bahadur AIR. 1917 Patna 260 dealing with Art.36, Atkinson, J., observed: "In my opinion it (Art. 36) has no application whatsoever to the present case. We have only to read the terms of the Article to see that it is an Article referable to damages for some tortious act. This is not a case of damages at all. This is a case in which the plaintiff seeks to recover a specific sum of money, her property, which has been applied by the defendant in the action for his own use, benefit and enjoyment." Identical are the observations in Rajah Khetter Kristo Mltter v. Kumar Dinenara Narain Roy 3 Cal. W. N. 202. It was observed: "It seems to me that the first answer to the contention that the case conies within that article (36) is that this is not a suit for compensation in the true acceptation of that term. What compensation, qua compensation, does the suit ask for? I received no answer from the Appellant's vakil to that question. It was observed: "It seems to me that the first answer to the contention that the case conies within that article (36) is that this is not a suit for compensation in the true acceptation of that term. What compensation, qua compensation, does the suit ask for? I received no answer from the Appellant's vakil to that question. If it be not for compensation, that alone would be sufficient to exclude the case from the operation of Art.36." These two decisions were followed by a Bench of the Madras High Court in India S. & R. Ltd. v. Estate of V. Ramalingam AIR. 1953 Mad. 694 wherein Rajamannar, G. J, with the concurrence of Venkatarama Iyer, J, observed: "In the first place, it may be mentioned that this article (36) contemplates an action for compensation for a wrong in the nature of a tort. Secondly, the suit to which this article would apply is a suit for compensation. If the suit is for the recovery of particular property or sum of money as such, then the suit cannot fall within Art.36." We follow the above decisions and hold that Art.36 of the Limitation Act cannot govern the same. 9. The learned counsel for the plaintiff contended that Art.90 or 95 or 120 of the Limitation Act should apply. Art.120 can be invoked only in the absolves of any specific Article governing the case. In Benares Bank, Ltd. v. Ram Prasad AIR. 1930 Allahabad 573 the clerk in a bank in charge of savings bank accounts, through whom alone money could be withdrawn colluded with the customer and allowed him to withdraw money in excess of what he could have withdrawn from his account. A suit was instituted by the bank against the clerk as well as the customer for recovery of the excess drawn and it was held that the suit was governed by Art.95 of the Limitation Act. A suit was instituted by the bank against the clerk as well as the customer for recovery of the excess drawn and it was held that the suit was governed by Art.95 of the Limitation Act. Their Lordships said: 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." We follow the above dictum and hold that Art.95 should apply. Under the said Article the starting of limitation is from the date of knowledge of the fraud. It has been stated in the plaint and also sworn to by pw.1 one of the directors of the plaintiff that Ext. P. 4 was not placed before the directors of the plaintiff or before the general meeting of the plaintiff and the members were not aware of the same until the directors came to know about it after they assumed management of the company from the receiver. The suit is within three years from that date. If so the entire claim is within time. We therefore dismiss the appeal with costs. We allow the memorandum of cross-objections and modify the judgment and decree of the court below by allowing the plaintiff to recover from the defendant Rs. 8495 with interest thereon at 6% from the date of the decree and allowing the plaintiff bis full costs in the trial court. There will be no order for costs in the memorandum of cross-objections.