JUDGMENT M. Satyanarayana Murthy, J. 1. The 1st defendant in OS No. 89 of 1987 on the file of Subordinate Judge, Jagtial, filed this appeal against the impugned judgment and decree dated 4.3.1996, wherein the defendants 1 and 2 were made liable to pay Rs. 50,000/- with interest at 12% per annum from the date of suit till the date of realization. The appellant was the 1st defendant and the respondents 1 and 2 were the plaintiff and 2nd defendant before the trial Court and they will be ranked as in suit, for convenience sake and for reference. 2. The plaintiff filed the suit for recovery of Rs. 50,000/- against both the defendants together with interest contending that the plaintiff is the customer of defendant No. 1 and the bank is acting on behalf of plaintiff for both paying and receiving amount. The Registrar of Co-operative Societies appointed Inspector to inspect the books, during the inspection, mis-appropriation of amount of the plaintiff-society was noticed. On 4.11.1986 the Chief Project Manager, Rural Electrification Corporation Limited addressed a letter to the plaintiff for monitoring of annual accounts of the plaintiff-society for the year 1984-85, Sri B. Rajaiah, S.A. Cess Limited, Sircilla was asked to attend the FDRs reconciliation work with various banks on top priority basis and found the difference in FDRs account from general ledger and investment register. On verification of FDRs reconciliation work with defendant No. 1 bank and after 2.12.1986 it was found that an amount of Rs. 50,000/- was misappropriated by defendant No. 2 out of FDR proceeds credited to the plaintiffs current account with defendant No. 1 bank on 23.10.1982. 3. On 30.9.1982 the Accounts Officer, K.V.L. Narsimha Rao sent a letter to defendant No. 1 along with 5 other FDRs aggregating Rs. 4,25,231.10 ps. with instructions to the bank to credit the amount to the plaintiff's current account and again after debiting to the current account, with Rs. 4,23,876.58 ps. to issue two FDRs for Rs. 1,68,374.79 ps. for eighty four months and for Rs. 2,55,501.79 ps. for (120) months. In the said letter under the instructions, D2 had left some place and then got the signature of the Accounts Officer. D2 has managed in fair copy of said letter sent to D1 on 23.10.1982 and added another Part-C instructions written in manuscript requesting to issue D.D., for Rs. 2,55,501.79 ps. for (120) months. In the said letter under the instructions, D2 had left some place and then got the signature of the Accounts Officer. D2 has managed in fair copy of said letter sent to D1 on 23.10.1982 and added another Part-C instructions written in manuscript requesting to issue D.D., for Rs. 50,000/- in favour of Sri T. Seetharamulu (D2) payable at Indian Overseas Bank, Sulthan Bazar, Hyderabad under intimation to the plaintiff. Thus, the 2nd defendant tampered the figures in the letter correcting Rs. 2,55,501.79 ps. as Rs. 2,05,501.79 ps. by altering the letter materially and swallowed an amount of Rs. 50,000/-. Thus, D2 misappropriated Rs. 50,000/- and on the instructions of D2 the 1st defendant negligently without verifying, issued D.D., for Rs. 50,000/- in favour of D2. Thus, on account of negligence of D1 the plaintiff suffered huge loss of Rs. 50,000/-. Hence, both D1 and D2 are liable to pay the said amount together with interest and claimed relief against both the defendants making them liable for payment of the amount jointly. 4. The defendant No. 1 filed written statement denying material allegations while contending that the plaintiff-society used to correspond with the 1st defendant either on cyclostyled or typed proformas and filling up the blanks in handwriting of the 2nd defendant with the signatures of the officer concerned. Similarly a letter CESS No. 984/A-82 dated 30.9.1982 was issued by the plaintiff and the 1st defendant acted upon the letter, kept the amount in deposits and issued demand draft in the name of the 2nd defendant drawn on Canara Bank for Rs. 50,000/-. Therefore, the 1st respondent-bank is not responsible for misappropriation of Rs. 50,000/- by the 2nd defendant. 5. It is specifically contended that the suit claim of the plaintiff is barred by limitation as the alleged incident of misappropriation by D2 took place on 30.9.1982 but the suit was filed before the trial Court after lapse of 5 years i.e., in 1987. Thus, the suit is hopelessly barred by limitation. 6. It is further contended that the annual statement of account with the defendant-bank was sent to the plaintiff mentioning the details of deposits etc. and if those scrolls of the accounts regularly sent by D1 to plaintiff is sufficient to impute knowledge to the plaintiff. Thus, the suit is hopelessly barred by limitation. 6. It is further contended that the annual statement of account with the defendant-bank was sent to the plaintiff mentioning the details of deposits etc. and if those scrolls of the accounts regularly sent by D1 to plaintiff is sufficient to impute knowledge to the plaintiff. Even if the amount is misappropriated by D2, it is within the knowledge of the plaintiff on the date when accounts scroll of the plaintiff with the 1st defendant was received. Hence, the suit is barred by limitation. 7. The 1st defendant did not act negligently and not guilty of any misconduct and that there is no relationship of principal and agent between the plaintiff and defendant. Thereby the 1st defendant has not under obligation to pay the suit amount together with interest and prayed for dismissal of the suit. 8. Defendant No. 2 also filed written statement separately contending that he is only an accountant of the plaintiff-society and the transaction was only at the instance of higher officials of the plaintiff. The Managing Director and Accounts Officer are the higher authorities in the plaintiff and whatever amount drawn was accounted for in the main cash book of the plaintiff signed by him. He denied the allegation of making additions in the letter dated 30.9.1982 and that there is no negligence or misconduct on his part and prayed to dismiss the suit. 9. Basing on the above pleadings, the trial Court framed the following issues: (1) Whether the defendant No. 1 have paid the funds of the plaintiff's society to defendant No. 2 and at his instance to other without the authority of plaintiff's society? (2) Whether the defendant No. 2 has fabricated and forged cheques, demand drafts and requisition slips to encash the amount in his favour and at his instance to persons of his choice? (3) Whether the defendant No. 1 in collusion with defendant No. 2 caused loss of suit amounts to the plaintiffs society by encashing forged cheques, demand drafts and requisition slips? (4) Whether the plaintiff's society is entitled to recover suit amount with interest at 12% per annum from the defendants jointly and severally? (5) Whether the plaintiff's suit is maintainable against defendant No. 2 in view of his being employee of co-operative society under Cooperative Societies Act? (6) To what relief? 10. (4) Whether the plaintiff's society is entitled to recover suit amount with interest at 12% per annum from the defendants jointly and severally? (5) Whether the plaintiff's suit is maintainable against defendant No. 2 in view of his being employee of co-operative society under Cooperative Societies Act? (6) To what relief? 10. During the course of trial, on behalf of the plaintiff, PWs. 1 to 3 were examined, marked Exs. A1 to A30 and Exs. C1 to C5. On behalf of the defendants DWs. 1 and 2 were examined, marked Exs. B1 to B5. 11. Upon hearing argument of both the Counsel for the plaintiff and defendants, perusing the material and after considering oral and documentary evidence, the trial Court decreed the suit against the defendants. 12. Challenging the impugned decree and judgment of the trial Court, the 1st defendant-bank filed this appeal on various grounds mainly contending that the suit claim is barred by limitation and there is no relationship of principal and agent and the bank issued the DD only basing on a letter signed by the concerned officer of the bank and the defendant is not aware about the additions or alterations in the letter. Therefore, the appellant is not liable to pay any amount and prayed to set aside the impugned decree and judgment of the trial Court. 13. The Counsel for the appellanl/1st defendant contended that the suit is barred by limitation and no other contention is urged during the course of arguments. 14. Per contra, the Counsel for the respondent/plaintiff contended that Article 4 of Limitation Act alone is applicable as the relationship between the plaintiff and 1st defendant is principal and agent and for the wrongful act of the agent, the plaintiff being the principal is entitled to recover the amount and the limitation starts from the date of knowledge about the mis-conduct or negligence on the part of the defendant. Therefore, the claim of the plaintiff is in time and the suit cannot be dismissed on the ground of limitation and prayed to dismiss the appeal confirming the impugned judgment and decree of the trial Court. 15. Basing on the contentions of both the plaintiff and defendant and perusing impugned decree and judgment, the material on record, the sole point that arises for consideration is: 16. 15. Basing on the contentions of both the plaintiff and defendant and perusing impugned decree and judgment, the material on record, the sole point that arises for consideration is: 16. Whether the relationship between the plaintiff and the 1st defendant is principal and agent, if so, whether the 1st defendant acted negligently or mis-conducted in discharge of its duties and liable to pay the suit amount and the claim if any is within limitation? 17. The trial Court framed a specific additional issue with regard to bar of limitation and decided the additional issue in favour of the plaintiff/1st respondent and against the defendant/appellant. In Para 33 the trial Court held that Article 4 of Limitation Act alone is applicable since the relationship between the plaintiff and the 1st defendant is principal and agent and the limitation starts from the date of knowledge. 18. The finding of the trial Court is challenged now on the ground that the relationship between the plaintiff and the 1st defendant is only a banker and customer and at best creditor and debtor and not the principal and agent. Therefore, Article 4 of Limitation Act has no application. According to Article 4 of Limitation Act, the limitation of three years starts from the date of knowledge if the suit is filed by the principal against the agent for recovery of any loss sustained due to negligence or misconduct. Article 4 is extracted is hereunder: Description of suit Period of limitation Time from which period begins to run 4. Other suits by principals agents for neglect or misconduct. Three years. When the neglect or misconduct become known to the plaintiff. 19. It is clear from Article 4 that it applies only to the suits between principal and agent for the negligent or misconduct of the agent. Here, the relationship between plaintiff and defendant is only a banker and customer and at best the relationship is only creditor and debtor but not principal and agent. The word agency is defined under Section 182 of Indian Contract Act and it is as follows: "Agent" and "Principal" defined:--An "Agent" is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented is called the "principal". 20. The word agency is defined under Section 182 of Indian Contract Act and it is as follows: "Agent" and "Principal" defined:--An "Agent" is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented is called the "principal". 20. Here the 1st defendant-Bank is not acting on behalf of the plaintiff in dealing with the third parties. Thus, there is neither express nor implied agency between the plaintiff and 1st defendant. Therefore, there is no relationship of principal and agent, as defined under Section 182 of Indian Contract Act between the plaintiff and 1st defendant. But the trial Court on erroneous application of law concluded that the present suit is governed by Article 4 of Limitation Act. 21. In a similar circumstance, in a judgment in Nayar Modern Bank v. Travancore N and Q Bank, AIR 1941 Mad. 48 , the High Court of Madras held as follows: "The deposits made under Section 17(1) stand on no different footing. They are interest bearing fixed deposits in the foreman's name, on the face of them not different from any ordinary fixed deposit, and, just as in any other case, the fixed deposit receipt made out in the foreman's name is delivered to him, although, for the purpose of securing acceptance of the security given by him, he has to deposit the receipt with the Chitty Registrar so as to prevent him from drawing the money without the latter's concurrence. A fixed deposit, like any other deposit, is only a loan, although for a stated term, and, like any other deposit, the relationship it creates between the depositor and the bank is, in the absence of a special arrangement whether express or implied, impressing it with the character of a trust, that of an ordinary debtor and creditor. The essence of the matter is whether the deposit is a species of trust. And to say as some decisions do, that the test is whether the bank holds the money in a fiduciary capacity, or whether the deposit is a special deposit for a specific purpose, is to say the same thing in different words. The essence of the matter is whether the deposit is a species of trust. And to say as some decisions do, that the test is whether the bank holds the money in a fiduciary capacity, or whether the deposit is a special deposit for a specific purpose, is to say the same thing in different words. But, with regard to the latter test, it is necessary to bear in mind the caution that it is not enough that the depositor has in mind a special purpose when making the deposit, even if that purpose be known to the bank. An example would be of a trustee depositing trust funds in a bank. As already pointed out, even if the bank knows that the funds are trust funds, the transaction is, in the absence of any special arrangement, a mere loan creating only the relationship of an ordinary debtor and creditor. To make it something more and to entitle the deposit to priority, it is necessary that the bank should have agreed to hold the money and to apply it for the particular purpose thus making of itself an agent or a trustee." 22. In another judgment reported in New Bank of India Ltd. v. Pearey Lal, AIR 1962 SC 1003 , while dealing with the relationship between a banker and a customer, a Constitution Bench of the Supreme Court held as follows: "The transaction, as evidenced by the two receipts, was primarily one of entrustment of the amount to the Bank for transmission to Calcutta. After the purpose for which the moneys were entrusted was carried out, in the absence of further instructions the defendant did not cease to be a trustee. So long as instructions were not given by the plaintiff for appropriation of the amounts the Bank continued to hold the amounts transmitted for and on behalf of the plaintiff and there is no evidence that the plaintiff gave instructions or acquiesced in the opening of a fixed deposit account after the same reached Calcutta. It is immaterial that the Bank purported to open fixed deposit account in the name of the plaintiff with the amounts received at its head office at Lahore. That course of action was adopted without the consent of the plaintiff and it could not bind the plaintiff. It is immaterial that the Bank purported to open fixed deposit account in the name of the plaintiff with the amounts received at its head office at Lahore. That course of action was adopted without the consent of the plaintiff and it could not bind the plaintiff. The High Court was, therefore, right in holding that the amount delivered by the plaintiff to the Bank at Lahore remained in trust even after it reached Calcutta, and it was not held by the Bank, in deposit for the plaintiff within the meaning of the scheme sanctioned by the High Court of East Punjab." 23. Similarly, in Shanti Prasad Jain v. Director of Enforcement, AIR 1962 SC 1764 , another Constitution Bench considered the relationship between the banker and customer and held that: "Now the law is well settled that when monies are deposited in a bank, the relationship that is constituted between the banker and the customer is one of debtor and creditor and not trustee and beneficiary. The banker is entitled to use the monies without being called upon to account for such user, his only liability being to return the amount in accordance with the terms agreed between him and the customer. And it makes no difference in the jural relationship whether the deposits were made by the customer himself or by some other persons, provided the customer accepts them. There might be special arrangement under which a Banker might be constituted a trustee, but apart from such an arrangement, his position qua banker is that of a debtor, and no trustee". 24. In view of the principles laid down by the apex Court in the two decisions referred supra, the relationship between the plaintiff and 1st defendant is only the creditor and debtor, but not a principal and agent. 25. Article 4 of Limitation Act applicable when there exists relationship of principal and agent between plaintiff and 1st defendant. But no such relationship existed between them. Therefore, Article 4 of the Act has no application. But the trial Court on erroneous appraisal of law held that Article 4 of Limitation Act is applicable. At best, Article 19 of Limitation Act alone is applicable. 26. But no such relationship existed between them. Therefore, Article 4 of the Act has no application. But the trial Court on erroneous appraisal of law held that Article 4 of Limitation Act is applicable. At best, Article 19 of Limitation Act alone is applicable. 26. In the instant case on hand, the 1st defendant used to send account scrolls of the plaintiff with the defendant-bank regularly which contains the transactions between the plaintiff and 2nd defendant when the plaintiff sent the account scrolls the plaintiff is supposed to verify the financial transaction between the plaintiff and defendant and from the date of receipt of account scrolls with the 1st defendant the knowledge about the payment is attributable to the plaintiff. Therefore, the limitation starts only from the date of receiving account scroll dated 23.10.1982 even assuming that Article 4 is applicable. 27. It is the contention of the plaintiff that only during audit the misappropriation by 2nd defendant was detected. If the plaintiff exercises due diligence in verification of accounts scrolls sent regularly by the 1st defendant it would have been detected much earlier, more particularly on the date of issue of D.D., i.e., on 23.10.1982. Hence, on this ground also the suit is not in time. 28. To apply Article 4 of Limitation Act there must be a subsisting relationship of principal and agent and that the agent acted negligently or guilty of misconduct. Here, the misconduct attributed/directed to the 2nd defendant is misappropriation of amount. Certainly the 2nd defendant is an employee of the plaintiff and acting as per the directions of the plaintiff but the letter was not signed by 2nd defendant and signed by the Accounts Officer. However, Ex. A6 letter is in the handwriting of the 2nd defendant. The officer is supposed to sign on the letter Ex. A6 only after completion of writing or typing. Thus, the officer is deemed to have been signed only after filling the blanks. In such a case no negligence or misconduct is attributable to the 2nd defendant. 29. In Devji Shivji v. Mohanlal Odhabji Thacker, AIR 1960 Pat. The officer is supposed to sign on the letter Ex. A6 only after completion of writing or typing. Thus, the officer is deemed to have been signed only after filling the blanks. In such a case no negligence or misconduct is attributable to the 2nd defendant. 29. In Devji Shivji v. Mohanlal Odhabji Thacker, AIR 1960 Pat. 223 , when similar question came up before it under old Limitation Act, the Supreme Court held as follows: "For a suit based on agency, the Articles especially provided for in the Limitation Act are only Articles 89 and 90 with this difference that as between them Article 90 is a residuary Article that means, Article 90 in the case of agency is meant only for such a suit which is not covered by Article 89. That being so, in relation to these two Articles, the crucial question to be considered is whether a particular case is one which is at all attracted by the provisions of Article89. In case it is so, then any amount of argument advanced in support of the contention that the provision of Article 90 applies to the facts of the case can be of no avail to the plaintiff." "The word 'neglect' or 'misconduct' as used in Article 90 contemplates something which is tortuous in nature and, therefore, necessarily an act that is not authorized under the terms of agency or contemplated, there-under, that means, in the case of agency, what in law amounts to misconduct or neglect as contemplated in Article 90 is that act which is done quite independent of the authority given to the agent. That being so, the retention of any money by an agent which he has received in the due discharge of his duty is not in law, may it be due to any motive, either an act of misconduct or neglect as contemplated in Article 90. Therefore, in a case where apart from the demand of accounts from the agent there is also an allegation of misappropriation against him that cannot by itself take away that suit from the category of Article 89 or can put it into one which is covered by Article 90." 30. In Kinattinkara Madhvan Nair v. M.R. Ry. Manavikroma Zamorin Maharajah Avergal of Calicut, AIR 1928 Mad. In Kinattinkara Madhvan Nair v. M.R. Ry. Manavikroma Zamorin Maharajah Avergal of Calicut, AIR 1928 Mad. 906 , the Full Bench of Madras High Court defined the word "neglect or misconduct" to cover the facts of case under Article 90 of Old Limitation Act, held as follows: "The expression 'neglect' or 'misconduct' appearing in the third column of Article 90 has special reference to what is termed negligence or misconduct of the agent in the conduct of the agency and does not cover every failure of duty on the part of the agent." 31. In the same decision when misappropriation was done by the agent, the Madras High Court is of the view that Article 89 alone is applicable, but not Article 90 of Old Limitation Act. If that is the case, Article 4 of the Limitation Act in the present suit after amendment of the Limitation Act has no application. 32. In an oldest judgment reported in S.A.A. Anamalai Chettyar v. N.M. Cowasjee, AIR 1938 Rang. 258, the Full Bench of Rangoon High Court, while deciding the scope of Article 90 (old Act) held as follows: "The starting point of limitation is the knowledge that something has been omitted or done. This knowledge must be the knowledge of all the facts; if the plaintiff is lulled into a sense of security by being led to believe that something was done which was not in fact done, or that something was not done which was in fact done, clearly time cannot run against him. But, in my judgment, once he knows the true facts, it is for him to judge of their legal consequences, and he cannot afterwards say that he did not know what those legal consequences might be." 33. In the above judgment, a suit was filed against an advocate for neglect or misconduct towards his client in discharging his duties by an advocate who is a professional advisor. The Full Bench held that the limitation starts from the date of knowledge under Article 90 of Old Limitation Act. 34. In Bahadur of Darbhanga v. Narendra Nath Das, AIR 1923 Pat. The Full Bench held that the limitation starts from the date of knowledge under Article 90 of Old Limitation Act. 34. In Bahadur of Darbhanga v. Narendra Nath Das, AIR 1923 Pat. 259, the Division Bench of Patna High Court had an occasion to deal with Articles 89 and 90 of Limitation Act and drawn a specific distinction and held that: "Articles 89 and 90 which relates to suits by a principal against his agent do not apply to suits against representatives of a deceased agent. Where there is a continuous and comprehensive agency, time begins to run from the time the agent refuses to render accounts." But this principle laid down in the above judgment may not directly applicable to the present facts of the case. 35. Similarly in Sankaranarayana Ayyar v. Trichendur Dharmaparipalana Sakthithara Bhajana Sabha through A. Sivaramakrishna Iyer, AIR 1939 Mad. 114, the Madras High Court while dealing with a matter regarding running of true and correct account of income and expenditure dealt with Article 90 of Limitation Act and held as follow: "A Bhajana Sabha brought a suit against its former secretary for recovery of certain amount, this amount being made up of several items, one of which was an item of receipt not entered in the account. As regards the remaining items, the claim was based on the allegation that the agent, i.e., the secretary, had shown certain sums of money as having been spent on behalf of the sabha when as a matter of fact they were not spent at all on behalf of the sabha". 36. The High Court is of the view that the claim amounting to an allegation of misconduct, hence, the suit was governed by Article 90 of Old Limitation Act. 37. In view of the settled law referred above by various High Courts, it is clear that; to attract Article 90 corresponding to Article 4 (Amendment of Limitation Act) in 1963. There must be an existing relationship of principal and agent and that the agent might have acted negligently or guilty of misconduct. In the present case, the appellant/1st defendant is not an agent within the definition of Section 182 of Indian Contract Act. As such, there was no subsisting relationship of principal and agent between the plaintiff and 1st defendant. There must be an existing relationship of principal and agent and that the agent might have acted negligently or guilty of misconduct. In the present case, the appellant/1st defendant is not an agent within the definition of Section 182 of Indian Contract Act. As such, there was no subsisting relationship of principal and agent between the plaintiff and 1st defendant. Consequently, Article 4 cannot be applied to the present facts of the case to conclude that the limitation of three years starts from the date of knowledge. But, the trial Court on misinterpretation of Article 4 presuming that the relationship between the banker and customer i.e., 1st defendant and plaintiff is principal and agent, applied Article 4 of Limitation Act. Hence, the finding of the trial Court is erroneous ex facie and liable to be set aside as the relationship between the banker and the customer is only a debtor and creditor, but not an agent and principal. Hence, I hold that the Article 4 of Limitation Act is not applicable to the present facts of the case. 38. One of the specific contentions of the defendant is that the suit is barred by limitation and the limitation for recovery of amount is only three years under Article 19 of the Limitation Act which starts from the date when the payment is made. Article 19 deals with loan but here the amount was paid by the 1st defendant on receipt of letter from the Accounts Officer. In such a case, Article 22 is applicable but not Article 19, the limitation starts only from the date of issue of D.D., dated 23.10.1982, but not from the date of knowledge as contemplated under Article 4. In the present case, D.D., was issued in the year 1982 and the suit was filed before the trial Court in 1986. Hence, the suit is hopelessly barred by limitation. Accordingly, the point is answered in favour of the 1st defendant/appellant and against the plaintiff. 39. As the claim of the plaintiff is barred by limitation, the 1st defendant cannot be saddled with any liability to pay the amount covered by D.D., issued in the name of 2nd defendant drawn on Canara Bank, Sultan Bazar Branch. Hence, I hold that the 1st defendant/appellant is not liable to pay suit claim of the plaintiff. 40. 39. As the claim of the plaintiff is barred by limitation, the 1st defendant cannot be saddled with any liability to pay the amount covered by D.D., issued in the name of 2nd defendant drawn on Canara Bank, Sultan Bazar Branch. Hence, I hold that the 1st defendant/appellant is not liable to pay suit claim of the plaintiff. 40. As the amount was misappropriated allegedly by the 2nd defendant who is an employee by making necessary alterations, at best the 2nd defendant alone is liable to pay the suit claim as he was an agent being an employee acted on behalf of the plaintiff as per the directions while dealing with third parties. Accordingly, I hold that the 2nd defendant alone is liable to pay the suit claim. 41. In view of the above findings, the suit claim is barred by limitation and the defendant No. 1/appellant is not liable to pay the suit amount. However, the 2nd defendant is liable to pay the suit claim together with interest. 42. During the course of arguments, it is brought to the notice of this Court that the 1st defendant deposited Rs. 25,000/- i.e., half of the suit claim. In view of the dismissal of suit against the 1st defendant/appellant, he is at liberty to withdraw the amount lying in deposit, if any. 43. With the above directions, the appeal is allowed setting aside the impugned judgment and decree passed against the appellant/1st defendant, dismissing the suit against 1st defendant while upholding the liability of the 2nd defendant to pay the suit claim with costs. Consequently, miscellaneous applications, if any, pending in this appeal, shall stand disposed of. Disposed off