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Case Analysis: Devendrakumar Lalchandji v/s Gulabsingh Nekhesingh

Brief facts of Devendrakumar Lalchandji vs Gulabsingh Nekhesingh, A.I.R 1946 Nag 114.:
In this case, the Plaintiff is Devendrakumar Lalachandji and the Defendant is Gulabsingh Nekhesingh.

The plaintiff is a banker and the defendant is a customer of that bank. The defendant had opened two accounts; one is deposit account and another is loan account with the plaintiff. The plaintiff alleged that the defendant had instructed the plaintiff to transfer rupees 265-5-0 from the deposit account to the loan account. The defendant admitted that he did not instruct the plaintiff to transfer money from one account to the other. So, when the plaintiff filed a suit claiming Rupees 290-10-0 on the loan account, the defendant denied the claim. Along with denying the claim of plaintiff, the defendant made a counter claim of Rupees 135-11-2.

The lower Court held that the defendant did not instruct the plaintiff to transfer money from the deposit account to the loan account. It also held that the plaintiff has no lien[1] over his money against the deposit account. So, the lower court in its trial dismissed the plaintiff's suit and gave the decision in favor of the defendant. The defendant counter claim was decreed by the lower court. As the plaintiff was not satisfied by the lower court's decision, he applied for the revision against this decision. The decision of the trial court was challenged by the plaintiff in revision in the Nagpur High Court.

Name of the Court:
The judgment was pronounced by the Nagpur High Court.

Name of the Judge:
The judgment was given by Puranik, J.

Date of the Decision:
The decision date was February 6, 1945.

Case No. :
Civil Revn. No. 542 of 1943.

Issues Raised:
  1. Whether the money deposited can be covered by the words goods bailed?
  2. Whether the banker has a lien?

Arguments Advanced
The arguments presented by both the parties in the court are discussed here.
  1. Arguments by the Plaintiff:
    1. The learned counsel for the plaintiff argued that the word �goods' includes money. So, the money can be the subject matter of the Bailment.
    2. The plaintiff argued that the Section 171 of the Indian Contract Act, 1872 is applicable by stating that the principle embodied in the section would apply. As per this section, the defendant's counter claim for Rupees 135-11-2 was not available.
    3. Mainly, the petitioner argued that he claimed a lien by way of defence and there is no bar of limitation.
    4. The counsel for the plaintiff argued that if any special provisions are not present in Indian Contract act, 1872, then the principles of English law should be applied under the Section 6 of the Central Provinces Laws Act.
       
  2. Arguments by the Defendant:
    1. The defendant's counsel contended that the money deposited cannot be covered by the words �goods bailed'. They argued that the words �goods' is not defined in the Indian Contract Act and also they mentioned that the money was excluded from the definition of goods under the Section 2 (7) of the Sale of Goods Act.
    2. The counsel for the defendant argued that the banker has no such lien to transfer the money. The defendant contended that he did not instruct the plaintiff. So, counter-claim can be applicable in this case.
    3. The counsel for the defendant argued that the plaintiff did not plead that it was the settled law of land or that it was the usage of the banking business.
    4. The defendant argued that the plaintiff's claim on the basis of the loan was barred by time and denied the claim of the plaintiff.


Judgment
  1. The Nagpur High Court held that the decision made by the trial court is contrary to law and therefore, it is wrong. The court held that the plaintiff's claim is within time and the defendant has no right to recover from the plaintiff because the plaintiff has such a lien on all the moneys of the defendant.
  2. As a result, the court held that the plaintiff is entitled to the decree for the amount claimed (i.e. 290-10-0).
  3. The court held that the plaintiff, who is a banker, succeeds on facts as well as law.
  4. The judge of the Nagpur High Court allowed the application for revision, decreed the plaintiff's claim and dismissed the counter claim of the defendant, with costs in both of the courts.
Ratio Decidendi
  1. The Nagpur High Court accepted the plaintiff's contention. The court explained the scenario of the case as per the English Law. Generally, banking business in carried on the same lines on which it is carried on in England and it is but natural that the bankers in India should treat themselves governed by the rules that govern such business in England[2].
     
  2. When the defendant denied the claim of the plaintiff and stated that claim on the basis of the loan was barred by time, the Court had explained that even if there are no instructions from the defendant to transfer money, the plaintiff's claim is within the time and his claim is justifiable.
     
  3. The court explained the challenge of plaintiff against the defendant and the decision of the lower court by giving valid reason. While dealing with the deposit account, the defendant found very little amount left to his credit obtained which is known as an Overdraft. So, the defendant put his signature in the account books of the plaintiff stating that the defendant was overdrawing on the deposit account so that the bank can transfer money from deposit account to the loan account. By keeping signature, he had given the permission to the plaintiff to transfer the money.
     
  4. So, here the judge declared his decision based on the concept of English Law, which is Section 6 of the Central Provinces Laws Act. It states the rules of justice, equity and good conscience. This law was applied because of the lack of provisions in the Indian Contract Act to deal with the banker's lien.

Analysis of the Case
In this case, the petitioner was a banker and the defendant was the customer of the same bank. The plaintiff made an allegation that the 265-5-0/- was transferred from the deposit account to the loan account as per the instructions of the defendant. But the defendant denied this claim and made a counter-claim of 135-11-2/-. So, the plaintiff filed a suit claiming 290-10-0 on the loan account. The lower court gave the judgment in the favor of the defendant and the plaintiff's suit was dismissed. So, the plaintiff made an appeal against this decision and this case was further dealt by the Nagpur High Court.

Then, the plaintiff's counsel argued that the Section 171 of the Indian Contract Act was applicable to the facts of the case and the words �goods bailed' include the deposited money. In the appeal, the case was dealt in the assumption that there were instructions to transfer money by the defendant. Hence, Section 171 was applied but there was confusion in the words �goods bailed'. The counsel for the plaintiff in his argument mentioned that word �goods' includes money and the section 171 of the Contract Act can be applicable. So, the counter-claim of the defendant cannot be enforced.

As the plaintiff claimed a lien by way of defence, there is no bar of limitation because bar of limitation won't apply to anything that is claimed by way of defence. So, in this case, the banker has such a lien over the defendant's accounts. Also, one argument was raised by the plaintiff that if any special provision was absent in the Indian Contract act, 1872 to deal with the banker's lien, the rules of justice, equity and good conscience should apply under the Section 6 of the Central Provinces Laws Act. So, this law was applied in this case. Under this English Law, the banker has such a lien over all the securities of the defendant.

Also, if the banker wants to combine the two accounts or transfer the money form one account to the other, he can do it under this English Law. The court held that even if there were no instructions from the defendant to the plaintiff to transfer money, the banker had lien and had authority to do the act. When the defendant argued that the plaintiff done that act without his consent and the claim on the basis of the loan as barred by time, the court held that the plaintiff's claim is within time and defendant has nothing to recover from the plaintiff.

The court had proven that the defendant had permitted the plaintiff to withdraw the money from the deposit account to the loan account by keeping the signature in the account books of the plaintiff when he found that only little balance was left to his credit while dealing with the deposit account. So, the Nagpur High Court gave the judgment in the favor of the plaintiff and held that the lower court's decision was wrong. The court held that the plaintiff succeed on facts as well as law. The judgment was concluded by decreeing the claim of the plaintiff and dismissing the counter claim of the defendant, with costs in both the courts.

Laws Applied
The laws applied in this case are:
1. Section 6 of the Central Provinces Laws Act.
2. Section 171 of Indian Contract Act, 1872.
3. Section 148 of Indian Contract Act, 1872.
4. Section 2 (7) of the Sale of Goods Act.

End-Notes:
  1. Lien is one of the rights available to a person to retain possession of goods owned by another person until the assertion of the person having the control is satisfied. Under the Indian Contract Act, 1872 the Bailee is free to employ or operate the Right of Lien in a Contract of Bailment.
  2. Devendrakumar Lalchandji Vs. Gulabsingh Nekhesingh, https://www.casemine.com/judgement/in/5ac5e2f24a932619d903b2d4

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