1. The only question for decision in this second appeal is whether the suit is barred by limitation or not. According to the plaint allegations, one Kumaran Nair had taken an assignment of a decree for redemption of certain mortgaged properties which were in the possession of the plaintiffs, the defendant and other persons, and as the plaintiffs desired to obtain from him a sale of the equity of redemption they entrusted a sum of Rs. 900/- to the defendant, who was an acquaintance of the said Kumaran Nair, for negotiating the sale. The defendant was to settle with Kumaran Nair the terms of the sale and pay to him as advance the amount entrusted, and at the time of the execution of the sale deed this advance was to be adjusted against the sale consideration payable by the plaintiffs and they were to pay only the balance sale consideration. Alleging that the defendant did not pay the amount to Kumaran Nair and obtain from him the sale for them in pursuance of the terms of the entrustment and they had therefore to take a sale deed after direct negotiations with Kumaran Nair and paying the full sale consideration, without getting any credit for the amount entrusted by them to the defendant for payment of the advance, the plaintiffs brought this suit on 7-8-1126 (21st March 1931 A.D.) for recovery of the said amount and interest thereon. They had taken the sale from Kumaran Nair on 3-9-1123 and the suit was brought on the basis that their cause of action arose on the said date and they were entitled to get interest also from 3-9-112

3. The defendant denied the entrustment and contended further that the suit was barred by limitation. The plaintiffs case was that the entrustment was made by means of two payments, one of Rs. 500/- on 5-3-1122 (22-10-1946 A.D.) and another of Rs. 400/- on 2-6-1123 (16-1-1948 A.D). The courts below concurrently found that the plaintiffs have not proved the second payment of Rs. 400/- and that the first payment of Rs. 500/- on 5-3-1122 is true. They also found that this amount of Rs. 500/- was entrusted to the defendant for paying the advance to Kumaran Nair and obtaining from him a sale deed for the plaintiffs as alleged by them. On the question of limitation, the findings were divergent. According to the defendant, the suit is governed by Art.62 of the Limitation Act, and the plaintiffs cause of action arose on the date of the entrustment, namely, 5-3-112

2. The first court repelled this contention and, holding that the plaintiffs cause of action arose only on 3-9-1123, gave a decree to them for recovery of Rs. 500/- and interest thereon. The lower appellate court upheld the defendants contention regarding limitation, and reversing the first courts decree, dismissed the suit without costs. Plaintiffs have therefore brought this second appeal.



2. The plaint allegations and the concurrent findings of the court below are to the effect that the amount of Rs. 500/- was paid by the plaintiffs to the defendant for a specific purpose, namely for negotiating and obtaining for them a sale from Kumaran Nair and for paying the advance to him. At the time of the entrustment nothing had been settled as regards the terms of the sale deed to be taken, and neither the plaintiffs nor the defendant was sure whether Kumaran Nair would agree at all to give a sale to the plaintiffs. The defendant was to negotiate with Kumaran Nair and if the latter was agreeable to give a

sale, settle the terms of the sale with him and pay the amount entrusted by the plaintiffs as advance to Kumaran Nair so as to take a firm agreement. Therefore, what has really happened in this case is that the plaintiffs constituted the defendant as their agent for negotiating with Kumaran Nair and obtaining a sale from him for them and pay to him the necessary money for carrying on, on their behalf, the work with which he was entrusted, that is to say, the amount was paid by the plaintiffs to the defendant for a specific purpose in connection with the work of the agency the defendant had undertaken on behalf of the plaintiffs. Art.62 of the Limitation Act reads:

Table:#1

This Article cannot obviously apply to a case where a principal has paid money to his agent in connection with the work of the agency and the latter has not made use of the money for the purpose for which it was entrusted to him and is wrongfully retaining it with him. The money no doubt, belonged to the plaintiffs even after it was paid to and received by the defendant, but the obligation or duty that fell on him on receipt of the money was not to hold it on behalf of the plaintiff.", or for the plaintiffs use and return it to the plaintiffs; but to negotiate with Kumaran Nair for a sale, and if Kumaran Nair agreed to give a sale to the plaintiffs, to pay the amount to him as advance and obtain from him a firm agreement. The legal relationship between the plaintiffs and the defendant was therefore one of principal and agent and not merely of two persons one of whom has received money belonging to the other and has to hold the same for and on behalf of the other. In Bhaumikhs book on the Indian Limitation Act, third edition, it is pointed out at page 394:

"where the defendant is not under a mere duty to hand over the money which he received but has other duties as well in respect of it, Art.62 will not apply."

Cases of agency are governed by Art.88, 89 and

90. Art.88 cannot obviously apply to this case as it provides only for a suit against a factor for an account. Art.89 provides for a suit by a principal against his agent for movable property received by the latter and not accounted for. That article reads:

Table:#2

As the money, in the present case, was received by the defendant for paying the advance to Kumaran Nair on behalf of the plaintiffs there was undoubtedly a duty on his part to return or account for it if for any reason the amount could not be or was not paid to Kumaran Nair. Before the plaintiffs took the sale dead from Kumaran Nair, the defendant had not paid the advance to him, and after they took the sale deed directly from him paying the full sale consideration the defendant could not pay any advance to him, and his agency also automatically terminated with the execution of the sale deed. The defendant was therefore clearly bound, after the execution of the sale by Kumaran Nair, either to return the amount or to account for it to the plaintiffs; and his retention of the money without accounting for it would be either neglect or misconduct on the part of the agent. Therefore, this is clearly a case coming under Art.90 of the Limitation Act. I am fortified in this view by the decision of the Allahabad High Court in Jaganji v. Bandan (A.I.R.1930 All 397) [LQ/AllHC/1930/33] wherein it has been held:

"The position of the defendant in the transaction in which various sums of money were from time to time entrusted to him was that of an agent. He was either a middleman or intermediary on behalf of the plaintiff. The sums of money were entrusted to him with the specific direction that they should be paid in one instance to the brothers and in the other to Moti Chaube. If the defendant abused his position and retained the money, the suit for recovery of the sums which he wrongfully retained in his hands was clearly covered by Art.90 Lim. Act, it being a suit by the principal against an agent for neglect or misconduct."



3. Art.89 also would apply to this case. The agency which the plaintiffs bad granted to the defendant for negotiating with Kumaran Nair on their behalf and obtaining for them a sale deed on payment of the amount entrusted with him as advance can be deemed to have been terminated only with the execution of the sale deed on 3-9-112

3. It is true that the defendant had not paid the amount to Kumaran Nair before that date, but till then neither the plaintiffs nor the defendant had issued any notice terminating the agency, and as no time limit had been prescribed at the time of the entrustment for getting Kumaran Nairss agreement and paying the advance to him, the agency must be deemed to have continued till it became impossible to obtain the sale deed from him. It was only with the execution of the sale deed on 3-9-1123 that it became impossible for the defendant to obtain Kumaran Nairs agreement and pay the advance to him. Therefore, this is a case to which the second part of the third column of Art.89, namely, "where no such demand is made, when the agency terminates", applies. Since the suit contemplated in the first column of Art.89 is a suit for movable property, it was urged that Art.89 would not apply to the case. But it has been held in several cases that the terms movable property in the first column of Art.89 would include money also. These cases have been collected and mentioned at page 468 of Mitras Limitation Act, 13th edition. They are ShibChandra Boy v. Narain Mukherjee (32 Cal. 719), Pran Ram Mukherjee v. Jagadish Nath Roy (49 Cal. 250) [LQ/CalHC/1921/133] , Pran Ram v. Jagadish Nath (A.I.R.1922 Cal. 355) [LQ/CalHC/1921/133] , Venkatachalam v. Narayanan (39 Mad. 376) [LQ/MadHC/1914/509] and Asghan Alikhan v. Khupched Ali Khan (24 All. 27 (P. C.). Following these decisions, I hold that the expressionmovable property in the first column of Art.89 would include money also and that the present suit would fall under Art.89 also.



4. In the present case the period of limitation will be the same whether it is Art.89 or Art.90 that is applied. As it is the second part of the third column of Art.89 that applies to this case, time begins to run only from 3-9-1123 which is the date on which the agency terminated, and the plaintiffs have three years time from that date to file the suit under Art.

85. Under Art.90 time begins to run when the neglect or misconduct becomes known to the plaintiffs. As the neglect or misconduct is the failure of the defendant to return the money to the plaintiffs after the execution of the sale deed on 3 91123 and his retention of the same thereafter, the plaintiffs could not have known that neglect or misconduct earlier than 3-9-112

3. Therefore, under that Article also plaintiffs have 3 years from 3-9-1123 to file the suit. Thus, whether it is Art, 89 or Art.90, that is applied, the plaintiffs had time till 3-9-1126 to file the suit. It follows that the present suit filed on 7-8 -1126 is not barred by limitation.

5. In the result, the second appeal is allowed with costs throughout, the decree of the lower appellate court is set aside and that of the trial court restored.