CASE ANALYSIS

Central Warehousing Corporation

v.

Central Bank of India

CITATION: AIR 1974 AP 8

Submitted To: Submitted By:

Shraddha Sanjeev Mishu Jain (19213221)

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 INDEX:

SL. NO. TOPIC PAGE NO.

1. Introduction 3

2. 3
Related Provisions

3. Facts 3-4

4. Issues 5

5. Held 5-6

6. Analysis 6-7

7. Conclusion 8

INTRODUCTION:
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Contract Law has evolved in different dimensions as various landmark cases have shaped its
basic concepts by placing scenarios that put the judicial minds under thought. This is one
such landmark case. This case is one of the most important case due to the subject matter of
the case. Most importantly it became a landmark judgment due to its curious subject matter.

RELATED PROVISIONS

 Article 70 of the Limitation Act, 1963 has replaced Article 145 of the Indian limitation Act,
1908. Whereas Article 145 prescribed for filing such a suit a period of 30 years from the date
of deposit or pawn, Article 70 prescribes a period of three years from the date of refusal after
demand.1

FACTS:

This appeal by the Central Warehousing Corporation, the 2nd defendant, is directed against
the judgment and decree, passed against it and in favour of the Central Bank of India in O.S.
No. 14 of 1966 by the Chief Judge. City Civil Court, Hyderabad at Secundrabad for the
recovery of a sum, of Rs. 54,311-13 p. with interest at 6 % from 1-7-1966.2

The Central Bank of India Ltd., the 1st respondent herein, claimed the suit amount against the
1st defendant. Gali Krishnamurthi who borrowed certain sums of money on cash Credit Kev
Loan Account. The 1st defendant has endorsed several warehouse receipts including Exs.A.
53 and A. 54 obtained by him from the appellant. The claim of the plaintiff against the 1st
defendant is in respect of the sums borrowed by him from the bank and in so far as the 2nd
defendant is concerned, the plaintiff's claim is based on the receipts Exs. A. 53 and A, 54
given by the Warehouseman to the 1st defendant. The right to claim the value of the goods

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covered by Exs. A.53 and A. 54 has accrued to the plaintiff on account of the endorsements
made by the depositor, the 1st defendant in its favor. The 1st defendant was ex parte in the
trial court. The suit was resisted by the appellant contending inter alia that it was not
maintainable for failure to issue the statutory notice, that there was no cause of action against
it and that the suit was barred by limitation. 3 The plaintiff examined its Chief Agent as P. W.
I and P.Ws. 2, 3 and 4 and filed exs. A. 1 to 55 in support of its case. The 2nd defendant
examined D. Ws. 1 to 4 and filed Exs. B. 1 to B. 9 to substantiate its defence. The trial court
framed as many as about 9 issues. On a consideration of the entire material on record , it
found in favor of the plaintiff on all the material issue and decreed the suit as prayed for.
Hence, this appeal.

Sri Ramachandra Rao and Sri J. K. Hiranandani, the learned counsel for the appellant,
passed upon us that there was no cause of action against the appellant that the suit was barred
by limitation at least in so far as the claim on the basis of Ex. A.54 is concerned, that the suit
is not maintainable as it failed to comply with the provisions of Rule 16 of the Hyderabad
area Warehouses Rules 1959, that there was fraud committed by the 1st defendant on T.
Rajagopalan, then Warehouse man at Hyderabad. That T. Rajagopalan is a necessary party
and that suit, in any event, should be dismissed. This claim of the appellant has been resisted
by Mr. Vaidyanathan, the learned counsel for the plaintiff-decree holder contending inter alia
that there is no merit in any of the contentions raised by the appellant and the Court below
has rightly decreed the suit against the defendants 1 and 2.4

ISSUES:

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 1. Whether the suit is liable to be dismissed for the non-compliance?
2. Whether jurisdiction of this Court is barred in view of the special provisions and
machinery provided under the Hyderabad Warehouses Regulation and the Rules made
there under?
3. Whether a suit for recovery of jewels deposited by the plaintiff with the defendant
was governed by Article 145 or by Article 48 of the Indian limitation Act 1908?
4. Whether the suit is barred by limitation?
5. Whether warehouseman acted outside the scope of this authority in issuing the
warehouse receipts?5

HELD

The learned Trial Court Judge has found that the suit was governed by Article 22 of the
Limitation Act, 1963. In that view of the matter he dismissed the suit on the ground that it
was barred by time under Article 22 it is that finding which has led to the dismissal of the suit
and which Mr K.N. Mankad has challenged before us. It is common ground between the
parties that Section 10 of the limitation Act, 1963 does not govern the present suit because
this is not a suit against a trustee or his legal representatives or assigns for the purpose of
following in his or their hands trust property or the proceeds thereof, or for an account of trust
property or proceeds.6 Article 22 which the learned Trial Judge applied to the instant case
provides as follows:

For money deposited under an agreement | three years | when the demand is that it shall be
payable on demand. The trial Court found on all the issues against the appellant and in
favour of the respondent and decreed the suit.7

Supreme Court has observed that an Action for wrongful conversion and an Action for
wrongful detention are otherwise known as Action in trove and Action in detinue. Judgment
for the petitioner in trove is for recovery of damages for conversion judgment for the
petitioner in detinue is for delivery of the chattel or payment of its value and damages for
detention.8

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https://uknowledge.uky.edu

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Applying the principle laid down by the Supreme Court in the aforesaid decision it is quite
clear that the claim which the plaintiffs have made represents an Action in detention. In the
result, the appeal is dismissed with costs.

ANALYSIS:

This plea must be rejected for reasons more than one. Firstly, there is no specific pleading.
No particulars of the fraud committed by the 1st defendant upon the Warehouseman have
been specifically stated in the written statement, nor were they supplied in the course of the
trial. It is well-supplied in the course of the trial. It is well-settled that to substantiate the plea
of fraud, there must be specific allegations in that regard and the failure to do so is fatal. That
apart, admittedly there is no evidence worth mentioning in this regard. It is not the case of the
appellant that any goods specified in Exs. A.53 and A.54 were found at the time of delivery.
The person who was in charge of the warehouse at the relevant time was one Rajagopalan.
Nor has any evidence worth mentioning been adduced by the appellant in this regard. 9Hence,
this plea must fail even on this sole ground. We cannot infer that simply because no goods
could be traced or found at the time of the delivery in the Warehouse, no goods at all were
deposited as per Exs. A.53 and A.54 . There may be so many reasons for not finding the
goods at the time of the delivery even if they were taken delivery of at the time of the
issuance of Exs. A.53 and A.54 have been issued by the then Warehouseman. They are in
proper form. There is no defect in those receipts. Hence, we have to presume that those
receipts must have been issued in the normal due course of business and they are true and
valid. The burden is on the appellant to show that they have not been issued in due course of
business and they have been fraudulently obtained by the 1st defendant. 10 The person who
issued those receipts was competent to issue the same. Hence, there is no merit in this
objection of the appellant. Question No. 4 is, therefore, answered in the negative and against
the appellant.11

We shall now proceed to examine whether T. Rajagopalan is a necessary party as claimed by

the appellant. It is well settled that a necessary party is one without whom the suit necessary
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https://lawpage.in

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party is one without whom the suit cannot go on. Admittedly the plaintiff is not seeking for
any relief against Rajagopalan. He is only an employee of the appellant. The appellant is the
necessary party. Rajagopalan need not made a party to the suit as the plaintiff can certainly
make the appellant liable for what all has been done by its employee, Rajagopalan. It cannot
also be said that he is a proper party without whom there cannot be a proper and effective
adjudication of all the rights of the parties in the suit. Hence, we are satisfied that he is neither
a necessary party nor a proper party to the present suit and without him, the suit certainly can
be decided and the rights of the parties can be validly and effectively adjudicated upon.

20. The submission of the appellant that Rajagopalan had acted outside the scope of his
authority in issuing the receipts cannot be accepted. As pointed out earlier, he was the
competent authority to issue the receipts. Whether he had actually verified each bag of the
goods deposited under Exs. A.53 and A.54 or not is not the concern of the depositor. It was
the duty of the employee of the appellant to examine all the bags if necessary or only some of
them and satisfy himself whether the goods as per the representation of the depositor were
supplied.12 If he commits any mistake or negligently issues the receipts, the depositor cannot
be blamed. It is only the appellant that should blame itself for appointing such employee. It
can take appropriate action against such employees for their negligent acts but cannot plead
any immunity from the recovery of the value of the goods covered by the receipts issued by
its employee who was authorised by it to issue the same. The appellant is also estopped from
contending that he is not liable for the acts of commission or omission of its employee,
Rajagopalan or any other Warehouseman. On the authority conferred by the appellant on
Rajagopalan, the then Warehouseman at Hyderabad, the 1st defendant had approached him
for arranging the deposit of the goods and obtained Exs. A.53 and A.54 in the due course of
business. As stated before us, the Warehouseman at Hyderabad need not await the
instructions of the head office at New Delhi for the issuance of the warehouse receipts. It is
within his competence to issue the same after proper verification. 13 In the circumstances, we
are satisfied that there is no merit in this claim of the appellant. For all these reasons, we must
hold that the appeal must fail.

CONCLUSION:

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Though the court took a long time the decision of rejecting the appeal is very historic because
it keeps up the truth and faith of the individuals in the judiciary. This judgment has marked
the significance of Article 70 of new limitation act. 14

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