Gujarat High Court
Tele Network Pvt Ltd Thro' Managing ... vs Director Of Relief on 27 November, 2025
NEUTRAL CITATION
C/FA/1584/2012 JUDGMENT DATED: 27/11/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 1584 of 2012
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE DEVAN M. DESAI
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Approved for Reporting Yes No
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TELE NETWORK PVT LTD THRO' MANAGING DIRECTOR
Versus
DIRECTOR OF RELIEF
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Appearance:
MR.D K.PUJ(3836) for the Appellant(s) No. 1
GOVERNMENT PLEADER for the Defendant(s) No. 1
RULE SERVED for the Defendant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE DEVAN M. DESAI
Date : 27/11/2025
ORAL JUDGMENT
1. The present First Appeal is filed under Section 96 of the Code of Civil Procedure, 1908 (for short, "CPC") by the appellant - original defendant, challenging the judgment and decree dated 30.09.2011 passed by 2 nd Additional Senior Civil Judge, Gandhinagar, in Special Civil Suit No.126 of 2005. Page 1 of 13 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:30:28 IST 2025
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2. Heard learned advocate Mr. D.K. Puj for the appellant and learned AGP, Mr. Manohar Rahevar for the respondent.
3. The brief facts of the case are as follows:
3.1 The original plaintiff - respondent herein, filed the suit for the recovery of security deposit from the original defendant - appellant herein. It is the case of the plaintiff that by a memorandum dated 06.08.1999, defendant agreed to supply four Iridium Satellite Phones as per stipulations mentioned in the memorandum. At the time of execution of the said memorandum, a security deposit to the tune of Rs.1,50,000/- per set was tendered which was refundable against the satellite phones, sim-cards and accessories. By written communication dated 31.12.1999, defendant was informed to collect satellite phones and out of total four satellite phones, two satellite phones were collected by defendant on 07.01.2000. On 07.01.2000, by way of a communication, the plaintiff demanded refund of security Page 2 of 13 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:30:28 IST 2025 NEUTRAL CITATION C/FA/1584/2012 JUDGMENT DATED: 27/11/2025 undefined deposit. Thereafter, vide communication dated 03.02.2000 and 29.02.2000, plaintiff demanded refund of security deposit. The defendant - appellant did not refund security deposit and therefore, on 26.04.2004, by a communication, defendant was asked to refund security deposit. As the demand of refund of security deposit was not satisfied, plaintiff was constrained to file the suit for recovery of refund of security deposit with interest and cost. The defendant was served with summons who contested the suit by filing written statement at Exhibit - 9. The defendant resisted the suit on the ground of limitation and contended that the suit of the plaintiff is beyond the period of limitation, as the first demand of refund of security deposit was made on 07.01.2000 and the suit is filed on 29.11.2005. Plaintiff examined himself at Exhibit - 14 and produced documentary evidence in support of his claims. The defendant examined witness, Akshay Rashiklal Shah, at Exhibit - 42. Following issues are framed at Exhibit - 11:
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1. Does the defendant prove that the plaintiff''s suit is barred by limitation?
2. Does the plaintiff prove that the sanction of satellite phones was till 31.12.1999 and whether the two phones out of four phones were returned on 07.01.2000?
3. Does the defendant prove that on 03.01.2000 the plaintiff had returned only one satellite phone and that too was defective and unoperational?
4. Does the plaintiff prove that although repeated letters were written, the defendant did not give eceipts for the deposit amount and raised false bills?
5. Does the plaintiff prove that he is entitled to recover Rs.9,74,000/- with 18% interest on the demand made in the suit?
6. What is the 'Order' and 'Decree'?
After considering the evidence, the learned Trial Court partly decreed the suit and directed the appellant - original defendant to refund the deposit amount of Rs.6,00,000/- with interest at the rate of 8% per annum from the date of suit till realisation.
3.2 Being aggrieved and dissatisfied with the impugned judgment and decree, the appellant has filed the present First Appeal.
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4. Learned advocate for the appellant, at the outset, contended that a memorandum dated 06.08.1999 at Exhibit - 19 was executed between the plaintiff and defendant for the supply of four Iridium Satellite Phones on rental basis. The security deposit to the tune of Rs.1,50,000/- per set was paid by the plaintiff to the defendant. On 31.12.1999, vide Exhibit - 22, defendant was intimated to collect four Iridium Satellite Phones without assigning any reasons. On 03.01.2000, defendant received one Iridium Satellite Phone in a damaged condition and the remaining three phones were lying with the plaintiff. The demand for refund of security deposit was made by the plaintiff on 07.01.2000, Exhibit - 23, and thereafter, vide Exhibit - 24 and 25 dated, 03.02.2000 and 29.02.2000, respectively, demand was repeated. It is contended that the present suit is filed on 29.11.2005 which is clearly beyond the period of limitation as prescribed under Article 22 of the Limitation Act. It is contended that, admittedly, the suit is for refund of security deposit and therefore the period of limitation is three years from the date of demand. It is contended that a Page 5 of 13 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:30:28 IST 2025 NEUTRAL CITATION C/FA/1584/2012 JUDGMENT DATED: 27/11/2025 undefined communication, ensued between parties, cannot extend the period of limitation. The learned Trial Court has erred in not appreciating the legal position as decided in the cases of "Harikumar Radhakisan and others vs. Uderman Ramkuwar Firm by owners Ramkuwar Uderman and Others" reported in AIR 1969 Bom 262 and "M/s SSV Transporters through its Partners vs. Food Corporation of India and Others" reported in 2012 SCC OnLine P&H 8171. Except above, no other submissions were canvassed by learned advocate for the appellant.
5. Per contra, learned AGP has supported the judgment and decree and contended that the representative of the defendant has signed the memorandum, Exhibit - 19 and therefore, the terms and conditions of the memorandum are binding to the defendant. The said memorandum, in clear terms, indicates that the security deposit is a refundable security deposit. The defendant was returned back total three satellite phones: one, on 31.12.1999 and the remaining two on 07.01.2000. The plaintiff demanded refund of security deposit by communication dated 07.01.2000 and Page 6 of 13 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:30:28 IST 2025 NEUTRAL CITATION C/FA/1584/2012 JUDGMENT DATED: 27/11/2025 undefined thereafter by letters dated 03.02.2000 and 29.02.2000, respectively. The period of limitation would start running from the date of 26.02.04, which is the last communication for refund of security deposit. It is therefore contended that the period of limitation would start running from the date of 26.04.2004 and therefore, the suit is within the period of limitation. Except above, no other submissions were canvassed by learned AGP for the respondent.
6. I have considered the submissions canvassed by learned advocates for the parties, and perused record and proceedings. Admittedly, the suit is for refund of security deposit which was retained by the defendant pursuant to a memorandum which was executed between the parties on 06.08.1999, Exhibit - 19. The memorandum stipulates that the security deposit is a refundable security deposit against the satellite phones/SIM- cards/accessories. The record indicates that on 31.12.1999, by a communication at Exhibit - 22, the plaintiff inter-alia informed the defendant to collect four Iridium Satellite Phones from them. On Page 7 of 13 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:30:28 IST 2025 NEUTRAL CITATION C/FA/1584/2012 JUDGMENT DATED: 27/11/2025 undefined 07.01.2000, the plaintiff, first requested the defendant to collect the satellite phones and before that, to refund security deposit. By further communications dated 03.02.2000 and 29.02.2000, Exhibit
- 24 and 25, respectively, the demand for refund of security deposit was reiterated by plaintiff. The plaintiff, by communication dated 26.04.2004, Exhibit - 30, demanded refund of security deposit. The said communication is the last communication for refund of security deposit. The last demand for security deposit is after the expiry of the period of limitation, i.e. three years prescribed under Article 22 of the Limitation Act. The submission of learned AGP, that the period of limitation would start running from 26.04.2004 for the institution of the suit, is misconceived. For a suit to recover money deposited under an agreement that it shall be payable on demand, Article 22 of the Limitation Act prescribes period of three years and time begins to run from the date demand is made. Article 22 is reproduced hereunder:
For money deposited under an Three When the demand is agreement that it shall be years. made.
payable on demand, including money of a customer in the hands of his banker so payable.
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NEUTRAL CITATION C/FA/1584/2012 JUDGMENT DATED: 27/11/2025 undefined Therefore, the aforesaid provision, in clear terms, mandates that the period of limitation would start running from the date of demand. The law on the question of limitation for the demand of refund of security deposit is well settled. It is also an established proposition of law that the period of limitation cannot be extended by writing communications. Once the demand of refund of security deposit is made, in the present case, on 07.01.2000, the period to institute a suit for refund of security deposit would start running from 07.01.2000, and not from 26.04.2004, which is the last communication. The period to recover security deposit would expire on 06.01.2003. Any communication, ensued between parties after 06.01.2003, is of no relevance, so far as the question of limitation is concerned. In the case of Harikumar (Supra), in para - 8 and para - 15, the Hon'ble Apex Court has discussed the issue of limitation in cases of transaction of deposit. Para - 8 and para - 15 of the said decision is reproduced Page 9 of 13 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:30:28 IST 2025 NEUTRAL CITATION C/FA/1584/2012 JUDGMENT DATED: 27/11/2025 undefined hereinbelow, respectively:
"8. Admittedly, this transaction is one of deposit, and, therefore, a suit on the basis of this deposit will be governed by Article 22 of the Limitation Act 1963 (Article 60 of the old Act). Article 22 provides a period of 3 years for money deposit under an agreement that it shall be payable on demand, The period of limitation starts from the date when the demand is made. Now, admittedly, the demand was made by the plaintiff first on 24-7- 1952 in one case and on 3-10-1952 in the other. It was an unqualified demand for payment of the sum due to him. In my view, it was a legal demand by a person capable of giving valid discharge made directly on the party with whom a sum lies as a depositee. It was not necessary for the plaintiff to have made this demand in the year 1952 if he felt that he was under a disability or inability to file a suit. Since the limitation under Article 22 runs from the date of demand, which is entirely within his operative volition, the period or limitation could have been indefinitely prolonged by him; the institution of the suit may itself also be a demand. Therefore, if the plaintiff bad wished to prolong the limitation, he need not have made a demand by his notice in the year 1952. But he chose to serve a notice in the year 1952. In my view the period of limitation, therefore, had to run from the date of demand (in this case 1952) which he voluntarily chose; but the learned Advocates for the appellant contends here that he could not have filed a suit without the consent of the Insolvency Court; but is this contention valid?"
"15. For the aforesaid reasons, therefore, the period of limitation would start under Article 22 of the Indian Limitation Act when the demand is made. The demand made by the plaintiff in one suit is on 24-7-1952 and in the other on 8-10-1952. The period is of three years. Therefore, the suits in both these matters are not tenable. The notice given afterwards by the plaintiff in the year 1957 will not be of any use to him. In this view of the matter, therefore, the suits in each of the appeals are barred by limitation."
The Hon'ble Apex Court held that suit based on deposit will Page 10 of 13 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:30:28 IST 2025 NEUTRAL CITATION C/FA/1584/2012 JUDGMENT DATED: 27/11/2025 undefined be governed by Article 22 of the Limitation Act and said Article provides period of 3 years for money deposit under an agreement that it shall be payable on demand. The period of limitation would start running from the date of demand is made.
In the case of M/s SSV Transporters (Supra), the Hon'ble Supreme Court, while addressing an issue of refund of security deposit has observed as under:
"In addition to the aforesaid, the suit is barred by limitation. According to the plaintiff, it submitted 'no demand certificate' on 11.8.1997 to the defendants and the same was accepted by the defendants on 14.8.1997 after verification and thereupon the plaintiff became entitled to refund of the security amount. However, suit was filed on 5.12.2002 i.e. more than five years after the plaintiff had allegedly become entitled to seek refund of the security deposit. Limitation period for filing the suit is three years. Consequently, the suit is hopelessly barred by limitation."
The Hon'ble Supreme Court has further held that even if no issue of limitation is framed, Section 3 of the Limitation Act, 1963 stipulates that every suit filed beyond the stipulated period of limitation shall be dismissed although limitation has not been set up as defence. Therefore, even if in absence of any pleading or issue, a suit instituted after a period of limitation shall be dismissed.
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NEUTRAL CITATION C/FA/1584/2012 JUDGMENT DATED: 27/11/2025 undefined Applying the aforesaid ratio, in the present case, issue of limitation was framed. However, learned Trial Court has committed a grave error in not considering Article 22 of Limitation Act, 1963, which categorically prescribes period of three years limitation for the suit instituted for recovery of money deposited under an agreement that shall be payable on demand.
7. On perusal of entire record, an admitted fact culls out from the record that, the first date of demand for refund of security deposit is 07.01.2000 and the period would start running from that date itself. The learned Trial Court, while deciding the controversy of refund of security deposit, though, a specific contention of limitation has been raised in the written statement, has not framed the issue of limitation. However, the issue of limitation was decided against the defendant by observing that no evidence was led by the defendant as to how the suit is beyond the period of limitation. The learned Trial Court has observed that "once a deposit, is always a deposit" and under such principle, the period of limitation is not applicable. In my view, such finding on the question of Page 12 of 13 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:30:28 IST 2025 NEUTRAL CITATION C/FA/1584/2012 JUDGMENT DATED: 27/11/2025 undefined limitation is not only misconceived but also, the ignorance of the specific provision of Article 22 of the Limitation Act. Article 22 of the Limitation Act, as discussed above, prescribes a specific period of three years of limitation in the cases of demand for return of deposit based upon a contract. The findings of the learned Trial Court on the question of limitation are illfounded and therefore, this Court is of the opinion that such finding deserves to be set aside and it is held that the suit of the plaintiff is hopelessly time-barred. Therefore, in view of the above facts and circumstances of the case, the present First Appeal is allowed. The judgment and decree passed by the 2nd Additional Senior Civil Judge, Gandhinagar, is hereby quashed and set aside. Special Civil Suit No.126 of 2005 is hereby dismissed. No order as to costs. Record and Proceedings be sent back to the concerned Court/Tribunal, forthwith.
(D. M. DESAI,J) MUSKAN Page 13 of 13 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:30:28 IST 2025