Syndicate Bank, Sadar Bazar Branch vs Madhu Insulated Cable Co. (P) Ltd. and Others

Valmiki J Mehta, J.—The challenge by means of this Regular First Appeal u/s 96 of the Code of Civil Procedure, 1908 (CPC) is to the impugned judgment and decree dated 10.2.1986 which dismissed the suit of the Appellant bank not only against Respondent No. 1/Defendant No. 1/principal borrower but also against the guarantors/Defendant Nos. 2 to 5/Respondent Nos. 2 to 5. The suit was dismissed qua the Respondent No. 1/principal borrower on the ground that the bank failed to prove the appropriate authority for filing of the suit by Mr. U.N. Bakshi, Manager of the Appellant bank. As regard Respondent Nos. 2 to 5, the suit was dismissed as the guarantees were found to have been manipulated after being signed by the Respondent Nos. 2 to 5 in blank. Guarantors have also been discharged on the ground that the guarantee was granted with respect to the Bill Discount Facility in terms of a sanction letter which was valid upto 31.10.1979, however, the bills which were discounted in this case were from 17.3.1981 onwards.

I may also note that the suit was dismissed qua Defendant No. 6, acceptor of the hundis, inasmuch as the suit was not shown to have been validly filed by Mr. U.N. Bakshi as already stated above.

So far as the finding of the trial Court that the suit has not been properly instituted and signed and which finding is given with regard to issue No. 1, I find the said finding and conclusion to be wholly illegal and perverse in view of the decision of the Supreme Court in the case of United Bank of India v. Naresh Kumar and Ors. AIR 1997 SC 3 in which it was held that suits of banks should not be dismissed once they are prosecuted till the end. It was also held by relying upon Order 29 CPC that a principal officer of the bank is authorized to institute the suit. In the present case, it is not disputed that Mr. U.N. Bakshi was the Principal Manager. Therefore, I set aside the finding with regard to issue No. 1 that the suit was not properly instituted.

Learned Counsel for the Appellant has also drawn my attention to the dishonoured hundis in the present case and which show that they were duly accepted by the Defendant No. 6/Respondent No. 6 and which hundis have been exhibited as Ex.P3, P6, P9, P11 and P14. Since the suit is decreed against Respondent No. 1/principal borrower and the fact that the Appellant bank has also proved the hundis dishonoured by Respondent No. 6, the suit is also to be decreed against the Respondent No. 6.

I have perused the evidence which has been led before the Court below and the security documents have been duly proved and exhibited by the Appellant bank showing the sanctioning and the utilization of facilities by the Respondent No. 1. Statement of account has also been filed and exhibited as Ex.PW2/4 showing the dishonouring of the hundis.

So far as the dismissal of the suit against the Defendant Nos. 2 to 5 is concerned, I fully agree with the findings and conclusions of the Court below. There may be two views as to whether the guarantee letters Ex.PW2/2 and Ex.PW2/3 were signed in blank and thereafter fabricated more so as the trial Court has in great depth considered this aspect from paras 15 to 22 of the impugned judgment. I am of the opinion that the appeal is liable to be dismissed qua Respondent Nos. 2 to 5 on the other ground that the guarantees were given with respect to bill discounting facility, which as per the sanctioned letter Ex.PW2/1 was valid only upto 31.10.1979 and the discounted and dishonoured bills in the present case are of the year 1981. Thus the guarantees cannot be enforced with respect to bills discounted after 31.10.1979, when the validity of the facility had already expired. I therefore sustain the findings with respect to dismissal of the suit against Respondent Nos. 2 to 4.

The suit of the Plaintiff for recovery of Rs. 80,228/- is therefore decreed with pendent lite and future interest @ 9% simple till realization against Respondent Nos. 1 and 6. The appeal is dismissed against Respondent Nos. 2 to 5. Appellant is awarded cost of the appeal being the Court fee paid. Decree sheet be prepared. Trial Court record be sent back.