United Commercial Bank vs Deekor and Others

R.C. Lahoti, J.

(1) This is a suit filed by a bank for recovery of Rs.1,17,050 77Pwith future interest @ 19.50% p.a. on Cash Credit Facility Account and B.P. Account.

(2) According to the plaintiff, the defendant No. 1 is a partnership-firm. Later on it was converted into a sole proprietorship concern of defendant No. 2. The defendant No. 3 is the father of defendant No. 2. He had stood guarantor for repayment of all dues against the defendants Nos. 1 and 2. The plaintiff-Bank sanctioned two facilities to the defendants 1 to 2. One was a Cash Credit Hypothecation Limit. The other was Bill Purchase Limit. In the Cash Credit Hypothecation Limit ,the defendants 1 and 2 executed a Pro-note dated 27.8.77 for Rs. 30,000.00 in favor of the plaintiff. The same was renewed from time to time. The defendant No. 3 executed a guarantee bond dated 1.5.79. The defendants land 2 drew the following Hundies in favor of the plaintiff-Bank on defendant No. 4 -

SI. Hundi No. Date of Hundi Amount of HundiNo. Rs.1. 1101 12.8.79 7350.002. 1104 21.8.79 7560.003. 1106 27.8.79 5880.004. 1115 22.9.79 4400.005. 1129 26.10.79 7590.006. 1130 29.10.79 5290.007. 1149 29.12.79 5980.008. 1152 11.1.80 3910.00 The defendant No. 4 had accepted the hundies but the Hundies were not honoured on their due dates.

(3) It is further stated that as per the accounts books of the plaintiff, there was debit balance of Rs. 50,570.46 P in the Cash Credit A/c. inclusive of interest up to15.7.82. The defendants Nos. 1 to 3 were jointly and severally liable to pay the said amount .In the B.P. Account there was an outstanding balance of Rs. 66,480/31Pinclusive of interest up to 15.7.82 which the defendants 1 to 4 were jointly and severally liable to pay.

(4) In their written statement defendants have submitted that the plaint has not been signed and verified by a duly authorised is an competent person and hence the same was liable to be rejected. The execution of several documents set-out in the plaint has been denied. It has been stated that blank papers were got executed by the plaintiff from the defendants 1 to 3. As to the dishonoured Hundies, it is submitted that the liability was of defendant No. 4 alone. It is also stated that the suit is barred by limitation against defendants 1 to 3.

ON 13.8.84, following issues were framed :-1. Whether the plaint has been signed and verified by a duly authorised and competent person on behalf of the plaintiff? 2. Whether the documents referred in the plaint were not executed by the defendants Nos. 1, 2 and 3? OPD3. Whether blank papers were got executed by the plaintiff from the defendants 1 to 3? OPD. 4. Whether the Hundies accepted by defendant No. 4 were the hundred without recourse to the drawer? OPD. 5. Whether the suit is barred by limitation against defendants 1, 2 and 3? OPD 6. Whether the liability for dishonoured Hundies is entirely that of defendant No. 4 as alleged in para No. 7 of the written statement of defendant No .3? OPD7. Whether the written statement of defendant No. 3 is liable to be rejected for not verifying the same? OPP 8. Whether the defendant No. 4 is not liable to pay the amount of eight hundred of the value of Rs. 46,960.00 mentioned in para No. 9 of the plaint inspire of its admission that the said Hundies were drawn by defendants 1 and 2 for consideration and duly accepted by defendant No. 4 ?OPD 9. Whether the plaintiff is entitled to recover a sum of Rs. 50,570.46 in the cash credit account against the defendants 1 to 3 and a sum of Rs.66,480.31 in the B.P. Account against defendants 1 to 4? OPP10. Whether the plaintiff is entitled to recover interest, if so, at what rate and on what amount? OPD.11. Relief.

The parties have not claimed or insisted on framing of any other issue.

(5) As the order sheet dated 13.1.86 discloses, at the stage of admission/denial of the documents, most of the documents marked as Ex. P-1 to P-39 have been admitted.

(6) In oral evidence Mr. S.C. Shah, Divisional Manager of the plaintiff-Bank,who was Branch Manager of the plaintiff-Bank at the time of filing of the suit has been examined. On behalf of the defendants Mr. Dinesh Bhatnagar the defendant No .2 has alone appeared in the witness box. Issue No. 1

(7) The plaint is signed and verified by Mr. S.C. Shah. He was the Branch Manager of the plaintiff-Bank on the date of filing of the suit. He has proved power of attorney Ex.PW.1/l in his favor. It is executed by two directors of the bank. Ex.PW. " is a General Resolution of the plaintiff-Bank authorising all branch managers to sign and verify the pleadings and file the suit. Ex. PW.I /3 is a sanction order given by the then deputy General Manager of the plaintiff-Bank, specially authorising the branch to file the present suit. It is, Therefore, clear that Mr. S.C. Shah was duly authorised and competent on behalf of the plaintiff-Bank to sign and verify the plaint. Issue No. 1 is answered in the affirmative. Issues Nos. 2 and 3

(8) The onus of proof lay on the defendants. No evidence has been adduced to prove that any of the documents were signed by any of the defendants as blank papers .Mr. Dinesh Bhatnagar, defendant No. 2 appearing in the witness box also does not say so. Both the issues are answered in the negative. Issue No. 4

(9) The onus of proof lay on the defendants. As no evidence has been adduced by the defendants, the issue is answered in the negative. Moreover the plea forming subject matter of the issue does not find support from the hundies as they are. Issue No. 5

(10) The suit is not barred by limitation. The documents have either been renewed or acknowledged in writing within the prescribed period of limitation. The issue is answered in the negative. Issue Nos. 6 and 8

(11) The Hundies were drawn by the defendants 1 and 2 on the defendant No. 4.The Hundies were accepted by defendant No. 4. These were discounted by the plaintiff-Bank. On the date of presentation, the Hundies were dishonoured. The plaintiff is entitled to recover the amount from all the defendants. It cannot be said that the liability of the defendants 1 to 3 has stood extinguished. The issue is answered in the negative. Issue No. 7

(12) The written statement filed by defendant No. 3 bears a verification at the foot thereof. It is not liable to be rejected. The issue is answered in the negative. Issue No. 9

(13) As per the statement of account, proved by the plaintiff, the liability of the defendants for the two accounts as alleged in the plaint is proved. The issue is answered in affirmative. Issue No. 10

(14) Mr. S.C. Shah, PW-1 has proved that the rate of interest agreed upon between the parties was 11%. as on 27.8.77. However, he has proceeded to state that the rate of interest has fluctuated consistently with the guidelines issued by the Reserve Bank of India. In 1979, the rate of interest was changed to 12%. At the time of filing of the suit, in the year 1982 the rate of interest was changed to 19.5% p.a. On the date of statement i.e. 8.11.87 the rate of interest was 16.5%. However, no documents have been filed in support of the statement of the witness bringing on record the rate of interest decided by the Reserve Bank of India.

(15) To the extent to which the interest has been debited in the account of the defendants, it may be presumed that it must have been done consistently with the Reserve Bank of India guidelines inasmuch as the officials of the Bank would be debiting several accounts of their customers with interest from time to time and the rate applied by the bank official would be one as determined by the Reserve Bank of India. Therefore, the balance shown as outstanding in the books of accounts against the defendants cannot be disturbed nor its truthfulness can be doubted. However ,the Court would not be justified in granting interest pendente lite and future at a rate other than the one agreed upon between the parties, which was 11%p.a.Issue No. 11

(16) At the time of final hearing, i.e. on 7.11.94, learned Counsel for the plaintiff had produced a certificate issued by the Chief Manager of the plaintiff-Bank certifying the following payments having been made by the defendants 1 and 2 during the pendency of the suit against the outstanding dues of Cash Credit Facility A/c.-

Date of receipt Amount1. 2.12.89 15,930.502. 21.12.93 7,966.503. 21.12.93 20,778.204. 21.12.93 2,019.50 Total 46,694.70

For the following reasons, the suit filed by the plaintiff is decreed. Let a decree be drawn in the following terms :

(1)The defendants 1 to 3 shall pay jointly and severally an amount of Rs.50,570.46p minus Rs. 46,694.70p realised during the pendency of the suit.(2) The defendants No. 1 to 4 shall pay joint and severally an amount of Rs.66,480.31P to the plaintiff-Bank.(3) That both the above said amounts shall carry interest @ 11% p.a.calculated from 20.7.82, the date of filing of the suit till realisation.(4) The defendants shall bear their own costs and shall also pay the costs incurred by the plaintiff-Bank.