Calcutta High Court
Ceramist Multipurpose Cold ... vs Canara Bank on 24 July, 2023
IN THE HIGH COURT AT CALCUTTA
(Ordinary Original Civil Jurisdiction)
COMMERCIAL DIVISION
Present:
The Hon'ble Justice Krishna Rao
IA No: GA 4 of 2023
In CS 128 of 2018
Ceramist Multipurpose Cold Storage & Ors..
Versus
Canara Bank, Mid Corporate Branch
Mr. Sudhosatva Banerjee
Mr. Mahesh Joshi
Mr. Vivek Basu
Mr. S. Nayak
Ms. Kajal Kumar Dutta
Ms. Swarnaly Das
... For the plaintiff.
Mr. Debmalya Ghosal
Mr. S. Dutt
Ms. Aparajita Ghosh
Mr. Souvik Ghosh
... For the defendant/ canara bank.
Hearing Concluded On : 23.06.2023
Judgment on : 24.07.2023
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Krishna Rao, J.:
1. The defendant has filed the present application for dismissal of C.S No.
128 of 2018 on the ground that in the plaint itself the plaintiff has
admitted that the cause of action to file the suit arose in the year 2008
and in the year 2011, admittedly, the suit is barred by limitation.
2. The defendant further contended that the plaintiff had relied upon the
dates March 8, 2012 and March 7, 2012 when the plaintiff had made
the final payment in respect of all accounts to the defendants and the
suit is filed in the year 2018 which is barred by limitation.
3. The defendant further contented that the plaintiff has instituted the
suit in the Commercial Division without seeking leave to dispense with
the pre-institution mediation as contemplated under the Commercial
Courts Act, 2015.
4. The plaintiff has filed the suit against the defendant for decree of Rs.
8,57,19,563/- along with interest and damages against the defendant
bank.
5. Mr. Debmalya Ghosal, learned Counsel for the defendant has drawn
the attention of this Court to the paragraphs 14, 22, 32, 33 and part
paragraph 46 of the plaint which reads as follows:
"14. By its letter of sanction dated 3rd March,
2008, the defendant inter alia sanctioned a limit
of Rs. 126 lakhs in favour of the plaintiff No. 1 on
account of "farmers loan". The said letter of
sanction dated 3rd March, 2008 inter alia provides
that the said credit facility would be secured by
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"Pledge of bonds and guaranteed by the
Company". A copy of the said letter of sanction
dated 3rd March, 2008 is hereto annexed and
marked as Annexure "E".
22. By numerous letters dated 1st September,
2008, 5th November, 2008, 4th December, 2008,
19th February, 2013, 18th November, 2013, 30th
July, 2014, the plaintiff No. 1 has from time to
time repeatedly called upon the defendant Bank
to make over the said bonds against payment by
the plaintiff No. 1 so that the plaintiff No. 1 in turn
could realise the loans and credit facilities given
to the individual farmers against such bonds.
Copies of the said letters dated 1st September,
2008, 5th November, 2008, 4th December, 2008,
19th February, 2023, 18th November, 2013, 30th
July, 2014 written by the plaintiff No. 1 to the
defendant Bank repeatedly calling upon the
defendant to release the said bonds against
payment are hereto annexed and collectively
marked as Annexure "H".
32. The plaintiffs state that on or about
November 29, 2012, the plaintiffs fully repaid the
said WCTL account of Rs. 63 lakhs by repaying to
the defendant Bank a sum of Rs. 88,09,268.93/-.
A copy of the statement of accounts which will
demonstrate that the said WCTL account was
repaid in full together with interest is hereto
annexed and marked as Annexure "K".
33. On or about September 28, 2011 the
plaintiffs also repaid in full, together with interest,
costs and charges; the farmers loan pledge
account of Rs. 63 lakhs. In respect of the said
farmers loan pledge account, the plaintiffs have
repaid a total sum of Rs. 68,94,403.78/- as will
be manifest from a statement of accounts which is
hereto annexed and marked as Annexure "L".
46. The cause of action thereafter arose on
8th March, 2012 when the plaintiffs had to effect
distress sale of the said cold storage and also
arose on 7th March, 2012 when final repayment
was made by the plaintiffs in respect of all its
accounts to the defendant. The cause of action is
continuing to arise on a day-to-day basis by
reason of the failure and refusal of the defendant
to make payment of the claims of the plaintiffs."
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6. Mr. Ghosal submitted that from the above mentioned paragraphs, it is
clear that the cause of action lastly arose in the year 2012 and
admittedly the plaintiff has filed the present suit in the year 2018 thus
the suit is hopelessly barred by limitation.
7. Mr. Ghosal further submitted that the suit is filed in the Commercial
Division but neither the plaintiff has exhausted the remedy of
mediation nor the plaintiff has prayed for any leave from this Court for
urgent relief.
8. Mr. Ghosal by relying upon the judgment reported in (2020) 7 SCC
366 (Dahiben vs. Arvindbhai Kalyanji Bhanusali (Gajra) Dead
Through Legal Representatives and Others) submitted that the right
to sue accrues only when the cause of action arises. The suit must be
instituted when the right asserted in the suit is infringed, or when there
is a clear and unequivocal threat to infringe such right by the
defendant against whom the suit is instituted.
9. Mr. Ghosal relied upon the judgment reported in (1977) 4 SCC 467 (T.
Arivandandam vs. T.V. Satyapal and Another) and submitted that
exercise of power under Order VII, Rule 11 of the the Code of Civil
Procedure should be exercise to see that the ground mentioned in the
plaint is fulfilled. And, if clever drafting has created the illusion of a
cause of action, nip it in the bud at the first hearing by examining the
party searchingly under Order X of the Code of Civil Procedure.
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10. Mr. Sudhosatva Banerjee, learned Advocate representing the plaintiff
submitted that the ground of limitation is mixed question of law and
facts and the same cannot be decided in an application under order VII,
Rule 11 of the Code of Civil Procedure.
11. Mr. Banerjee submitted that the plaint is to be taken as a whole and
some paragraphs cannot be read in isolation. He submits that in the
present case, if the plaint if read as a whole it reveals that the
communications made from the side of the defendant, the cause of
action continues from the year 2008 till 2018 and it will be taken as
2018 or at least 2016 and the plaintiff has filed the present suit in the
year 2018 within the prescribed time of limitation.
12. Mr. Banrjee submitted that the defendant has taken some of the
paragraphs of the plaint wherein the plaintiff has narrated the facts of
the case starting from 2012 till 2018 and out of which the plaintiff has
taken some of the paragraphs and had filed the present application.
13. Mr. Banerjee submitted that the paragraphs relied by the defendant is
to be read along with paragraphs 31, 34, 35, 36, 37, 40 and first part of
paragraph 46 which reads as follows :
"31. Between 2008 till November, 2016, the
defendant Bank never admitted and/or
acknowledged that any of the security bonds were
lying with it. Having regard to the fact that the
defendant did not release the said security by
bonds and Consequently the plaintiffs could not
realise the loans and credit facilities from the
individual potato farmers, the plaintiffs had no
choice but to repay the said farmers loan account,
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sub-divided into the two limited being the WCTL
account and the Pledge account, by themselves.
34. By its letter dated 23rd November, 2016
written to the plaintiff No. 1, the defendant Bank
for the first time admitted and acknowledged the
fact that the said security bonds were still lying
with it. By the said letter dated 23rd November,
2016, the defendant has inter alia admitted and
conceded that :-
"Regarding pledged potato bonds, we have
found a bunch of bonds after searching old
files since the matter is now more than eight
years old. We request you to verify the same
and take delivery."
A copy of the said letter dated 23rd November,
2016 written by the defendant to the plaintiff No. 1
is hereto annexed and marked as Annexure "M".
35. On 22nd December, 2016 the defendant
Bank wrote yet another letter to the plaintiff No. 1
whereby the defendant contended, for the first
time, that the said security bonds were a common
co-lateral security and the same could be returned
only after closure of the other accounts of the
plaintiffs. The plaintiffs state that the said bonds
were issued by the farmers and the same could
never constitute security for the other limits of the
plaintiffs.
A copy of the said letter dated 22nd December,
2016 written by the defendant to the plaintiff No. 1
is hereto annexed and marked as Annexure "N".
36. By yet another letter dated 27th February,
2017, the defendant Bank once again contended
that the defendant would be in a position to return
the said security bonds only after necessary
approval from its competent authority. A copy of
the said letter dated 27th February, 2017 written
by the defendant to the plaintiff No. 1 is hereto
annexed and marked as Annexure "O".
37. The defendant Bank on the one hand
wrongly and illegally retained the said security
bonds and thereby prevented the plaintiffs from en-
cashing the same and on the other hand exerted
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tremendous and continuous pressure upon the
plaintiffs to repay the outstanding dues. The
defendant kept on charging excessive interest in
the account of the plaintiffs thereby compelling the
plaintiffs to arrange for immediate liquidation of all
its assets to repay the illegal, excessive and
inflated claims and demands of the defendant.
40. Although the defendant for the first time by
the said letter of 23rd November, 2016, admitted
that the said security bonds were lying with it, the
defendant on one pretext or the other refused to
return such bonds to the plaintiffs.
46. The cause of action of the plaintiffs arose for
the first time on 23rd November, 2016, when the
defendant for the first time admitted that the said
bonds were lying with it."
14. Mr. Banerjee submitted that if the whole plaint is read together as per
the case made out by the plaintiff, the suit is filed within the prescribed
time of limitation.
15. Mr. Banerjee submitted that the Commercial Courts Act, 2015 come
into force with effect from 31st December, 2015 and the suit is filed
before this Court but at the time of filing of the case, no infrastructure
was established for pre-mediation proceeding and thus there is no
question of exhausting pre-mediation proceeding.
16. Mr. Banejree relied upon the judgment report in 2014 SCC OnLine Cal
6092 (Nandalal Rathi vs. The Kamalalaya Centre Shops and
Office Owners Association & Ors.) and submitted that in deciding the
application for rejection of plaint, the Court has to see on a reading of
the plaint as to whether any or all of the conditions under Order 7,
Rule 11 of the Code of the Civil Procedure are attracted.
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17. Heard the learned Counsel for the respective parties, perused the
materials on record and the judgments relied by the parties. Order VII,
Rule 11 of the Code of Civil Procedure, 1908 reads as follows:
"11. Rejection of plaint.- The plaint shall be
rejected in the following cases:-
(a) where it does not disclose a cause of action;
(b) where the relief claimed is undervalued, and
the plaintiff, on being required by the Court to
correct the valuation within a time to be fixed by
the Court, fails to do so;
(c) where the relief claimed is properly valued,
but the plaint is written upon paper insufficiently
stamped, and the plaintiff, on being required by
the Court to supply the requisite stamp-paper
within a time to be fixed by the Court, fails to do
so;
(d) where the suit appears from the statement in
the plaint to be barred by any law;
[(e) where it is not filed in duplicate;]
[(f) where the plaintiff fails to comply with the
provisions of rule 9:]
[Provided that the time fixed by the Court for the
correction of the valuation or supplying of the requisite
stamp-paper shall not be extended unless the Court, for
reasons to be recorded, is satisfied that the plaintiff
was prevented by any cause of an exceptional nature
form correcting the valuation or supplying the requisite
stamp-paper, as the case may be, within the time fixed
by the Court and that refusal to extend such time would
cause grave injustice to the plaintiff]."
18. In order to give effect to the executive intent of the Government, the
defendant bank framed a Scheme namely "Syndicate Kisan Samrudhi
Credit Card "SKSCC" Scheme." To implement of the said scheme, the
defendant had entered a terms with the plaintiff which reads as follows:
"i. The defendant Bank would grant credit facilities
to individual potato farmers;
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ii. Such loans would however be disbursed by the
defendant to the plaintiff No. 1 as its agent;
iii. The plaintiff No. 1 as the agent of the defendant
would in turn disburse the said credit facilities
so obtained from the defendant to individual
farmers;
iv. The security in respect of the credit facilities so
disbursed to the farmers would be the potato
stored by then in the cold storage of the plaintiff
No. 1.
v. The creation of the pledge by the individual
farmers in favour of the plaintiff No. 1 would be
in the form of bonds executed by the individual
farmers in favour of the plaintiff No. 1. A copy of
a sample bond executed by an individual farmer
in favour of the plaintiff No. 1 is hereto annexed
and marked as Annexure "D".
V. The bonds executed by the individual potato
farmers would in turn be made over and/or
assigned by the plaintiff No. 1 in favour of the
defendant to secure the credit facilities granted
by the defendant to the plaintiff No. 1 for
onward disbursement of such credit facility to
the individual farmers."
19. The defendant bank has sanctioned a loan of Rs. 126 lakhs in favour of
the plaintiff on account of farmers loan on March 3, 2008. The said
amount of Rs. 126 lakhs was disbursed by the plaintiff to the individual
farmers as agent of the bank. As security, each of the farmers deposited
their bonds through the plaintiff with respect of the potatoes pledged by
the farmers and the defendant bank has duly accepted the bonds and
agreed to release such bonds as and when repayments were made by
the individual farmers.
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20. It is the case made out by the plaintiff that since 2008 till the month of
November' 2016. the defendant Bank never admitted about the
acknowledgement of security bonds and thus the bank has not released
the security bonds due to which the plaintiff could not realise the loan
and credit facilities from the individual potato farmers.
21. The plaintiff relied upon three letters issued by the defendant bank to
the plaintiff dated November 23, 2016, December 22, 2016 and
February 27, 2017 which reads as follows :
"Ref No. 9591/CMS/253/ADV/2016 Date : 23.11.2016
To
M/s. Ceramist Multipurpose Cold Storage
P.O. At : Tarahat, P.S. Ghoghat, Dist : Hooghly
West Bengal
Reg. Office - 2B, Jadulal Mullick Road, Kolkata - 700006.
Dear Sir,
Subject : Your SODH/Term Loan facility with us
The present outstanding position of the account furnished as under.
(Amount in Lacs)
Facility Limit O/s on Overdue Remarks
22.11.16
SODH 200.00 202.91 2.91 Account is
9591/125/ overdue to
577 Non-servicing
ODMS 50.00 52.83 2.83 of the
9591/125/ interest of
819 Sept & Oct
BG 20.00 8.21 0.00 2016. You
are
requested to
clear all the
overdue
immediately.
Probable
11
NPA date :
28.11.2016
.
We have for reference your representation regarding your
SODH/Term Loan accounts with our Branch. You have requested
that certain credit facilities were sanctioned by the branch against
pledge of Bonds of Potato stored in your cold storage. Subject
pledge loan have already been closed in 2009. Further WCTL and
ODH Limits were sanctioned as per request of the Company. You
have mentioned that certain losses were incurred by the company
for pledge of said potatoes. The aforesaid matter was examined in
detail during the meeting dated 15.11.2016 at Regional Office in
presence of our Regional Manager, AGM (credit), the Company
officials Branch officials. After a threadbare discussion, it was
concluded that the facility was closed. The other credit facilities of
the Company were reconstructed/renewed in subsequent years
with fresh documentation. The terms and conditions of the
succeeding sanction letters were duly accepted by the company.
The contention of incurring loss relating to pledging of potatoes in
2008 is a business loss to the company for which bank is not
responsible. Hence, we are not in a position to compensate the
business loss incurred by the company.
Regarding Pledged potato bonds, we have found a bunch of bonds
after searching old files since the matter is now more than 8 year
old. We request you to verify the same and take delivery.
We also refer your Letter Ref. No. CMCS/16-17/054 dated
29.09.2016 in which you have submitted request for liquidation of
the OD accounts with us. You may please note that outstanding
liability
M/s. Ceramist Multipurpose Cold Storage, A/C with Camac
Street Branch
Ref No. 9591/CMS/253/ADV/2016 :2: Date 23.11.2016
position is furnished in the table in first paragraph. Interest and
applicable service charges from 01.11.2016 is to be added to the
above outstanding balance till the date of final liquidation.
The system generated interest charged report (as intimated vide
our letter dated 13.11.2016) in the above accounts are attached
herewith for your confirmation. Please verify the details and
intimate
This is for your kind information.
Kind acknowledge.
Yours faithfully
For SYNDICATE BANK
ASST GENERAL MANAGER
Camac Street Branch
Kolkata - 700 017."
"Ref No. 9591/CMS/273/ADV/2016 Date : 22.12.2016
TO WHOM EVER IT MAY CONCERN
This is to certify M/s. Ceramist Multipurpose Cold Storage enjoying
various facilities with our Branch. On request of the Borrower Firm
dated 21.12.2016; we have closed the ODMS facility of Rs. 50.00
lacs having Account No. 95911250000819 with our Branch under
full and final settlement on 22.12.2016.
Firm has also requested us for release of the security for the ODMS
facility. In this connection we hereby confirm that the security
offered with this account is also common collateral security in the
Account No. 95911250000577 (Secured Overdraft Facility) and as
on date the balance in the account is 2,02,91,192.49. We further
inform that we can be able to return the securities pertained to this
account after closure of the SODH account 95911250000577, after
approval from our competent authority.
This certificate issued on specific request of the company.
Yours faithfully
ASST GENERAL MANAGER
Issued to :
M/s. Ceramist Multipurpose Cold Storage
P.A. At : Tarahat, P.S. Ghoghat, Dist: Hooghly
West Bengal.
Reg. Office-2B, Jadulal Mullick Road, Kolkata-700006."
"Ref No. 9591/CMS/359/ADV/2017 Date :27.02.2017
TO WHOM EVER IT MAY CONCERN
This is to certify that the SODH facility of Rs. 200.00 lacs (Account
No. 95911250000577) of M/s Ceramist Multipurpose Cold Storage
with our Branch is closed in full and final settlement on
18.02.2017 on request and the funds were remitted by State Bank
of India, Arambagh Branch. As on date, all the fund based
facilities availed by the Firm stand closed with our Branch.
The Firm has also requested for release of the security documents.
We confirm that we shall be able to return the securities (Mortgage
Papers), after approval from our competent authority on joint
discharge of the firm and from SBI Arambagh.
This certificate is issued on specific request of the firm.
Yours faithfully
ASST GENERAL MANAGER
Issued to :
M/s. Ceramist Multipurpose Cold Storage
P.A. At : Tarahat, P.S. Ghoghat, Dist: Hooghly
West Bengal.
Reg. Office-2B, Jadulal Mullick Road, Kolkata-700006."
22. The documents mentioned in paragraph 21 (supra) is the
Communication made by the defendant bank to the plaintiff and are in
connection with the suit filed by the plaintiff, thus prima facie it reveals
that the cause of action continue till 27.02.2017 and suit is filed on
June 28, 2018.
23. As per the submissions made by Mr. Banerjee at paragraph 47
inadvertently the date is typed as March 7, 2012 instead of March 7,
2017 and the submission of Mr. Banerjee supports the document i.e
Deed of Conveyance executed on March 7, 2017 wherein the plaintiff
has sold his land.
24. After careful consideration of the plaint as a whole, this Court finds
that at the stage of hearing of an application under Order VII, Rule 11
of the Code of Civil Procedure, 1908, the point of limitation cannot be
decided as the same is mixed question of fact and law and the same is
to be decided in trial only.
25. As regard that the plaintiff has not complied with the provisions of
Commercial Courts Act, 2015 by invoking the provisions of pre-
institution mediation, the plaintiff has instituted suit on 28th June,
2018. In the case reported in AIR 2021 Cal 190 (Laxmi Polyfab Pvt.
Ltd vs. Eden Realty Ventures Pvt. Ltd.), the Coordinate Bench of this
Court held that :
"57. Section 12 A of the Act of 2015 has entered
the statute book with retrospective effect from May 3,
2018. It has been introduced to the Act of 2015 by
the Amendment Act of 2018. The Amendment
Act of 2018 has been published in the Gazette of
India on August 21, 2018. The Act of 2015 has
come into force on October 23, 2015. The Act of
2015 has been published in the Gazette of India on
January 1, 2016.
58. Between the periods October 23, 2015 when the
Act of 2015 had come into retrospective effect till
January 1, 2016, when the Amendment Act of
2018 was published, the public was not aware that
a plaintiff was required to undertake a pre-institution
mediation in respect of a commercial dispute of the
Specified Value. In my view, suits involving a
commercial dispute of the Specified Value instituted
before the Commercial Division without pre-
institution mediation till January 1, 2016 cannot be
faulted on the touchstone of failure to undertake a
pre- institution mediation in terms of section 12 A of
the Act of 2015 simply on the ground that the public
was not aware of the requirement to do so till
January 1, 2016.
59. For the period therefore from October 23, 2015
till January 1, 2016, a plaintiff was not aware of the
provisions of Section 12 A of the Act of 2015 for
such plaintiff to comply therewith. There is one more
period to which, the plaintiff cannot be faulted for not
undertaking a pre- institution mediation. It is the
period from January 1, 2016 till December 11, 2020
being the date when the manner and procedure for
the pre- institution mediation had been prescribed by
the rules made by the central government. The same
would include the availability of requisite
infrastructure for pre-institution mediation as also
availability of trained mediators. Once the procedure
has been prescribed by the rules of the central
government and the requisite infrastructure to
undertake a pre- institution mediation is in place, a
plaintiff cannot claim that, Section 12 A of the Act of
2015 is directory and not mandatory, when such
plaintiff is not seeking any urgent interim relief.
Therefore, for the period from October 23, 2015 till
December 11, 2020 a plaintiff cannot be faulted for
not undertaking pre-institution mediation
under Section 12A of the Act of 2015 where the
plaintiff is not seeking any urgent interim relief as
the requisite infrastructure to do so was not in
place."
The judgment referred above in the case of Laxmi Polyfab (Supra)
squarely applicable in the present case as this case is also filed on June
28, 2018 and thus the argument made by the defendant is not
sustainable.
26. In view of the above facts and circumstances of the case, this Court
finds that no relief can be granted to the defendant in the present
application.
27. Accordingly, G.A No. 4 of 2023 is thus dismissed.
(Krishna Rao, J.)
