Vijaya Bank vs Gold Foot Pvt. Ltd.
1998 Latest Caselaw 607 Del

JUDGMENT

K. Ramamoorthy, J.

1. The plaintiff bank has instituted the suit for the recovery of a sum of Rs.1,32,962/- against defendants 1 to 3 with interest @ 19.5% p.a. from 16.1.1986 onwards. The suit was instituted on the 31st of January, 1986. Defendants 2 & 3 had been set ex parte. The allegations in the plaint could he abridged in the following terms:

2. The second defendant, M/s.Dhanarjan Enterprises, was borrowing money from the plaintiff. The stocks at the defendant No.2 factory premises were hypothecated with the plaintiff bank. The first defendant was permitted to take delivery of stocks of 3,000 pairs of ladies white shoes from the factory of the second defendant vide letter dated the 25th of February, 1983. The first defendant undertook that the stocks would continue to be under the charge of the plaintiff and defendant No.1 was taking delivery of those shoes for reprocessing. The first defendant undertook that at the time when the goods were handed over to the clearing agents for export, the receipt would be issued in favour of the plaintiff and by letter dated the 9th of August, 1984, the first defendant assured that the dues due to the plaintiff would be cleared. The first defendant had taken shoes of the value of Rs.90,000/- but the first defendant had not paid any money. By letter dated the 26th of September, 1985, the first defendant offered to pay the amount due in four monthly instalments of Rs.25,000/-each and the first of such instalment would be paid on the 10th of October, 1985. The first defendant did not pay any amount as promised. The plaintiff issued a notice dated the 29th of August. 1985 claiming the sum of Rs.90,000/- towards principal amount and Rs.42,962/- towards interest @ 16.5% p.a. and the total amount claimed was Rs. 1,32,962/-.

3. The first defendant filed the written statement stating that the first defendant was not liable to pay the amount and this Court has no territorial jurisdiction. In paragraph 8 of the written statement, it is stated:-

"That para No.8 of the plaint is not admitted as stated. There was no undertaking as such by the answering defendant but as the custody of stocks was emanating from defendant No.2 which in turn was under the charge of the plaintiff, the receipt, against delivery of stocks to the clearing agent, would be got issued in the name of the plaintiff and the plaintiff is not complaining about the receipts. The question of payment or of sale of stocks did not in any way create any privity between the plaintiff and the answering defendant as the money was to be received to the account of defendant No.2 at Ghaziabad, not within the jurisdiction of this Hon'ble Court. In that sense of the matter the value of the stocks was payable at NOIDA, Ghaziabad, from where the stocks were lifted for reprocessing with a promise to restore the custody of the stocks to defendant No.2 at NOIDA, Ghaziabad. The letter dated 9th August, 1984 may kindly be perused for its true interpretation. It is stated that at all times the defendant No.1 was trying to help defendant No.2 in clearing the dead stock in order to enable defendant No.2 to repay its debt to the plaintiff bank and as the stocks were under the charge of the plaintiff bank the correspondence between the plaintiff and answering defendants was necessitated. The transaction thus was one of principal to principal between defendant No.l on the one part and defendants No.2 and 3 of the second part and it was not even a tripartite transaction."

4. Admitting the letter dated the 26th of September, 1985, the first defendant would state:-

"That in reply to para No.9 of the plaint, it is stated that the answering defendant did write to the plaintiff bank and intimated in the said letter dated 26th September, 1985 that the amount payable against the goods of defendant No.2 would be released to the plaintiff bank in four instalments as stated in the letter, but the perusal of the contents of the said letter would reveal that the shoes were purchased from M/s.Dhanarajan Enterprises, NOIDA and the monies were payable to the said defendant No.2 and that these were to be deposited with the plaintiff bank. According to this letter also, no privity was created or executed between the plaintiff and the answering defendant. It may be stated that the answering defendant had various other dealings with defendant No.2 and various accounts between the parties required to be settled. The plaintiff bank was in any case no cause of action to maintain the present suit."

4. In paragraph 10 of the written statement, it is stated that the whole transactions took place at Noida, Ghaziabad, the money was payable at Noida, and therefore, this court has no jurisdiction. It is also stated that the claim made in the suit is less than the jurisdictional value of this Court. Therefore, the suit is liable to be dismissed. The plaintiff filed the replication to the written statement filed by the first defendant. It is not necessary to narrate the same.

5. The plaintiff bank had filed the suit No.1569/86 against defendants 2 & 3 and the amount claimed in this suit was included therein and subsequently, the plaintiff bank did not press the claim with reference to Rs.1,32,962/- in view of the present suit.

6. The plaintiff had filed the Ex.P-1 to Ex.P-15. First defendant has not filed any document. Ex.P-1 is the letter dated 25.2.1983 by the first defendant to the plaintiff. Ex.P-2 is the receipt dated 28.2.1983 given by the first defendant acknowledging the receipt of 1288 pairs white ladies shoes received from the second defendant in the custody of the plaintiff bank. Ex.P-3 is a letter dated 18.5.83 from the first defendant to the plaintiff informing the plaintiff about the shipment of 3,000 pairs made by the first defendant to M/s.Globe Traders, London. Ex.P-4 is a letter dated 19.5.83 by the first defendant to the plaintiff confirming the discharge of 3,000 pairs of shoes. Ex.P-5 is a letter dated 28.11.83 from the first defendant to the Divisional Manager of the plaintiff bank. Ex.P-6 is the letter dated 29.11.83 from the first defendant to the plaintiff stating that efforts were being made to get the bill paid. Ex.P-7 is the letter dated 1.3.84 from the first defendant to the Asstt.General Manager, plaintiff bank, undertaking "Last but not the lease we do reconfirm to remit Rs.90,000/- from the Export proceeds to your NOIDA Branch A/c M/S.DHANARJAN ENTERPRISE, as soon as the same are received by our best services". Ex.P-8 is a letter dated 9.8.84 from the first defendant to the plaintiff bank, Noida Branch undertaking to settle the bill after selling the goods lying #t European Airport. Ex.P-9 is the General Power of Attorney by the bank in favour of Mr.L.S.Shanbhogoe. Ex.P-10 is the General Power of Attorney by the plaintiff bank. Ex.P-11 is the letter dated 24.2.83 by the second defendant to the Manager, plaintiff bank, Noida Branch seeking permission to take the goods for furnishing process. Ex.P-12is the letter dated 27.5.83 by the second defendant to the plaintiff. Ex.P-13 is the letter dated 26.9.85 by the first defendant to the Asstt.General Manager of the plaintiff bank, Connaught Circus, New Delhi. Ex.P-14 is the copy of the notice dated 29.7.85 sent by the counsel on behalf of the plaintiff to the first defendant. Ex.P-15 is the receipt issued by the Postal Department for Ex.P-14. On the 27th of July, 1988, the following issues were framed for trial:

"1. Whether the plaint has been signed, verified and filed by a duly authorised person?

2. Whether the court has no jurisdiction to entertain the suit?

3. Whether there is no privity of contract between plaintiff and defendant No.1.

4. Whether the suit amount is not due to the plaintiff from defendant No.1?

5. Whether the plaintiff is entitled to any interest?"

7. The plaintiff PW-1, Mr.Laxmi Narayana Shanbhogoe who was working as Manager and Principal Officer of Vijaya Bank, Noida Branch from May 1985 to May, 1988. He has spoken to Ex.P-9 and Ex.P-10 to show that he had the authority to sign and verify the plaint. PW-2 is Vipin Kumar who was working as Manager in Vijaya Bank, Noida Branch from July, 1982 to June, 1985. PW-2 has referred to the letters written by the first defendant Ex.P-1 to Ex.P-8. Ex.P-5, as I noticed above, is the letter by the first defendant to the Divisional Manager, Vijaya Bank, Connaught Circus Branch, New Delhi. The learned counsel for the first defendant, Mr.S.K.Puri, cross-examined witness mainly on the point relating to jurisdiction. The witness admitted that the sale proceeds of the goods were payable at Noida to the bank, the loan was advanced to the second defendant at Noida.

7. Mr.P.S.Doshi, the Managing Director of the first defendant, was examined by the first defendant as DW-1. The witness would admit:-

"Q.4. What was the association between you and Mr.DHANRAJAN? A. * was requested by the Dhanrajan to help them because in Noida, the labour problem was there. Then defendant No.2, M/s.DHANRAJAN approached me to solve their problem. When I told them that the goods can be rectified if the goods were brought to my factory at DELHI."

8. In the cross-examination, the witness would admit:-

"0.17. Your factory was at Delhi?

A. Yes, I have been residing at Delhi, my factory was at Delhi.

Q.18. Whether the goods were brought to you at Delhi?

A. It is correct that goods were brought to DELHI."

9. Regarding payment of the amount, the witness would admit:-

"Q. 19. You agreed to pay the money to the bank or not?

A. At that time, the goods were not sold at all. It was on the presumption that the goods will be sold. As a gentlemen and a good businessman, I told him that I will pay."

10. He would further admit:-

"Q.20. Did the bank accept your offer?

A. No, the bank never accepted our offer at all. I agreed to pay to the bank as per the details given videex.P-13.

Q.21. Were you prepared to pay this money to the bank?

A. YES."

11. The learned counsel for the First defendant, Mr.S.K.Puri, submitted that the plaintiff had admitted that the goods were kept by the plaintiff in Noida, delivered to the first defendant at the instance of the second defendant at Noida, and the money was payable at Noida, and therefore, this Court has no territorial jurisdiction.

12. In the light of admission by DW-1, it is clear that the suit filed by the plaintiff is competent and this Court has got jurisdiction.

13. Section 20 of the Civil Procedure Code reads as under:-

"Other suits to be instituted where defendants reside or cause of action arises.

Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction-(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

(c) the cause of action, wholly or in part, arises."

14. Therefore, it is not open to the first defendant to say that this Court is not competent to deal with the subject matter in this suit.

15. Regarding the claim of the plaintiff, the first defendant had admitted, in its letter to the plaintiff, and, therefore, it is too late in the day for the first defendant to contend that it is not liable lo pay the amount in the suit. I have no hesitation in coming to the conclusion that the plaintiff is entitled to the amount claimed in the suit.

16. Regarding the issue that there is no privity of contract between the plaintiff and the first defendant, the first defendant had approached the plaintiff for release of the goods and the plaintiff agreed to release the goods and whatever the understanding of contract between the first defendant and the second defendant it is none the concern of the plaintiff. Once the first defendant had undertaken to pay the amount to the plaintiff, the first defendant cannot try to wriggle out of the situation.

17. Regarding the interest claimed by the plaintiff, the transaction being a commercial one and in the light of the conduct of the first defendant, I am not inclined to accept the submission on behalf of the first defendant that the plaintiff is not entitled to claim interest @ 19.5% per annum. The plaintiff being a bank who had allowed the first defendant to have the goods for doing business, cannot be denied interest.

18. I now proceed to deal with the issues.

19. On Issue No.1, I find that the plaint has been verified and signed by duly an authorised person.

20. On Issue No.2, I find that this Court has jurisdiction to entertain the suit.

21. On Issue No.3, I find that the first defendant was liable to pay the amount to the plaintiff and, therefore, there is privity of contract between the plaintiff and the first defendant.

22. On Issue No.4, I find that plaintiff is entitled to the suit amount.

23. On issue No.5, I find that the plaintiff is entitled to the interest claimed in the suit.

24. In view of the stand taken by the plaintiff in S.No. 1569/80, the plaintiff cannot make any claim against defendants 2 & 3 in respect of the amount claimed in this suit. Accordingly, there shall be a decree:

 1.     directing    the     first defendant  to    pay    the  plaintiff the sum of Rs.1,32,962/-  
 

 2.  directing the first defendant to pay the plaintiff the interest (a) 19.5% per annum on Rs.90,000/- from 16.1.1986 up to the date of realisation. 
 

 3. directing the dismissal of suit against defendants 2 & 3 without costs. 
 

 4. directing the first defendant to pay cost of the suit.