State Bank Of India vs Indian Utility Products And Ors.
2000 Latest Caselaw 442 Del

ORDER

K.S. Gupta, J.

1. Plaintiff filed this suit inter alia alleging that it is a corporation constituted under the State Bank of India Act No. XXIII of 1955 and has its branches, amongst others, at Paharganj, New Delhi. S. K. Batura is the Branch Manager of Paharganj branch and is competent to sign and verify the plaint and to institute suit under the State Bank of India Regulations, 1955 and the notification(s) issued thereunder. Defendant No. 2 is the sole proprietor of defendant No. 1 firm and on their approaching the said branch of the plaintiff-bank, lock and key loan facility (against stock and machinery) of Rs. 50,000/- was sanctioned to them. In consideration thereof, defendant No. 2 executed agreement of hypothecation dated 16th February, 1970, the terms and conditions whereof are incorporated in para No. 5 of the plaint. One of the terms was that interest would be charged @ 1 1/4% above State Bank of India advance rate with minimum of 8-3/4% per annum to be calculated on daily balance. Additionally, defendant No. 2 executed demand promissory note in the sum of Rs. 50,000/- in favour of the bank on 16th February, 1970. It is pleaded that the bank further agreed to grant clean term loan limit facility of Rs. 12,000/- to defendants 1 and 2 on the personal security of defendant No. 3. Defendant No. 3 executed guarantee agreement on 30th September, 1972 in favour of the bank. He also furnished demand promissory note in the said sum dated 30th September, 1972 executed by defendants 1 and 2 in his favour and duly endorsed by him in favour of the bank together with another demand promissory note of Rs. 12,000/- executed by him in favour of defendant No. 1 and endorsed by defendant No. 1 in favour of the plaintiff-bank. Salient terms of the said guarantee agreement dated 30th September, 1972 have been set out in para No. 6 of the plaint. It is stated that defendants 1 and 2 availed of the aforesaid loan facilities and as per the statement(s) of account, Rs. 92,626.56 in lock and key loan account and Rs. 17,029.86 in clean term loan account, totalling Rs. 1,09,656.42 including interest were due from the defendants as on 2 5th September, 1975. On 5th June, 1973 defendants 1 and 2 gave the revival letter besides confirming the balance. Defendants have failed to pay the said amount despite repeated demands and service of legal notice dated 29th June, 1974. It was prayed that a decree of Rs. 1,09,656.42 may be passed against defendants 1 and 2 and the pledged stock/hypothecated articles be ordered to be sold and sale proceeds thereof appropriated towards the decretal amount under Order XXXIV, Rule 6 CPC. It was also prayed that a decree for Rs. 17,029.86 may be passed against defendant No. 3 with costs and interest pendente lite and future @ 12% per annum.

2. Defendants have contested the suit by filing separate written statements. In the written statement filed by defendant No. 3 by way of preliminary objections, it is alleged that the suit is barred by time and is bad for misjoinder of causes of action. On merits, it is denied that S.K. Batura is competent to sign and verify the plaint as alleged. It is not disputed that defendant No. 3 stood guarantor for defendants 1 and 2 and signed certain documents. However, it is pleaded that defendant No. 3 has been informed that the entire amount of Rs. 12,000/- with interest stands paid by defendants 1 and 2 to the bank. Liability to pay the suit amount is denied.

3. In the joint written statement filed by defendants 1 and 2, by way of preliminary objections, it is denied that the plaint has been signed and verified and suit instituted by a properly authorised person on behalf of the plaintiff-bank. It is alleged that the bank illegally locked the defendants' factory/ godown in September, 1970 and this fact was brought to the notice of Kalyan Sudaran, Inspector who came for periodic audit of the accounts of defendant No. 1 from the central office of bank at Bombay. At the instance of Sh. Sudaran, the locks were removed from godown. As the factory remained locked for a period of over two years, the machinery became rusty, raw material was spoiled and manufactured goods became useless. Defendants thus suffered a loss of about Rs. 60,000/-. It is alleged that said Sh. Sudaran advised Paharganj branch of the bank to nurse the defendants' factory. Defendants thereafter immediately applied for further advances. Although, loan of Rs. 12,000/-was sanctioned on 9th September, 1972 and a promissory note for that amount was got signed from defendant No. 3 as guarantor, S. Chandra, the then Branch Manager and R. K. Jai, the then Field Officer did not release the amount. Only a sum of Rs. 3,500/- was released to the defendants later on. Because of non-co-operative attitude of the said officers of bank, the factory remained closed and the defendants further suffered loss of Rs. 1,50,000/-. Suit is stated to be barred by limitation. On merits it is pleaded that defendants 1 and 2 had cash credit account of Rs. 10,000/- with the plaintiff-bank at its Asaf All Road branch which was subsequently transferred to Paharganj Branch. It is stated that the bank got signed some blank forms from the defendants. It is denied that any confirmation was made on15th June, 1973 as alleged. Liability to pay the suit amount is emphatically denied.

4. On the pleadings of the parties, following issues were framed :--

1. Has the suit not been competently filed?

2. Has the suit been instituted within time?

3. If it is found that the suit has been instituted within time then to what amount, if any, is the plaintiff entitled and against whom?

4. Did the plaintiff bank illegally and without the consent of the defendants lock the defendants' factory/godown in September 1970? If so, to what effect?

5. Relief.

S. K. Batura, P. W. 2 deposed that he was the Branch Manager at Paharganj branch of the plaintiff-bank from 1st January, 1975 to 10th April, 1976 and the plaint bears his signatures. Ex.PW-2/1 is the photostat copy of notification No. Staff20/PCF/R-1/1765 published in Gazette of India, Part III, Section 4 dated 6th December, 1975 which goes to show that said S. K. Batura, P. W. 2 took over as Branch Manager of Paharganj branch of the plaintiff-bank w.e.f. 20th February, 1975. Regulation No. 77 of the State Bank of India General Regulations, 1955 provides that the plaints, written statements, petitions and applications may be signed and verified, affidavits may be sworn or affirmed, bonds may be signed, sealed and delivered, and generally all other documents connected with legal proceedings whether contentious or non-contentious may be made and completed on behalf of the State Bank by the Chairman or by any officer or employee empowered by or under Regulation 76 to sign documents for and on behalf of the State Bank. In pursuance of the powers conferred under Regulation 76, notification dated 17th September, 1959 was published in the Government of India Gazette, Part III, Section 4 dated 26th September, 1959 by virtue of which besides other persons 'Agents' were authorised to sign the documents mentioned in Regulation 76. Later on, the designation of Agents was re-designated as Branch Managers by virtue of a notification dated 21st June, 1972 published in Government of India Gazette, Part III, Section 4 dated 26th August, 1972 which came into force w.e.f. 1st September, 1972. Thus, w.e.f. 1st September, 1972, a Branch Manager was entitled to sign and verify the pleadings and authorised generally to complete all other documents connected with legal proceedings besides other matters. In the decision in State Bank of India v. Kashmir Article Printing Press, (1983) 54 Com Cas 56 it was held that the use in said Regulation of the words 'generally all other documents connected with legal proceedings whether contentious or non-contentious, may be made and completed on behalf of the State Bank', are quite comprehensive and the authorised officer has been given power to sign all documents connected with legal proceedings and one of such documents would be a Vakalatnama and the presentation of plaints in Court by an advocate in whose favour Vakalatnama has been executed, would be a proper presentation. In the present case, Vakalatnama was executed by said S. K. Batura, P. W. 2 being Branch, Manager of Paharganj branch of the plaintiff-bank in favour of Singh and Company, Advocates who presented the plaint in Court. Thus, the suit was competently filed on behalf of the plaintiff-bank and the issue is answered in favour of the plaintiff and against defendants.

6. It is not in dispute that the plaint in this case was presented, before the officer authorised to receive the plaints on 26th September, 1975. As is manifest from the office noting dated 16th October, 1975, the office found the presentation of the plaint to be defective on six counts-- (i) Memo of parties was not signed, (ii) Cuttings were not initialed, (iii) Certain paragraphs were left blank, (iv) ad valorem Court-fee had not been paid according to the Court-fee Act, (v) ad valorem court-fee which was to be paid according to each relief claimed, was not stated in para No. 11 of the plaint, and (vi) power of attorney was not stamped. On 22nd October, 1975 the plaintiffs counsel appeared before A.R. (O) and he wanted the papers back for removal of said objections. Accordingly, the plaint was directed to be returned to the counsel for doing the needful within a week. Thereafter, the plaint was represented on 15th November, 1976 after rectifying the objections including payment of deficit Court-fee. It seems that certain objections were again raised by the office. On 22nd December, 1976 the case was directed to be listed before the Registrar for admission on 23rd December, 1976. On that date, the plaint was ordered to be registered and summons/notices issued to the defendants by the Registrar.

7. It was contended by defendant No. 2 who argued the case in person, that the plaint was directed to be represented after removing the objections by 23rd October, 1975 but it was actually represented on 15th November, 1976. It is the latter date which is to be taken for counting the limitation and the suit is barred by limitation. On the other hand, it was urged by Sh. A. K. Roy appearing for the plaintiff-bank that the issue on hand stood decided in favour of the plaintiff by the order dated 5th November, 1986 in IA no. 5119/85. According to him, the order of registration of plaint by the Registrar on 23rd December, 1976 amounted to an exercise of power by him to allow the deficiency to be made good etc. on the date of representation of the plaint after rectification of objections and that order would operate from the date of the institution of the suit, i.e. 26th September, 1975 and the suit is, therefore, within limitation. He also pointed out that the plaint was never rejected under Order VII, Rule 11, CPC and the suit was filed within three years from 5th June, 1973, the date of balance confirmation by the defendants with undertaking to pay the amount due. In support of the submission, reliance was placed on the decisions in Mannan Lal v. Mst. Chhotka Bibi (dead) by her legal representative, , Mahasay Ganesh Prasad Ray v. Narendra Nath Sen, , Mahanth Ram Das v. Ganga Das, and Maltex Malsters (P) Ltd. v. Allied Engineers, .

8. Rules 1 and 2 of Chapter IV of Delhi High Court (Original Side) Rules, 1967framed in exercise of powers conferred by Sections 122 and 129. CPC and Section 7 of the Delhi High Court Act, 1966 which are relevant, read as under ;--

"1. Presentation at the counter-- All plaints, petitions, applications and documents shall be presented by the plaintiff, petitioner, applicant-defend ant or respondent in person or by his duly authorised agent or by an advocate duly appointed by him for the purpose, at the filing counter. All such documents filed in Court shall be accompanied by an index in duplicate containing their details. The amount of Court-fee affixed or paid on any such document shall also be indicated in the index.

Sufficient number of copies of the plaint, petition or application shall also be filed for service on the opposite party.

2. Endorsement and scrutiny of documents-- (a) The officer in charge of the filing counter shall endorse the date of receipt on the plaint, petition, application or proceedings and also on the duplicate copy of the index and return the same to the party. He shall enter the particulars of all such documents in the register of daily filing and thereafter cause it to be sent to the officer concerned for examination. If on scrutiny, the document is found in order, it shall be duly registered. Where a document is found to be defective, such document shall, after notice to the party filing the same be placed before the Registrar. The Registrar may for sufficient cause return the said document for rectification or amendment to the party filing the same, and for this purpose may allow to the party concerned such reasonable time as he may consider necessary.

(b) Where the party fails to take any step for the removal of the defect within the time fixed for the same, the Registrar may, for reasons to be recorded in writing, decline to register the document.

(c) Any party aggrieved by any order made by the Registrar under this rule may, within fifteen days of the making of such order, appeal against it to the Judge-in-Chambers."

9. Order VII, Rule 9, CPC provides for procedure on admitting the plaint. Under Rule 10 of said Order VII, subject to the provisions of Rule 10A, the plaint shall at any stage of the suit be returned for being presented to the Court in which the suit should have been instituted. Rule 11 enumerated the four classes where the plaint has to be rejected. Under Clause (c) of the said Rule, the plaint shall be rejected 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 the time to be fixed by the Court, fails to do so. Normally, said Rules 10 and 11 would apply after the stage set out in aforesaid Rule 9 is crossed.

10. In Sukh Nandan Parshad v. Babu Ram, AIR 1952 Vindh Pra 12(4), it was held:--

"In proper way of ascertaining the date of institution is to find out, whether while tendering the plaint the plaintiff has done all that he has to do in compliance with orders 4, 6 and 7. If he has done this, and has nothing more to do, then the tendering of the plaint to the proper officer should be treated as institution. Any delay in office for non-laches of the plaintiff should naturally not be put at his door. If on the other hand, there is some defect to be removed or some deficiency in the Court-fee to be made up, then it becomes an important question whether the suit is instituted on the date of the tender, or on the date the defect is remedied by the plaintiff. When the Court grants time for the removal of the defect, and the defect is remedied, then the suit would normally be deemed to have been instituted not on the latter day but the day of the tendering itself, because the Court in its discretion has, as it were condoned the delay. This condensation of the time taken to remove the defects is at the discretion of the Court, but it cannot exercise it ex parte so as to deprive the defendant of any right he might have acquired in this interval under the law of limitation. At all events the other party should have the right of urging that the Court's granting time for removal of defect has not affected the advantage he might have gained in the interval."

11. Indisputably, the amount of Court-fee initially affixed on the plaint was Rs. 3.50 while the total amount of Court-fee payable on suit amount was Rs. 3,419.30. In between 16th October, 1975 and 15th November, 1976, no application whatsoever was filed by the plaintiff-bank seeking extension of time or rectification of the aforesaid objections. It may be noticed that in terms of the order dated 5th November, 1986 passed in IA No. 5119/85 on which great stress was laid on behalf of the plaintiff-bank, said application was disposed of observing that the plaintiff had already made up the Court-fee and, therefore, the question of condensation of delay in filing the application in making up the Court-fee, did not arise. This order further notices that the contention advanced on behalf of the defendants that the plaint would be deemed to have been filed when it was refiled for the purpose of limitation was left open. Thus, the limb of argument referred to above in regard to the issue of limitation having been decided in bank's favour by the said order deserves to be repelled being without merit. In my view, by reason of representation of the plaint after more than a year of the time allowed for rectification of objections, a valuable right under the Law of Limitation had accrued to the defendants and mere admission of plaint by the Registrar by the order dated 23rd December, 1976 of which no notice was issued to the defendants, cannot deprive the defendants of that right. In this view of mine, I am supported by the decision in Sukh Nandan Parshad's case (AIR 1952 Vindh Pra 12) (supra).

12. Let me turn to the aforementioned four decisions relied on behalf of the plaintiff. In Mannan Lal's case , deficiency in Court-fee on memo of appeal was made good in terms of the order of Court within time and in that context it was held by the Supreme Court that though the curing of the defect took place on the date of making good the deficiency, the defect must be treated as remedied from the date of its original institution, In Mahasay Ganesh Prasad Ray's case the High Court in exercise of its discretion had allowed the appellant to amend the memorandum of appeal and granted time for payment of Court-fee under Section 149, CPC and in that background it was held that the other party cannot attack that order on the ground that it took away his valuable rights to plead the bar of limitation as the question of payment of Court-fee was primarily a matter between the Government and the person concerned. In Mahanth Ram Das's case , it was held that the Court can extend time for payment of deficit Court-fee on an application being made before the time fixed had run out but the application comes up for hearing after the period had run out under Sections 148, 149 and 151, CPC and the order extending time will operate from the date on which the time fixed expired. In the decision in M/s. Maltex Malsters (P) Ltd.'s case (supra), the observations particularly made in para No. 11 of the report on page 127 to which may attention was drawn, were made while disposing of the application for condensation of delay in affixing requisite stamp on the order appealed from after the expiry of limitation for filing the appeal.

13. Obviously, said decisions are clearly distinguishable on facts and are of no help of the plaintiff. In my opinion, in the facts and circumstances of the present case, aforesaid defects including deficit in Court-fee pointed out by the Registry cannot be treated as having been remedied from the date of original institution of suit and the plaint would be deemed to have been presented on 15th November, 1976 instead of 26th September, 1975 for the purpose of counting the period of limitation. Admittedly, as on 15th November, 1976, the suit was barred by limitation. Issue is answered against the plaintiff.

14. Case of the plaintiff-bank is that lock and key loan limit of 'Rs. 50,000/- was sanctioned to defendants 1 and 2 on 16th February, 1970. Clean term loan limit of Rs. 12,000/- was further granted to defendants 1 and 2 on the personal security of defendant No. 3 on 30th September, 1972. A sum of Rs. 92,626.56 including interest was alleged to be due from defendants 1 and 2 in lock and key loan account as on 25th September, 1975. Rs. 17,029.86 including interest were further allegedly due in clean loan term loan account as on 25th September, 1975. Ex. P-14 is the agreement of hypothecation dated 16th February. 1970 admittedly executed by defendant No. 2 as proprietor of defendant No. 1 in favour of the plaintiff-bank in respect of said lock and key loan facility. Ex P-2 is Annexure 'A' to the said agreement of hypothecation Ex.P-14 wherein the details of the assets hypothecated with the bank have been set out. Admittedly, Ex.P-5 dated 16th February, 1970 is the promissory note executed by defendant No. 2 in the said capacity in favour of the bank in the sum of Rs. 50,000/-. This demand promissory note also notices that defendant No. 2 had agreed to pay interest at 1 1/4% above SBI advance rate with minimum of 8 3/4% per annum with monthly rests. Ex. P-13 dated 1st February, 1973 is the letter of revival executed by defendant No. 2 in respect of said lock and key loan limit (date noted as 5th June, 1973. In para No. 10 of the plaint). Ex.PW-1/3 is the statement of account wherein Rs. 92,626.56 are shown to have been due from defendants 1 and 2 in the said account.

15. Ex P.W. 1/4 is the guarantee bond dated 30th September, 1972 in the sum of Rs. 12,000/- executed by defendant No. 3 in favour of the plaintiff-bank concerning clean term loan limit. Ex.P-11 is the pronote executed by defendant No. 2 in the sum of Rs. 12,000/- on the said date in respect of above loan facility. Ex. P.W. 1 /2 is the statement of account wherein Rs. 17,029.86 have been shown to be due from defendants 1 to 3 in the said account.

16. Defendant No. 3 (D1W1) in his cross-examination has admitted that the said guarantee bond, Ex.P.W. 1/4 bears his signature at point 'C'. Defendant No. 2 (D2W1) in his cross-examination has stated that he did not protest at the time of signing the revival letter Ex.P-13 although he had gone time and again to the bank officers bringing out his grievance. Considering the said evidence, I have, no hesitation in recording the finding that Rs. 92,626.56 as on 25th September, 1975 were due from defendants 1 and 2 in lock and key loan account while a sum of Rs. 17,029.86 from defendants 1 and 3 on the said date in clean term loan account as alleged by the plaintiff-bank. Issue is answered accordingly.

17. In the written statement filed by defendants 1 and 2, it is alleged that the plaintiff-bank illegally and without the consent of the defendants locked the defendants' factory/godown in September, 1970 and because of that reason the factory remained closed for over two years and the defendants suffered a loss of Rs. 60,000/-. Although in his examination-in-chief, defendant No. 2 (D2W1) has spoken about the factory being locked in May/June, 1970 but his testimony is absolutely silent in regard to having suffered the said loss. defense raised to the said effect was also not put to either S. P. Khanna, P. W. 1 or S. K. Batura, P. W. 2 in cross-examination nor requisite Court-fee paid on the said amount. That being so, defendants 1 and 2 are not entitled to claim any amount on the said score from the bank.

18. As is manifest from the order dated 26th October, 1979, hypothecated goods were auctioned by the Receiver appointed by the Court for a total amount of Rs. 6,400/-which amount was to be deposited by the receiver with the plaintiff-bank. In view of my finding on issue No. 2, the suit deserves to be dismissed being barred by limitation and the said amount minus the fee paid to the Receiver and the expenditure incurred by the bank on auctioning of hypothecated goods are to be refunded to defendants 1 and 2.

19. Suit is, therefore, dismissed being barred by limitation with no order as to costs. Aforesaid amount of Rs. 6,400/- minus the fee paid to the Receiver and the expenditure incurred on auctioning, will be refunded by the plaintiff-bank to defendants 1 and 2.