Anant Raj Agencies Properties vs State Bank Of Patiala
2002 Latest Caselaw 164 Del

JUDGMENT

A.K. Sikri, J.

1. By means of this suit, the plaintiff is seeking to recover a sum of Rs.15,37,857.18p against the defendant-State Bank of Patiala. The circumstances which led the plaintiff to file this suit against the defendant, as can be gathered from the plaint, are as under:

That the plaintiff is owner/landlord of premises No.C-31, C-32, Connaught Place, New Delhi. The plaintiff had let out the second floor of C-31 and C-32 Connaught Place New Delhi having a total covered area of 2740 sq.ft. to the defendant initially for a period of five years w.e.f. 1.9.1980 with one renewal option for five years at 10% increase in the rent.

S.No.3026/91:

That similarly, the plaintiff also let out the first floor of C-32, Connaught Place, New Delhi having an area of 1950 sq.ft to the defendant w.e.f. 8.4.1981 for five years with one renewal option at 10% enhancement.

That at the time of letting the second floor of C-31 and C-32, as described above, the defendant vide letter dated 29.9.1980, had agreed to grant to the plaintiff an overdraft facility of Rs.15 lakhs at interest rate of 14% p.a.

Similarly at the time of letting first floor C-32, the defendant vide letter dated 10.3.1981 agreed to grant to the plaintiff overdraft facility of Rs.15 lakhs at interest rate of 15% p.a. plus interest tax.

The plaintiff had been enjoying both limits of Rs.15 lakhs each. Later on the defendant bank withdrew the first overdraft of Rs.15 lakhs which was granted at the time of letting out second floor of C-31 and C-32, Connaught Place, New Delhi and the plaintiff thereafter enjoyed only one facility of overdraft limit of Rs.15 lakhs against letting out first floor of C-32, Connaught Place, New Delhi. This was enjoyed by the plaintiff at defendant's Branch Office, Hauz Khas as the premises which were let out by the plaintiff were being used by the defendant as their Zonal office. It is further alleged in the plaint that in respect of aforesaid facilities, the plaintiff was to be charged interest at the rate of 14% and 15% with interest tax, respectively per annum at simple rate. However, it was subsequently revealed that the defendant bank was unauthorisedly charging interest at the rate of 16.5% with quarterly rests for some time and at the rate of 17.5% with quarterly rests at that times and had subsequently started charging the interest at the rate of 19% per annum with quarterly rests. In this way the defendant overcharged a sum of Rs.15,37,857.18 which was against the terms of letter dated 29.9.1980 and 10.3.1981 in pursuance of which this overdraft facility was granted to the plaintiff. It is because for this reason the present suit had been filed for recovery of overcharged interest in these two accounts.

2. The defendant bank filed written statement contesting the suit alleging that the suit was not maintainable and was merely an abuse of the process of law as the plaintiff had filed Suit for vacation of the premises in question against the defendant. The plaint did not disclose any cause of action and that the interest had been charged in accordance with the Agreement and in accordance with the documents executed by the plaintiff.

The plaintiff in its application reiterated the stand taken in the plaint.

3. On the basis of the pleadings, following issues were framed:

1. Whether the suit of the plaintiff as framed is not maintainable as alleged in paras 1 to 4 of the preliminary objections of the written statement? OPD.

2. Whether the suit of the plaintiff is barred by limitation? OPD.

3. Whether the plaint does not disclose any cause of action? OPD.

4. Whether the plaintiff is entitled to the amount claimed? OPP.

5. Relief.

4. The matter was set down for trial. The plaintiff examined one witness, namely, Mr.Pankaj Nakra on 18.3.1996 and closed its evidence in the affirmative. The case was listed on 19.3.1996 also on which date defendant was required to produce witness. However, counsel for the defendant requested for a short adjournment and the case was accordingly adjourned to 16.5.1996 for defendant's evidence. On that date the evidence could not be recorded and the case was adjourned to 17.7.1996. On 17.7.1996 evidence of defendant started with statement of Mr.Rajendra Singhla, Assistant Manager of defendant bank. Examination-in-Chief was partly recorded where after the matter was adjourned. However, the matter was derailed on defendant's filing application (IA.231/97 under Order XIII Rule 2 CPC) for permission to file certain documents. It was allowed by order dated 6.1.1999 and the matter was fixed for fresh evidence, if any, of the plaintiff. By order dated 3.2.2000 matter was fixed for trial on 22nd & 23rd August,2001. When the matter was listed before the Joint Registrar for scrutiny the plaintiff submitted that its evidence has already been concluded. The defendant was accordingly directed to file its list of witnesses within six weeks and it was directed that he would produce its witness on the dates fixed for trial. However, neither on 22.8.2001 nor on 23.8.2001 defendant appeared or produced its witnesses. Right to lead evidence of the defendant was, therefore, ordered to be closed and matter was directed to be listed in the category of "Finals" on 3.9.2001. It remained in the cause list of `Finals' from 3.9.2001. However, nobody appeared on behalf of the defendant. The arguments were heard on 2nd November,2001 and thereafter on 20.11.2001 and the judgment was reserved. Thereafter it was listed for directions from time to time. In none of these dates the defendant appeared.

5. The sequence of the events as disclosed aforesaid would amply demonstrate that the defendant has not led any evidence or appeared from 22nd August,2001.

6. In the statement of Mr.Pankaj Nakra who was examined as PW-1 on behalf of the plaintiff, he has proved on record the certified copy of the form A as Ex.PW-1/1 evidencing the registration of plaintiff as partnership firm which includes Mr.Ashok Sarin who has signed the present plaint and signed the vakalatnama. He has also deposed to the effect that defendant bank had advanced a loan of Rs.15 lakhs for each of the two premises C-31 and C-32, Connaught Place, New Delhi at the time of letting out these premises to the bank for which no formal agreement was executed between the parties and only letters dated 29.9.1980 and 10.3.1981 were exchanged which are Ex-.P-1 and Ex.P-2. He has further deposed to the effect that in violation of the Agreement regarding interest as mentioned in these letters the defendant bank charged interest at the rate of 16.75% to 19% with quarterly rests which was not proper and the suit was filed for recovery of the excess interest. Details of the excess interest are given in Annexure-A to the plaint. He has also stated that the plaintiff demanded the bank to refund the excess interest by letters Ex.PW-1/2 and Ex.PW-1/3. In cross-examination he has stated that the loan granted by the bank was against letting out of the premises and not an overdraft. Some blank documents were got signed. It was for the first time in the end of 1990 when the plaintiff got the balance reconciled that it realised that bank was charging more interest than the agreed rate. He further stated that loan was repaid in 1991. He did not recollect if the loan was only for a period of one year. He denied the suggestion that fresh loan/overdraft limit was sanctioned to the plaintiff in 1989. He also denied the suggestion that interest had been charged according to the Agreement. He admitted that the balance confirmation letter dated July 6,1989 had been signed by the plaintiff and also letters dated July 6,1989 and June 18,1992 which had been signed by the plaintiff were marked as Ex.PW-1/X-1 to Ex.PW-1/X-3. He also admitted that the plaintiff was receiving the statement of account regularly from the bank. He also denied the suggestion that letters Ex.P-1 and Ex.P-2 were never acted upon.

7. The issues framed in the suit are to be decided on the basis of the aforesaid evidence and documents proved on record. My findings thereon are as under:

Issue No.2.

The overdraft facilities were granted to the plaintiff by the defendant bank in the year 1980-81. It is admitted by PW-1 in cross-examination that the plaintiff has been receiving statement of account regularly. In this statement of account debit entries of the interest were made which were not objected to by the plaintiff at that point of time. Thus, if according to the plaintiff such debit entries in respect of interest charged were at higher rate than agreed upon, the cause of action arose in favor of the plaintiff when the respective debit entries were made and the suit could be filed within three years of the said entries. In this suit which is filed on 25.9.1991 the plaintiff could challenge the debit entries made only for last three years from the date of filing the said suit i.e. w.e.f. 26.9.88. This suit for recovery of alleged overcharged interest up to 25.9.1988 has thus become time barred.

8. However, learned counsel for the plaintiff tried to urge that it was a mutual and open current account. He tried to demonstrate that statement of account would amply demonstrate that the said account showed debit balance as also credit balance on different occasions. On the basis of this fact he sought to argue that the suit would be within time as Article-1 of the Limitation Act would apply in such a situation.

9. I am afraid this contention of the counsel for the plaintiff is not tenable. Article-1 reads as under:

Discription of suit Period of limitation Time from which period begins to run ______________________________________________________________________

1. For the balance due Three years The close of the year on a mutual, open in which the last item and current account, admitted or proved is where there have been entered in the account reciprocal demands ;such year to be between the parties. computed as in the account.

10. This provision would be applicable when the suit is filed for the "balance due" on a mutual open and current account. The present suit is not filed for the balance due based on this account. It is filed for the interest allegedly overcharged from time to time.

11. It accordingly follows that the claim in the suit for recovery of alleged overcharged interest up to 25.9.1988 is time barred and the claim for the period 26.6.1988 only would be within the period of limitation. This issue is answered accordingly. Issues No.1,3 and 4.

12. Issue No.1 is based on preliminary objections 1 to 4. In these objections the defendant has alleged that the suit filed by the plaintiff is not maintainable and is an abuse of the process of law and the plaintiff has no right to file the suit at belated stage and the interest has been charged by the defendant in accordance with the agreement and in accordance with the documents and the suit is filed to check-mate the defendant from not claiming the amount which was due on account of the limit availed by the plaintiff. The points raised in these preliminary objections on this issue framed are related to Issues No.3 and 4. Therefore, all these issues are inter related and are taken up together.

13. It is not in dispute that the plaintiff had let out the premise at C-31 and C-32 Connaught Place, New Delhi to the defendant-Bank. Letter dated 29.9.1980 Ex.P-1 lays down the stipulations on which the premises at C-32 as well as a portion of building at C-31 having a total covered area of 2600 sq.ft. was let out to the defendant bank. After setting the various conditions about letting out these premises, para (ix) thereof deals with the loan in question reading as under:

ix) "You will be disbursed six month's advance rent amounting to Rs.1,50,000/- approximately which will be repaid by you definitely within the first six months by monthly appropriation of rent. In addition to the above advance rent you will be granted an overdraft to the extent of Rs.15 lakhs on the following terms and conditions:

a) The above loan will carry an interest @ 14%.

b) After the advance rent of Rs.1,50,000/- is adjusted the loan will be liquidated by monthly appropriation of entire rent (i.e. including the rent of the premises presently with us) within a total maximum period of 5 years interest accrued on this loan (which will be charged at quarterly rests) will be paid separately. The advance rent will be adjusted first and then adjustment of overdrafts will start.

c) if feasible loan of Rs.15,00,000/- will be secured by equitable mortgage of the building hired to us".

14. In the same manner letter dated 10.3.1981 Ex.P-2 deals with letting out of premises at C-32 and also stipulates grant of over draft limit to the plaintiff by the defendant bank in the following manner:

"An overdraft limit of Rs.15 lakhs bearing interest at the rate of 15% plus interest tax will be granted to you".

15. The aforesaid exhibits would show that over draft limit was granted to the plaintiff by the defendant bank at the time of letting of the premises on rent by the plaintiff to the defendant Bank. On this over draft limit the defendant had agreed to charge interest at the rate of 14% and 15% respectively plus interest tax. In view thereof, when the terms, on which the over draft limit was sanctioned, were specifically contained in these exhibits, it was not open for the bank to charge interest at more than the specified rate. The facility in this case was granted at a fixed rate of interest. It was not a variable rate dependent upon the rate prescribed by Reserve Bank of India from time to time. The transaction between the parties is specifically governed by the terms and conditions contained in Ex.P-1 and Ex.P-2 and the parties would be bound by these terms. When the defendant charged more interest than permissible under the law, the plaintiff shall have a cause of action to file the present suit for the recovery of over charged interest. Thus Issues 1,3 and 4 are decided in favor of the plaintiff and against the defendant-Bank. It is held that the plaintiff shall be entitled to refund of the overcharged interest w.e.f. 26-9-1988 as the claim for prior period is barred by limitation. As per the details given by the plaintiff, the amount overcharged by way of interest, for this period is Rs.261571.31p. The plaintiff shall be entitled to decree for this amount.

16. At this stage, it may be stated that although the defendant has not led any evidence in support of its case, in the cross-examination of the plaintiff's witness, three documents were put to him and the witness had admitted those documents which were exhibited as PW-1/X-1 to PW-1/X-3. However, it was argued by learned counsel for the plaintiff that these documents do not relate to the transaction in question and in fact these relate to another overdraft facility of Rs.15 lakhs granted in favor of the plaintiff for which third party guarantee of M/s.Anant Raj Agencies Pvt.Ltd. was also given. The submission of learned counsel for the plaintiff appears to be correct. Ex.PW-1/X2 which is a letter dated 6.7.1989 states that on an application made by the plaintiff, overdraft limit of Rs.15 lakhs had been sanctioned in favor of the plaintiff subject to the conditions mentioned in the said letter. Therefore, these documents relate to same overdraft facility which was sanctioned in the year 1989 whereas we are dealing with the transaction relating to overdraft facility given to the plaintiff in the year 1980-1981 that too when the plaintiff had let out the premises No.C-31, C-32, Connaught Place to the defendant. It is also mentioned in the letter dated 6.7.1989 (Ex.PW-1/X2) that the equitable mortgage of the property "already mortgaged" with the bank is extended to this overdraft facility also. This shows that the property was already mortgaged in respect of previous transaction which was extended to the transaction in question. It was explained by learned counsel for the plaintiff that the previous transaction was the overdraft facility of 1980-81. There appears to be substance in what the learned counsel for the plaintiff contends and in the absence of any evidence in rebuttal, I am agreeable to accept this submission of the learned counsel for the plaintiff. It is clear from this that the documents which were put by the defendant bank in cross-examination of the plaintiff witness do not relate to the transaction in question.

17. Issue No.5. Relief:

In view of the foregoing discussion, the suit is decreed in the sum of Rs.261571.31p with proportionate costs. The plaintiff shall also be entitled to interest at the rate of 9% per annum from the date of filing of the suit till its payment. Decree sheet be drawn accordingly.