Deva Engineering Works And Ors. vs Punjab & Sind Bank
2002 Latest Caselaw 711 Del

JUDGMENT

Vikramajit Sen, J.

1. This Regular First Appeal is directed against the judgment of the Learned Single Judge dated 4.8.1989. There hasbeen no representation on behalfof Respondent-Punjab & Sind Bank despite service.

2. The case of the Plaintiff-Bank is that on the request of Defendant Nos. 2 and 3, who are partners of Defendant No.1-DevaEngineering Works (theAppellants before us), the Bank had sanctioned an overdraft limit to the extent of Rs.1,28,000/-. Security for this financial accommodation was thehypothecationof machinery installed or to be installed at the Defendants' factoryat 34, Okhla Industrial Complex, Phase-II, Part-II, New Delhi. Defendant No.4 had stood surety/guarantee towards this financial arrangement;as no decree has been passed against this Defendantno further attention need be directed towards him. Various documents were executed on 29.12.1976 including a Demand Promissory Note and Form No. 126 (which is Ex. P-3) whereby the Defendants agreed that the overdraft limit shall continue during the Bank's pleasure and thatit shall have the liberty to cancel the said overdraft facility without any notice;and a Deedof Hypothecation. The Bank has asserted that on 14.5.1979 the amount due inthe said current account was Rs.1,00,000/- and on this date the Defendants executed and delivered fresh loan documents.It is then averred thata sum of Rs.1,28,578.04 was due as on 31.12.1980, as confirmed by Defendant No.2. As this amount was not repaid thesuit had been filed for the sumof Rs.1,34,115.78 which was inclusive of interest. A Written Statement was filed on behalf of Defendants 1 and 2 to which a Replication was also filed. It needs to be mentioned that the averments in the plaint have not been denied; all that is contained in the Written Statement is that the Bank did not extend the full loan facility to the Defendants.

3. In support of their case the Bank recorded the testimony of one of its officers. The witness has proved the documents filed on behalf of the Bank.In particular he has stated that the blanks in the documents were duly filled in before they were got singed by the Defendants. He also proved Annexure `B' to the plaint, which is the Statement of Accounts pertaining to Defendant No.1 maintained by the Bank, and certified under the Bankers' Books Evidence Act, 1891. He has also stated that the Defendants had not made any payment after the institution of the suit. In his cross-examination this witness has deposed that the margin money was settled at Rs.34,000/- out of which Rs.29,000/- was tobe given, and was given, by the DSIDC. He admitted that the Bank did not provide any financial help to Defendant No.1 towards purchase of raw materials or working capital and this was so because Defendant No.1 did not submit the Statement of Stocks. He has denied the suggestion that it was part of the scheme that the Bank would first advance money and then Defendant No.1 would purchase the raw material. Although the Bank received a letter from the Defendant requesting for financial help for the purchase of raw material for running the project, this request was not acceded to since the project was not going well. This witness has further stated in cross-examination that the Bankcould call for the amount at any moment and it was not necessary that the repayment was to commence after theproject had startedmanufacturing. In his cross-examination he has further denied thesuggestion thatblank printed forms were got signed by the Bank from the party. Most remarkably, however, no witness was produced by the Defendants and their learned counsel made a statement on 19.3.1987 that reliance need only be placed by them on Exhibits D-3 to D-7. In the absence of any evidence on behalf of the Defendants the case is to be decided on the statement made by the only witness, namely, P.W.1.

4. Althoughall the documents were duly considered by the Learned Single Judge we shall advert toExhibits D-3to D-7 briefly. Exhibit D-2 is the Bank's letter dated 14.5.1979 asking Defendant No.1to sign Form No.192 which had previously been signed on 29.12.1976. Ex. D-3 is the Defendants letter to the Bank dated 7.12.1977 in which they have requested for the release of funds. However, this letter also contains a vital admission to the effect that - "We know that we have not done any turn-over for such a long time but you see that we are unable and helpless and this you can judge it yourself that why we could not do any return to you". By Exhibit D4 and Exhibit D-5 the Defendants had again requested for release of funds.In Exhibit D-6Defendant No.2 had informed the Bank that the partnership had been dissolved and he had taken over Defendant No.1 as his sole proprietor. This statement appears to be false inasmuch as this person has filed an affidavit dated 20.10.1989 in these proceedings stating thathe is a partner of Appellant No.1/Defendant No.1. He has stated therein that he hoped that within a short period he would be able to start the return of his account. In Ex.D-7 the same sentiments have once again beenexpressed. These documents are palpably of little assistance to the Defendants who have not even bothered to substantiate their defense by entering into the witness box.

5. The contention of Mr. Sabharwal, learned counsel appearing on behalf of Defendants/Appellants, is that the claim is barred by the principlesof limitation.He hence based his submission, inter alia, on Exhibit D-2, which is a letter dated 14.5.1979. His argument is that the hypothecation of goods to secure a Demand Cashi.e. Credit/Form No.192, was obviously executed after 14.5.1979 and, therefore, the claim was barred by the law of limitation. By simple calculation thisargument is without any merit.In paragraph 8of the plaint it has been specifically stated that a sum of Rs.1,28,578.04 was due on31.12.1980 and this was confirmed by Defendant No.2.In answer to this averment all that has beenstated is that the sum has been inflated. Furthermore, even this stand has not been substantiated. Since the parties maintained a current and mutual accountwhich has been disputed albeit obliquely, for the first time in the Written Statement. Limitation would start to run from this date only. The Learned Single Judge has rightly decided against the Appellants/Defendants on this issue. On a perusalof the Bank accounts of the Defendants, it will be evident thatthe suit is governed by Article 1 of the Schedule to the Limitation Act, 1963 (Refer to Hindustan Forest Company v.Lal Chand & others, and Kesharichand Jaisukhalal v. Shilong Banking Corporation Ltd. Shilong, 1965 SC 1711). Since no evidence has beenled by the Defendants, andnor has it been established through cross-examination that there was any dispute in respectof these accounts the suit was clearly within time. Althoughno evidenceis forthcoming in support of the Written Statement, there is, even otherwise, no merit in the Written Submissions filed on behalf of Defendants since the loan having been advanced in1976 the suit filed on 1.4.1981 was time barred. Contrary to his submission the Bank has not relied only on the Acknowledgement dated 17.2.1981 for extension of time. Section 18 of the Limitation Act has no application to the facts of the present case.

6. It has next been contended thatsince the Learned Single Judge had returned the finding that the account wasnot a simple overdraft facility, but that the overdraft was a part of a scheme for financing the Project of the Appellant, the judgment on the next issue

- viz. `Is the Plaintiff entitled to the amount claimed from the Defendants' - is palpably erroneous. We are unable to agree. P.W.1 had proved the Statementof Accounts, which are in fact Annexure `A' to the plaint. No dent in his testimony on this vital issue was even attempted. The submission that the entire loan hadto be paid before the Bank was entitled to seek any recovery iscontrary to the documents executed by the parties andalso contrary to logic. In their letters there are numerous admissions of the Defendants to the effect that the Project was in doldrums. Therefore, the Bankwas not bound, contractuallyor otherwise,to continue tofinance a sterile project. Much emphasis has been laid on the statement of the Bank's witness thatfurther financial help was not extended towards purchase ofraw material or working capital since Defendant No.1 did not submit the Statement of Stocks. If it was the case of the Defendant that it was not bound to submit any Statement of Stocks this should atleast have been put to the witness if not conclusively proved by the Defendants in their evidence. The Defendants have failed altogether to prove their defense.

7. In these circumstances we find no infirmity in the judgment of the Learned Single Judge. The Appeal is dismissed. However, as there has been no representation on behalf of Respondent-Bank, we decline to award costs.