Sheel Polypacks And Anr. vs The Sangli Bank Limited
2006 Latest Caselaw 1781 Del

JUDGMENT

T.S. Thakur, J.

1. This is a defendant's appeal arising out of a suit for recovery of money which the court below has decreed with interest pendent elite and till realization.

2. Defendant No. 1 - appellant herein was during the relevant period carrying on business in the manufacture and sale of poly propelene bags and sheets. It appears to have approached the respondent bank for two facilities in the nature of IBD and Cash Credit Hypothecation limits as early as in the year 1990 and 1991. Upon execution of the requisite documents that included demand promissory notes, letters of lien, hypothecation agreements, undertakings, etc., the bank provided the facilities of IBD limit to the tune of Rs. 2 lakhs and Cash Credit Hypothecation limit to the tune of Rs. 1 lakh, against security of stock of raw material, finished goods and goods in process. Repayment on amounts availed by the borrower was guaranteed by the defendant-appellant No. 2 in this appeal who had executed two letters of guarantee on 1.3.90 and 24.8.1991. Since the defendants did not arrange the repayment of the amounts outstanding in their account, a sum of Rs. 1,77,538.25 as on 12th February, 1998 was due from them towards IBD limit apart from a sum of Rs. 173708.60 towards Cash Credit Hypothecation limit. These amounts were exclusive of interest @ 22.5% claimed by the plaintiff-bank from 12.2.98 onwards. A suit for recovery of the said outstanding amount was accordingly filed by the plaintiff bank which was contested by the defendants on several grounds giving rise to the following issues

1. Whether the suit is signed, verified and instituted by a duly authorized and competent person? OPP

2. Whether the suit of the plaintiff is barred by limitation as alleged in the written statement? OPD

3. Whether the documents of the plaintiff are not valid, if so, its effect? OPD

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

5. Whether the plaintiff is entitled for the interest, if so, at what rate and for what period? OPP

6. Relief.

3. In support of its case, the plaintiff bank examined PW-1 Shri K.D. Naik, Senior Manager, PW-2 Vithal D. Mohide, Deputy Regional Manager and PW-3 Ram Narsinha Puntambekar, apart from a number of documents that were proved and exhibited in the course of the trial. The defendants remained content with the affidavit of Shri Sushil Bahl, examined as DW-1 while defendant No. 2 was ex parte and did not appear or adduce any evidence.

4. By the Judgment and decree impugned in this appeal, the trial court has found Issue No. 1 in favor of the plaintiff and held that the suit has been signed, verified and instituted by a duly authorized and competent person. The Court has, in this regard placed reliance upon the statement of Shri K.D. Naik, PW-1 according to whose deposition, the plaint has been verified and signed by Shri V.Y. Pendse who was one of the principal officers of the Bank who had been working as a senior Manager. He has also identified his signatures on the plaint and has proved the Power of Attorney marked Ex.PW1/1.

5. In so far as Issue No. 2 is concerned, the court below has relying upon the balance confirmation signed by Defendant No. 1 on 3rd December, 1995 held that the suit was within time. The court has in this regard referred to the statement of PW-3 Shri Ram Narsinha Puntambekar, who has proved the letters of balance confirmation marked Ex. PW3/1, PW3/3 and PW3/4 and letters of balance confirmation in respect of IBD limit marked Ex.PW3/5 and Cash Credit (Hypo) limit marked Ex.PW3/6.

6. The court has also found Issue No. 3 in favor of the plaintiff and held that the documents relied upon by the plaintiff were legally valid. It has on those findings decreed the plaintiff's claim for a sum of Rs. 1,04,881.60 with interest @ 18.5% per annum with effect from 3rd December, 1995 till recovery in respect of Cash Credit Hypothecation facility and a sum of Rs. 1,08,090.25 with interest @ 15% per annum w.e.f. 3rd Decmeber 1995 in re pect of IBD facility till realization. The present appeal as already noticed earlier calls in question the correctness of the said Judgment and decree.

7. Mr. Kamaldeep, learned Counsel for the appellant made a three-fold submission before us. Firstly, he argued that the court below was not legally correct in holding that the suit filed by the plaintiff was within the period of limitation prescribed for the same. He urged that the court had fallen in error in relying upon the balance confirmation certificates produced by the plaintiff bank. Alternatively, he argued that the court was in error in relying upon the General Power of Attorney marked Ex.PW1/1 without ensuring that the costs of Rs. 500/- which the court had imposed for production of the said document was paid. Since the costs had not been paid, argued Mr. Kamaldeep, the said documents could not be relied upon by the plaintiff bank. Thirdly, he argued that the rate of interest awarded by the trial court pendent elite and for the pre-suit period was excessive and deserved to be suitably reduced.

8. Issue No. 1 as framed in the suit related to the competence of the person instituting the suit and signing and verifying the plaint. The plaintiff bank had in proof of that issue examined Shri K.D. Naik, PW-1 who had filed a photocopy of the Power of Attorney which was marked Ex.PW1/1 subject to payment of costs of Rs. 500/-. The trial court has relying upon the said document and the deposition of Shri K.D. Naik held that Shri V.Y. Pandse who had signed the plaint and the verification was one of the principal officers of the bank at the time of the filing of the suit and that the Power of Attorney in his favor was duly signed by Shri S.L. Shah and V.B. Chaudhry, the two directors of the bank whose signatures were identified by Shri Naik. A copy of the General Power of Attorney in favor of shri V.Y. Pandse was also marked Ex.PW1/1.

9. The court below has on the basis of the above evidence concluded that the suit had been filed by a competent person. We see no reason to take a different view. The deposition of Shri Naik and a copy of the General Power of Attorney duly proved and marked Ex.PW1/1 in our opinion leaves no manner of doubt that the suit had been filed by a person duly authorized to do so. Reference may in this regard be made to United Bank of India v. Naresh Kumar and Ors. where the Supreme Court had in similar circumstances held that the questions relating to competence of the person instituting, signing and verifying the suit is a technical and procedural matter which cannot be allowed to defeat a just cause. Their Lordships have held that the court can in appropriate cases assume that the suit has been filed by a competent person or that the action taken by the officer concerned has been ratified by the bank. Such an assumption can arise from the circumstances in which the suit is instituted and tried. Suffice it to say that not only the circumstances of the case but also the proof of the Power of Attorney of Shri Pandse who had signedthe plaint and verified the same is sufficient to prove his authority to institute the suit and sign and verify the plaint. There is, therefore, no error of fact or law in the finding recorded by the trial court on Issue No. 1to warrant interference.

10. As regards the alleged non-payment of costs, there is nothing on record to show that the costs of Rs. 500/- imposed by the court had not been paid. The court can, in fact, assume that the amount stood paid for orotherwise the defendant would not have remained silent and would have brought the matter to the notice of the court in which event the court would have ensured that the costs are duly paid. In any case, the non-payment of the costs would not result in exclusion of the evidence which has been lawfully adduced at the trial. If the defendants are still keen to recover the amount of costs, they can take steps in that regard in accordance with the procedure established by law. The first limb of the argument of Mr. Kamaldeep, therefore, fails and is accordingly rejected.

11. That brings us to the question whether the suit filed by theplaintiff was beyond the period of limitation as alleged by the defendants. The trial court has, as already noticed earlier, relied upon the deposition of PW-3 Ram Narsinha Puntambekar and held that the balance confirmation letters marked Ex.PW3/5 and Ex.PW3/6 relating to the facility extended to the defendants stood proved. There again, we see no reason to take a different view. The proof ofthe letters of confirmation and the deposition of PW-3 does not, in our opinion, leave any room for either rejecting the acknowledgment letters or holding that the suit is beyond the period of limitation. Mr. Kamaldeep was at pains to point out that the letters had not been signed on the dates on which they purport to have been signed. There is nothing in the letters of confirmation to support that submission nor has any other circumstance been brought to our notice which could prove that the letters were not actually signed on the dates on which the same purport to have been so signed. What is significant is that the signatures on these letters have not been disputed by the defendants. In that view of the matter and in the light of the deposition of PW-3 Shri Ram Narsinha Puntambekar, we are inclined to affirm the finding recorded by the trial court that the letters of confirmation of balance werevoluntarily signed by the borrower on the dates on which the same purport to have been signed. There is also evidence to show that the defendants had visited the bank on the dates the letters of confirmation were signed. That being so, the period of limitation shall have to be reckoned form the date the acknowledgment letters were signed. The suit filed within three years of the said date were, therefore, rightly held to be within time. The findings recorded by the trial court on the question of limitation is accordingly affirmed and the contention urged to the contrary by Mr. Kamaldeep repelled.

12. That brings us to the third and the only other aspect which Mr. Kamaldeep urged touching the question of interest awarded by the trial court. The trial court, has disallowed the claim made by the plaintiff for award of penal interest on the outstanding amount. It has all the same awarded the agreed rate of interest pendent elite and till realization. Having heard learned Counsel for the parties, we are of the view that the rate of interest awarded by the trial court pendente lite and till realization is excessive and, therefore, deserves to be reduced. We accordingly reduce the rate of interest pendent elite and till realization to 12% per annum on a uniform basis in regard to both the facilities enjoyed by the defendants.

13. In the result, this appeal succeeds but only in part and to the extent that instead of interest @ 18.5% on Cash Credit Hypothecation facility and 15% on IBD facility, awarded by the trial court, the plaintiff shall be entitled to interest pendent elite and till realization of the suit amount @ 12% per annum. The decree passed by the trial court in regard to the rest of the relief granted by it shall stand affirmed. No costs.