M/S Sheila Enterprises & Anr. vs Uco Bank & Anr.
2011 Latest Caselaw 948 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                  Judgment Reserved on: 11.02.2011
                  Judgment Delivered on: 17.02.2011


+            RSA No.126/2004 & CM No.6895/2004



M/S SHEILA ENTERPRISES & ANR.    ...........Appellants
              Through: Mr.Gaurav Bahl, Advocate.

                   Versus

UCO BANK & ANR.                           ..........Respondents
             Through:          Mr.Rajesh Ratan, Advocate.

        CORAM:
        HON'BLE MS. JUSTICE INDERMEET KAUR

     1. Whether the Reporters of local papers may be allowed to
        see the judgment?

     2. To be referred to the Reporter or not?

     3. Whether the judgment should be reported in the Digest?


INDERMEET KAUR, J.

1. This appeal has impugned the judgment and decree dated

05.2.2004 which has reversed the finding of the trial judge dated

17.3.1998. Vide judgment and decree dated 17.3.1998 the suit

filed by the plaintiff i.e. UCO Bank had been dismissed. Vide the

impugned judgment the finding of the trial judge was reversed and

the suit of the plaintiff stood decreed.

2. Plaintiff had filed a suit for recovery of ` 51,850/- against

three defendants. Defendant no.2 was the proprietor of defendant

no.1. His account was introduced by defendant no.3. Defendant

no.2 had requested for availing temporary over-draft facility which

was permitted. Defendant no.2 had pledged his FDR in the sum of

`1,00,000/- which was jointly in his name and in the name of his

wife in the account of defendant no.3 and requisite formalities had

been completed by defendants no.2 and 3 in this regard.

Defendant no.3 availed over-draft facility on the strength of this

FDR which was in the joint names of defendant no.2 and his wife.

Since the account of the defendant no.3 was outstanding and he

had failed to regularize it in spite of requests, the proceeds of the

aforenoted FDR which was in the joint names of defendant no.2

and his wife were adjusted against outstanding account of

defendant no.3. On 30.3.1992 the bank came to know that a wrong

credit entry of `19,000/- dated 24.7.1990 had been made in the

account of defendant no.1 Defendant no.1 through defendant no.2

wrote a letter dated 28.3.1992 to the bank wherein he requested

the Bank that the FDR which he had pledged be adjusted against

his account. The contention of the bank was that the said FDR

already stood adjusted against the outstanding against defendant

no.3. On 8.3.1995 a legal notice (Ex.PW-1/16) was served upon

the plaintiff informing him that since he had failed to regularize his

account; he was called upon to pay a sum of `40,468.42/- which

was outstanding as on 31.12.1993 along with interest failing which

legal action would be taken against him. Present suit was

accordingly filed.

3. In the written statement, the contention of the defendant

No.1 was that he has pledged this FDR of `1,00,000/- against his

own account; it was not pledged against the account of defendant

no.3. The said FDR should have been adjusted against his account

i.e. of defendant no.1; no amount is payable by the answering

defendants no.1 and 2.

4. Defendant no.3 has filed a separate written statement

wherein he had stated that this FDR which was in the joint in the

names of defendants no.1 and 2 had in fact been pledged against

the account of defendant no.3.

5. On the pleadings of the parties issues were framed. No

specific issue on the question of limitation was framed. Oral and

documentary evidence was led by the respective parties. Suit of

the plaintiff was dismissed.

6. In appeal, the impugned judgment was reserved and the suit

of the plaintiff stood decreed.

7. This is a second appeal. After its admission on 04.5.2010,

the following substantial question of was formulated; it reads as

follows:

"In the given case, when period of limitation would start running

against the appellants for filing a suit for recovery of money?"

8. Admittedly no issue on limitation was framed by the Trial

Court. However, since the question of limitation goes to the root of

the matter and there is a mandate cast upon the courts under

Section 3 of the Limitation Act, 1963 to examine this issue and in

the eventuality of a legal proceeding being time barred it cannot be

allowed to proceed the aforenoted substantial question of law was

framed.

9. The averments in the plaint have to be necessarily examined

to answer this query. Defendant no.2 proprietor of defendant no.1

had opened a current account with the bank on 18.7.1989 on the

introduction of defendant no.3. Overdraft facility was permitted to

defendant no.2. On 01.4.1990 a debit of `10,596/- had been shown

in the account of defendant no.1. On 16.4.1990 by virtue of a cash

deposit of `3,20,000/- there was a credit balance of `3,31,596/- in

the account of defendant no.1. On 13.5.1991 defendants no.2 and

3 came to the bank to pledge the FDR which was in the joint names

of defendants no.2 and his wife against the account of defendant

no.3. The account of defendant no.3 became bad; he defaulted in

making payments. The proceeds of this FDR i.e. `1,00,000/- which

was in the joint names of defendants no.2 and his wife was

adjusted against the account of defendant no.3 on 24.9.1992. On

30.3.1992 a credit balance of `1298.40 was reflected in the

account of defendant no.1 but this was because of a wrong credit

entry which had been made in the account of defendant no.1 of

`19000/- on 24.7.1990 which had come to light on 30.3.1992. On

20.7.1992 debit balance in the account of defendant no.1 was

`28,478.60. No money had been deposited by defendant no.1 or

defendant no.2 to clear this amount. This was in spite of requests.

Letter dated 28.3.1992 (Ex.PW-1/7) addressed by defendant no.2 to

the bank requested for an adjustment of his FDR which stood

pledged with the bank. Ex.PW-1/3 is the said FDR; it is dated

9.10.1989; showing maturity date as 09.10.1991. It was duly

discharged; the back of Ex.PW-1/3 bore signatures of both

defendant no.2 and his wife. Contention of the bank is that this

amount stood adjusted against the account of defendant no.3;

which stand was supported by defendant No.3.

10. The Bank through oral and documentary evidence had

proved that a wrong credit entry of `19,000/- stood reflected in the

account of defendant no.1 on 24.7.1990. Contention of the Bank

was that the letter of defendant No.2 dated 28.3.1992 Ex.PW-1/7

was an acknowledgment of liability by defendant No.2; period of

limitation stood extended. Relevant would it be at this stage to

reproduce this document which was held in the impugned

judgment to be a valid acknowledgment. The said document reads

as under:

"To The Manager, United Commercial Bank, Sadar Bazar, DELHI

Reg: Encashment of my FDR No. 364579/334/dt. 9-10-89 maturing on 9.10.91 for Rs. 1,00,000/- pledged with you.

Sir, This is to say that I have my C/Account named M/s SHEELA ENTERPRISES in my proprietorship on which I availed overdraft in my A/c so and often.

Now I request that above F.D.R. may be credited with interest in my Current Account.

Thanking you, Yours faithfully,

(SUDESH SALUJA) B 63 Jyoti Nagar, DELHI DATED : 28.3.92

ENCLOSER:

Photocopy of F.D.R."

11. Vide Ex.PW-1/7 dated 28.3.1992 duly signed by defendant

no.2, he had acknowledged his liability. A scrutiny of this

document shows that the jural relationship of debtor and creditor

stood admitted; the defendant no.2 had admitted that he had

pledged this FDR with the Bank; further this amount be credited in

his current account. This was a valid acknowledgement under

Section 19 of the Indian Limitation Act extending the period of

limitation. This finding returned in the impugned judgment calls

for no interference.

12. Article I of Part I of the Schedule appended to the Indian

Limitation Act, 1963 presupposes a period of three years as

limitation to recover balance due, in a current account where there

are reciprocal demands between the parties which was admittedly

so in this case. The time would begin to run from the closing of the

year. In the instant case, last entry in the statement of account

(Ex.PW1/19) showed a credit balance of `1298.40 on 12.3.1992 as

is evident in the version of DW-2. This statement of account has

been certified under Section 4 of Bankers' Books Evidence Act. It

has been duly proved as Ex.PW-1/19; this document has to be read

in evidence. On the close of the year i.e. on 31.3.1992 there was a

credit of `1298.40 in the account of defendant no.1; this was

because of the wrong entry of `19,000/- which although wrongly

credited on 24.7.1990 was known to the Bank only on 30.3.1992.

However Ex.PW-1/7 dated 28.3.1992 being a valid

acknowledgment had extended the period of limitation. Suit filed

on 25.3.1995 was within a period of three years.

13. In AIR 1987 Karnataka 236 S. Kotrabasappa Vs. The Indian

Bank while examining provisions of Section 72 of the Indian

Contract Act a Division Bench of the Karnataka High Court had

held that where a sum of money had been wrongly credited in the

account of a person by the bank, the said amount is liable to be

refunded back with interest to the bank. In this case a mistaken

credit of Rs.1,00,000/- was made in the account of the defendant by

the plaintiff bank on 21.6.1980. This mistake was discovered after

nearly two years. Adverting to the provision of Section 72 of the

Indian contract Act, 1972, the Court was of the view that this

wrongful money was bound to be repaid back to the bank with

interest.

14. The judgment relied upon by learned counsel for the

appellant reported in AIR 1997 Gujarat 24 M/s Shivam

Construction Co. Vs. Vijay Bank recites that in a running account,

under Article I of Schedule of the Limitation Act, the period of

limitation has to be computed from the close of the year in which

the last item admitted or proved is entered into account. There is

no dispute to this legal proposition. The last entry in the account

of defendant no.1 is dated 30.3.1992. Counsel for the appellant

has failed to show how this judgment come to his aid. The second

judgment relied upon by learned counsel for the appellant reported

in 898 SCR (1967) Chandradhar Goswami & Ors. Vs. The Gauhati

Bank Ltd. also lays down the proposition that the entries in a

statement of account which have been certified under Section 4 of

Bankers' Books Evidence Act become prima facie evidence. There

is no dispute to this proposition either. Again learned counsel for

the appellant has failed to show how this judgment has come to his

aid.

15. The evidence on record both oral and documentary had

established that the suit filed by the plaintiff Bank was filed within

time entitling him to recover the suit amount. The substantial

question of law is answered against the appellant and in favour of

the respondent.

16. There is no merit in the appeal. The appeal as also the

pending application is dismissed.

INDERMEET KAUR, J.

FEBRUARY 17, 2011 nandan