Canara Bank vs Allahabad Law Journal Co. Ltd. & ...
2011 Latest Caselaw 1375 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         RFA No. 611/2001
%                                                  9th March, 2011

CANARA BANK                                             ...... Appellant
                              Through:      None
                          VERSUS


ALLAHABAD LAW JOURNAL CO. LTD. & ANR                    ...... Respondents

Through: None.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

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?

VALMIKI J. MEHTA, J (ORAL)

1. This case is on the „Regular Board‟ of this Court since 17.1.2011.

Today, it is effective item No.9 and though it is 12.20 P.M. nobody has

chosen to appear for the parties. I have, therefore, perused the record and

am proceeding to dispose of the appeal.

2. The challenge by means of this Regular First Appeal under

Section 96 of the Code of Civil Procedure, 1908 (CPC) is to the impugned

judgment and decree dated 15.9.2001 whereby the suit of the

appellant/plaintiff was dismissed only on the ground of limitation. There was

no dispute of any substance before the trial Court that the credit facilities

were in fact granted to the defendant No.1/respondent No.1 and with respect

to which the respondent Nos.2 and 3/defendant Nos.2 and 3 stood as

guarantors. Two facilities were granted namely the overdraft facility and

credit facility against discounting of supply bills. Demand promissory note

was executed by the respondent No.1 on 8.6.1976 and liability was said to

be acknowledged by the respondents/defendants on 20.11.1978 and

5.11.1981 on acknowledgments of debts signed by the Managing Director of

the principal borrower/defendant No.1/respondent No.1. As on 17.8.1983, a

sum of Rs.1,01,276.07/- was due and payable by the defendants/respondents

to the plaintiff in the current account and a sum of Rs.50,000/- was payable

in the "Advance against Supply Bills" account. The basic defence of the

respondent in the trial Court was that the suit was time barred and which

was accepted dismissing the suit as time barred.

3. After the pleadings were complete, the trial Court framed the

following issues:-

"1. Whether the suit is within time? OPP

2. Whether the plaintiff is entitled to the suit amount? OPP

3. Relief."

4. The relevant findings of the trial Court to hold the suit to be time

barred are as under:-

"xxxx

In consideration of the submissions made by both the counsels, I have also perused the file and exhibited documents available on record. It is not disputed that the defendant has executed the agreement dated 8.1.76 which has been proved by the plaintiff as

Ex.PW1/1 and letter dated 20.11.78 Ex.PW1/5 and Ex.PW1/4 dated 5.11.81 and I also perused the request for OD facility which is Ex.PW1/3 i.e. also for dated 8.1.76 and I also perused the Ex.PW1/2 i.e. promissory demand note i.e. letter dated 8.1.76 and I also perused another letter Ex.DW1/D-1 and another letter Ex.PW2/2 and Ex.PW2/3 and from the gist of the argument of the plaintiff counsel, plaintiff bank count its limitation from the letter dated 5.11.81 which is Ex.PW1/4 & Ex.PW2/2. But on the perusal of the testimony of PW2 he denied about the knowledge of the said document Ex.PW1/4 dated 5.11.81 as he has stated that he has no knowledge about the details of the aforesaid document Ex.PW1/4 dated 5.11.81 as he has stated that he has no knowledge about the details of the aforesaid document Ex.PW1/4 dated 5.11.81. He has further deposed that defendant no.2 executed the letter regarding acknowledgment of debt dated 20.11.78 which is Ex.PW1/5 in his presence and defendant no.1 did not made any other acknowledgment of debt in his presence. On perusal of his testimony he had no connection with Chandni Chowk Branch of Canara Bank after May 1981, the bank was proved the said document by him, while the said witness was not in the bank in the relevant time i.e. 5.11.81 how he proved said document in favour of the plaintiff. PW2 who has stated in his examination chief that defendant no.2 Sh. K.M. Tayal has also signed AOD i.e. acknowledgment of debt and security dated 5.11.81 in his presence and the said AOD is Ex.PW1/4 and he has also executed another acknowledgment of debt dated 5.11.81 of his current account. The same is Ex. PW2/2 and the plaintiff bank credited the proceed of FDR of Rs.1850/- dated 15.11.83 in the account of defendant no.1 and letter of request of defendant is Ex.PW2/3. I have also given my thoughtful consideration to this letter Ex.PW2/3 but it does not show that the said amount may be adjusted in the OD facility account and this letter clearly shows „to issue a pay order for Rs.1850/- in favour of Sh. H.K. Jain, the beneficiary in view of court‟s order to cover up this payment kindly encash the security FDR no.125/82 and I have also perused the testimony of DW1 who has deposed in his testimony that the meeting was to be held with the Dy. Manager and Chief Manager of the plaintiff bank on 29.9.81 when this letter was to be finalized. Unfortunately he could not go to the plaintiff bank on 29.9.81 but he visited there on 30.9.81. The meeting was to be held regarding both the accounts. On that day Dy. General Manager & Chief Manager was not available but other officials of the bank were present. As the Manager of the plaintiff Bank was not available, the officials of the plaintiff bank placed before him their prescribed confirmation memos. At his request showing outstanding balance of Rs.55,000/- against overdraft account and

Rs.50,000/- against supply bills. He has signed these memos on the balance which exists on 30.9.81. It means the defendant had executed the acknowledgment of debt letter on 30.9.81 not on 5.11.81 and he has further stated that the photocopy of those acknowledgment memos were given to him and he has filed the photocopy of that one acknowledgment memo in this case and the photocopy of the memo is mark „B‟. He has further stated that he has seen Ex.PW2/2 and when he signed the aforesaid document at that time on the aforesaid document neither date, nor place, nor address of the branch was mentioned. Address of the defendant was not mentioned at that time and when he signed Ex.PW1/4 at that time also neither date, nor place or address of the defendant was mentioned. The word supply bill was also not mentioned on the document at that time. When the photocopy of the aforesaid documents was given to him at that time aforesaid particulars was not mentioned. The plaintiff has subsequently filled up the document in order to bring this case within the limitation. On 5.11.81 he never went to the plaintiff bank but on the said date an Officer of the plaintiff bank came to his office and on 17.2.82, plaintiff bank also wrote him letter informing him that they had visited his office on 5.11.81 and the said letter has been proved by the plaintiff as Ex.PW2/D2. He has further deposed that the plaintiff bank has wrongly routed the transaction of Rs.1850/- in this account by first crediting the amount of KDR no.125/82 to ALJ‟s account and then debiting the same amount to ALJ‟s account with ulterior motive to bring the suit within limitation period. The transaction involving the KDR bank guarantee and pay order of Rs.1850/- in favour of Sh. H.K. Jain is completely an independent transaction not connected with the present suit filed by the plaintiff bank. The limitation of the plaintiff bank expired on 29.9.84. Even in cross examination he has stated that the document were not completely filled up when he signed the same i.e. Ex.PW2/2. There was no date, no address as well as no address of the company, as well as address of the plaintiff bank is mentioned when he signed the same. He has further denied that the amount of Rs.1850/- was adjusted on the basis of the letter Ex.PW2/3 but Vol. he has stated that the bank guarantee no.8/82 for Rs.1850/- was purchased by Allahabad Law Journal Co. while depositing cash amount with plaintiff bank exclusively for this purpose this bank guarantee furnished in another case Harish Jain Vs. Allahabad Law Journal Co. He has further deposed that Ex.PW2/3 is documentary proof in this regard and further denied that the bank had credited the proceeds of FDR of Rs.1850/- dated 15.11.93 in the account of defendant No.1 at his request. But he admitted in his cross examination that on 30.9.81 he went to the bank and his meeting

was held with Junior Officers of the bank but he denied that at that time he collected his statement of account from the plaintiff bank Vol. said on the other hand plaintiff bank failed to give the statement of account in spite of several requests. He had written letter to the plaintiff on 17.12.20 regarding the rate of interest. So, in consideration of the above discussions, I am of the opinion that the plaintiff suit is highly time barred and the same is not within time. The plaintiff has failed to prove that the plaintiff suit is within time. So, issue no.1 is disposed off accordingly in favour of the defendant and against the plaintiff."

5. I am afraid, the trial Court has clearly fallen into an error and

thereby committed an illegality and perversity in dismissing the suit as being

barred by time. The trial Court has without valid reasons held that the

acknowledgment of debt was signed in blank. A reference to the

acknowledgment of debt shows that the same in fact even contains the seal

of the respondent No.1 company. There is no personal interest of any

individual when a bank files a suit for recovery, and therefore, I am not

inclined to believe the case that the acknowledgment of debt dated

5.11.1981 cannot be looked into inasmuch as the same was blank. The suit

was filed on 31.10.1984 and therefore the same is within three years of the

acknowledgment of debt dated 5.11.1981, Ex.PW2/2 and consequently, the

suit was very much within limitation and was not time barred. One

important aspect, I may note is that there is a very good reason to hold that

the acknowledgment of debt dated 5.11.1981 as not having been signed in

blank inasmuchas at the end of typed portion there is an acknowledgment in

hand, which appears to be clearly on behalf of the respondent

No.1/defendant No.1 and which states "this is subject to our letter dated

17.12.1980". Another reason to hold that the suit has been filed within

limitation is that it is not disputed that the respondent No.1 asked the

appellant bank to prepare a pay order in name of Sh. H.K. Jain by encashing

the fixed deposit receipt No.125/82. This was admittedly done by the bank

by first making the credit entry in the current account and then making a

debit entry in the said account in order to prepare the pay order. The bank

in law and as per banking practice necessarily operates by means of an entry

in the account and I do not find that any illegality was committed by the

bank in first creating a credit entry for encashing of the FDR in the current

account of the defendant No.1/respondent No.1 and thereafter debiting the

amount for issuing pay order of Rs.1850/- in favour of Sh. H.K. Jain. These

entries in the account are dated 15.11.1983. The current account of the

bank in which overdraft limit is granted is an open mutual and current

account in terms of Article 1 of the Limitation Act,1963 and limitation for

filing of the suit is three years from the end of the financial year in which the

last entry is admitted or proved. The last proved entry in the account is

dated 15.11.1983 when the credit and debit entries were put in the account

for issuing of the pay order in favour of Sh. H.K. Jain. The end of the financial

year with respect to the entry dated 15.11.1983 shall be 31.3.1984 and thus

in terms of Article 1 of the Limitation Act the suit could have been filed till

31.3.1987 whereas the suit has been filed on 31.10.1984. For this reason

also the suit can be said to have been filed within limitation.

6 I note that the appellant bank has filed and proved the various

documents including the loan/hypothecation agreement dated 8.1.1976 as

Ex.PW1/1, demand promissory note as Ex.PW1/2, request letter for overdraft

facility as Ex.PW1/3, acknowledgment of debt dated 5.11.1981 with respect

to the supply bills account as Ex.PW1/4, acknowledgments of debts dated

20.11.1978 for both the accounts as Ex.PW1/5 and, DW1/D-1, request letter

dated 15.11.1983 for issue of the pay order in favour of Sh. H.K. Jain as

Ex.PW2/3 and statement of account duly certified under the Bankers Books

Evidence Act, 1891 as Ex.PW2/4.

7 In view of the above, the appeal is accepted, the impugned

judgment and decree is set aside. Suit of the appellant bank is decreed for

Rs.1,90,145.47/- with pendente lite and future interest @ 9% per annum

simple alongwith cost of the appeal being the Court fee filed. Decree sheet

be prepared. Trial Court record be sent back.

MARCH 09, 2011                                     VALMIKI J. MEHTA, J.
ib