M/S Geodis Overseas Pvt Ltd vs Punjab National Bank
2016 Latest Caselaw 1115 Del

          *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                   Date of decision: 12th February, 2016

+                                RFA No. 128/2015

       M/S GEODIS OVERSEAS PVT LTD                 ..... Appellant
                    Through: Mr. Jitender Mehta, Adv.
                                           versus

       PUNJAB NATIONAL BANK                     ..... Respondent

Through: Mr. Ajay Bahl, Adv.

CORAM:-

HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1. The appeal impugns a judgment and decree, dated 15 th October, 2014

of the Court of the Additional District Judge (ADJ)-06, South District, Saket

Courts, New Delhi, of dismissal of a suit filed by the appellant, for recovery

of Rs. 6 lacs from the respondent Bank as not maintainable.

2. Notice of the appeal was issued and the Trial Court record

requisitioned.

3. Admit.

4. Considering the fact that if the appeal were to be allowed, the matter

will have to be remanded back for trial, with the consent of the counsels the

appeal is taken up for hearing today itself.

5. The counsel for the appellant has been heard. The need to hear the

counsel for the respondent Bank has not arisen.

6. The appellant instituted the suit pleading, (i) that it is carrying on

business as a freight forwarding agency and during the course of its business

receives Demand Drafts (DD) from its clients in favour of the shipping lines

carrying the goods of the clients of the appellant and submits the said DDs

with the shipping line to cover / secure the shipping line for damage if any

caused to the shipping line during de-stuffing of the containers of the

shipping line and the said DDs are kept by the shipping line with

themselves, to be encashed in the event of any damage being caused and to

be returned if no damage is caused; (ii) that the appellant in the course of its

business received a DD for Rs.6 lacs drawn on HDFC Bank, New Delhi

from its client Reliance Communication Ltd. (Reliance) and submitted the

same to the shipping line CSAV Group Agencies (India Pvt. Ltd.) (CSAV);

(iii) however when Reliance asked the appellant for return of the said DD,

the appellant realised that the receipt obtained by it of deposit of the said DD

from CSAV had been misplaced in the office of the appellant and intimated

CSAV so and asked CSAV for return of the DD; (iv) CSAV informed the

appellant that the aforesaid DD of Rs.6 lacs had already been collected from

their office; (v) that the appellant on making enquiries learnt that the said

DD had been encashed by opening an account in the name of CSAV at the

respondent/defendant Bank and a sum of Rs.2 lacs had already been

withdrawn from the said account in the name of CSAV with the respondent

Bank; and, (vi) on alarm being raised, the balance amount of Rs.4 lacs then

still lying in that account with the respondent Bank was frozen (the counsel

for the appellant informs that the said amount is still lying frozen). The suit

from which this appeal arises was filed impleading the respondent Bank only

as a defendant thereto, claiming the said amount of Rs.6 lacs from the

respondent Bank contending that the respondent Bank had opened the bank

account in which the aforesaid DD was encashed without satisfying itself of

the identity of the persons who had opened the bank account in the name of

CSAV and without complying with the procedures prescribed by the

Reserve Bank of India (RBI) for opening of bank account and owing to the

said negligence of the respondent Bank, the appellant had suffered a loss

since Reliance has deducted the amount of Rs.6 lacs from the dues of the

appellant.

7. The respondent contested the suit by filing a written statement (but the

need for going therein is not felt since the suit has been dismissed on the

aspect of maintainability) and on the pleadings of the parties issues framed

on 11th January, 2012 and the matter posted for evidence of the appellant.

8. Thereafter the matter was adjourned for appellant‟s evidence on 28th

March, 2012, 12th July, 2012, 13th December, 2012 & 8th February, 2013 on

the request of the appellant and finally one of the witnesses of the

appellant/plaintiff was examined, cross examined and discharged on 11 th

July, 2013. Thereafter the matter was again adjourned for remaining

evidence of the appellant/plaintiff on 12th September, 2013, 9th January,

2014, 7th April, 2014, 13th May, 2014, 4th July, 2014, 8th August, 2014, 10th

September, 2014 and 10th October, 2014. It may be mentioned that the

appellant/plaintiff during this time was seeking to examine the witness from

Reliance.

9. During the hearing on 15th October, 2014, the trial court finding that

there was no privity of contract between the parties, heard arguments on

maintainability of the suit and vide impugned order / judgment passed on the

same date dismissed the suit as not maintainable, reasoning (i) that the

appellant/plaintiff has failed to show any privity with respondent Bank; (ii)

that according to the appellant/plaintiff also it was the CSAV which was

supposed to return the DD to the appellant/plaintiff and who had lost the DD

and the cause of action if any of the appellant/plaintiff was against CSAV

and not against the respondent Bank as it was owing to the negligence of

CSAV that the appellant/plaintiff claimed to be suffering; (iii) that the

appellant/plaintiff has no locus standi to file suit against the respondent

Bank; (iv) that the appellant/plaintiff had no cause of action against the

respondent Bank.

10. The counsel for the appellant/plaintiff in his initial arguments

contended that the matter is fully covered by the judgment dated 21 st March,

2011 of this Court in RFA No.524/2004 titled Oriental Bank of Commerce

Vs. Pawan Kumar Aggarwal but upon enquiry as to how the facts of the

present case can be said to be even similar to the facts of the judgment cited,

the counsel did not press the said argument. However now when this order is

being dictated, the counsel for the appellant/plaintiff again states that the

case is identical and relies on observations in para 7 of the said judgment.

11. I have perused the said judgment and do not find it to be a constituting

a precedent on the proposition. Therein, a judgment and decree for recovery

of amount of the cheque against the bank on which the cheque was drawn

was upheld finding that the bank had misplaced the cheque when it was

presented for payment and had made payment thereunder treating the cheque

to have been converted from „account payee‟ to „bearer‟ on the basis of

signatures not of the account holder. Per contra there is no such negligence

of the respondent Bank in the present case.

12. The counsel for the appellant/plaintiff has then contended that the

opening of the account by the respondent Bank in the name of CSAV and in

which the cheque was encashed was without following the RBI Guidelines.

13. He is however unable to show the Guidelines and states that "that is

the general principle".

14. I have considered the contention of the appellant/plaintiff and perused

the Trial Court record.

15. The appellant/plaintiff in the present case can by no stretch of

imagination be stated to be the „holder‟ of the negotiable instrument (i.e. DD

for Rs.6 lacs) within the meaning of Section 8 of the Negotiable Instruments

Act, 1881 which describes „holder‟ as a person entitled in his own name to

the possession of the negotiable instrument and to receive or recover the

amount due thereon from the parties thereto. Section 8 further provides that

it is only the „holder‟ who is entitled to the amount thereof. The

appellant/plaintiff cannot also be described as a „holder in due course‟ of the

said negotiable instrument within the meaning of Section 9 of the said Act

inasmuch as the appellant/plaintiff at no time, for consideration, became the

possessor of the said negotiable instrument. It has been held by the Supreme

Court in Milind Shripad Chandurkar Vs. Kalim Khan (2011) 4 SCC 275,

National Small Industries Corporation Ltd. Vs. State (2009) 1 SCC 407

and Punjab & Sindh Bank Vs. Vinkar Sahkari Bank Ltd. (2001) 7 SCC

721 that it is only a holder in due course of a negotiable instrument who is

entitled to complain with respect thereto and/or to realise the money which

the negotiable instrument represents.

16. The appellant/plaintiff as per its own admission was merely a

facilitator and carried the DD drawn by Reliance in favour of CSAV from

Reliance to CSAV.

17. If at all Reliance, contrary to the contract with the appellant/plaintiff,

withheld any dues of the appellant/plaintiff, the claim of the

appellant/plaintiff therefor would be against Reliance.

18. The privity of contract according to the appellant/plaintiff also was

between the appellant/plaintiff, Reliance and CSAV and if the dues of the

appellant/plaintiff from Reliance have been held owing to any conduct of

CSAV, the remedy if any of the appellant/plaintiff was to institute the suit

impleading both Reliance and CSAV as parties thereto and in which suit

may be the respondent Bank could also have been impleaded as a party.

Without Reliance and CSAV being parties to the claim of

the appellant/plaintiff in the suit, the suit was also bad for non-joinder of

necessary parties.

19. I may in this context observe that the appellant/plaintiff appears to

have not taken the said steps being fully aware it was itself to blame, having

misplaced the receipt obtained from CSAV of deposit of the DD with

CSAV, by way of security deposit, and on presentment of which receipt

CSAV was liable to return the DD and is admitted to have been done. The

appellant/plaintiff appears to have been apprehensive that in the event of

CSAV being impleaded as a party, the negligence of the appellant/plaintiff

itself would come to the fore and chose to proceed against the respondent

Bank only.

20. Though the counsel for appellant/plaintiff has failed to show the

binding instructions in violation of which the respondent Bank is claimed to

have opened the account in which the DD is stated to have been encashed

but even if it were to be assumed that the respondent Bank was negligent to

the said extent, the same would still not entitle the appellant/plaintiff to any

relief against the respondent Bank, for the reasons already stated and on the

principle of comparative headship and "pari delicto, potior est conditio

defendants" i.e. in equal fault better is the condition of the defendant.

21. The rule of equity formulated in this regard in Lickbarrow Vs. Mason

(1787) 102 E.R. 1192 and recognized by the Supreme Court in The New

Marine Coal Co. (Bengal) Private Ltd. Vs. Union of India AIR 1964 SC

152 and Bhagwandas Goverdhandas Kedia Vs. Girdharilal Parshottamdas

and Co. AIR 1966 SC 543 is that whenever one of two innocent parties must

suffer by the act of third, he who has enabled such person to occasion the

loss must sustain it.

22. I am therefore of the view that there is no error in the order of the

learned ADJ holding the suit to be not maintainable as per averments in the

in the plaint itself and resultantly the judgment and decree of dismissal of

suit cannot be said to be erroneous.

23. The counsel for the appellant/plaintiff has also argued that the trial

being underway the learned ADJ erred in dismissing the suit.

24. There is no merit in the said contention also. Supreme Court in I.T.C.

Limited vs. Debts Recovery Appellate Tribunal (1998) 2 SCC 70 relying on

Azhar Hussain Vs. Rajiv Gandhi (1986) 1 SCC 573 negatived the

contention that once issues have been framed the matter has to necessarily

go to trial, holding that a litigation which is meaningless and bound to prove

abortive should not be permitted to occupy the time of the court. Similarly in

Abdul Gafur Vs. State of Uttarakhand (2008) 10 SCC 97 and in P.P.A.

Impex Pvt. Ltd. Vs. Mangal Sain Mittal 166 (2010) DLT 84 (DB) it was

held that if on a meaningful not formal reading the pleading is found to be

manifestly vexatious and meritless, not disclosing a right to sue and

implausible, the court should exercise its power and should not permit it to

go to trial. Reference may also made to T. Arivandandam Vs. T.V. Satyapal

(1977) 4 SCC 467 and Liverpool and London S.P. and I Asson. Ltd Vs.

M.V. Sea Success I (2004) 9 SCC 512 where it was held that proceeding in

which there is no possibility of success and are deadwood and are doomed

should be shot down at the earliest stage and ought not to be permitted to

clog the resources of the Court and at the cost of other deserving matters

requiring attention of thee Courts. To the same effect is Shipping

Corporation of India Ltd. Vs. Machado Brothers (2004) 11 SCC 168. I

have also held so in P.S. Jain Co. Ltd. Vs. Atma Ram Properties (P) Ltd.

205 (2013) DLT 302 and in Sanjay Sharma Vs. Madan Mohan Sharma

MANU/DE/1999/2013.

25. In the present case the appellant/plaintiff is found to have kept the trial

pending at the stage of recording of his own statement for inordinately long

time and the learned ADJ at the time of entertaining the request of the

appellant/plaintiff for opportunity for summoning of the witnesses having

become aware of the controversy and having heard the arguments on the

maintainability cannot be said to have acted in violation of the procedure

established by law.

Dismissed.

No costs.

Decree sheet be prepared.

RAJIV SAHAI ENDLAW, J

FEBRUARY 12, 2016 „pp‟..