Jharkhand High Court
Smt. Gayatri Singh vs The Manager on 4 October, 2023
IN THE HIGH COURT OF JHARKHAND AT RANCHI
First Appeal No. 113 of 2011
Smt. Gayatri Singh --- --- Appellant
Versus
1. The Manager, Allahabad Bank, B.S. City Branch, Bokaro
2. Allahabad Bank through its Chairman, Kolkata
3. The Regional Manager, Allahabad Bank, Ranchi --- --- Respondents
---
For the Appellant: M/s Pandey Neeraj Rai, Rohit Ranjan Sinha, Advocates
For the Resp.-Bank: Mr. P.A.S. Pati, Advocate
---
PRESENT
Hon'ble Mr. Justice Ambuj Nath
---
Reserved on: 14.06.2023 Pronounced on:04.10.2023
---
Ambuj Nath, J: Appellant-Gayatri Singh has filed this appeal against the judgement and
decree dated 07.06.2011, (Decree drawn on 14.06.2011) passed by Shri Arjun
Modi, Sub-Judge-II-cum-Land Acquisition Judge, Bokaro in Title Suit No.
04/1993, whereby and wherein, the learned Sub-Judge-II-cum-Land
Acquisition Judge, Bokaro dismissed the suit of the appellant seeking a
declaration that the appellant was entitled to recover Rs. 25,50,000/- as
damage, loss and compensation from the Respondent No. 1 along with the cost
of the suit.
2. For the sake of convenience, parties shall be referred to in their original
capacity as in Title Suit No. 04/1993.
3. Case of the plaintiff is that her brother Sanjay Kumar Singh was the
proprietor of M/s Vikas Saw Mills. He had taken loan from the defendants. The
plaintiff and her husband stood as a guarantor against the loan. The plaintiff
had mortgaged 17 decimals of land against the loan given by the defendants to
her brother. Subsequently, plaintiff became the partner in M/s Vikas Saw Mills
and the aforesaid Firm was converted into a Partnership Firm on 20.02.1986. In
the meantime, husband of the plaintiff namely, R.D. Singh qualified in the
Bihar Judicial Services and was posted as a Probationary Munsif in Darbhanga.
Plaintiff started residing with her husband at Darbhanga. In the meantime, her
brother Sanjay Kumar Singh ran the business haphazardly and in irregular
manner and also started misappropriating money of the Firm. Plaintiff and her
husband being the guarantors, requested R.K. Rai, the then Branch Manager of
Allahabad Bank, B.S. City Branch, Bokaro several times not to advance any
further loan to Sanjay Kumar Singh, but R.K. Rai continued advancing him
loan. Subsequently, Sanjay Kumar Singh went missing. The plaintiff took over
the business of M/s Vikas Saw Mills and informed the defendants about this
fact. When the defendants started demanding to return the loan amount which
was taken by Sanjay Kumar Singh, the plaintiff requested the defendants that
she has taken over the control of M/s Vikas Saw Mills and has started a new
business under the name and style of Jai Maa Bhawani Timber. She requested
the defendants to advance loan of Rs. 3,00,000/- for supplying timber to her
customers. On the assurance of the defendants, she took order for supply of
timber from her customers. The defendants did not honour their commitment,
leading to loss to the extent of Rs. 16,45,000/-. On 16.01.1992 the plaintiff
wrote a letter to the defendant no. 1 regarding the loss suffered by her due to
gross violation of the assurance given for sanctioning loan to the plaintiff. The
defendant no. 1 vide letter no. ADV/26/92 dated 16.01.1992 replied that the
proposal for sanctioning loan in the name of the Firm M/s Jai Maa Bhawani
Timber was rejected by the Regional Manager, Ranchi on 18.05.1989..
Accordingly, the present suit was filed.
4. Defendants appeared on notice and filed contesting written statement. It
has been pleaded in the written statement that the suit is neither maintainable
nor tenable in the eyes of law. It has also been pleaded that the suit is bad for
misjoinder of cause of action and it was barred by law of limitation, estoppel,
waiver and acquiescence. The suit is barred by Specific Relief Act. It has been
pleaded that Section 69 of Partnership Act provides that no suit arising out of
contract shall be instituted in any court, unless Firm was registered and the
plaintiff has not been shown in the Register of M/s Vikas Saw Mills as a
partner in the said Firm. It has further been pleaded that on 15.11.1984, loan of
Rs. 1,70,000/- was sanctioned to M/s Vikas Saw Mills, Proprietorship Firm of
Sanjay Kumar Singh, subject to hypothecation of stocks, Machines, tools and
plants of the said Firm, Guarantors and good equitable mortgage. In token of
the said loan facilities, the said Sanjay Kumar Singh on 27.11.1984 executed a
letter of hypothecation by hypothecating the Machines, Tools, Plant and stocks
of M/s Vikash Saw Mills to the bank and the Plaintiff and her husband Sri Ram
Deo Singh voluntarily stood as guarantor by executing an Agreement of
Guarantee in favour of Allahabad Bank for the performance of the aforesaid
hypothecation. The plaintiff also created an equitable mortgage of her
immovable property / land area measuring 17 decimals at Chas Mouza by
depositing the Registered Deed to the Allahabad Bank with a view to secure the
entire outstanding balance / dues against M/s Vikas Saw Mills. It has also been
pleaded that Allahabad Bank has instituted a Title (Mortgage) Suit No. 35/1994
against the borrower M/s Vikas Saw Mills, its proprietor and guarantors for
recovery of Rs. 3,06,697.32 by way of attachment and auction of the
immovable properties detailed in the schedule below which belongs to the
guarantor Smt. Gayatri Devi. It has been denied that the plaintiff had intimated
the defendants regarding the execution of the partnership Deed, as no document
was presented to the defendants to that effect. It has also been denied that the
plaintiff has made any fresh request for fresh sanction of loan of Rs. 3,00,000/-
in the name of M/s Jai Maa Bhawani Timber, rather it has been pleaded that the
plaintiff had in fact requested for fresh cash credit of Rs. 1,00,000/- only in the
name of M/s Jai Maa Bhawani Timber, proprietorship business of the plaintiff
with a view to liquidate the Bank's dues of Rs. 160,294.13 which stood in the
name of M/s Vikas Saw Mills. Subsequently, prayer of the plaintiff for giving
her fresh cash credit of Rs. 1,00,000/- was rejected as assets of M/s Jai Maa
Bhawani Timber (converted from M/s Vikash Saw Mill) stood in the ownership
of Sanjay Kumar Singh. It has also been pleaded that the defendants came to
know that M/s Jai Maa Bhawani Timber was a fake Firm and was neither
registered under Small Scale Industries nor established anywhere on the earth
to have its own premises, shed, Machines, tools, stocks or employees.
Accordingly, it was prayed that the suit be dismissed with cost.
6. On the pleadings of the parties, learned court below formulated the
following issues for just and proper disposal of the suit.
i. Is the suit maintainable?
ii. Is there any cause of action for the suit?
iii. Is the suit barred by limitation, estoppel, waiver and acquiescence?
iv. Is the suit barred by any Act viz. Specific Relief Act, Court Fee Stamp
Act, Indian Contract Act, Partnership Act and Banking Regulation Act?
v. Is the plaintiff entitled for decree of Rs. 25,50,000/- or reliefs claimed in
the plaint and / or any other reliefs against the defendants / Bank?
vi. Is there any agreement between the plaintiff and the defendants / Bank
for advancing any loan?
vii. Is the plaintiff entitled to compel the defendants / Bank to advance loan
without adhering to the basic norms of banking loan?
viii. Is the plaintiff partner or guarantor of M/s Vikash Saw Mills?
ix. Is the firm M/s Vikas Saw Mills proprietorship firm or partnership form?
x. Has the plaintiff any locus-standi to bring such suit against the
defendants / Bank?
xi. Has the plaintiff any right or title to convert the hypothecated assets of
M/s Vikas Saw Mills to the defendants / Bank in the form / name of M/s
Jai Maa Bhawani Timber?
xii. Is the plaintiff liable to pay the Bank's dues whatsoever against M/s
Vikas Saw Mills?
7. In order to prove its case, plaintiff has adduced both oral and
documentary evidence. Nitai Chandra Mahto has been examined as P.W.1;
Kapildeo Singh has been examined as P.W-2; Abhay Kumar has been
examined as P.W-3; Ramji Singh has been examined as P.W-4; Madan Prasad
Singh has been examined as P.W-5; Jai Shankar Ojha has been examined as
P.W-6; Ramdeo Singh has been examined as P.W-7; Bhim Prasad Mahto has
been examined P.W-8; Atul Mahto has been examined as P.W-9 and Gayatri
Singh has been examined as P.W-10.
8. Plaintiff has adduced several documentary evidences. Ext-1 is the
affidavit; Ext.-2 series are letters of various dates; Ext.3 series are signature of
Kapildeo Singh; Ext.4 is purchase order; Ext.5 is the Deed of Partnership; Ext.6
is Bank's registered letter dated 06.06.1986 and Ext.7 is copy of the plaintiff
letter dated 26.07.1989 to the Allahabad Bank. Defendant has examined
Dhirendra Nath Mahato as D.W-1 and S.K. Mangalik as D.W-2.
9. On the basis of both oral and documentary evidences available on the
record, learned Sub Judge-II, Bokaro dismissed the suit of the plaintiff.
10. Mr. Pandey Neeraj Rai, learned counsel appearing on behalf of the
appellant, confined his argument on the issue that M/s Jai Maa Bhawani
Timber was a different entity from M/s Vikas Saw Mill and the plaintiff had
sustained both financial loss and loss of goodwill due to the fact that the
defendant even after assurance, had not advanced her loan to meet the order of
her customers and she was entitled for the relief prayed for.
11. Learned counsel appearing on behalf of the defendants, submitted that
there was no agreement between the plaintiff and the defendants for providing
her loan for carrying out business under the name and style of M/s Jai Maa
Bhawani Timber. It was further submitted that the plaintiff was the guarantor
against the loan given to her brother Sanjay Kumar Singh, proprietor of M/s
Vikas Saw Mill and in order to avoid payment of loan amount and auction of
the attached properties of M/s Vikas Saw Mill, this suit was brought by the
plaintiff.
12. It is admitted case of the plaintiff that her brother Sanjay Kumar Singh
was the proprietor of M/s Vikas Saw Mills. He had taken loan from the
defendants. She and her husband stood as guarantors against the said loan.
Plaintiff had also mortgaged 17 decimals of land to cover the loan amount.
Subsequently, her brother Sanjay Kumar Singh started defaulting in repayment
of instalment of loan and he also stopped maintaining accounts of the Firm, due
to which, at the instance of the plaintiff, M/s Vikash Saw Mills was converted
into a Partnership Firm with the permission of the defendants. When the
defendants started pressurising the plaintiff to repay the loan amount, she
proposed to the bank to further grant her loan so that she can carry business of
M/s Vikash Saw Mills and in the meantime, she will continue to repay the loan
amount which was taken by her brother. It is further case of the plaintiff that
subsequently, on the basis of assurance of the defendants, she started a new
Firm in the name and style of M/s Jai Maa Bhawani Timber. She took order for
supply of timber from several persons on the assurance of the bank that they
will provide loan to her. However, the bank did not honour its commitment,
due to which, she could not supply timber to her customer, causing her great
financial loss.
13. Kapildeo Singh (P.W-2), Abhay Kumar (P.W-3), Ramji Singh (P.W-4);
Madan Prasad Singh (P.W-5) and Jai Shankar Ojha (P.W-6), all have stated
that they had placed orders for supply of timber to M/s Jai Maa Bhawani
Timber belonging to the plaintiff. They had submitted quotation for supply of
timber. They have proved the quotations in evidence which have been marked
Ext.-2 series. They have stated that the plaintiff did not supply the timber, due
to which, she has suffered a financial loss and also loss of her goodwill.
Kapildeo Singh (P.W-2) in his cross-examination, has stated that M/s
Vikas Saw Mills and M/s Jai Maa Bhawani Timber are the same entity.
Abhay Kumar (P.W-3) in his cross-examination, has stated that M/s
Vikas Saw Mills and M/s Jai Maa Bhawani Timber are different Firms.
However, he has admitted in his cross-examination that M/s Jai Maa Bhawani
Timber belongs to the plaintiff and she used the letter pad of M/s Vikas Saw
Mills by cutting name of M/s Vikas Saw Mills and writing the name of M/s Jai
Maa Bhawani Timber. He has stated that he cannot state the date on which M/s
Jai Maa Bhawani Timber was registered.
Ramji Singh (P.W-4) in his cross-examination, has stated that M/s
Vikash Saw Mills and M/s Jai Maa Bhawani Timber are the same entity. In his
cross-examination, he has stated that he had submitted quotation for supply of
timber to M/s Jai Maa Bhawani Timber.
Jai Shankar Ojha (P.W-6) in his cross-examination has stated that he had
submitted a quotation for supply of timber to the plaintiff's Firm in January
1992.
14. Plaintiff Gayatri Singh has examined herself as P.W-9. She has stated
that she has filed this case against the Allahabad Bank and her brother Sanjay
Kumar Singh. She was the partner in the business of M/s Vikas Saw Mills
along with his brother Sanjay Kumar Singh. She became partner in M/s Vikas
Saw Mills after permission of the Manager of Allahabad Bank and his brother
Sanjay Kumar Singh. She has stated that after her brother started defaulting in
repayment of his loan amount, she requested the Manager of the Bank not to
advance further loan to him. Subsequently, Sanjay Kumar Singh lost interest in
the business of M/s Vikas Saw Mills, on which she told the defendants to file a
money suit against Sanjay Kumar Singh for realization of the loan amount. In
the meantime, proposal came from the Manager, Allahabad Bank that if she
will carry out the business of M/s Vikas Saw Mills, the Bank will advance her
loan and she can repay the loan amount of M/s Vikas Saw Mills and carry her
own business. On the assurance of the Manager, she started a new business in
the name and style of M/s Jai Maa Bhawani Timber and submitted a proposal
for advance of Rs. 3.00 lakh for carrying out the business of this Firm. She also
spent Rs. 50,000/- for renovating the premises and plants of M/s Vikas Saw
Mills and also in advertising her new Firm. She received order for supply of
timber from various persons to the tune of 33,000 cft of timber. However, she
could not honour her commitment.
She has been cross-examined at length. In her cross-examination, she has
stated that she has not sought written consent from the defendants for becoming
partner of M/s Vikas Saw Mills. She has further stated that M/s Jai Maa
Bhawani Timber and M/s Vikas Saw Mills were situated at same place.
Machines of both the Firms were the same. She has also admitted that there was
no written agreement between the defendant and her Firm. She has further
admitted that she procured order for supply of timber from M/s Vikas Saw
Mills and not in the name of M/s Jai Maa Bhawani Timber.
Ramdeo Singh (P.W-7) is the husband of the plaintiff. He was co-
guarantor of M/s Vikas Saw Mills. He has stated that his brother-in-law Sanjay
Kumar Singh had taken loan from the defendants to carry out his business of
M/s Vikash Saw Mills and subsequently, he went missing. Thereafter, he and
his wife met the defendants and told them not to advance loan to Sanjay Kumar
Singh, but the defendants did not pay heed to their request. He has further
stated that subsequently, at the instance of the bank, his wife started a new Firm
in the name and style of M/s Jai Maa Bhawani Timber. The Bank official told
them they will advance loan for M/s Jai Maa Bhawani Timber, on which she
spent Rs. 50,000/- in renovating the premises and plants of M/s Vikas Saw
Mills. She also procured work order from several persons for supply of timber,
but the plaintiff could not honour her commitment as the bank did not honour
its commitment of advancing loan to the plaintiff. He has adduced several
documents in evidence.
He has been cross-examined at length. In his cross-examination, he has
stated that in the Partnership Deed, Sanjay Kumar Singh has not put his
signature, nor he had put his signature. He has further stated that there was no
written consent from the bank to convert the Firm M/s Vikas Saw Mills into a
Partnership Firm. He has also stated that the bank had not given written consent
to convert M/s Vikas Saw Mills into a Partnership Firm. He has further
admitted that till 15.01.1992, there was no separate letter pad of M/s Jai Maa
Bhawani Timber. At para-13 of his cross-examination, he has stated that M/s
Jai Maa Bhawani Timber has no property of its own except the property of M/s
Vikas Saw Mills, which was hypothecated with the defendants against the grant
of loan. He has admitted that the bank has instituted a money suit being Title
(Mortgage) Suit No. 35/1994 for realization of loan amount. At para-16, he has
further admitted that there was no written agreement between the bank and M/s
Jai Maa Bhawani Timber for advance of loan in the name of M/s Jai Maa
Bhawani Timber.
14. On perusal of the statement of S.K. Mangalik (D.W-2), it transpires that
M/s Vikas Saw Mills had failed to pay the outstanding loan amount. Thereafter,
the Respondent Allahabad Bank filed a money suit being Title (Mortgage) Suit
No. 35/1994 in the court of Sub-Judge, Chas (Bokaro). He has further stated
that the plaintiff was the guarantor against the loan amount advanced to M/s
Vikash Saw Mills and in order to escape the liability from paying the loan
amount of M/s Vikas Saw Mills, she is claiming compensation of
Rs. 25,50,000/- under different heads. He has further stated that Allahabad
Bank was never approached for conversion of the proprietorship Firm M/s
Vikas Saw Mills into a Partnership Firm. At para-14, he has stated that
Allahabad Bank never agreed to the proposal of the plaintiff to run the business
of M/s Vikas Saw Mills. As such, there was no question of granting fresh loan
in her name or in the name of any other Firm. At para-18, he has stated that the
bank never agreed for grant of Rs. 3.00 lakh by way of loan to the plaintiff.
In his cross-examination, he has stated that he has no knowledge whether
Partnership Deed was drawn between Gayatri Singh and Sanjay Kumar Singh.
He has stated that Sanjay Kumar Singh was the proprietor of M/s Vikas Saw
Mills and Gayatri Singh was the guarantor. He has denied of having knowledge
that the plaintiff Gayatri Singh had made a proposal to issue fresh loan so that
she could carry the business in the name of the new Firm and she will also be in
a position to repay the loan of M/s Vikas Saw Mills.
15. Plaintiff has adduced various documents showing that orders were
placed by different customers to M/s Jai Maa Bhawani Timbers for supply of
timber.
16. It is the case of the plaintiff that M/s Jai Maa Bhawani Timbers was
separate entity from M/s Vikas Saw Mills. Plaintiff and her witnesses have
stated that the defendants had assured the plaintiff that they will sanction loan
to her for carrying out business in the name of M/s Jai Maa Bhawani Timbers if
she undertakes to repay the loan of M/s Vikas Saw Mills. No document has
been brought on record by the plaintiff to show that she has applied for loan
before the defendants for carrying out business of M/s Jai Maa Bhawani
Timbers. It is well known fact that the Bank does not grant loan to any
customer on oral request. Certain procedure is followed before the loan is
sanctioned and the sanctioned amount is released. Therefore, it is evident that
though, the plaintiff has claimed that she was carrying out a fresh business in
the name and style of M/s Jai Maa Bhawani Timbers, but for all practical
purposes, it was being carried in the name of M/s Vikas Saw Mills. Witnesses
of the plaintiff had stated that the plaintiff was using the letter pad of M/s Vikas
Saw Mills by cutting its heading and by writing the name of M/s Jai Maa
Bhawani Timbers. M/s Jai Maa Bhawani Timbers had defaulted in repayment
of loan amount, for which the defendants had instituted Title (Mortgage) Suit
No. 35/1994. The entire machineries and assets of M/s Vikas Saw Mills was
hypothecated with the defendants. The plaintiff was the guarantor of M/s Vikas
Saw Mills. In such event, whether M/s Vikas Saw Mills had defaulted in
repayment of loan, defendants were well within their rights not to grant further
loan to M/s Vikas Saw Mills. Though, the plaintiff has stated that M/s Vikas
Saw Mills was subsequently converted into a Partnership Firm, but there is no
documentary evidence to this effect. It is admitted case that no permission was
sought from the Bank to convert the Proprietorship Firm into Partnership Firm.
The plaintiff not being the proprietor of M/s Vikash Saw Mills, had no locus to
request the defendants to grant further loan in the name of M/s Vikas Saw
Mills.
16. In view of the aforesaid facts, I am of the opinion that the defendants
were well within their rights not to consider the oral request of the plaintiff to
grant her loan for continuation of business in the name and style of M/s Jai Maa
Bhawani Timbers.
17. In view of the aforesaid findings, I am of the considered opinion that the
defendants had not caused any financial loss or goodwill to the plaintiff by
refusing to advance her loan to meet the orders of her customers which was
placed to her Firm M/s Vikas Saw Mills.
18. Accordingly, it is hereby
Ordered
that this appeal is dismissed. Parties shall bear their own cost. The judgment
and decree dated 07.06.2011, passed by the learned Sub-Judge-II-cum-Land
Acquisition Judge, Bokaro in Title Suit No. 04/1993, is hereby affirmed.
(Ambuj Nath, J)
Ranjeet/
