M/S. Vinobha Finishers vs State Bank Of Hyderabad,
2023 Latest Caselaw 127 Tel

     THE HONOURABLE SMT. JUSTICE P.SREE SUDHA

                  APPEAL SUIT No.171 of 2003

JUDGMENT:

This appeal is filed against the Judgment and Decree of

the trial Court in O.S.No.410 of 1984 dated 04.10.2002.

2. The State Bank of India (hereinafter referred as 'S.B.H')

filed suit for recovery of Rs.89,454.89ps against Vinoba

Finishers represented by its Proprietor N.Rangaiah. The S.B.H

stated that defendant got sanctioned loan of Rs.25,000/- for the

purpose of business on 22.12.1979 and executed certain

documents in favour of the Bank. The defendant availed the

said facility and withdrew the amount through the current

account bearing No.1199, but he failed to repay the said

amount. So, notice was issued on 25.10.1984 by the S.B.H and

later filed suit for recovery of amount. The defendant contended

that plaint is not signed by the proper person and he never

availed the credit facility nor withdraw the amount. The current

account number relates to only supply of bills regarding

account No.1199. The defendant submitted bills to the plaintiff

bank for the recovery of the same from the concerned

customers, as such the claim of the plaintiff is not

maintainable. The statement of account pertained to supply bill

transactions. There is no cause of action in the suit as

mis-conceived and is liable to be dismissed.

3. The trial Court examined P.W.1 & P.W.2 on behalf of the

plaintiff and marked Exs.A1 to A5, D.W.1 was examined on

behalf of the defendant and marked Ex.B1. After considering the

entire evidence on record, the trial Court decreed the suit with

costs for Rs.89,454.89ps with future interest at the rate of 10%

per annum simple from the date of the suit till the date of

decree and thereafter at the rate of 6% per annum till

realization. Aggrieved by the said Judgment, the present appeal

is preferred by the defendant and mainly contended that no

amount was paid under the D.P note dated 22.12.1979 by the

plaintiff's bank and defendant never availed the cash credit

loan, as the D.P note is not supported by any consideration

plaintiff's bank is not entitled to recover the amount. He stated

that current account No.1199/CC has nothing to do with credit

loan facility. It was only account for adjusting the supply

accounts from customers. He further stated that cash credit

loan facility and supply bills accounts are two distinct

transactions and have nothing to do with each other. The

plaintiff even though claiming the amount basing on D.P note,

mixed the amounts under supply bills accounts and filed a

single suit for recovery of amount, as such suit itself is not

maintainable. He also stated that if the bank fails to realize any

amounts from the customers, it will not allow the appellant from

utilizing the supply bills system and will not pay any amount to

him, as the bank never complained any irregularities, he is not

liable to pay the amount.

4. He mainly contended that the D.P note agreement for

cash credit and delivery letter dated 22.12.1979 are not

supported by any consideration, but it was not appreciated

properly. Later when it was remanded by this Court in

A.S.No.1172 of 1991 dated 04.02.2000, the plaintiff bank did

not place any fresh material either oral or documentary

evidence to substantiate their claim and the trial Court decreed

the suit based on the very same earlier evidence without any

reasons. As Ex.A1 is not supported by any consideration, even

according to the statement of account there is no evidence to

show the withdrawal of Rs.25,000/- by the

appellant/defendant. As the appellant/defendant failed to prove

realization of any amount by the bank from his customers, the

order of the trial Court is without any basis. The trial Court also

extracted the deposition of certain portion of P.W.1 and stated

Ex.A4 is vague in the absence of a specific claim and the

plaintiff is not entitled for the relief. He further stated that P.W.1

is the field officer, he cannot say about the loan amount availed

by defendant on 22.12.1979, even before the sanction of loan by

the plaintiff's bank under Ex.B1 dated 30.12.1979. P.W.1

admitted that bank has not filed any Cheques and Vouchers

pertaining to suit loan amount. The plaintiff filed suit for

recovery of Rs.89,454.89ps as outstanding amount, while the

sanctioned amount was only Rs.25,000/-. Therefore, requested

the Court to allow the appeal by setting aside the Judgment and

Decree of the trial Court in O.S.No.410 of 1984 dated

04.10.2002.

5. Heard arguments of both sides and perused the record.

6. P.W.1 is the Field Officer. He stated that defendant has

applied for loan of Rs.25,000/- from the plaintiff bank against

the pledge of machines and also executed demand promissory

note on the same day i.e, on 22.12.1979 in favour of bank.

Ex.A.1 is the promissory note. Ex.A2 is the agreement for pledge

of goods and machinery executed by the defendant. When he

failed to repay the said amount, notice was issued on

25.10.1984 under Ex.A3. He also filed Ex.A4 statement of

account and Ex.A5 revival letter. He stated that rate of interest

was 13% per annum. He also stated that no amount was paid

after filing of the suit. Ex.B1 dated 30.12.1979 is the loan

sanctioned letter issued by the bank and it was marked through

him. He also stated that defendant had opened current account

No.1199 on 22.12.1979 prior to that, he was having account

No.456 OD SB (Supply Bills) account and it was closed on

22.12.1979. The statement of account for the account No.1085

is not filed as per Ex.A4, there was withdrawal of Rs.10,000/-

on 24.12.1979. He stated that Ex.A4 contains account of other

loan O.D.B.C.C on M.T.L, O.D.B.C.C means Over Draft against

Bills in the Course of Collection. He also stated that defendant

is liable to pay Rs.60702.25ps as on 30.121980 and it includes

Rs.25,000/-.

7. P.W.2 is the Manager of the Bank from September, 2000.

He has no personal knowledge about the loan amount. The

Ex.B1 dated 30.12.1979 is the sanctioned order. The cash limit

sanctioned to the defendant was Rs.25,000/-. Originally it was

Rs.10,000/-.

8. D.W.1 is the proprietor of the defendant firm. He stated

that he was having account in plaintiff bank since 1970

onwards and he used to operate supply bills discount through

account No.1199/cc. He applied for loan of Rs.50,000/- and

bank agreed to avail sanction of Rs.25,000/-, but it was not

released. He executed Exs.A1 to A3 for a loan amount of

Rs.25,000/- only. He received a sanctioned letter under Ex.B1.

He also executed Ex.A5 along with Exs.A1 to A3 on the same

day. He has not withdrawn the amount under Ex.A4 on

22.12.1979 and also on 24.12.1979.

9. Based on the above documents filed before the Court, the

trial Court observed that Branch Manager has signed the plaint

and he is the proper person, therefore the argument of the

defendant that suit is not filed by the proper person is not

tenable. The main contention of the appellant herein is that no

consideration was passed under Ex.A1 and A2, he has not

disputed his signature on Ex.A1 and A2 and it is not his case

that his signature was forged on the said documents, he simply

pleaded that they are not supported by consideration. But the

trial Court raised the presumption under Section 118 of the

Negotiable Instrument Act and observed as the defendant failed

to produce any positive evidence on the admission of P.Ws. 1 &

2 presumption can be raised. He also filed Ex.A4, which shows

facility was availed on 22.12.1979. Ex.A3 is the office copy of

the legal notice dated 25.10.1984. The argument of learned

Counsel for the defendant is that the sanctioned letter was

dated 30.12.1979, subsequent to Exs.A1 & A2 and it clearly

shows that Ex.A1 & A2 are not supported by consideration. The

trial Court observed that Ex.A6 is the letter dated 05.05.1978,

addressed by the defendant to the bank stating that he requires

particulars of the Mundy type account as per the sanction.

Ex.A7 is another letter dated 16.06.1980, in which he stated

that due to the short power supply he did not meet the

demands of his customers. He was also given Cheque for

Rs.10,000/-. He acknowledged the liability under Ex.A8 dated

30.09.1982 towards the loan account No.1199. Considering the

oral and documentary evidence, it was held that defendant

availed the cash credit facility. The defendant also contended

that he has discharged the amount due by recovering the

amount from the customers, as such he need not pay the

amount. The trial Court also held that account was opened on

22.12.1979 and debt was acknowledged under Ex.A8 on

22.07.1982, as such suit is within time and it is not barred by

limitation. Basing on the statement of account, it was held that

defendant obtained loan from the plaintiff bank and directed to

pay the same along with interest. The appellant herein, obtained

amount from the S.B.H for business purpose. Though, he

admitted his signatures on Ex.A1 & A2 basing on the

sanctioned letter, he stated that he is not liable to pay the loan

amount of Rs.25,000/-. Perusal of the sanctioned letter under

Ex.B1shows that there was sanction of Rs.25,000/- under cash

credit/Mundy type, Rs.25,000/- under composite bill limits,

Rs.8,000/- under medium term loan. Admittedly, Ex.B1 is the

sanction of credit facility and the amount sanctioned, amount

actually availed by the defendant is Rs.25,000/-. When once the

amount is sanctioned, the argument of petitioner Counsel that

he never availed loan cannot be accepted. The trial Court

considering all the factors rightly granted decree with interest.

As there is no infirmity or illegality in the Judgment of the trial

Court, this Court finds no reason to interfere with the Judgment

of the trial Court.

In the result, the appeal is dismissed confirming the

Judgment and Decree of the trial Court in O.S.No.410 of 1984

dated 04.10.2002. There shall be no order as to costs.

Miscellaneous petitions pending, if any, shall stand

closed.

_________________________

JUSTICE P.SREE SUDHA

DATED: 06 .01.2023

tri

THE HONOURABLE SMT. JUSTICE P.SREE SUDHA

APPEAL SUIT No.171 of 2003

DATED: 06 .01.2023

TRI