Delhi District Court
Union Bank Of India vs Sh. Dipak Kumar Gupta on 14 February, 2013
IN THE COURT OF SH. ANIL KUMAR SISODIA :
ADDITIONAL DISTRICT JUDGE06, WEST DISTRICT
TIS HAZARI COURTS : DELHI.
CIVIL SUIT NO. 93 OF 2012
UNION BANK OF INDIA
having its Head Office at:
Union Bank Bhawan, Vidhan Sabha Marg,
239, Backbay Reclamation,Nariman Point,
Fort, Bombay400001
and Branch office at
14.15/F, Connaught Place,
New Delhi110001. ............ PLAINTIFF
Versus
1. SH. DIPAK KUMAR GUPTA
Proprietor of M/s. Star Enterprises
416, Kucha Baij Nath,
Chandni Chowk, Delhi110006.
2. SH. PADAM CHAND AGGARWAL
R/o 416, Kucha Brij Nath,
Chandni Chowk, Delhi110006. ........... DEFENDANTS
Date of institution : 01.02.1988
Order reserved on : 31.01.2013
Date of Decision : 14.02.2013
SUIT FOR RECOVERY
Suit No.93/12 Page : 1/28
J U D G M E N T :
1. The plaintiff has filed the present suit for recovery of Rs.5,74,194.90 with costs and interest thereon against the defendants.
2. The facts of the case are that the plaintiff bank is a body corporate engaged in the business of banking. The defendant no.1 is the sole proprietor of M/s. Star Enterprises who approached the plaintiff bank on 24.01.1985 to establish in favour of M/s. Sumanglam Impex Pvt. Ltd., 1North Bridge Road, 901 High Street Centre, Singapore0617 an irrevocable letter of credit in the sum of US$ 32,187.10 for import of 29,261 meters polyester fabric of South Korean origin in terms of Sale Contract No. SIM/800/902, dated 21.12.1984. The import was to be done on the basis of licence no.P/L/3072251/C/XX/92/Z/84, dated 20.07.1984 in favour of M/s. Andhra Oils & Fertilizers Company, Jalandhar who had issued a letter of Authority in favour of defendant no.1 authorizing him to import the goods. It has been stated that the terms & conditions on which the said letter of credit was established were setout by defendant no.1 in his letter dated Suit No.93/12 Page : 2/28 24.01.1985. In view of the abovesaid request, on 25.01.1985 the plaintiff bank established an irrevocable letter of credit, after defendant no.2 had signed and executed a Deed of Guarantee. The documents under letter of credit were received by plaintiff in or about February, 1985 and the plaintiff was informed by the Morgan Guaranty Trust Co. of New York, the foreign correspondent that it had claimed reimbursement of the amount of the bill together with commission and other charges totalling to US$ 33,268.85. The plaintiff by its Intimation Memo dated 01.03.1985 informed the defendant no.1 of the said receipt of documents requesting the defendant no.1 to make payment of the amount of documents in the sum of Rs.4,27,402/, the rupee value equivalent to the amount paid under the Letter of Credit. The defendant no.1 was also informed that the rate of interest @ 18% p.a. Was being charged from the date of negotiation of the bill on 25.02.1985 and w.e.f. 07.03.1985, the plaintiff would charge interest @ 20% p.a. besides commission @ 1.8%. The abovesaid documents were presented to the defendant no.1 on 05.03.1985 and defendant no.1 after scrutinizing the same accepted the Suit No.93/12 Page : 3/28 same to be in order on 05.03.1985 and informed the plaintiff that he will make the payment of the said amount shortly. The plaintiff vide its letters dated 23.03.1985, 11.04.1985, 27.01.1985, 06.08.1985, 04.10.1985 and 02.12.1985 requested the defendant no.1 to retire the documents by making payment of the amount immediately as the Ship carrying the imported goods had unloaded the consignment which was lying at the Port incurring heavy demurrages but no payment was received nor were the documents retired. The plaintiff sent a legal notice to the defendants on 11.12.1986 calling upon the defendants to make the payment of Rs.5,82,753.80 but he neglected to make the payment. It has been stated that the goods received under the consignment were confiscated by the Enforcement Directorate on account of certain investigations under the Foreign Exchange Regulation Act. During the course of investigations, the original documents executed by the defendants and also received under the Letter of Credit were also taken possession of by the investigating authorities, however, photocopies were retained by the plaintiff. It has further been stated that the facilities were granted and were Suit No.93/12 Page : 4/28 repayable at Delhi. The defendants reside and work for gain at Delhi. Finding no other alternative, the plaintiff has filed the present suit.
3. Summons of the suit were served on the defendants. Defendant no.1 has contested the suit by filing the Written Statement raising preliminary objections that suit of the plaintiff is bad for nonjoinder of necessary defendants i.e. Collector of Customs, Bangalore and Union of India. It has been submitted that plaintiff bank has a lien over the goods which were confiscated by the Custom Authorities through adjudication Order No.VII/10/11/85Cust.Adj., dated 20.07.1989 but the Custom Authorities auctioned the goods and kept the entire sale proceeds with them. In the letter of credit it is specifically mentioned that the foreign supplier should send documents showing plaintiff bank to be the owner of the goods. It has further been stated that the order of adjudication and confiscation of goods was quashed by the Civil Court in Suit No. 624/91 titled as P.C. Aggarwal & Anr. Vs. Deputy Collector and Union of India filed by defendant no.2 and Shri Vinod Kedia. In para 10 of the plaint, in para 3 of the reply Suit No.93/12 Page : 5/28 dated July, 1998 filed by the plaintiff to the application u/O 6 Rule 17 CPC of the defendant no.2 and in the last para of Bank Auditor's Report dated 30.09.1986, the facts of confiscation of the goods and investigation by Govt. authorities are admitted and hence, the facts of confiscation were well within the knowledge of the plaintiff. The suit of the plaintiff is not maintainable as no amount is due against defendant no.1. The amount deposited against the sale of the goods in auction, deposited with the Custom Authorities, was much more than the amount claimed by the plaintiff. The plaintiff can realize the amount from the Custom Authorities and in case of any shortfall, can file the suit against the defendants. The suit filed by the plaintiff is time barred as all the documents were signed on 16.01.1985 and the L.C. was opened in January, 1985. The plaint is not signed and verified by proper person.
On merits, the contents of the plaint have been denied. It has also been denied that defendant no.1 is liable for the amount in the suit. The facts of the documents having been received by the plaintiff in February 1995 or of any information claiming reimbursement of the amount of bill are within special Suit No.93/12 Page : 6/28 knowledge of the plaintiff and defendant no.1 has no knowledge about the same. The defendant no.1 has denied having received any legal notice. All other allegations made in the plaint have been denied and a prayer has been made for dismissal of the suit with costs.
4. Defendant no.2 has contested the suit by filing the Written Statement raising preliminary objections that suit of the plaintiff is bad for nonjoinder of the defendants. It has been stated that a criminal complaint has already been filed by the Central Bureau of Investigation at Patiala City against defendant no.2 and the same is pending adjudication before the Judicial Magistrate which relates to the same transaction. The plaint has not been signed and verified by a proper person.
On merits, the contents of the plaint have been denied. It has also been denied that defendant no.2 gave any guarantee or is liable to pay any amount in suit either jointly or severally. The defendant no.2 has denied having received any legal notice. It has been admitted that it was in the knowledge of defendant no.2 that goods received under the consignment were confiscated by the Enforcement Directorate on account of Suit No.93/12 Page : 7/28 certain investigations. All other allegations made in the plaint have been denied and a prayer has been made for dismissal of the suit with costs against defendant no.2.
5. The plaintiff filed replications denying the contents of the Written Statements of defendants no. 1 and 2 in so far as they were contrary to the plaint. The contents of plaint were reiterated and reaffirmed.
6. On 25.08.2004, Ld. Predecessor of this court framed the following issues :
1) Whether the suit filed by the plaintiff is signed, filed and verified by the duly authorized and and competent person on behalf of the plaintiff? OPP
2) Whether the suit of the plaintiff is bad for nonjoinder of necessary party, as objected to in the written statement? OPD
3) Whether the defendant no.2 stood guarantor for defendant no.1 with the plaintiff bank? OPP
4) Whether the suit of the plaintiff is time barred? OPD
5) Whether the plaintiff is entitled to relief claimed for recovery of said amount from the defendant as claimed, if yes, at what rate of interest? OPP Suit No.93/12 Page : 8/28
7. Thereafter, the parties were directed to lead their evidence. In support of its case, the plaintiff has examined PW1 Shri K.K. Chopra, Senior Manager who has filed his evidence by way of affidavit Ex.PW1/A. PW1 has also proved on record the documents Exs.PW1/1, PW1/6, PW1/8 to PW1/10 and MarkPX. This witness also relied on the documents MarkA to MarkX1, Mark Z and Mark Z1. The plaintiff also examined PW2 Sh. Ajit Singh, LDC, Record Room, Civil Judge, Patiala, Punjab who proved the certified copies of the documents Exs.PW1/2 to PW1/5 and PW1/7. Thereafter, PE was closed.
8. Defendants, on the other hand, have examined DW1 Sh. P.C. Aggarwal i.e. defendant no.2 who filed his examinationin chief by way of affidavit Ex.DW1/A and has proved on record the certified copy of the judgment dated 27.01.1995 passed by the Court of Civil Judge, Ghaziabad in Suit No. 624/91 as Ex.DW1/1 and thereafter, DE was closed.
9. Counsel for the plaintiff as well as defendant no.2 have filed their written submissions in support of their case. I have Suit No.93/12 Page : 9/28 perused the written submissions filed by the plaintiff as well as defendant no.2 and have perused the record carefully. Defendant no.1 has neither led any evidence nor has submitted any written arguments nor oral arguments have been addressed on behalf of the defendant no.1 despite opportunities being given. My findings on the issues are as under : ISSUE NO.1 :
Whether the suit filed by the plaintiff is signed, filed and verified by the duly authorized and and competent person on behalf of the plaintiff?
10.The onus of proving this issue was on the plaintiff. The plaintiff has submitted that the plaint was signed, verified and filed by Shri M.H. Jafri, Chief Manager, Principal Officer and Constituted Attorney of the plaintiff bank and the suit has been duly instituted by the plaintiff. Ld. Counsel for the plaintiff has placed reliance on the judgment of United Bank of India Vs. Naresh Kumar & Ors. AIR 1997 SC 3 in support of his arguments.
11.Defendant no.2, on the other hand, has submitted that Shri M.H. Jafri who had signed and verified the plaint had no authority to file and institute the suit and in fact, he even had no Suit No.93/12 Page : 10/28 authority to sign and verify the plaint. The plaintiff has not filed a Memorandum and Articles of Association and no Resolution passed by the Board of Directors to file the suit and authorizing M.H. Jafri to institute the suit is placed on record and even Sh. M.H. Jafri has not filed his evidence by way of affidavit nor has appeared as a witness. It has been submitted that the judgment relied upon by the plaintiff is not applicable to the present facts and reliance has been placed on Nibro Ltd. Vs. National Insurance Company Ltd. 41 (1990) DLT 633, University of Kashmir Vs. Gulam Nabi Meer AIR 1978 NOC 114 and State Bank of Travancore Vs. M/s. Kingston Computer (I) Pvt. Ltd. and Lucas Indian Services Ltd. Vs. Sanjay Kumar Aggarwal 173 (2010) DLT 438. It was argued that the filing of the suit by a competent person is different from signing and verification of plaint and Order 29 Rule 1 CPC does not authorize persons mentioned therein to institute suit on behalf of the Corporation. It only authorizes them to sign and verify the pleadings on behalf of the Corporation. It was also argued that Order 29 CPC does not entitle the Principal Officer of the Company to file a suit on its behalf, for Suit No.93/12 Page : 11/28 that the authority has to be found either in the Articles of Association of the Company or in the Resolution of its Board of Directors. It has further been submitted that PW1 Sh. K.K. Chopra in his crossexamination has not proved any Power of Attorney of supplementary Power of Attorney and therefore, the suit has not been signed, verified and filed by the competent person.
12.A careful perusal of the judgments relied upon by the defendant no.2 would show that in all these judgments the authority of the persons filing the suit on behalf of the companies which were not in the nature of public corporations was challenged. However, in the present suit, plaintiff is a public Corporation. In the case of United Bank of India Vs. Naresh Kumar (supra), Hon'ble Supreme Court had held that "in cases like the present where the suits are instituted or defendant on behalf of a public Corporation, public interest should not be permitted to be defeated on a mere technicality. Procedural defects which do not go to the root of the matter should not be permitted to defeat a just cause. There is sufficient power in the Courts under the Code of Civil Procedure, to ensure that Suit No.93/12 Page : 12/28 injustice is not done to any party who has a just case. As far as possible, a substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable."
13.In the said judgment, it was further held by Hon'ble Supreme Court that "a person may be expressly authorized to sign the pleadings on behalf of the company for example, by a Resolution passed by Board of Directors to that effect and in absence thereof where the pleadings have been signed by one of its Principal Officers, a Corporation can ratify the said action of its officer. Such ratification can be express or implied. The Court can, on the basis of the evidence on record, and after taking all the circumstances of the case, specially with regard to the conduct of the trial, come to the conclusion that the Corporation has ratified the act of signing of the pleadings by its officer."
14.In my considered opinion, the observation made by Hon'ble Supreme Court with regard to the ratification of the signing of the pleadings, whether expressly or impliedly also apply to the institution of the Suit by the Officer of the Corporation. In the Suit No.93/12 Page : 13/28 present case, the pleadings have been signed and the Suit has been filed by Sh. M.H. Jafri, the Chief Manager of the plaintiff bank. Hon'ble High Court of Delhi in United India Insurance Co. Ltd. Vs. Okara Trade Parcel Carriage, RFA No. 160/1991 decided on 07.12.2010 had held that General Manager of company is indeed a Principal Officer within the meaning of Order 29 Rule 1 CPC. Similarly, in MTNL Vs. Bharat Bhushan Sharma RFA No.343/2001 decided on 06.12.2010 held that an Accounts Officer (Legal) is also definitely a Principal Officer, within the meaning of Order 29 Rule 1 CPC and Section 2 (30) of the Companies Act, 1956.
15.In these two judgments, Hon'ble High Court of Delhi after referring to the case of United Bank of India Vs. Naresh Kumar (supra), held that there is a presumption of valid institution of the suit once the same is prosecuted for number of years.
16.In the present case also, the suit has been prosecuted by the plaintiff bank since 1988 i.e. for the last about 25 years and there is no objection on behalf of the plaintiff bank to the filing of the suit by Shri M.H. Jafri. When it has been held by Suit No.93/12 Page : 14/28 Hon'ble Supreme Court and Hon'ble High Court of Delhi that even a defective plaint can be ratified, which may be even through implied ratification, I see no reason as to why the plaintiff should be non suited on this technical ground of defect in the institution of the suit, if any.
17.Even otherwise, law is well settled that the Courts are meant for dispensing justice on the merits of the case. Technicalities of procedural matters cannot be allowed to come in the way of substantial justice. It is not the case where the plaintiff does not own up the act of institution of the suit and its prosecution including giving of evidence and other proceedings. Rather, till date the plaintiff bank stands by all the proceedings done in the matter. The present suit is pending for the last 25 years and the plaintiff bank has owned up proceedings which have taken place till date. This circumstance alone is sufficient to conclude that the plaintiff bank ratified all the acts done by its officers in signing and verifying the plaint, filing of the suit, filing of replication and other proceedings including the evidence. Therefore, in such circumstances, the issue is decided in favour of the plaintiff and against the defendants.
Suit No.93/12 Page : 15/28
ISSUE NO.2 :
Whether the suit of the plaintiff is bad for nonjoinder of necessary party, as objected to in the written statement?
18.The onus of proving this issue was on the defendants. Defendants in their Written Statement have taken a stand that the suit is bad for nonjoinder of the defendants as Enforcement Directorate under Foreign Exchange Regulation Act was a necessary party to the suit as the goods were confiscated by the Custom Authorities before clearance from the Customs and the plaintiff bank has a lien over the said goods. The said goods were auctioned by the Customs Authorities and the sale proceeds are lying with them. Therefore, the suit is bad for nonjoinder of necessary parties.
19.Defendant no.1 has not filed any written submission nor had advanced any oral submissions in support of his case. Defendant no.2 has not pressed this issue in the written arguments and as such, the said issue has been givenup by the defendants and accordingly, the issue is decided in favour of the plaintiff and against the defendants.
ISSUE NO.4 :
Whether the suit of the plaintiff is time barred?
Suit No.93/12 Page : 16/28
20.The onus of proving this issue was on the defendants. The
defendant no.1 in its WS has taken a defence that the suit is time barred as the documents were allegedly signed on 16.01.1985. The alleged LC was also opened in January, 1985 and therefore, the suit is hopelessly barred by time and is liable to be dismissed.
21.Defendant no.1 has not led any evidence nor has cross examined the witnesses of the plaintiff on this aspect. In fact, there is no suggestion to the witnesses of the plaintiff even in the crossexamination that the suit is barred by limitation.
Therefore, the defendants have failed to discharge the onus cast on them and the issue is accordingly decided in favour of the plaintiff and against the defendants.
ISSUE NO.3 :
Whether the defendant no.2 stood guarantor for defendant no.1 with the plaintiff bank?
22.The onus of proving this issue was on the plaintiff. The case of the plaintiff is that defendant no.2 had stood as a guarantor of defendant no.1 and had signed the Deed of Guarantee.
23.Defendant no.2 has denied his signatures on the Deed of Guarantee and has taken a stand that defendant no.2 never Suit No.93/12 Page : 17/28 stood as a guarantor of defendant no.1 and is not liable for the amount in the suit either jointly or severally. Defendant no.2 also denied the receipt of the legal notices issued by the plaintiff.
24.The plaintiff in support of its case has examined PW1 Shri K.K. Chopra who has testified in his affidavit Ex.PW1/A that on 21.01.1985, defendant no.2 signed and executed a Letter of Guarantee and also identified the signatures of defendant no.2 on the ground that he had seen him signing and writing during the course of his employment. The certified copy of the Deed of Guarantee was proved as Ex.PW1/8.
25.Defendant no.2 in his written submissions has stated that the plaintiff has not filed the original Guarantee Deed and has failed to prove the signatures of defendant no.2 on the Deed of Guarantee. The disputed signatures were not got examined by the plaintiff through Handwriting Expert and the sureties stood discharged u/S. 139 of Contract Act as the omission of the plaintiff bank to take steps against the Custom Authority has impaired the eventual remedy of the surety and he stands discharged. It was also argued that the LC was not opened at Suit No.93/12 Page : 18/28 the request of the guarantor which was a mandatory condition for the Guarantee Deed to become operational. Further, there was variance without the surety's consent in the terms of contract between the principal debtor and the creditor and the sureties stood discharged u/S. 133 of Indian Contract Act.
Reliance has been placed on the judgments AIR 2003 Kerala 114, AIR 1999 AIHC 2147, AIR 2006 Bombay 33, AIR 1928 Allahabad 303, AIR 1975 SC 290, 2008 Crl. LJ 2165 and AIR 1958 Orissa 207 to argue that in the absence of original guarantee deed being produced, the signatures of defendant no.2 were not proved by the plaintiff and the certified copy in itself cannot be held as proper evidence. It was also argued that the plaintiff has not examined any person in whose presence, the signatures on the guarantee deed were affixed by the defendant no.2 nor plaintiff has examined any person acquainted with the handwriting with the defendant no.2. PW 1 Sh. K.K. Chopra in his crossexamination has stated that he had seen the applicant signing and writing during the course of his employment and therefore, he can recognize the disputed signatures on the copy of the guarantee deed but his oral Suit No.93/12 Page : 19/28 testimony cannot be relied upon as he is an interested witness. It has also been stated that there could not have been any question of seeing the defendant no.2 signing and writing during the course of his employment as there is no other document with the plaintiff bank bearing the signatures or handwriting of defendant no.2. There is also no proof that defendant no.2 had signed the guarantee deed in the presence of PW1 and even PW1 has not stated in his evidence that he had signed the deed of guarantee in the presence of PW1 and therefore, there can be no question of PW1 having seen the defendant no.2 signing and writing. It was also submitted that deed of guarantee must have been signed by defendant no.2 in the presence of some bank official who could have identified the defendant no.2 but no such person has been examined by the plaintiff bank. The application filed by the plaintiff u/S. 65 of the Indian Evidence Act for leading secondary evidence was rejected on 29.11.2007 and hence, the secondary evidence given by the plaintiff is not admissible.
26.The plaintiff, on the other hand, in its written submissions has simply taken a stand that on 21.01.1985, the defendant no.2 had Suit No.93/12 Page : 20/28 signed and executed the Letter of Guarantee and the original Guarantee Deed was seized by the CBI vide Seizure Memo Ex.PW1/1 alongwith the other documents.
27.The onus of proving the fact that defendant no.2 stood as a guarantor was on the plaintiff. In case the plaintiff was unable to produce the original Guarantee Deed, it was incumbent upon him to prove the same by secondary evidence. However, except for filing the certified copy of the Guarantee Deed Ex.PW1/8, the plaintiff has not proved on record the said Guarantee Deed by an independent evidence which is a mandatory requirement under the law, more particularly when the signatures on the Guarantee Deed were denied by the defendant no.2. It is well settled principle of law that mere marking of a document as an exhibit does not dispense with its proof and this was so held by Hon'ble Supreme Court in AIR 1971 SC 1865. The plaintiff was, thus, required to examine the person in whose presence defendant no.2 had signed the Guarantee Deed or at least a person who was well acquainted with the handwriting and signatures of defendant no.2. However, no such witness has been examined by the plaintiff.
Suit No.93/12 Page : 21/28 PW1 Sh. K.K. Chopra in his crossexamination does not state that defendant no.2 had signed the Deed of Guarantee in his presence. Although, he testified that he met defendant no.2 only at the time of opening of Letter of Credit but this statement is not sufficient to prove that defendant no.2 had signed the Deed of Guarantee Ex.PW1/8. It is the case of the plaintiff bank itself that Letter of Credit and Deed of Guarantee were not executed on the same day.
28.Therefore, in view of the aforesaid discussion, I am of the considered opinion that the plaintiff has failed to discharge the onus cast on it. The issue is accordingly decided in favour of the defendant no.2 and against the plaintiff. ISSUE NO.5 :
Whether the plaintiff is entitled to relief claimed for recovery of said amount from the defendant as claimed, if yes, at what rate of interest? OPP
29.The onus of proving this issue was on the plaintiff. The plaintiff has submitted that on the request of defendant no.1 an Irrevocable Letter of Credit was opened in favour of M/s. Sumangalam Impex Pvt. Ltd. It is further the case of the plaintiff that defendant no.2 stood as a guarantor and the Suit No.93/12 Page : 22/28 plaintiff bank received the documents under the Letter of Credit and communicated the same to the defendant no.1 to make the payment of Rs.4,33,296.90P but the repayment was not received from defendant no.1. The plaintiff bank also issued a notice to defendant no.1 for making the payment alongwith the interest but when the amount was not paid to the plaintiff bank, the said amount was debited to the account of defendant no.1. When the defendants did not make the payment, the present suit was filed. The plaintiff has examined PW1 Sh. K.K. Chopra in the evidence who has proved the documents available with the plaintiff and proved the case of the plaintiff. Defendant no.1 has not filed any evidence and therefore, the claim of plaintiff bank goes unrebutted against defendant no.1. Defendant no.2 has denied the Guarantee Deed but he has not filed any complaint case against the prosecuting agencies of the plaintiff bank who has filed the case against him on the basis of the Deed of Guarantee executed by him despite the fact that he was a Law Graduate. A prayer was made for decreeing the suit in favour of the plaintiff bank and against the defendants.
30.Defendant no.2, on the other hand, has submitted that the Suit No.93/12 Page : 23/28 plaintiff is not entitled for any decree as he had not executed any Guarantee Deed. This issue has already been decided against the plaintiff bank vide my findings on issue no. 3 hereinabove. Therefore, plaintiff bank is not entitled for any decree against defendant no.2.
31.Coming to the liability of defendant no.1, the documents filed and proved by the plaintiff bank itself would show that the plaintiff bank was a consignee of the goods imported by defendant no.1. It is also an undisputed fact that the goods so imported were confiscated and seized by the Custom officials for violation of Foreign Exchange Regulation Act before the same could be delivered to the defendant no.1 vide order dated 20.07.1989 issued on 31.07.1989 and the goods were later on sold by way of auction. Defendant no.2 contested the said order and filed a Civil Suit bearing original suit no. 624/91 and vide judgment Ex.DW1/1, the said order / adjudication was declared void ab initio. Crossexamination of PW1 Sh. K.K. Chopra shows that he has admitted that the goods imported were not delivered to defendant no.1 as the same were seized by the Customs Department. He also admitted that the plaintiff Suit No.93/12 Page : 24/28 bank had the first preferential right/ charge in respect of the imported goods or over the value of the said goods. It is, however, surprising that in spite of having the first preferential charge over the imported goods/ their value, the plaintiff bank did not pursue the matter with the Customs Department nor laid any claim for recovery of the amount paid by it vide Letter of Credit Ex.PW1/7. The crossexamination of PW1 rather shows that instead of pursuing the matter with the Customs Department either for release of the goods or for claiming the value of the goods, the plaintiff bank has shown least interest in the proceedings. The PW1 was not aware if the bank was even aware about the fact that the goods were put to auction on 20.03.1985 or that the sale proceeds worth Rs.20.00 Lacs were lying with the Customs Department. He was also not aware that the bank was aware of these facts and had not taken any steps to know the status about the seized goods. The witness was also not aware if a letter dated 26.08.1986 was written by the plaintiff bank to the Customs Department for demanding the sum of Rs.4,50,000/. Defendant no.2 has submitted in the written submissions that since the bank had the first lien and Suit No.93/12 Page : 25/28 charge over the goods and the same have been illegally retained by the Customs Department, it was the duty of the bank to approach the Customs Authorities and recover the value of the goods from them. Reliance was placed on The Bank of Bihar Vs. State of Bihar AIR 1971 SC 1210 wherein it was held that pownee has special property and lien on the goods and so long as his claim is not satisfied, no other creditor or owner has any right to take away the goods or its price and the rights of pownee who has parted with money cannot be extinguished even by lawful seizure of goods by the government. Further reliance was placed on the judgment of Central Bank of India Vs. Siriguppa Sugars & Chemicals Ltd. & Ors. AIR 2007 SC 2804 and it was argued that the bank can recover the amount lying with the Customs Department as the confiscation and seizure has been declared illegal by the Civil Court of Ghaziabad.
32.Perusal of Sections 172 to 176 of the Indian Contract Act, 1872 provide for the rights of the pawnor and in case of default by the pawnor, the pownee has the right (1) to sue upon the debt and to retain the goods as collateral security and (2) to sell the Suit No.93/12 Page : 26/28 goods after reasonable notice of the intended sale to the pawnor.
33.Therefore, the right to sue the pawnor (defendant no.1) for recovery of debt does not get extinguished even if the goods were seized by the Custom Officials or were sold in auction which was later on declared to be null & void. The right of the plaintiff bank to sue for recovery of debt against defendant no.1 is an independent right and the same cannot be taken away merely because it has been given a right to retain the goods as collateral security. Defendant no.1 has not contested the suit after filing of the WS and there is no rebuttal evidence by defendant no.1 against the plaintiff.
34.Hence, in view of the aforesaid discussion, I am of the considered opinion that the plaintiff is entitled to recover the suit amount from defendant no.1. The plaintiff shall also be entitled to simple interest @ 12% p.a. from the date of filing of the suit till its realization. The defendant no.1 shall, however, have the right to claim the value of the goods lying with the Customs Department after obtaining the NOC from the plaintiff bank after the repayment of the debt. The issue is accordingly Suit No.93/12 Page : 27/28 decided in favour of the plaintiff and against the defendant no.1.
RELIEF.
35.In view of my findings on the aforesaid issues, the suit of the plaintiff is dismissed qua defendant no.2 and decree is passed against defendant no.1 and in favour of the plaintiff. The plaintiff shall be entitled to recover the amount of Rs. 5,74,194.90 from defendant no.1. The defendant no.1 shall, however, have the right to claim the value of the goods lying with the Customs Department after obtaining the NOC from the plaintiff bank after the repayment of the debt. The plaintiff shall also be entitled to simple interest @ 12% p.a. from the date of filing of the suit till its realization. The plaintiff shall also be entitled to the cost of the suit. Decree sheet be prepared accordingly.
File be consigned to record room.
Announced in the open Court Dated : 14th February, 2013. (ANIL KUMAR SISODIA) ADJ06 (WEST DISTRICT) TIS HAZARI COURTS, DELHI.
Suit No.93/12 Page : 28/28