Delhi District Court
Arvind Bhardwaj vs State Bank Of India on 26 September, 2011
IN THE COURT OF DR. ARCHANA SINHA
ADDL. DISTRICT & SESSIONS JUDGE, (CENTRAL) 04, THC, DELHI
Date of institution : 09.09.1996
Judgment reserved on : 19.09.2011
Judgment delivered on : 26.09.2011
Suit No.441/08/96 Unique Case ID No. 02401C0872382003
1. Arvind Bhardwaj
Sole Proprietor of
M/s Apparel & Accessories Inc.
5/13, Sarva Priya Vihar,
New Delhi.
2. Sh. K.S. Bhardwaj,
S/o H.L. Bhardwaj,
r/o D835, New Friends Colony,
New Delhi. .... Plaintiffs
Versus
State Bank of India
Sansad Marg,
New Delhi110001.
one of its branches at
A5, Friends Colony,
New Delhi. ... Defendant
J U D G M E N T
1. This is a suit for mandatory injunction and damages, interalia, the plaintiffs submit that the plaintiff No.1 is the sole proprietor of M/s Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 1 of 55 Aparal and Accessories Inc, which was carrying on its business as manufacturer and exporter of ready made garments, whereas the plaintiff No.2 is the father of the plaintiff No.1. The plaintiff No.1 approached the defendant for availing Export Packing Credit facility (hereinafter referred as 'EPC') up to the sanctioned limit of Rs.4.00 lacs, which was subsequently revised and enhanced initially to Rs.10.00 lacs, and then to Rs.13.00 lacs, and lastly to Rs.25.00 lacs, along with an additional Bill discounting facility up to Rs.5.00 lacs. Accordingly, an EPC account No. 148 and current account No.1847 was allotted to the plaintiff's firm M/s Aparal and Accessories Inc. The plaintiffs deposited the title deeds as collateral security of the immovable property bearing No. 5/13 Sarv Priya Vihar, New Delhi, which was in the name of Smt.Janki Devi Bhardwaj, the mother of plaintiff No.1.
2. It is averred that on the death of Smt. Janki Devi Bhardwaj on 14.08.1993, the title deeds deposited with the bank were got released to enable mutation in the name of the plaintiff No.1, and accordingly a certain number of securities as detailed in para 3 of the plaint, for the face value of 26.00 lacs, were deposited in place of the title deed so released. Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 2 of 55
3. Further that in January 1995, the plaintiff No.1 along with his brother Sh. Chaitnya Bhardwaj, incorporated another company with name and style of M/s. Transworld Clothing Pvt. Ltd., wanted to open an EPC facility with any bank, and the defendant bank assured to provide the facility to them up to the limit of Rs.25.00 lacs with an assurance that within two months, it would be enhanced to Rs.60.00 lacs against the security by way of equitable mortgage on the basis of the same title deed of the property bearing No. 5/13, Sarv Priya Vihar, Delhi16 and thus, the plaintiff No.1 handed over the title deeds to the defendant for the said purpose of availing the EPC facility up to the sanctioned limit of Rs.60.00 lacs for the company named M/s.Transworld Clothing Pvt. Ltd. However as the defendant Bank did not adhere to its assurances, it was decided not to avail any such facility from them, but the defendant despite repeated demands, failed and neglected to return the title deeds to plaintiff No.1 and the defendant falsely claimed that the title deeds were held as additional collateral security for EPC facility granted to M/s Apparel Industries Inc., and that the same could only be returned on clearing of dues outstanding in the accounts of M/s Apparel Accessories Inc. It was also informed that even the securities would not be released, unless outstandings are cleared.
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4. Further, as per the communications with the bank, the plaintiffs were intimated the debit balance of Rs.1,92,909.47 in the current account No.1847 and an amount of Rs.24,49,280/ in the EPC Account No.148, and accordingly two pay orders bearing numbers 012119 and 012118 both dated 04.05.1996, issued by the bank of Punjab Ltd. Cannaught Circus, in favour of SBI, Friends Colony, Account of Apparel and Accessories Inc. were handed over by delivering a letter dated 04.05.1996 along with the two pay orders, to settle the accounts and it was agreed that on encashment of the pay orders the securities would be released.
5. Further that the defendant bank falsely claimed that two pay orders were not enclosed with the plaintiffs' letter dated 04.05.1996 and the plaintiffs were asked to issue the stop payment instructions to the Bank of Punjab Ltd. and obtained the duplicate pay orders. Accordingly, the duplicate pay orders issued in lieu of the earlier two pay orders, were delivered vide letter dated 08.07.1996 and the same were cleared and encashed on 10.07.1996, despite that the defendant bank failed to deliver the securities and the title deeds to the plaintiffs. Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 4 of 55
6. Hence the suit praying for a decree for mandatory injunction for the directions to revert all the debits of interest and ECGC Fee and to release and deliver all the securities along with the original title deeds, along with recovery of sum of Rs16.00 lacs towards damages along with an interest @ 20% per annum and the cost of the suit.
7. The defendant by way of its contra pleadings in the written statement, apart from the preliminary objections that there was no cause of action, and that the suit was based on the wrong facts, and thus not maintainable, on merits denied the claims of the plaintiff on the ground that the title deeds were pledged towards collateral security, which was got released for the purpose of transfer or mutation in his name, but was not returned after mutation and delivered the securities to the defendant bank with undertaking to redeposit the title deeds but he did not do so and get released the securities. It was denied that the defendant had ever assured the plaintiffs for sanctioning the EPC up to the extent of Rs.60.00 lacs in favour of the Transworld Clothing Pvt. Ltd. and that the title deeds were delivered in lieu of the undertaking dated 15.07.1994 and not against the security for EPC for the new concerned named M/s. Transworld Clothing Pvt. Ltd. of the plaintiffs. It was also denied that plaintiffs were not liable for payment of the interest up to 10.07.1996 on which certain Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 5 of 55 amounts were paid through two pay orders. It was submitted that the defendant was bound to keep the guarantee cover unless its dues are fully paid by the borrowers and thus, the ECGC fees was justifiable and the interest as claimed was also payable. It was submitted that despite the reminder the plaintiffs failed to clear the total outstanding dues of the defendant bank in the loan accounts of M/s. Transworld Clothing Pvt. Ltd. and M/s Apparel and Accessories Inc.
8. It was specifically pleaded by the defendant that the plaintiffs are not entitled for any decree for mandatory injunction against the defendant bank for reversal of debit entries of interest and E.C.G.C. Fees in their Current Account No.1847. Unless the plaintiffs pay the entire amount outstanding in their accounts, the defendant Bank cannot be ordered to deliver back the securities. No order for return of original title deed pertaining to the property bearing No. 5/13, Sarv Priya Vihar, New Delhi can be passed against the defendant Bank since the said title deeds are not only the subject matter of dues outstanding against M/s Apparel and Accessories Inc. but are also the security for the dues/amount outstanding against the concern of M/s.Transworld Clothing Pvt. Ltd. The plaintiffs are not entitled for any decree for recovery of Rs.16.00 lacs or any lesser amount, against the defendant bank. Thus, it was submitted Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 6 of 55 that the plaintiffs were not entitled for any relief claimed in the suit and prayed for dismissal of the suit.
9. The replication to the written statement was filed by the plaintiffs, reiterating the facts as stated in the plaint and also denied the averments of the defendant.
10. On the basis of the pleadings of the parties, the following issues were framed by the court, vide order dated 12.09.2000.
11. Issues
1. Whether two Pay Orders dated 04.05.1996 for Rs.24,49,280/ and Rs.1,92,909.97 were enclosed with the plaintiffs' letter dated 04.05.1996 sent to the defendant. If so, to what effect?
2. Whether the defendant bank wrongfully withheld and delayed return of title deeds of property bearing No.5/13, Sarv Priya Vihar, New Delhi and/or the securities enumerated in para 3 of the plaint?
3. Whether the plaintiff is entitled to recover damages from the defendant. If so, to what amount?
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4. Whether the defendant was justified in continuing to charge and debit interest from 1.1.96 onwards at the given rate?
5. Whether the defendant made unauthorized and unjustified debits in the Current Account of M/s Apparel & Accessories as stated in paras 11 & 12 of the plaint?
6. Whether the suit is not maintainable in the present form?
7. Whether the plaint does not disclose cause of action against the defendant bank?
8. Relief.
12. To prove their case, earlier the plaintiffs have filed affidavits inevidence of four witnesses, namely Sh. Arvind Bhardwaj, Sh. K.S. Bhardwaj, Mr. Chetan Bhardwaj and Sh. Nirmal Khanna, but PW2 was never produced in the Court for tendering his evidence, therefore, only the testimony of PWs 1, 3 & 4 would be read. The affidavitsinevidence of PWs 1, 3 and 4 by way of examinationinchief are filed and affidavitin evidence of PW4 was marked as PW4/A, and also that all the witnesses were duly crossexamined at length by the defendant. Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 8 of 55 These three witnesses exhibited the following documents:
1. Ex.PW1/ is the office copy of the letter dated 17.12.1994 for return of the said title deeds.
2. Ex.PW1/2 is the photocopy bearing the original endorsement at pages 14 to 16 of additional documents on behalf of plaintiffs on 06.09.2000.
3. Ex.PW1/3 is the photocopy of letter dated 16.08.1995 of Canara Bank.
4. Ex.PW1/4 is the original conveyance deed.
5. Ex.PW1/5 is the photocopy of letter of confirmation of deposit dated 16.11.1995.
6. Ex.PW1/6 is the photocopy of the form 8 filed by the defendant bank with the Registrar of Companies.
7. Ex.PW1/7 & 8 are the office copies of legal notices both dated 19.12.1995 and their postal money receipts and certificate of posting are Ex.PW1/9 to 13.
8. Ex.PW1/14, 14A, P8, 9, 10 & 12 are photocopies of two pay orders, original letter dated 04.05.1996 and signed office copies of letters dated 06.05.1996 and 09.05.1996 respectively.
9. Ex.PW1/15 is the letter dated 04.05.1996.
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10.Ex.PW1/16, 16A, 17 & 17A are the original letter dated 13.05.1996 and 15.05.1996 and their postal certificates.
11.Ex.PW1/18 is the original letter dated 15.05.1996 and its signed office copy is Ex.PW1/19.
12.Ex.PW1/20 is the office copy of letter dated 14.06.1996 and its speed post acknowledgments are Ex.PW1/21 to 23 respectively.
13.Ex.PW1/24 is the office copy of notice dated 26.07.1996 and its Acknowledgment is Ex.PW1/25.
14.Ex.PW1/26 is the statement of account.
15.Ex.PW1/27 is the office copy of the letter dated 02.08.1996 and the photocopies of 3 illustrative inter office Memos of AEPC supplied by AEPC to the plaintiffs evidencing release of FDRs are Ex.PW1/28 to 30, respectively.
16. Ex.P2 is the original letter dated 06.03.1996.
17.Ex.P1, 4, 5 & 7 are the office copies of letters dated 10.02.1996, 19.04.1996, 22.04.1996 and 24.04.1996 respectively.
18.Ex.P3 & P6 are the original letters dated 19.04.1996 & 23.04.1996. Ex.P11 & 13 is the original letter dated 06.05.1996 along with postal envelope. Ex.P14 and 15 Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 10 of 55 are the office copies of letters dated 03.07.1996 and 08.07.1996. Ex.P16 & 17 are the copies of letters dated 16.07.1996 & 19.07.1996.
19.Ex.P18 is the office copy of the letter dated 20.07.1996.
13. Thereafter the defendant to prove its defence produced only one witness namely Sh.J.P. Sarmah. The DW1 tendered his affidavitin evidence as DW1/A by way of examinationinchief, who was also cross examined at length by the plaintiff.
This witness exhibited the following documents:
1. The document Ex.DW1/1 is the letter dated 15.07.1994.
2. The document Ex.DW1/2 is the undertaking dated 15.07.1994.
3. Ex. DW1/3 is the letter dated 15.12.1994.
4. Ex.DW1/4 is the letter dated 20.03.1996.
5. Ex.DW1/5 is the office copy of the letter dated 04.05.1996.
6. Ex.DW1/6 is the certified copy of statement of account.
7. Ex.DW1/7 is the statement of EPC Account.
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14. I have heard the arguments addressed by Ld. Counsel Ms. Jaya Goyal for the plaintiffs and Ld. Counsel Sh. R.P. Vats and Ms. Pooja Dewan for the defendant and perused the record of the case carefully.
15. My issue wise findings are as below:
16. Issues No.6 & 7
6. Whether the suit is not maintainable in the present form?
7. Whether the plaint does not disclose cause of action against the defendant bank?
These two issues are interrelated issues and are thus taken up together at the beginning and at first, before the other issues, being the one based on the preliminary objections.
17. With respect to these issues, it is pleaded by the defendant in the written statement that the case of the plaintiffs is based on the wrong and concocted facts/grounds and it does not disclose any cause of action as the plaintiffs have already admitted that the amount was outstanding in their current account which they have failed, neglected and avoided to pay or clear, despite several requests and reminders from the defendant. Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 12 of 55
18. Apart from the above pleadings Sh. J.P. Sarmah, the Chief Manager of the defendant bank examined as DW1 in para No.17 of his affidavitinevidence Ex.DW1/X has deposed that the plaintiffs have no right or claim against the defendant as they were ready and willing to deliver back the securities on the payment of the entire dues by the plaintiffs, and on receipt of the same on 13.06.1997, it immediately delivered the same, thus the plaintiffs have no claims of Rs.16.00 lacs or any amount raised in the suit.
19. Ld. counsel Sh. R.P. Vats for the defendant, during the course of arguments has submitted that the plaintiffs have already acknowledged their liability to pay interest and ECGS fee and have paid the same, therefore, was not entitled for any claim in the suit, either for the mandatory injunction or for any other claim as it does not disclose any cause of action, because of nonclearing of the outstanding amount for seeking the delivery of the securities deposited with the bank and that there was no specific para in the plaint to disclose the date of the cause of action or any cause of action in the suit.
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20. Ld. counsel Ms. Jaya Goyal for the plaintiffs has countered vehemently the arguments and the contentions of the defendant, submitting that the defendant bank has made the excess liability on the basis of wrong debit entries in the account of the plaintiffs and wrongfully withheld the securities and the documents of title deeds, even after clearing of outstanding amount in their account and thus caused damages on various heads to call for an action in the suit and thus, it clearly discloses the cause of action in favour of the plaintiffs and against the defendant.
21. In legal phraseology, cause of action is a set of facts, sufficient to justify a right to sue, to obtain money, property, or the enforcement of a right against another party. The term also refers to the legal theory upon which a plaintiff brings a suit.
It can be any communication notifying the party to whom it is addressed or an alleged fault which resulted in damages from which it originates, often expressed in amount of money, the receiving party should pay/reimburse.
To pursue a cause of action, a plaintiff pleads or alleges facts in the form of a complaint or the pleadings that initiates a lawsuit. A cause of action generally encompasses both the legal theory (the legal Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 14 of 55 wrong the plaintiff claims to have suffered) and the remedy (the relief a court is asked to grant).
22. In the instant case, the plaintiffs have raised the claim in the suit for mandatory injunction and damages on the bare facts that they were the account holders with the defendant bank and have shown their dissatisfaction for services provided by the defendant bank and requested to disclose the outstanding amount for settling their liability qua such accounts in the month of December, 1995 and though the outstanding amount as disclosed by the defendant was duly paid and even the encashment was confirmed, then also the securities/title deeds deposited with the bank for collateral security qua such accounts were not delivered, due to which they had to suffer certain losses, which are being claimed.
23. It is observed that certain facts were established on record, or rather not denied and admitted in the pleadings, to the effect that both the plaintiffs and defendant had certain commercial relations, which became strained, and certain claims regarding wrong debit entries in the accounts and nondelivery of the securities, despite clearing of outstanding as disclosed. Thus, as per the set of statements of facts of the plaintiffs and the replies tendered by the defendant, certainly there were some disputes Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 15 of 55 that needed a settlement, which gave rise to an action for a cause.
It does not matter as to whether some facts were denied which were needed to be adjudicated by way of evidence of the parties, but claims and counterclaims of the premises/statements of the parties definitely raise a cause of action in the suit. So far as the contentions of the counsel for defendant is concerned that on clearing of the total outstanding amount on 13.06.1997, the securities were delivered, it cannot be said that the plaintiffs had no cause of action in the suit, when such cause was raised through an action by way of filing of the law suit, as the deliveries of the securities for which the injunction, mandatory in nature was prayed, were made only in the court under the directions of the Hon'ble High Court, vide its order dated 13.06.1997, whereas it was pleaded in the suit that the outstanding amount disclosed was duly confirmed to have been received on 13.07.1996 itself, i.e. a year prior to issuance of the said directions, and that is also only when, the suit was filed in the court.
It does not matter as to whether, any specific para referring the cause of action is specifically required in the pleadings, when the cause of action has been disclosed in detail raising the dispute of not releasing of the securities even on making payment of the outstanding amount, and when for the purpose of cause of action in the jurisdiction of Delhi, para Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 16 of 55 No.16 of the plaint is already devoted for this purpose. The cause of action is basically a matrix of facts stated by the plaintiffs to raise a dispute and of the facts replied by the defendant to contest such dispute.
24. Thus, on the basis of facts on record, it is observed that the defendant has failed to establish the issues on record that there was no cause of action in the suit or that the suit was not maintainable as apart from the bald statement in the pleadings, there is nothing in the evidence of the defendant to prove these issues.
On the contrary, the plaintiffs have disclosed the cause of action, not only through their averments in the pleadings but also to prove such pleadings through evidence of three PWs along with the supporting documents exhibited in the court.
Therefore, the issues no. 6 & 7 are decided against the defendant and therefore, goes in favour of the plaintiffs. 25. Issues No. 1, 4 & 5
1. Whether two Pay Orders dated 04.05.1996 for Rs. 24,49,280/ and Rs.1,92,909.97 were enclosed with the plaintiffs' letter dated 04.05.1996 sent to the defendant. If so, to what effect?
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4. Whether the defendant was justified in continuing to charge and debit interest from 1.1.96 onwards at the given rate?
5. Whether the defendant made unauthorized and unjustified debits in the Current Account of M/s Apparel & Accessories as stated in paras 11 & 12 of the plaint?
These three issues are interrelated issues as are based on the same premises/statements of the plaintiffs and also that the evidence of both the parties, for all these three issues were the same.
26. The onus for proving these issues was basically laid on the plaintiffs. The plaintiffs have pleaded that they have already disclosed their intentions to settle the accounts with the defendant in the month of December 1995 and on disclosing the outstanding amount in their accounts by the defendant, the plaintiffs have paid the amount on 4th May, 1996 through two pay orders, duly encashed by the defendant in the month of July, 1996 and thus, the plaintiffs have questioned the debit entries mentioned in paras 11 & 12 of the plaint, that such entries were unjustified and unsustainable debits in the current account No.1847, as after 01.01.1996 onwards, neither the ECGC fee was payable nor the Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 18 of 55 interest for the period with effect from 04th May, 1996 onwards, after making the payment by way of the said pay orders dated 04.05.1996, towards clearance of the outstanding amount in their accounts as disclosed by the defendant.
These entries mentioned in para No.11 of the plaint are reproduced as under: Date Amount of Debit Remarks 6.6.96 Rs.0,01,496.60 (ECGC fee) 1.7.96 Rs.0,10,667.00 (interest in C.A.) 2.7.96 Rs.1,29,762.00 (interest in EPC) 2.7.96 Rs.0,01,469.00 (ECGC fee)
27. The counsel for the defendant raised the contentions refuting the averments raised in the plaint, on the ground that they had never received the payment on 04.05.1996, and was received only on 09.07.1996, and until the closure of the account on clearance of the total outstanding amount, the charge and interest debited become due against the plaintiffs and that only on 09.07.1996, on encashment of the two pay orders, the EPC account was satisfied, but an amount of Rs.1,45,537.72 remained balance in the current account, therefore further interest and EPGC charges were debited in the current account. Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 19 of 55
28. For establishing the issues, the plaintiffs have produced three witnesses namely Sh. Arvind Bhardwaj PW1, Mr. Chetan Bhardwaj PW3 and Sh. Nirmal Khanna PW4 and produced the supportive documentary exhibited the documents Ex.PW1/1 to Ex.PW1/30 and Ex.P1 to P18.
29. On appreciation of evidence, it is observed, that vide documents dated 19.12.1995 Ex.PW1/7 & 8, the plaintiffs have shown their dissatisfaction towards the services and asked for settlement of accounts on disclosing the outstanding amount in the account. The four letters Ex.P1, P4, P5 & P7 were also in reference to the same. It is also observed that vide letters dated 19.04.1996 and 23.04.1996 Ex.P3 & P6, the defendant disclosed the outstanding amount of Rs.1,92,909.47 in the Current A/c No.1847 and Rs.24,49,280/ in the EPC Account No.148.
30. It is deposed by PW1 in para 14 of affidavit dated 07.03.2003 that for clearing of the settled amount the plaintiff No.2 Sh.K.S. Bhardwaj along with his accountant Mr.Nirmal Khanna PW4, had personally visited the defendant bank on 4th May, 1996, but the then Asstt. General Manager Mr.Binati, agreed to accept the same against the release of the securities, but they were asked to come again in the morning of 6th May, Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 20 of 55 1996 for acceptance of the pay orders, and release of the securities, as the securities were not available at that time, but on 6th May, 1996, after having awaited for about two hours in the bank, the two pay orders bearing nos.012118 and 012119 issued by the bank of Punjab Ltd., Cannaught Place, New Delhi drawn in favour of SBI New Delhi Friends ColonyM/s Apparel and Accessories Inc. for the amount of Rs. 1,92,909.47 and Rs.24,49,280/ respectively, copies of which were Ex.PW1/14 & 14A along with a letter dated 04.05.1996, Ex.P8 were delivered with the rider of the defendant bank.
31. It was also deposed that Mr. J.P. Sarmah endorsed the acknowledgment of receipt of letter dated 04.05.1996 by affixing the rubber stamps of the defendant bank with his initials and endorsing photocopies of the Pay Order in his own hand with the words "original P.O. Recd." and "Original Pay Order Recd" respectively and at that time the defendant bank confirmed by letter dated 06.05.1996, signed by Mr.Sarmah that the securities held by it would be released upon the aforesaid pay orders being cleared.
The letter dated 04.05.1996 is Ex.P8 and receipt of the said letter has been admitted. The letter dated 06.05.1996 is Ex.P10, and Ex.PW1/14 and Ex.PW1/14A are the photocopies of two pay orders. Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 21 of 55 It is observed that vide Ex.P8 i.e. a letter dated 04.05.1996, it is informed that the plaintiffs wanted to clear the outstanding amount, also that two pay orders under reference were enclosed with the letter. The documents Ex.PW1/14 and Ex.PW1/14A had the endorsement of "original pay order received".
Also the document Ex.P10 was a letter signed by one Sh.S.P. Sarmah for the defendant bank, informing that the securities would be released on clearance of such pay orders. This document Ex.P10 also has an endorsement regarding handing over of the letter along with pay orders to him, reporting that after waiting up to 11 O'clock the plaintiffs had to handover the letter along with two pay orders with him.
Also, the document Ex.PW1/15 is the letter dated 04.05.1996 of the defendant bank to the Bank of Punjab, with an endorsement thereon dated 07.05.1996 on behalf of the Bank of Punjab of the confirmation, to the effect that the said two pay orders would be cleared.
32. On appreciation of ocular evidence on record, it is observed that PW1 in paras 14 & 15 of his affidavitinevidence dated 07.03.2003 has deposed that his father Sh. K.S. Bhardwaj along with one Sh. Nirmal Khanna personally visited the defendant bank on 04.05.1996, with the two pay orders for the outstanding amount as disclosed by the defendant bank, Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 22 of 55 and on assurance of the then Asstt. General Manager Mr. Binati, he again went on 06.05.1996 for acceptance of the two pay orders, and for releasing of the securities, but on that date, they handed over the same to one Sh. J.P. Sarmah, after waiting up to 11.00am for Mr. Binati, AGM, and that a due receipt was taken for such letter and pay orders, and the issuing bank had also confirmed the clearance of the pay orders, on the communication being made by the defendant bank to the issuing bank.
PW1 was unrebutted on these aspects, on the test of cross examination, as he was not put on crossexamination for these depositions, and in view of the law settled in a case titled as Sri Chand and Shiv Das Vs. The State 28 (1985) DLT 360, being unrebutted part of the testimony, established such facts.
33. PW4, Sh. Nirmal Khanna in para 2 of his affidavitinevidence Ex.PW4/A, deposed in the corroborative manner on the above noted facts that he accompanied Sh. K.S. Bhardwaj first on 04.05.1996 and then on 06.05.1996, for handing over the pay orders for acceptance against the outstanding amount settled by the bank and for release of the securities and Sh. J.P. Sarmah received the same and acknowledged the receipts, by affixing stamp of the defendant bank and also endorsed the photocopies of the two pay orders, in his own handwriting.
Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 23 of 55 It is observed that the depositions of PW4 were undisturbed on the test of crossexamination on these aspects, that on both the days on 04.05.1996 and 06.05.1996, he visited the defendant bank with Sh. K.S. Bhardwaj and handed over the two pay orders to one Sh. Sarmah. This witness has specifically denied the suggestion put to him that the pay orders were not enclosed with the letter.
Thus, the plaintiffs have duly testified the factum of the visit of Sh.K.S. Bhardwaj along with Sh. Nirmal Khanna to the defendant bank on 04.05.1996 and 06.05.1996 for the purpose of tendering the pay orders, for settling the outstanding amount disclosed and for releasing of the securities. Also that the two pay orders along with a letter dated 04.05.1996 were handed over to one Sh.J.P.Sarmah, an official of the bank available on 06.05.1996. It is also established on record that the defendant bank processed for confirmation of clearance of the pay orders from the issuing bank vide information dated 04.05.1996, that confirmed vide endorsement dated 07.05.1996.
34. To contest the evidence of the plaintiffs on this aspect the defendant's plea is that the defendant bank did not receive any of the pay orders and to prove such facts produced the sole testimony of Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 24 of 55 Sh.J.P.Sarmah, who tendered his affidavitinevidence Ex.DW1/X. In paras 8 to 10 of such affidavit, the facts related to the visit of the plaintiff No.2 in the defendant bank and also related to the two pay orders under reference were deposed.
35. As per the testimony of DW1 on affidavit Ex.DW1/X, he has testified that the plaintiff No.2 visited the defendant bank on 04.05.1996 and had shown him the two pay orders for the amount mentioned above and for checking the genuineness the defendant bank wrote the letter dated 04.05.1996 to the issuing bank, the bank of Punjab Ltd., that confirmed about the pay orders on 07.05.1996. The office copy of such letter dated 04.05.1996 of the defendant bank, with noting dated 07.05.1996 of the issuing bank was Ex.DW1/5.
Also as per such testimony even on 06.05.1996, the visit of the plaintiff No.2 was admitted and the letter dated 06.05.1996, with the notings of the delivery of the same and of letter dated 04.05.1996 was also confirmed, but regarding the pay orders this witness deposed in para 9 of affidavit Ex.DW1/X that letter dated 04.05.1996 mentioned the enclosement of the pay orders, but such pay orders had not been delivered to him and that the receipt was given in ordinary course of business, 'without noting the contents of the same'.
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36. Now come to the letter under reference dated 04.05.1996 i.e. Ex.P8, it reads that the two 'pay orders No.012119 dated 04.05.1996 for 2449280.00 against EPC credit and a Pay order No.012118 dated 04.05.1996 for Rs.1,92,909.47 against current account 'as required by you' are enclosed. This letter has an endorsement of the bank tendered at portion A. The receipt of such document was 'admitted' at the time of admission/denial of documents.
Another letter dated 06.05.1996, Ex.P10 is a letter authored by Sh.J.P.Sarmah, who was examined as DW1 on behalf of defendant Bank. This document is on the letter head of the State Bank of India. That reads:
"With reference to the above we advise that the securities (Lds/Bonds/Conveyance deed) held by us will be released to you after the Bankers cheque for Rs. 24,49,280/ and Rs.1,92,907.40 are cleared through clearing house and credited into the respective accounts."
This letter has a noting of the plaintiff No.2 that reads about their visit in the bank and waiting up to 11 O'clock and handing over of the letter dated 04.05.1996 along with the two pay orders, to accept against the release of the securities by the bank. Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 26 of 55 The receipt of such document is admitted and contents denied by the defendant at the time of admission/denial of documents. There are two photocopies of the pay orders Ex.PW1/14 and 14A, on which there was an endorsement at portions B and C of 'original pay orders received'.
37. On appreciation of evidence, it is observed that DW1 on the test of crossexamination has admitted that he had received the two pay orders from Mr. Nirmal Khanna, who personally visited the Friends Colony Branch along with letter dated 04.05.1996. The extracts of such testimony is reproduced:
"It is correct that I had received two pay orders from Mr. Nirmal Khanna who personally visited the Friends Colony Branch along with the letter dated 04.05.1996."
38. Further, this witness has testified in his crossexamination the following words reproduced: "I have seen Ex.P8, which bears my signatures at point. I have also seen Ex.PW1/14 & 14A, which also bears Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 27 of 55 endorsement in my handwriting at points B and C. I have seen Ex.P10, which bears my signatures at points D and E."
39. This part of the testimony of DW1 makes the controversy at rest, regarding receipt of the original pay orders from the plaintiffs on behalf of the defendant bank on 06.05.1996.
40. Further, it is observed that vide letters dated 19.12.1995 Ex.PW1/7 & 8, it is clear that the plaintiffs have shown their intentions to settle their accounts with the defendant bank for the reasons mentioned therein. The letter dated 10.02.1996 Ex.P1, another admitted letters dated 06.03.1996 and 19.04.1996, such intentions were made clear when the outstanding amount in the accounts of plaintiffs was disclosed by the defendant bank, and the quarry regarding release of the securities were made. Letter dated 23.04.1996 is another admitted document issued from the defendant bank to the plaintiffs whereby the outstanding amount in the accounts of the plaintiffs were disclosed and it was ensured that on liquidation of the entire outstanding amount, the securities held by the bank shall be released.
Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 28 of 55
41. This is a well settled principle of law, that the admitted documents need not to be proved by any party and these are deemed as proved.
42. Thus, it is established on record that the plaintiffs have shown their intentions to settle their accounts with the defendant bank, in December, 1995. The outstanding amount in the accounts with the defendant bank was disclosed. The outstanding amount as disclosed by defendant bank was duly paid by the plaintiffs by tendering of the two pay orders to Sh.J.P. Sarmah on 06.05.1996 towards clearance of the outstanding amount mentioned by the defendant bank in the accounts of the plaintiffs.
Further, the controversy regarding the delivery of the original pay orders to the defendant bank has already been resolved on the basis of evidence led by the parties on record, concluding that the pay orders in original were delivered to Sh. J.P. Sarmah, who was an official of the bank and received the same, for and on behalf of defendant bank.
The defendant could not establish on record that the pay orders were lost or misplaced at the hands of the plaintiffs. Also, the document Ex.DW1/5 makes it clear that the genuineness and issuance of the pay orders was confirmed by the issuing bank to the defendant bank on Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 29 of 55 07.05.1996. Thus, raising the plea that on 06.05.1996, the original pay orders were not enclosed with the letter dated 04.05.1996, is contrary to the document Ex.DW1/5 on the test of reasonable prudence. If, the original pay orders were not delivered, then how and why the defendant bank would seek a confirmation from the issuing bank, which was received on the next day i.e. on 07.05.1996.
43. Also the plea of the defendant that the pay orders were encashed only on delivery of duplicate pay orders, issued by the issuing bank on 10.07.1996, cannot extend the liability of the plaintiffs for the period of 06.05.1996 to 10.07.1996, for any kind of interest or miscellaneous charges of any type, as on delivery of the original pay orders on 06.05.1996, the liability of the plaintiffs has already been discharged on the same day. The misplacement of the pay orders, not for the fault of the plaintiffs, or cooperating for issuance of the duplicate pay orders, by the plaintiffs at the instance of the defendant, shall not extend the liability of the plaintiffs, for the period in between the date of delivery of original pay orders to the defendant bank and date of encashment of such pay orders/duplicate pay orders.
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44. Therefore, the plaintiffs have duly established on record that the defendant bank was not entitled for the ECGC fee that was a third party payment for miscellaneous charges on the accounts of the plaintiffs w.e.f. 01.01.1996 onwards as there was no occasion of taking of ECGC cover in the year 1996 for the protection of the transactions in the accounts of the plaintiffs, when the plaintiffs have already communicated to the defendant bank of settlement of their accounts with the defendant bank in the month of December, 1995 and it was on the defendant bank to expedite the disclosure of the outstanding amount at the earliest to the plaintiffs to avoid incurring of any miscellaneous charges on the accounts that were to be paid to the third party for protection of the transactions in the account.
45. The defendant bank has not produced any ECGC cover of the Insurance Corporation with respect to the accounts to show that such cover has already been taken on yearly basis or half yearly or quarterly basis or for a particular period. The ECGC Fee is being deducted quarterly as shown in the chart and statement of account. As this is a fee for insurance cover to protect the transactions for which the account was opened by the plaintiffs, such fee is payable by the defendant bank to the third party i.e. ECGC, only if such cover has been taken. But there seems Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 31 of 55 no occasion as to why, such cover was obtained for the year 1996, when the account holder/customer has already disclosed his intentions of breaking of the business relations for the services of the bank in the month of December, 1995.
46. This is not the case of the defendant that such insurance cover was a mandate, even for the period the account was in the process of settlement and no transaction was to take place in the account.
47. The plaintiffs have also established on record that they have paid the outstanding amount disclosed in their accounts for settlement of such accounts from the date of confirmation by the issuing bank on 07.05.1996. As per the customary practice of the banks such pay orders were to be encashed within the three clear days of delivery, that was made on 06.05.1996. Thus, in any case, the plaintiffs were not entitled for debit entries qua interest for the period of May to July 1996, even if, the pay orders were encashed on 10.07.1996, on issuance of the duplicate pay orders as the misplacement of the original pay orders, were not proved at the fault of the plaintiffs.
Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 32 of 55
48. Thus, the plaintiffs have established that they were not entitled even for the interest of any kind on or after the period of 06.05.1996 or at the most after 09.05.1996, by adding three clear days for its clearance.
49. Thus, issues No.1 with regard to two Pay Orders dated 04.05.1996 for Rs.24,49,280/ and Rs.1,92,909.97 were enclosed with the plaintiffs' letter dated 04.05.1996 is duly established on the above noted facts.
With regard to issue No. 4 it is established that, the defendant was not justified in continuing to charge so far as debit interest from 1.1.96 onwards at the given rate is concerned, as the outstanding amount disclosed, shows that the interest up to that date is calculated and only the interest w.e.f. April, 1996 to 6th May, 1996, if it is not debited up to April 1996, could remain outstanding, but it is not the case of the defendant that interest for the month of April was not calculated on disclosure of outstanding amount in the month of April and before 10th May, 1996, the outstanding was cleared.
Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 33 of 55 Further with regard to issue No. 5 it is held that the defendant made unauthorized and unjustified debits in the Current Account of M/s Apparel & Accessories as stated in paras 11 & 12 of the plaint.
Therefore issues No. 1, 4 and 5 are decided accordingly in favour of the plaintiffs and against the defendant. 50. Issue No. 2
Whether the defendant bank wrongfully withheld and delayed return of title deeds of property bearing No.5/13, Sarv Priya Vihar, New Delhi and/or the securities enumerated in para 3 of the plaint?
This issue was framed on the plea of the plaintiffs that the defendant bank has wrongfully withheld and delayed the return of title deeds of property and the securities enumerated in para 3 of the plaint, thus, the onus to establish this issue lies on the plaintiffs.
51. For establishing the issue, the plaintiffs have produced three witnesses namely Sh. Arvind Bhardwaj PW1, Mr. Chetan Bhardwaj PW3 and Sh. Nirmal Khanna PW4 and produced the supportive Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 34 of 55 documentary evidence by exhibited the documents Ex.PW1/1 to Ex.PW1/30 and Ex.P1 to P18.
And to contest such plea, the defendant has produced DW1 Sh.J.P. Sarmah along with documents Ex. DW1/1 to 7.
52. On appreciation of evidence on record, it is observed that it is established on record that the plaintiffs opened an EPC account No.148 in the name of M/s Apparel and Accessories Inc. for availing Export Packing Credit Facility up to the sanction of Rs.25.00 lacs with an additional Bill Discounting of Rs.5.00 lacs, from the defendant bank and a Current Account bearing No. 1847 was also maintained as an operating account.
It is also not in dispute that the title deeds of the property bearing No. 5/13, Sarv Priya Vihar, New Delhi was tendered as security to the defendant bank against the sanctioned limit for availing Export Packing Credit Facility.
As per record, it is also an established fact that the documents of title deeds were released to the plaintiffs, after the death of Mrs. Janki Devi Bhardwaj, to enable mutation to be carried out in the name of the plaintiff No.1 and an undertaking Ex.DW1/2 dated 15.07.1994 was tendered in this regard.
Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 35 of 55 It is also not in dispute that on release of the documents of title deeds of the property, certain securities detailed in para 3 of the plaint and para 4 of the affidavit of PW1, were deposited with the defendant bank, for the purpose of securities in place of the title deeds against the facility availed.
53. As per the evidence of PW1, it is testified in paras 6 to 9 that the title documents, after mutation in the name of the PW1, was tendered against creating another equitable mortgage for availing the Export Packing Credit Facility for a company named as M/s.Transworld Clothing Pvt. Ltd. that was incorporated by PW1 along with his brother Mr.Chetan Bhardwaj examined as PW3.
54. DW1 has testified in his affidavit Ex.DW1/X that the defendant bank was dealing with the loan account of M/s. Transworld Clothing Pvt. Ltd. Also deposed in para 3 that the request of M/s Transworld Clothing Pvt. Ltd. was considered by the defendant bank, which sanctioned the Adhoc limit of Rs.17.00 lacs in the name of the Company and the plaintiff No.1 being the director of the company, executed the security documents in favour of defendant bank on Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 36 of 55 16.11.1995 for the sanctioned limit of Rs.17.00 lacs. Also that to secure the limit sanctioned by the defendant bank, the plaintiff No.1 mortgaged his property bearing No.5/13 Sarv Priya Vihar, New Delhi with the defendant bank, and that on 13.06.1997 when the liability in the account of the company was cleared, the defendant bank released the security.
55. Thus, as per record the plaintiffs' case was that the documents of title deeds of the property in question was tendered initially as collateral security against the EPC Account No. 148 in the name of M/s Apparel and Accessories Inc. The said title documents were released by the bank to enable the plaintiff No.1 to mutate the same in his name after the death of his grandmother, in whose name the title documents were earlier existed, along with an undertaking to return the same after mutation, and also that at the time of release of the said document, alternative securities mentioned in para No.3 of the plaint were tendered and accepted as security against the EPC Account No. 148.
Also it was established on record through the evidence of both the parties that another account in the name of M/s. Transworld Clothing Pvt. Ltd. was opened for availing the EPC Facility with the defendant bank against the security i.e. the title deeds of the property in question. Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 37 of 55
56. Thus, the combined effect of the above evidence of the parties was that the title deeds of the property was tendered to the defendant bank initially as collateral security against the EPC Account No. 148, in the name of M/s Apparel and Accessories Inc., but after releasing the same for the purpose of mutation in the name of the plaintiff No.1, certain alternative securities were kept as security for availing EPC Facility in that account.
Also that, though the undertaking was given by the plaintiffs to return it to the defendant bank after mutation, yet such title deeds were tendered to the defendant bank as collateral security for creating another equitable mortgage of the property, against availing of the Credit facility for M/s. Transworld Clothing Pvt. Ltd., which was accepted by the defendant bank for sanctioning the credit limit of Rs.17.00 lacs.
57. The controversy arises now, when the plaintiffs claim that the title deeds were deposited with the bank as collateral security for creating equitable mortgage against the credit facility issued for M/s.Transworld Clothing Pvt. Ltd., whereas the defendant was taking a plea that such title deed were deposited against the undertaking of the plaintiffs for the EPC Account of M/s Apparel and Accessories Inc. Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 38 of 55
58. On appreciation of evidence to resolve such controversy, it is observed that the pleadings of the defendant in para 4 of the written statement, in so many words has specifically denied that the plaintiff No. 1 had handed over the title deeds only to secure the credit facilities granted to and in the name of M/s Transworld Clothing Pvt. Ltd. It is averred that the title deeds were delivered by the plaintiff No.1 to the defendant bank on the basis of his undertaking dated 15.07.1994.
But in the affidavit of DW1 a contrary stand has been taken by the defendant bank, when it was deposed that to secure the limit sanction in the name of M/s.Transworld Clothing Pvt. Ltd. the plaintiff No.1 being the director of the company executed the security documents in favour of defendant bank on 16.11.1995 on the said limit of Rs.17.00 lacs and that the title deeds were released only on 13.06.1997, when the liability in the account of the company was cleared.
59. On totality of the facts coming on record in the pleadings, and also the evidence produced in the court by the parties, it is observed that the plaintiff No.1 has submitted an undertaking with the defendant bank for returning of the title documents of the property after mutation. That Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 39 of 55 means that the title documents were to be returned after mutation against the EPC Account No.148 of M/s Apparel and Accessories Inc. for whom certain alternative securities detailed in para No.3 also tendered in place of the titled deeds released to the plaintiffs. But it has also been established on record that the title deeds of the property were also tendered as collateral security for creating equitable mortgage of the said property against the credit facility sanctioned to the extent of Rs.17.00 lacs for M/s. Transworld Clothing Pvt. Ltd. as deposed and admitted by DW1.
This cannot be assumed that the same title documents were tendered and deposited with the defendant bank in lieu of the undertaking dated 15.07.1994 that was as security for the EPC Account No.148 for the sanction of Rs.25.00 lacs for M/s Apparel and Accessories Inc. and also that it was tendered as collateral securities for creating equitable mortgage against the credit facility sanctioned to the extent of Rs.17.00 lacs for M/s Transworld Clothing Pvt. Ltd.
60. This is not the case of either party that the title deeds of the property were tendered for both the companies M/s Apparel and Accessories Inc. and M/'s Transworld Clothing Pvt. Ltd. against the EPC Facility in the account No.148 for the sanction of Rs.25.00 lacs and the Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 40 of 55 credit facility in the account of M/s Transworld Clothing Pvt. Ltd. for the sanction of Rs.17.00 lacs.
Thus, after mutation of the property, the title deeds must have been deposited with the defendant bank either against the undertaking for M/s Apparel and Accessories Inc. or against the collateral security against the M/s. Transworld Clothing Pvt. Ltd.
This is worth noting that if it is assumed that the title deeds of the property were accepted by the defendant bank against the undertaking dated 15.07.1994, then it must have been taken against the EPC Account No.148 for M/s Apparel and Accessories Inc. In that case the bank was under a legal obligation and duty to return the alternative securities detailed in para 3 of the plaint, but that is not being done.
Also, defendant through DW1 has established on record that not only the title deeds were executed by plaintiff No.1 as collateral security for creating equitable mortgage against the sanction of Rs. 17.00 lacs for M/s. Transworld Clothing Pvt. Ltd. but the same was released on clearance of the account only on 13.06.1997.
61. Thus, the controversy regarding depositing of the title deeds of the property after mutation, sets at rest here to resolve that the title deeds of the property were deposited as collateral security for creating equitable Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 41 of 55 mortgage against the credit sanction limit of Rs.17.00 lacs for M/s.Transworld Clothing Pvt. Ltd. and it cannot be, in any case presumed to be against the undertaking, as per the plea taken by the defendant, because in that case the earlier alternative securities as detailed in para 3 of the plaint, were to be returned to the plaintiffs, and also some other collateral securities were to be asked from the plaintiffs against the sanction of credit facility of Rs.17.00 lacs for M/s Transworld Clothing Pvt. Ltd.
It is further observed that as per the record the title deeds of the property along with the securities detailed in para 3 of the plaint were released only on 13.06.1997 before the Hon'ble High Court as per the directions of the Hon'ble High Court vide Order dated 13.06.1997 and not before that.
Such orders read: "...... According to the State Bank, in current account No. 1847, there is credit balance of the plaintiff amounting to Rs.88674.98P. Out of this, if Rs.
13,965/ is adjusted, the interest would stand paid till 12th June 1996. Similarly, current account No.1847 of M/s Apparel and Accessories Inc. There is another account No.2366 of M/s Transworld Clothing Pvt.
Ltd. There is no credit balance in the amount on applied interest of Rs.24,794/. If the plaintiff allows the bank to adjust, then the amount of Rs.4,794/ in Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 42 of 55 the current account No.1847 of the Apparel & Accessories Corporation, this amunt would also stand paid and the bank would also have no objection in handing over the documents to the plaintiff.
The ld. Counsel for the plaintiff states that he has no objection but this will be without prejudice to the rights and contentions of the parties in the suit final.
The learned counsel for the defendant Sh.
R.P. Vats states that the only formality required to be done is that they should come and sign in that bank register that they have received the documents and a debit voucher.
Mr. Sawhney states that he has no objection to receive the documents tomorrow from the bank itself. Both the parties shall report on the next date whether the bank documents have been returned in terms of the understanding reached today, though it is without prejudice to the rights of the parties...."
62. The plaintiffs on clearing of the outstanding amount disclosed through two pay orders for an amount of Rs.1,92,909/ and Rs.24,49,280/ admittedly encashed on 10.07.1996, claim that the defendant bank wrong fully withheld and delayed the return of title deeds of the property and the securities detailed in para 3 of the plaint deposited with the defendant bank.
Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 43 of 55 The plaintiffs have raised a contention that on their asking for settlement of the accounts with the defendant bank, the defendant bank disclosed the total outstanding amount only for accounts No.1847 and 148 for total sum of Rs.26,42,189 (ie. the sum of 1,92,909 & 24,49,280) vide their letter Ex.P3 (an admitted document) mentioning that 'all the securities held by the bank would be released as soon as all the outstanding amount along with interest are liquidated in the various accounts of the plaintiffs'.
63. The plaintiffs submit that after opening of an account for M/s. Transworld Clothing Pvt. Ltd. no transactions took place in the said account and a false entry for the debit entry of Rs.2,70,100/ was challenged through legal notice dated 19.12.1995 Ex.PW1/7 duly served to the defendant bank and the same was even a subject matter pending subjudice before the Consumer Court and the plaintiffs were not liable to pay any outstanding amount, qua such account, and that is why on their intentions to settle all their accounts with the defendant bank conveyed through various letters Ex.PW1/7, 8 and Ex.P1, responded vide letter Ex.P2, and disclosed the total outstanding amount for all the various accounts of the plaintiff No. 1 vide their letter Ex.P3 and their intentions to settle the various accounts opened in the name of plaintiffs and release Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 44 of 55 of all the securities, deposited with the bank on liquidation of the outstanding amount along with interest as disclosed vide such letter.
64. The plaintiffs have established on record that the disclosed amount vide two pay orders was duly liquidated on tendering of the two pay orders on 06.05.1996 and the same were even encashed on 10.07.1996, the delay was for the fault at the ends of the defendants and thus, they were entitled to get released all the securities including the title deeds deposited with the defendant bank against the credit limits sanctioned for both the companies that is M/s Apparel and Accessories Inc. and M/s Transworld Clothing Pvt. Ltd.
65. In view of the findings on issues No.1, 6 & 7 decided in favour of the plaintiffs and against the defendant, and also on the basis of above discussed evidence on record, it is established that the plaintiffs had made the payments against the total outstanding amount disclosed by the defendant bank in the various accounts of the plaintiffs, as per letter Ex.P6, an admitted document.
Further it is observed that vide letter Ex.P6, the defendant has not disclosed any outstanding in relation to any account maintained for M/s Transworld Clothing Pvt. Ltd., but such document records:
Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 45 of 55 "that the outstandings in your (the plaintiffs) various accounts were advised to Sh. Bakshi of your office on 23.03.1996. The position was again advised to you vide our letter No. AGM/199697/476 dated 19.04.1996, (such letter was exhibited as Ex.P4).
We once again advised the outstanding in your various accounts as under
....148 EPC Rs.24,49,280/ ....1847 C/AC Rs.1,92,947/"
66. It is observed that the total sum of Rs.26,42,189/ (1,92,909 + 24,49,280 = 26,42,189) was cleared vide above mentioned two pay orders by the plaintiffs on 06.05.1996 (though liquidated/encashed on 10.07.1996 at the fault of defendant), and the defendant has not disclosed either in the pleadings or in the evidence tendered through DW1 J.P. Sarmah, the Chief Manager, Defendant Bank as to what was the account No. of M/s. Transworld Clothing Pvt. Ltd. or what was the outstanding in the said account, even no statement of account has been exhibited in relation to M/s. Transworld Clothing Pvt. Ltd. to show any transaction in such account or any outstanding left pending to be paid by the plaintiffs for the said account.
Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 46 of 55
67. To the contrary, the plaintiffs maintains and establishes that no transaction had ever taken place in the said account, thus no outstanding could be assumed for such account, as on such plea of the plaintiffs, if the defendant bank claims that there was any outstanding amount for M/s. Transworld Clothing Pvt. Ltd. then onus shifts to the defendant to prove such entries as per the settled law of evidence.
68. It is also a well settled principle of law that the party who relies on the entries of statement of account, is under a legal duty to produce the books of accounts to prove such entries. The reliance is placed on Parasnath Hiral Lal V/s Kishan Lal Chuni Lal cited as AIR 1965 All 189 wherein it was observed that:
'Where a party relied upon an entry in an account book, the original account book must be produced before the Court as primary evidence in proof of the entry.
69. Thus, finding not even an iota of evidence qua any outstanding amount, with regard to M/s Transworld Clothing Pvt. Ltd. and on the face of the letter Ex.P6, wherein the defendant bank discloses a particular Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 47 of 55 outstanding amount for only two accounts calling it in various accounts of the plaintiffs, it can safely be presumed and there was no reason to disbelieve the plaintiffs' contention that there was no transaction in the M/s. Transworld Clothing Pvt. Ltd. against which any outstanding amount was pending to be paid by the plaintiffs as the defendant has failed to prove the contrary.
70. Thus, it is established on record that the outstanding amount in the various accounts of the plaintiffs were cleared by making a payment by two pay orders dated 04.05.1996 tendered on 06.05.1996 encashed/liquidated on 10.07.1996. Thus, there appears no reasons for withholding any of the securities either the securities as detailed in para 3 or the title deeds of the property, deposited as collateral securities for availing the credit facilities. Also issue No. 5 regarding debit entries has already been decided in favour of the plaintiff.
Thus, this issue is decided against the defendant and in favour of the plaintiffs.
71. Issue No. 3
"Whether the plaintiff is entitled to recover damages from the defendant. If so, to what amount?"
Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 48 of 55 The plaintiffs have claimed the damages as below:
Heads under amount claimed Amount in
Rupees
i. With respect to debit entries in para No.11 Rs.1,43,394/.
ii. With respect to for earnest money for securities furnished to Rs.3,50,551/.
the defendant bank mentioned in para 14 (i)
iii. With respect to security for issuance of guarantee to the Sales Rs.70,000/.
Tax Authorities mentioned in para 14 (ii) iv With respect to recurring loss and damage for withholding the title dees of property No. 5/13 Sarva Priya Vihar, New Delhi
a). Loss of profit @ 15% Rs.6,00,000/
b). Duty Drawback @ 12½% Rs.5,00,000/
c). Export and other incentives Rs.4,00,000/ Total amount Rs.2063945
72. In view of the findings on issue Nos. 1,2, 4 & 5, the plaintiffs have established their claim with respect to Para 11 for an amount of Rs. 1,43,394/.
73. As the plaintiffs have not disclosed through any independent witness as to what was the actual turnover in the preceding years for the Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 49 of 55 company that he was expected from the business of such company during the period June 1996 to June 1997 during which after making all the payments clearing the outstanding amount in various accounts of the plaintiffs, the securities were not released and remained wrongfully withheld by the defendant bank, and it is argued that the turn over may be relied on the basis of the documents placed by the bank i.e. statement of account Ex.DW1/6, filed and relied by the defendant itself, that shows the actual transactions that have taken place in the EPC/Current Account of the plaintiffs for last years, it is observed that as per the calculation of the total amount of sales turn over in the last preceding years (i.e. 1991 to 1995) to 199697, it has come to Rs.2,07,39,304.94 averaging Rs.41,47,860.99 annual turnover, that could be taken into account to consider the expected turnover, during the year 199697, during which the securities/title deeds of the plaintiffs were wrongly withheld by the defendant.
Thus, as per the Law of Legitimate Expectation, it could be safely presumed, particularly on the face of the offer from the competative bank i.e. Canara Bank as per document Ex.PW1/3, the plaintiffs were expected to have a sales turnover to the tune of at least Rs.41,47,860.99 during 199697 and the quantum of damages for the loss of profit on such sales turnover, has to be considered accordingly. Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 50 of 55
74. So far as loss of profit is concerned, it is reasonably assumed that a company runs its business up to the period it gains at least a profit ranging from 8% to 10%, as per customary and business practice during the period it is being claimed, and nothing on record has been established by the plaintiffs for the claim of 15% on such turnover, thus assuming the reasonable rate of profit up to 10%, the same is allowed for the sales turnover for one year, on the basis of total calculation of the sales turn over as disclosed in document Ex.DW1/6 that calculates as Rs.4,14,786/.
75. Further with regard to duty draw backs could be received by the plaintiffs are concerned, they have not produced any amount for the preceding years to show average annual duty draw backs or the rate on which such duty draw backs were received by the plaintiffs, on the turn over or as per the Export Policy applicable to them. Thus, under this head, for not bringing such record for that claim, the claim is denied. Similar are the observations in respect of export and other incentives, as the plaintiffs have failed to establish on record that as to what were the loss towards the export and other incentives during that period.
Further with regard to claim of plaintiffs for an amount of Rs.1.00 lac for having been subjected to harassment, inconvenience and Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 51 of 55 expense, vide para 15 of plaint in concern, as no evidence, oral or documentary has been produced by the plaintiffs, the claim under this head is also declined, as not proved on record.
76. The plaintiffs are also entitled for an amount paid to the defendant bank vide order dated 06.06.1997 and 13.06.1997 an amount of Rs.1,55,772/ Rs.55,439/ and Rs.4,794/ respectively, along with other amount which he had paid for release of their securities, as per the directions of Hon'ble High Court, as such directions were issued subject to the rights & liabilities of the parties, to be adjudicated upon in the suit.
77. Thus the plaintiffs are entitled for the following amount: Heads under amount claimed Amount in Rs.
i. With respect to debit entries in para No.11 Rs.1,43,394/. ii. With respect to for earnest money for securities furnished to Rs.3,50,551/.
the defendant bank mentioned in para 14 (i) iii. With respect to security for issuance of guarantee to the Sales Rs.70,000/.
Tax Authorities mentioned in para 14 (ii) iv With respect to recurring loss and damage for withholding the Rs.4,14,786/ title dees of property No. 5/13 Sarva Priya Vihar, New Delhi Loss of profit @ 10% v. The amount deposited in the Hon'ble High Court vide orders Rs.2,16,005/ dated 06.06.1997 & 13.09.1997 Total amount Rs.11,94,736/ Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 52 of 55
78. So far as interest part is concerned, the interest by definition:
"In common parlance and in monetary terms, the 'interest' is basically a charge over the use of money or by retention of money by any person, during a specified period. The money used is always inferred to have been increased in value by the person who keeps the money in his possession during a particular period on the principle of 'money multiplier'.
Thus, as per the norms of interest, the plaintiffs are entitled for an interest only on the amount of Rs. 70,000 in lieu of security deposits, an amount of Rs.1,43,349/ in lieu of debit entries and Rs.2,16,005/ in terms of orders of Hon'ble High Court Delhi and that is also w.e.f. July, 1997.
So far as the other entries of entitlement i.e. Rs.3,50,551/ earning from the securities and Rs.4,14,786/, earning of the profit on sales turnover are concerned, these entries already embedded with the 'interest' part on the basis of principles of 'money multiplier'. Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 53 of 55
79. So far as the rate of interest is concerned as no contractual rate of interest was proved and it is a well settled principle of law that for such kind of commercial transactions as under reference in this suit, the 'reasonable' rate of interest is one that is prevalent as bank rate on that date. Thus, the plaintiff is entitled for an interest @ 12 % p.a on the part of the decreetal amount, as mentioned in para 78, of Rs.3,74,185/ (1,43,394 + 4,14,786 + 2,16,005) from July 1997 till the realization of the amount.
80. The plaintiffs have also prayed for a decree of mandatory injunction with regard to release of securities held by the defendant bank enumerated in paragraph 3 of the plaint and also of the original title deeds relating to property bearing No.5/13, Sarve Priya Vihar, New Delhi.
Vide order dated 13th June, 1997 the Hon'ble High Court had already directed the defendant for the return of the documents to the plaintiffs and in compliance of such orders, such documents i.e. the securities / the title deeds have already been returned. Thus, there is no need to make any observations in this regard.
Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 54 of 55
81. Issue No. 8:
Relief.
In view of the above observations and findings on the issues above discussed, the suit of the plaintiff is decreed.
Accordingly, the plaintiffs are entitled for a money decree:
i) For an amount of Rs11,94,736/.
ii) An interest @ 12% per annum on Rs.3,74,185/ from July, 1997 till its realization.
iii) Costs to the extent of the Court fees.
Decree sheet be drawn accordingly.
File be consigned to R/Room.
Delivered & announced in the open Court (Dr. Archana Sinha) 26th September, 2011. Addl. District Judge, Central04, Tis Hazari Courts, Delhi/26.09.2011 Suit No. 441/08/96 Arvind Bhardwaj Vs. State Bank of India Page No. 55 of 55