Delhi District Court
Satnam And Company vs Icici Bank Limited on 20 December, 2023
IN THE COURT OF MR. ANIL KUMAR SISODIA:
DISTRICT JUDGE (COMMERCIAL COURT)-
04,CENTRAL, TIS HAZARI COURTS, DELHI
CS (COMM)1689
M/s SATNAM AND COMPANY
(Through Mr. Nitin Jain, Partner)
1730/2/9, Mangal Building,
Bhagirath Place, Delhi-110006 ...PLAINTIFF
Versus
ICICI BANK LTD.
NBCC Place, Bisham Pitamah Marg,
Pragati Vihar, New Delhi-110003. ...DEFENDANT
Date of filing of the suit : 06.11.2020
Date of reserving judgment : 14.12.2023
Date of judgment : 20.12.2023
Judgment
1.This is a suit for recovery of Rs.25,24,912/-(Rupees Twenty Five Lakhs Twenty Four Thousand Nine Hundred Twelve Only) along with pendent-lite and future interest filed by plaintiff against defendant.
2. The case of the plaintiff as stated in the plaint is that plaintiff is a partnership firm and is carrying on business under the name and style of M/s. Satnam and Company dealing in the wholesale of pharmaceutical and other allied items. The plaintiff firm bought a Scorpio car bearing registration number DL3C AS 2635 on 26.03.2008 for a total consideration of Rs.9,16,682/-. It CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 1/21 is stated that plaintiff firm had to avail financial assistance from the defendant bank and took car loan for an amount of Rs.7,80,000/-. The plaintiff firm was not only paying regular monthly installment to the defendant with regard to the vehicle in question but also regularly renewing the car insurance as and when it fell due.
3. It is stated that on 09.06.2009 the aforesaid vehicle was stolen from Lajpat Nagar and an FIR no.217/2009 under section 379 of Indian Penal code was registered on 10.06.2009. Despite the fact that the vehicle in question was stolen and an appropriate FIR was registered, the plaintiff firm was regular in paying the monthly installments of the vehicle. After the investigation on the aforesaid FIR was complete, the investigating officer had filed a closure report dated 07.07.2009 before the Ld. MM. In the closure report the investigating officer stated that neither the vehicle in question could be traced nor the accused who stole the vehicle could be traced by the investigating officer despite his best efforts. After pursuing the closure report, Ld. MM accepted the same and closed the same. It is stated that despite the car being stolen, the closure report being filed and also the same being accepted by the Ld.MM, the plaintiff firm continued to pay the installments of the vehicle in question every month without fail. The plaintiff firm paid a total of 29 EMIs till 10.09.2016.
4. It is stated that after accepting the closure report by Ld. MM, the defendant bank communicated to the Oriental Insurance Company Ltd. With regard to the disbursement of the insurance amount. The defendant bank sent a letter dated 17.11.2009 to the CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 2/21 Oriental Insurance Company Ltd, stating the reason that as the vehicle has not been repossessed by the defendant bank, hence the insurance claim amount should be released in favour of the defendant bank as the vehicle in question was insured.
5. It is stated that on 22.12.2011 the goodwill of the existing plaintiff's partnership firm was purchased and taken over by new partners namely Mr. Nitin Jain and Mr. Praveen Jain. It is stated that the erstwhile partners never had any communication from the defendant bank with regard to recovery of the alleged amount or even otherwise and therefore while taking over the partnership firm, the erstwhile partners did not mention the existence of the recovery amount from the defendant bank. It is also stated that even in the duly executed partnership deed the erstwhile partners failed to disclose about the existing auto loan from the defendant bank.
6. It is stated that from 2009 till 2020 the defendant bank did not take any action with regard to the claiming the loan amount either from the Oriental Insurance Company Ltd. Or from the plaintiff firm. However, on 22.09.2020 the defendant bank sent an email to the plaintiff firm demanding an amount of Rs.15,24,912/- to be paid within 10 days from the receipt of the said mail, failing which the defendant bank threatened to forfeit the said amount from the bank account of the plaintiff firm. The said email dated 22.09.2020 was replied by the plaintiff's new partners stating all the facts and circumstances, however, the defendant bank paid no heed to the same. It is stated that the bank account of the plaintiff firm was opened only in 2018 by the CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 3/21 news partners of the plaintiff firm with the defendant bank.
7. It is stated that on 27.09.2020 the plaintiff was ready to file an application u/s 17 of the Secularization and the Reconstruction of the Financial Assets and Enforcement of Security Interest Act, 2002. The aforesaid application was filed on 07.10.2020 due to close down of the office of the Debt Recovery Tribunal-1, Delhi. It is prayed that a restraining order be passed against the defendant bank from taking the amount of Rs.15,24,912/- from the bank account of the plaintiff firm. The aforesaid application could only be listed before the Debt Recovery Tribunal-1 , Delhi on 15.10.2020. In the meanwhile the defendant bank deducted an amount of Rs.15,24,912/- from the plaintiff's bank account no. 163905000956 in ICICI Bank. On 15.10.2020 when the matter was listed before the Debt Recovery Tribunal-1, Delhi the same was withdrawn with liberty to approach the appropriate court as per law as the amount in dispute was already deducted by the defendant bank.
8. It is stated that the act of the defendant for illegally debiting an amount of Rs.15,24,912/- from the account of the plaintiff was illegal, therefore the plaintiff had filed the present suit for recovery of the same along with damages. It is stated that due to the arbitrary action of the defendant of stiffening off an amount of Rs.15,24,912/- from the account of the plaintiff firm, the plaintiff had suffered a huge loss of more than 10 lakhs as it was kept for the payment of salaries and other products which were supposed to be purchased during the difficult time of Covid-19.
CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 4/219. Now the defendant is liable to make a payment of amount of Rs.25,24,912/- along with pendent lite and future interest @ 24% per annum till date of realization.
10. The defendant was duly served with the summons of the suit. Defendant has contested the suit by filing the written statement. Defendant have raised preliminary submission and objections that the suit is not maintainable in the eyes of law as the plaintiff has not approached the court with clean hands and has concealed the material facts from this court; the plaintiff has not approached this court with clean hands and have concealed the material facts to achieve the ulterior motive to cause wrongful gain. It is stated that plaintiff has filed a false and frivolous suit against the defendant bank and no cause of action has ever arisen in favour of the plaintiff and against the defendant bank.
On merits, the contents of the plaint have been denied and A prayer was made for dismissal of the suit.
11. Plaintiff filed replication denying the contents of written statement and reiterated that the facts as stated in the plaint.
12. On the basis of pleadings of the parties, following issues were framed on 11.04.2022 :-
1. Whether the plaintiff has concealed the material facts, as alleged by the defendant?(OPD)
2. Whether the plaintiff has no CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 5/21 cause of action to file the present suit, as alleged by the defendant?
(OPD)
3. Whether the plaintiff is entitled for recovery of the decreetal amount, as prayed for ?(OPP)
4. Whether the plaintiff is entitled for a decree of damages, as prayed for?(OPP)
5. Whether the plaintiff is entitled for the interest, if any. If so, at what rate and for which period?
(OPP)
6. Relief.
13. The plaintiff examined Sh. Nitin Jain as PW-1 who has tendered his affidavit as Ex PW1/A and proved the following documents:-
S.No. Documents Exhibit
1 Partnership deed dated 22.12.2011 PW-1/1
2 Letter of authorization dated 29.09.2020 Mark A
3 Partnership dated 15.05.2021 PW-1/2
4 Letter of authorization dated 19.07.2021 PW-1/3
5 Retail invoice dated 26.03.2008 P-1
6 Scheme of premium with Oriental Insurance Mark B
Co. Ltd.
7 Closure report dated 07.07.2009 P-2
8 Letter dated 17.11.2009 sent by the defendant Mark C
9 Audited balance sheets by the erstwhile Mark D
members
10 Recovery vehicle notice dated 22.09.2020 P-3
11 Reply dated 23.09.2020 PW-1/4
CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 6/21
12 Copy of petition filed before DRT-1 Mark E
13 Debit Intimation email dated 22.09.2020 P4
14 Printout of the order dated 15.10.2020 P5
15 Affidavit under sec.65B of Indian Evidence Act PW-1/5
PW-2 Sh. Jairaj, Dy. Manager of the Oriental Insurance Company Limited was examined and proved the document i.e. certified true copy of policy no.215601/31/2010/428 in respect of vehicle make Mahindra & Mahindra-Scorpio 2.6 Turbo bearing registration no. DL03CAS2625 as Ex.PW2/2.
PW-3 HC Dharambir Jakhar of PS Lajpat Nagar has proved the FIR No. 217/09, PS Lajpat Nagar, containing the complaint dated 10.06.2009 w.r.t loss of Scorpio Car NO. DL 3CAS2635 as Ex.PW-3/1.
PW-1 and PW-2 were cross examined by defendant. Defendant did not cross examine PW-3. Thereafter, PE was closed.
14. Defendant examined AR of defendant as DW-1 Mr. Jarrar Rizvi, DW-1 has proved the following documents:-
S.No. Document Exhibits 1 Power of attorney DW-1/1 (OSR) 2 Credit Facility Application form DW-1/2 3 Deed of hypothecation DW-1/3 4 Power of attorney DW-1/4 5 Copy of Standard Term DW-1/5 6 Copy of lien intimation DW-1/6 7 Copy of mail DW-1/7 CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 7/21 8 Statement of account DW-1/8 9 Certificate u/s 65B of Indian Evidence Act. DW-1/9 10 Certificate u/s 2A of the Bankers Book of DW-1/10 Evidence Act
DW-1 was cross examined by counsel for plaintiff and thereafter, DE was closed.
15. I have heard Sh. Dhruva Bhagat, Ld. Counsel for plaintiff and Ms. Chetna Bhalla, Ld. Counsel for defendant at length and have also perused the record carefully including the written submissions filed by counsels for the parties.
16. Issue wise findings on the basis of evidence and arguments are as under: -
ISSUE NO. 1:
"Whether the plaintiff has concealed the material facts, as alleged by the defendant?(OPD)"
17. The onus of proving this issue was cast on the defendant.
In the WS, defendant had taken a stand that plaintiff has not approached the court and has concealed the material facts from the court. It has been submitted that the plaintiff did not give any intimation to the defendant bank regarding change of partners in the plaintiff firm nor any consent was taken from the defendant bank regarding the liability transfer of the loan account.
18. Plaintiff in the replication has denied the allegations made by the defendant. It was stated that erstwhile plaintiff firm was regularly paying the monthly installments to the defendant and CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 8/21 was renewing the car insurance. It was further stated that the defendant bank communicated to the Oriental Insurance Company with regard to disbursement of the insurance amount by sending the letter dated 17.11.2009 and when defendant failed to get the amount from the insurance company, defendant harassed the plaintiff by sending the email which was duly replied by the plaintiff, but then also defendant took wrong procedure and debited the amount from the account of the plaintiff firm which created huge loss to the plaintiff in the peak covid emergency situation.
19. Perusal of the evidence led by the defendant would show that defendant has not led any evidence on this aspect as to what material facts have been concealed by the plaintiff. Evidence by way of affidavit filed by AR of the defendant is absolutely silent on this aspect. On the other hand, PW-1 Nitin Jain in his evidence by way of affidavit Ex.PW-1/A has reiterated that the erstwhile partners had never communicated about the existence of recovery amount from the defendant bank and even in the partnership deed, the erstwhile partners failed to disclose about the existence of auto loan from the defendant bank and the new partners were completely unaware about the said transactions. Even the audited balance sheet of the erstwhile firm signed by the erstwhile partners did not mention about the auto loan. He also proved the said audited balance sheet as Ex. DW-1/7.
20. Thus, from the aforesaid evidence adduced by the parties, it is apparent that defendant has failed to discharge the onus cast on it. The issue is accordingly decided against the defendant and CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 9/21 in favour of the plaintiff.
ISSUE NO. 2 & 3:
2. Whether the plaintiff has no cause of action to file the present suit, as alleged by the defendant?(OPD)
3. Whether the plaintiff is entitled for recovery of the decreetal amount, as prayed for ?(OPP)
21. These issues are being taken up together as they can be disposed of by common discussion. The onus of proving issue no. 2 is on the defendant and onus of proving the issue no. 3 is cast on the plaintiff.
22. Counsels for plaintiff as well as defendant have admitted during the course of arguments that there is no dispute with regard to the facts of the case.
The undisputed facts of the case are that the plaintiff is an unregistered partnership firm. In the year 2008, the plaintiff firm through its erstwhile partners had obtained auto loan of Rs. 7,80,000/- from defendant bank for purchase of Scorpio Car bearing no. DL3CAS2635 from Bhasin Motor India Pvt. Ltd for a total consideration of Rs. 9,16,682/-. The said vehicle was stolen from the jurisdiction of PS Lajpat Nagar on 09.06.2009 and FIR No. 217/2009 was duly registered with the police station. After investigation, IO had filed a closure report dated 07.07.2009 which was accepted by the concerned Ld. MM. It is also undisputed that plaintiff firm had paid 29 EMIs till 10.09.2010 and thereafter, the plaintiff firm defaulted in the payment of installments. On 22.12.2011 the plaintiff firm was reconstituted and the new parters Mr. Nitin Jain and Praveen Jain CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 10/21 joined the firm and the original partners retired and the new partnership deed dated 22.12.2011 was executed between the new partners and the erstwhile partners. It is also undisputed that till 22.09.2020 defendant bank did not take any action against the plaintiff firm for recovery of the loan amount. On 22.09.2020 defendant sent email to the plaintiff firm demanding a sum of Rs. 15,24,912/- within ten days from receipt of the email failing which defendant threatened to forfeit the said amount from the bank account of the plaintiff firm. The email dated 22.09.2020 was duly replied by the plaintiff firm's new partners but the defendant debited the amount of Rs. 15,24,912/- from the bank account of the plaintiff firm which was opened with defendant bank in 2018. The plaintiff firm has filed the present suit for recovery of the aforesaid amount along with interest and damages against the defendant bank.
23. Counsel for the plaintiff has argued that plaintiff is an unregistered partnership firm but the present suit filed by the plaintiff firm is not hit by Section 69 (2) of Partnership Act as the present suit has been filed by the plaintiff for recovery of the amount illegally deducted from the bank account of the plaintiff firm by the defendant along with the common law remedy of tort i.e. damages for the losses caused to the plaintiff firm due to the illegal action of the defendant. Ld. Counsel for plaintiff has placed reliance on the judgments of (i) Purshottam & ors. Vs Shiv Raj Fine Art Litho Works & Ors., (2007) 15 SCC 58 wherein it was held that:
"The bar under Section 69 (2) must apply to a suit for enforcement of right arising from a contract entered into by the unregistered firm CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 11/21 with a third party in the course of business dealing with such third party. If the right sought to be enforced does not arise from a contract to which the unregistered firm is a party, or is not entered into in connection with the business of unregistered firm with a third party, the bar of Section 69 (2) will not apply."
(ii) Raptakos Brett & Co. Vs Ganesh Property, AIR 1998 SC 385 wherein it was held that:
"A mere look at the aforesaid provisions shows that the suit filed by an unregistered firm against a third party for enforcement of any right arising from a contract with such a third party would be barred at its very inception. To attract the aforesaid bar to the suit, the following conditions must be satisfied:-
(i)That the plaintiff -partnership firm on the date of the suit must not be registered under the provisions of the Partnership Act and consequently or even otherwise, the persons suing are not shown in the Register of Firms as partners of the firm, on the date of the suit.
(ii) Such unregistered firm or the partners mentioned in the sub-section must be suing the defendant-third party.(iii) Such a suit must be for enforcement of a right arising from a contract of the firm with such a third party."
(iii)Haldi Ram Bhujiawala & Ors. Vs Anand Kumar Deepak Kumar & Ors., AIR 2000 SC 1287 wherein it was held that a suit relating to trademark and its infringement is based on statutory right and common law principal of tort of passing-off action-such suits are not barred by Section 69 (2) of Partnership Act even if the right to be enforced is not arising from the contract. It was held that unregistered partnership firm can file and sue such cases.
(iv) Shiv Developers Vs Aksharay Developers and Ors., AIR 2022 SC 772 wherein it was reiterated that Section 69 (2) of Partnership Act does not bar unregistered partnership firm to file a suit if the same is for enforcement of a statutory right or a common law right.
CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 12/2124. Ld. counsel for the defendant has raised no objection with regard to the filing of the suit by the unregistered partnership firm. Even otherwise, the judgments relied upon by the plaintiff show that unregistered partnership firm can file suit for enforcement of statutory right or a common law right. The present suit filed by the plaintiff is not related to enforcement of contractual rights arising during the business transaction of the partnership firm and hence, the present suit filed by the plaintiff is maintainable.
25. Ld. Counsel for plaintiff has further argued that the defendant cannot claim lien on the money placed by the plaintiff in its current account opened up with the defendant bank and it could not have forfeited the money. It was argued that defendant did not take any action against the plaintiff firm or its erstwhile partners for the eleven years. It was further argued that as per the hypothecation agreement only the car was hypothecated with the bank for recovery of the loan amount and there is no general or particular lien on the money of the plaintiff firm deposited in the bank account. It was argued that Section 171 of the Indian Contract Act does not apply to a case where the bank intends to balance an account by making deduction from the account of the customer. It was argued that for the operation of Section 171 of Indian Contract Act, the deposits made in the bank account cannot be treated as goods and the right of the banker as lien over the deposit is not applicable. He argued that the money deposited by a person to the bank does not constitute a case of bailment and Section 171 of Indian Contract Act will not be applicable and as such bank does not have a lien in case of deposit of money by the CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 13/21 customer with the bank. Counsel for defendant has argued that the action of the defendant in debiting the money from the account of the plaintiff firm was illegal and the plaintiff is entitled to recover the said amount from defendant bank along with damages caused to it. In support of his arguments, plaintiff has relied upon the following judgments:-
(i)Devendrakumar Lalchandji Vs Gulabsingh Nekhesingh, AIR 1946 Nag 114 wherein it was held that there is a distinction between bailment and deposit. Money paid into a bank to be credited in the current account of the person making the payment does not constitute to a case of bailment. Therefore, Section 171 of Indian Contract Act does not apply to a case where the bank intends to balance an account by making deduction from the account of a customer.
(ii) Achinto Chakraborty Vs Chairman & Managing Director, State Bank of India & ors., MANU/CG/0407/2017 wherein it was held in para 14 that it is quite vivid that the money deposited by a person to a bank does not constitute a case of bailment and Section 171 of Indian Contract Act, 1872 would not be applicable and as such, banker's right of lien would not be applicable in the case of deposit of money by the customer with the bank.
26. Per Contra, Counsel for defendant has argued that in view of the admitted factual position, the only question which remains for consideration is whether the bank had lien over the money in the bank account of the plaintiff firm. It was argued that as per the terms and conditions of the loan agreement, the plaintiff firm was bound to make payment of the loan amount along with the interest and since the plaintiff firm defaulted in the payment, the bank was well within its right of lien/set off on the account of the plaintiff firm. It was argued that the defendant bank had sent lien intimation through email dated 22.09.2020 Ex. P-4 to the plaintiff firm requesting the plaintiff firm to clear the outstanding CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 14/21 amount but plaintiff failed to do so and therefore, defendant bank debited the saving account no. 63905000956 of the plaintiff for an amount of Rs. 15,24,912/- on 30.09.20200 and adjusted the amount recovered to the loan account number LADEL00012976744 of the plaintiff firm. It was argued that the plaintiff firm was bound by the terms and conditions mentioned in credit facility form Ex.DW-1/2. Clause 5 of the credit facility application form makes it clear that the credit facility was subject to and governed by "ICICI Bank Limited's (All India) Standard Terms and Condtitions For Facility for Purchase Of /Against Products" registered on 14.06.2005 with the Sub Registrar of Assurances (hereinafter referred to as "Standard Terms"). It was argued that Clause 29 of the Standard Terms Ex.DW-1/5 provides that the bank shall have paramount right of set off and lien irrespective of any other lien/charge and included deposits of any kind and nature (including fixed deposits/balances) lying in the account of borrowers. It was further argued that Hon'ble Supreme Court in Syndicate Bank Vs Vijay Kumar & ors. (1992) 2 SCC 330 has held that "By mercantile system the Bank has a general lien over all forms of securities or negotiable instruments including FDRs deposited by or on behalf of the customer in the ordinary course of banking business in absence of an agreement to the contrary. The general lien is a valuable right of the banker. Banker has a right to use the proceeds in respect of any balance that may be due from the customer by way of reduction of customer's debit balance."
Counsel for defendant has also relied upon the following judgments in support of her arguments:-
CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 15/21(i) Sadhna Gupta & ors. Vs R.C. Gupta & ors., 2009 (112) DRJ 376 wherein it was held that "when a person has number of accounts kept in the books of the bank, the customer cannot take a plea in the absence of any special contract to say that securities which he deposited are only applicable to one particular account and not subject to a general lien. It was held that Section 171 creates a general lien as distinguish from particular lien of banker. This general lien can be excluded by special agreement only."
(ii)Raj Kumar & Anr. Vs Syndicate Bank, 2016 SCC Online Del 4726, wherein the principal laid down by Hon'ble Supreme Court in Syndicate Bank Vs Vijay Kumar (supra) was reiterated
(iii)Shivam Construction Company & ors. Vs Vijaya Bank, AIR 1997 GUJ 24 wherein Division Bench of Hon'ble High Court in para 28 held that "Apart from the general lien of the Banker, there is also evolution of doctrine of "set off" under which the bank has a right to set off. Therefore, the action of plaintiff bank in transferring the fixed deposit receipt amount by liquidating for appropriation of the bank's dues in the current account of the defendants would not be set to be unjustified or illegal.
27. As regards the objection of the plaintiff that defendant bank did not take any action against the erstwhile partnership firm or its erstwhile partners for recovery of the loan amount and the same had become time barred, Ld. Counsel for defendant has argued that Section 3 of the Limitation Act only bars the remedy of the suit but does not extinguish the right to which the remedy relates. It was argued that time barred debt does not cease to exist by reason of Section 3. It was argued that the defendant bank can exercise the right in any other manner then by means of suit. It is settled law that creditor would be entitled to adjust, from the payment of a sum by a debtor towards the time barred debt. Therefore, the defendant bank did not act in violation of any law when it debited the account of plaintiff firm to balance the loan CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 16/21 account of the plaintiff firm. In support of her arguments, Ld. Counsel for defendant has heavily relied upon the judgment of Hon'ble Supreme Court in Punjab National Bank & Ors. Vs Surendra Prasad Sinha, 1993 Supp (1) SCC 499 in support of her arguments.
28. In rebuttal, counsel for plaintiff has tried to distinguish the judgment relied upon by the defendant. It was argued that the judgment of Syndicate Bank (supra) and Shivam Construction (supra) were against FDRs and Bank guarantee whereas the judgment of Sadhana Gupta (supra) and Raj Kumar (supra) involved title deeds. Similarly, the judgment of Punjab National Bank (supra) on quashing of FIR and is not applicable to the present set of facts.
29. A careful perusal of the testimony of the witnesses as well as the judgments relied upon by the counsels for the parties would show that PW-1 Nitin Jain was well aware about the vehicle loan taken by the plaintiff firm. He was also well aware that plaintiff firm had not filed any legal proceedings against the Insurance Company for recovery of the claim for theft of the vehicle. The contention of the plaintiff that new partnership firm was constituted in 2011 vide partnership deed dated 22.12.2011 Ex.PW1/1 is also without any merits. It is pertinent to note here that the plaintiff firm is having the same PAN number as that of the erstwhile partnership firm which had obtained vehicle loan from the defendant bank. Hence, it cannot be said that an entirely new partnership firm had come into existence after dissolution of the old firm. Rather, it is the old partnership firm continuing with CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 17/21 a new set of partners. Hence, the liability of the plaintiff firm to repay the loan to the defendant bank cannot be disputed.
30. Perusal of the credit facility application form Ex.DW-1/2 shows that the credit facility granted to the plaintiff firm was subject to and governed by the standard term "ICICI Bank Limited's (All India) Standard Terms and Condtitions For Facility for Purchase Of /Against Products". Clause 29 of Standard Terms Ex.DW-1/5 would show that the defendant bank had a paramount right of set of and lien which the bank could claim not only against the deposits but also against the balances lying in the other accounts held /under the control of defendant bank and its group companies. Therefore, the plaintiff firm was bound by the said Standard Terms which formed part of the loan agreement.
31. As noted from the judgments relied upon by the counsel for the defendant as well as counsel for the plaintiff, the defendant bank's right to apply a deposit to an indebtedness due from the depositor, results from the right of set-off obtaining between persons occupying creditor and debtor relationship with mutual demand existing between them. Right to set-off is a judicially recognized right which arises from the principle of equity and is an equitable right. Right to set-off is not a contractual right but follows from the custom and usages of mercantile law on the principle of equity and justice. The principles of banker's right of set off are followed in India in the same lines as has been followed by the English law.
In Krishna Kishor Kar Vs United Commercial Bank & CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 18/21 Anr, AIR 1982 Calcutta 62, it was held that in the absence of contract to the contrary, banker's lien under Section 171 could be exercised. In case of separate accounts in the bank, adjustment can be made by the bank under Banker's lien. The plaintiff having cash credit account and other account, all proceeds of fixed deposit duly credited in the cash credit account, it was held that relying on the provisions of Section 171 of the Contract Act, the balance can be adjusted by appropriating the amount lying in the separate account in exercise of general lien by the bank.
32. In Canara Bank Vs Taraka Prabhu Publishers Pvt. Ltd, AIR 1991 Andh Pra 258 the Division Bench has upheld the doctrine of "set-off" over and above the general right of Banker's lien. In that case, the suit was filed for the recovery of loan by the Bank and the Bank had transferred the amount deposited in the current account to its loan account for set off. It was found that the Bank has right of set-off in terms of contract to recover the debt due to it. It was further observed in the said case that enforcement of doctrine of set-off for the amounts to be realized by the Bank could not be said to be in the ultimate analysis, in public interest an action which is arbitrary or exercise in a malafide manner.
33. In view of the aforesaid judgments and well settled law that the bank can claim set-off /exercise its right of banker's lien, I am of the considered opinion that the action of defendant bank in debiting the account of the plaintiff firm for Rs. 15,24,912/- and adjusting the amount so recovered to the loan account of the plaintiff firm cannot be termed as illegal, arbitrary or malafide. The bank was well within its rights to exercise the banker's right of general lien and set-off. The argument that the debt had become time barred is also without any merits. Section 3 of CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 19/21 Limitation Act only bars the remedy but it does not destroy the rights. Hence, the right can be excercised in any other manner then by means of filing the suit. The defendant bank did not violate any law when it excercised its right of set-off.
Thus in view of the aforesaid discussions, I am of the considered opinion that the plaintiff firm has no cause of action to file the present suit and plaintiff is not entitled for the recovery of the decreetal amount. Accordingly, issues nos. 2 & 3 are decided against the plaintiff and in favour of defendant bank.
ISSUE NO. 4:
"Whether the plaintiff is entitled for a decree of damages, as prayed for?(OPP)"
34. The onus of proving this issue was on the plaintiff.
The plaintiff has not led any evidence to substantiate its claim for damages of Rs. 10 lakhs. No witness has been examined to show that plaintiff had suffered actual loss of Rs. 10 lakhs except for the bald statement of PW-1 Nitin Jain that the amount was kept for salaries and other products and that the plaintiff firm had to arrange finances from other sources to make necessary payments. The plaintiff has not even disclosed names of such sources from which it has arranged the finances.
Even otherwise, in view of the findings on issue nos. 2 & 3, once it is held that the action of the defendant bank was not illegal or malafide, the plaintiff is not entitled for any damages. The issue is accordingly decided against the plaintiff and in favour of defendant.
CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 20/21ISSUE NO. 5:
"Whether the plaintiff is entitled for the interest, if any. If so, at what rate and for which period?(OPP)"
35. The onus of proving this issue was on the plaintiff. However, in view of the findings on issue no. 3 herein above, once it is held that the plaintiff is not entitled to the decreetal amount, the question of awarding any interest does not arise. The issue is accordingly decided against the plaintiff and in favour of defendant.
Relief.
36. In view of my findings on the issues herein above, the suit of the plaintiff is dismissed. No order as to cost.
Decree sheet be prepared accordingly.
File be consigned to record room after due compliance.
Announced in the open Court (ANIL KUMAR SISODIA) Dated : 20th December, 2023 District Judge (Commercial Court-04) Central District, Tis Hazari Courts, Delhi CS (COMM) 1689/22 M/S. SATNAM AND COMPANY VS. ICICI BANK LTD Page No. 21/21