Delhi District Court
Ms New Foundland Enterprises vs Imperial Cooperative Bank Ltd on 13 December, 2023
DLND010000031998
IN THE COURT OF ADDITIONAL DISTRICT JUDGE- 01,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS,
NEW DELHI
Presided over by :- MS. VIJETA SINGH RAWAT (DHJS)
CS No. 57506/16
M/s New Foundland Enterprises Pvt. Ltd.
303, Aditya Complex-II
Plot no. 7, D-Block,
Central Market, Prashant Vihar,
Delhi - 110085
......... Plaintiff
Versus
1. Imperial Cooperative Bank Ltd.
L-125 A, Mahipalpur Extension,
Old Rangpuri Road,
Mahipalpur, New Delhi - 110037
2. Dr. Chander Shekhar
Chairman
Imperial Cooperative Bank Ltd.
B-58, D.D.A. Flat,
Vasant Vihar, New Delhi
3. Mrs. Anita Singh
W/o Dr. Chander Shekhar
Director
Imperial Cooperative Bank Ltd.
B-58, D.D.A. Flat,
Vasant Vihar, New Delhi
CS no.57506/16 Page no. 1 of 37
M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.
4. M/s Charmine International
89, Kailash Hills,
East of Kailash,
New Delhi - 110065
5. M/s Samsum Traders
54, Kailash Hills
East of Kailash
New Delhi - 110065
6. M/s Universal Trading Corporation
17/6, Main Mathura Road,
Faridabad - 127007
7. Punjab and Sindh Bank
Green Park Extension
New Delhi.
8. Bank of Baroda
11th Floor, Bank of Baroda Building
16 Sansad Marg,
New Delhi - 110001
........ Defendants
Suit presented On : 28.08.1998
Arguments Concluded On : 22.11.2023
Judgment Pronounced On : 13.12.2023
JUDGMENT
PLAINT
1. This is a suit by way of which the plaintiff has sought a decree for recovery of following amounts :
"(a) Pass a decree for Rs.8,96,119/0 (Rupees eight lacs, ninety six thousand, one hundred and nineteen only) in favour of the plaintiff company and against defendants no. 1,2,3,4,7 & 8 jointly and / or severally;
(b) Pass a decree for Rs.6,22,680/- (Rupees six lacs, twenty CS no.57506/16 Page no. 2 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.
two thousand, six hundred and eighty only) in favour of the plaintiff company and against the defendants no. 1,2,3,5, 7 & 8 jointly and / or severally;
(c) Pass a decree for Rs.29,36,806/- (Rupees twenty nine lacs, thirty six thousand, eight hundred and six only) in favour of the plaintiff company and against the defendants no. 1,2,3,6, 7 & 8 jointly and / or severally;
(d) Award pendente lite & future interest on the outstanding amount @ 24% p.a. from the date of filing of the suit till realisation in favour of the plaintiff company and against the defendants no. 1 to 8 jointly and / or severally;
(e) Award costs of the suit in favouir of the plaintiff company and against the defendants no. 1 to 8 jointly and / or severally;
(f) Grant any other further relief or reliefs to which the plaintiff be found entitled to be as granted in their favour and against the defendants."
2. The case as set up by the plaintiff company through it's authorized representative Sh. S.C Girdhar is as under :
(a) That it is a private limited company dealing in money exchange under license no. EC/DEL/FFMC/81/96 dated 29.09.1997 issued by The Reserve Bank of India (hereinafter referred to as 'RBI').
(b) That Defendants no. 4 to 6 are the customers to whom foreign exchange was issued by the plaintiff company on their applications who in return issued pay order / cheques drawn on defendant no.1 bank details of which are as under :
S.no. Dated Name of client Exchange taken Cash Amount Instrument cn :currency mem in Indian received tc:travellers o rupees cheque
1. 24.01.98 Universal Trading US $ CN:200 7412 6,72,560/- Pay order -
Corporation, US $ TC :17000 000738 dated defendant no. 6 24.1.98 for Rs.6,72,560/-
2. 27.01.98 Sam Sun Traders US $ TC :15400 7413 5,98,290/- Pay order -
defendant no. 5 000750 dated
27.1.98 for
CS no.57506/16 Page no. 3 of 37
M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.
Rs.5,98,290/-
3. 02.02.98 Charmine US $ CN:15000 7414 5,90,250/- Pay order -
International 000763 dated
defendant no. 4 31.1.98 for
Rs.8,63,200/-
4. 02.02.98 Charmine US $ TC :7000 7418 2,75,450/-
International
defendant no. 4
5. 04.02.98 Universal Trading US $ TC :7300 7419 2,85,065/-
Corporation,
defendant no. 6
Cheque no.
6. 04.02.98 Universal Trading US $ TC :11800 7420 4,60,790/-
415245 dated
Corporation,
5.2.98 for
defendant no. 6
Rs.9,87,965/-
7. 04.02.98 Universal Trading US $ TC :6200 7421 2,42,110/-
Corporation,
defendant no. 6
8. 06.02.98 Universal Trading US $ TC :16000 7528 6,25,600/-
Corporation, Cheque no.
defendant no. 6 415246 dated
6.2.98 for
9. 06.02.98 Universal Trading US $ TC :14000 7529 5,47,400/-
Rs.11,73,000/-
Corporation,
defendant no. 6
(c) That defendant no. 2 is the Chairperson and defendant no.3
is the Director of defendant no.1.
(d) That defendant no. 1 had a clearing arrangement with
defendant no. 8.
(e) That pay-order bearing no. 000738 dated 24.01.1998 and
pay order no. 000750 dated 27.01.1998 were deposited by the plaintiff company in its bank (defendant no.8) on 27.01.1998 and 29.01.1998, respectively. However, they were returned with memos of defendant no.1 dated 31.01.1998 with remarks "present again". Therefore, the pay orders were again sent by defendant on. 8 on 2nd/3rd.02.1998 to defendant no. 7. However, again the pay orders were returned dishonoured by defendant no. 7 by their dishonouring memo dated 09.02.1998 with remarks "arrangement cancelled".
CS no.57506/16 Page no. 4 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.
(f) That ordinarily and in the normal course, the negotiable instruments should have been returned on first deposit on 29.01.1998 or 31.01.1998 (30.01.1998 being a holiday), respectively. But the same was received by defendant no. 8 which is the presenting bank on 02.02.1998. Also, when the pay orders were submitted again 03.02.1998, the return memo should have been issued on 04.02.1998, itself. However, the plaintiff company apprehends that there has been collusion between officials of defendant no. 1, 7 and 8 to cause loss to the plaintiff, because if, the plaintiff company was intimated on time about the cancellation of the arrangement, it would not have accepted subsequent pay orders / cheques as valid tender against which it had already issued travelers cheques as mentioned in the table above on account of which the plaintiff has suffered a loss of Rs. 42,97,515/-.
(g) That collusion is apparent for following reasons :
(i) That the return memos have been belatedly issued on 31.01.1998 (on first presentation) and on 09.02.1998 (on second presentation) when in fact as per the Banking Rules, the same should have been done within a day, in ordinary course of business, so as to induce the plaintiff to believe that defendant no.1 had a clearing arrangement with defendant no. 7 which was still alive and so the plaintiff under mistaken impression of the pay orders / cheques being cleared, continued to accept pay order / cheques as a valid tender.
(ii) That the pay order no. 000738 dated 24.01.1998 and pay CS no.57506/16 Page no. 5 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. order no. 000750 27.01.1998 which the plaintiff company had deposited with defendant no. 8 have been changed / replaced by them as a slip has been affixed, thereon, with the same pay order number to match with the original pay order number.
(iii) That the replacement is also evident from the fact that it does not bear the clearing stamp of defendant no. 8 on the reverse of the said pay order without which it could not have been sent to the clearing house by the presenting bank because in the event of its return by the paying bank, it would not be possible to identify the presenting bank. Further, except for pay order nos 000738 and 000750, the rest of the pay orders / cheques have the RBI, MICR Center Transaction number and it suggests that possibly, the pay orders may not have been sent to the clearing house at all.
(iv) That defendant no. 8 in its letter dated 17.03.1998 had explained the delay in issuance of return memo as on 09.12.1998 as defendant no. 7 had wrongly returned the pay order to Canara Bank on 06.02.1998, inadvertently. However, it is urged that the return memo then, as well, should have been of 04.02.1998, itself and not of 06.02.1998. Considering that since the instrument on it's overleaf, merely has the crossing stamp of Canara Bank, RK. Puram and no clearing stamp either of defendant no. 8 or of Canara Bank, the instrument has been changed and it is an act to defraud the plaintiff company.
(v) That on 04.02.1998, a credit entry of Rs. 12,70,850/- had already been received by the plaintiff company in its account and CS no.57506/16 Page no. 6 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. so, subsequently, travellers cheques had also been issued for 05.02.1998 and 06.02.1998.
(vi) That pay orders as under were also dishonoured for following reasons :
S.no. Pay order / Dated Amount Reason for Date cheque no. return 1 000763 31.01.98 8,63,200/- Arrangement 05.02.98 cancelled 2 0415245 05.02.98 9,87,965/- Funds 07.02.98 insufficient 3 0415246 06.02.98 11,73,000/- Funds 10.02.98 insufficient
(vii) Thus, the promptness with which the dishonour of aforementioned pay orders was informed is also stated to be evidentiary of the fact that delayed intimation of dishonour of pay orders no. 000738 and 000750 was to defraud the plaintiff.
(viii) That the credit of Rs.12,70,800/- was illegally and unauthorizedly debited from the account of the plaintiff on 12.02.1998.
(h) That when the plaintiff company contacted defendant no.2 on 10.02.1998, he handed over 42 FDRs of Rs.1 lakh each and one FDR of Rs.95,015/- (in the name of Directors / family members/ relatives and friends) as collateral security.
(i) That on 28.02.1998, the plaintiff was shocked to read a public notice issued by RBI against defendant no. 1 cautioning the general public from dealing with defendant no.1 as it did not have a banking licence. Thereafter, the plaintiff company issued letter no. NLF-F3/OUTLR/Mar-98/RBI-1 dated 03.03.1998 to CS no.57506/16 Page no. 7 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. lodge a complaint with RBI. The plaintiff company alleges that defendant no.7 did not carryout proper due diligence before entering into a clearing arrangement with defendant no.1. Thus, in view of he above averments, the present suit for recovery came to be filed holding the defendants jointly and severally liable for the loss caused to the plaintiff.
(Despite service of summons by way of publication in newspaper 'The Statesman', none appeared on behalf of defendants no. 1 to 6 and they were proceeded ex-parte vide order dated 25.01.2007) WRITTEN STATEMENT OF DEFENDANT NO. 7
3. Preliminary objections have been taken that the plaintiff has no cause of action against defendant no. 7 and that the suit is bad for mis-joinder of parties.
3.1 On merits, it is stated that defendant no.1 represented itself to be a bank and on or around 24.06.1997, opened a current account bearing no. 3310 with defendant no. 7 by depositing a sum of Rs.5000/-. It is stated that thereafter, the account was being operated in an ordinary way. Subsequently, it is stated that defendant no. 2 presented certain documents including Bye-laws, letter dated 02.04.1997 issued by RBI and resolution dated 23.06.1997. It was further represented by defendants no. 1 to 3 that vide letter dated 06.08.1997, defendant no.1 had written to CS no.57506/16 Page no. 8 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. RBI and the copy of the letter dated 31.07.1997 sent to to RBI was enclosed, therewith. It is averred that on the basis of documents presented at the time of opening of account, in the ordinary course of business, clearing arrangement facility was extended by defendant no.7 to defendant no.1. Defendant no.1, then started issuing cheques with its stamp on clearing through defendant no.7 based upon the amount in the current account of defendant no.1 with defendant no.7. However, the cheques were to be returned by defendant no.1, itself, if the balance in the current account with defendant no. 7 was insufficient. It is stated that pay orders were presented by defendant no.1 on 28.01.1998 and were returned on the same date and again, they were presented on 31.01.1998 and were returned on the same date. Defendant no. 7 has stated that on or around end of January / beginning of February, 1998, defendant no. 7 learnt that defendants no. 1 to 3 had played fraud upon it. The suspicion was raised as large number of cheques were being issued by defendant no.1 without arrangement to honour the commitment. Thereafter, defendant no. 7 wrote to RBI on 11.02.1998 and conducted due diligence from the office of Registrar of Societies. It was then found that defendant no.1 was functioning illegally. Defendant no. 7 has stated that on 04.021998, it issued a letter to defendant no. 1 and 2 cancelling the arrangement for inward clearing as it had failed to produce proof of sub-membership of clearing house. It is stated that defendant no. 1 was also directed to instruct its clients not to issue payee account cheques. In CS no.57506/16 Page no. 9 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. response thereof, defendant no.1 requested for 15 days time vide letter dated 05.02.1998 but extension was only granted for one day. Vide letter dated 11.01.1998, it was demanded that defendants no. 1 to 3 should return unused cheque books and other stationary material as well as they were advised not to use the MICR code of defendant no. 7. Also, public notice dated 12.02.1998 was issued regarding closure of current account of defendants no. 1 to 3.
3.2 As regards, delay in issuance of return memos, it is stated that it could have been for various reasons. It is denied that defendant no. 7 had colluded with the remaining defendants. It has been explained that pay order no. 000738 for a sum of 6,72,560/- was presented to it on 04.02.1998 but since, it had the stamp of Canara Bank, R.K. Puram, it was returned to it on 04.02.1998, itself. Thereafter, Canara Bank returned the same to the defendant on 06.02.1998 on realizing that it did not pertain to it. However, on 06.02.1998, it was again returned by defendant no. 7 to Canara Bank, the second time but on checking the clearing slip it was found that the instrument was to be returned to Vijaya Bank / defendant no.8. On the same day, it is stated that defendant no.8 was telephonically informed that due to no clearing / crossing stamp, the instrument which was to be returned to it had been sent to Canara Bank. On 07.02.1998, information in writing was given to Canara Bank. Thereafter, defendant no. 8 was immediately asked on 09.02.1998 to return CS no.57506/16 Page no. 10 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. the instrument to the plaintiff as only on 09.02.1998, the instrument was received from Canara Bank. It is denied that the pay orders had been replaced. Defendant no. 7 has denied all allegations of lack due diligence in extending the arrangement facility.
WRITTEN STATEMENT OF DEFENDANT NO. 84. By way of the written statement, preliminary objections has been taken which are as under:
(a) That the plaintiff is estopped from raising any demand as it had accepted fixed deposits from defendants no. 1 to 3 and therefore waived off its rights qua defendant no. 8.
(b) That the plaintiff has not approached the Court with clean hands.
(c) That the suit is based on conjectures and surmises.
(d) That on cause of action arose against defendant no.8.
4.1 On merits defendant no. 8 has stated that pay order no. 000738 dated 24.01.1998 and pay order no. 000750 dated 27.01.1998 had been deposited with it for onward clearing which was diligently sent to defendant no. 7 on 04.02.1998 and accordingly, credit was reflected in the account of the plaintiff on 04.02.1998. However, as both the pay orders were returned vide memo dated 09.02.1998 issued by defendant no. 7 stating that "arrangement cancelled", the credit of Rs. 12,70,850/- was CS no.57506/16 Page no. 11 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. reversed. It is stated that the rules had been scrupulously followed. It is stated that in ordinary course of business, once a negotiable instrument is present for clearing, it takes 2-3 days however, in the present case, it was returned by defendant no. 7 on 09.02.1998 for which defendant no. 8 is not responsible. It has been denied that there was any collusion of the officials of defendant no. 8 with other defendants. The present suit against defendant no. 8 is stated to be an after thought pursuant to the caution issued by RBI.
REPLICATION
5. By way of replication to the written statement of defendant no. 7, facts of the plaint have been reiterated. It is averred that as per letter dated 02.04.1997, allegedly, RBI had merely granted temporary / provisional permission to defendant no.1 to commence banking operations from Mahipalpur branch but it did not grant permission for entering into any clearing arrangement with defendant no. 7. Further, it is stated that as per the letter, defendant no. 1 was required to have a membership of 6000 people and cumulative deposits of Rs. 70,00,000/- by 31.03.1998. However, permanent licence was obviously not granted as fraud played by defendants no. 1 to 3 upon the general public including the plaintiff was discovered. It is stated that defendant no. 7 was fully aware that defendant no.1 did not have permanent licence yet, entered into a clearing arrangement with it CS no.57506/16 Page no. 12 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. and represented to the plaintiff that defendant no.1 had a sound running co-operative bank whose financial stability was guaranteed by defendant no. 7. Referring to letter dated 11.02.1998 written by defendant no. 7 to RBI, it has also been stated that it is apparent that defendant no.1 had furnished misleading information for entering into the clearing arrangement. It has also been stated that the procedure adopted to introduce a sub-member of clearing house was not followed. It is stated that whenever National Clearing Cell, RBI grants sub- membership of the clearing house, it allots a unique MICR code to the sub-member which appears at the bottom of its instruments. However, comparison of MICR code numbers on pay orders no. 000738, 000750 and 000763 including cheques no. 415245 and 415246 issued by defendant no. 7 reveals that the same MICR code 110023036 of which the last 2/3 digits denotes the sub-member / branch at which instrument is issued. However, since the instruments carried the branch MICR code of defendant no. 7, it is apparent that defendant no. 1 was not granted an independent MICR branch code therefore, no permission had been obtained from RBI for making defendant no.1 a sub- member of clearing house. Also, it is alleged that no intimation to RBI regarding extension of clearing arrangement with defendant no.1 had been given.
5.1 Replication to written statement of defendant no. 8 is also reiteration of allegations made in the plaint. As regards estoppel, CS no.57506/16 Page no. 13 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. it is denied that the same was applicable as the FDRs were of defendant no. 1, itself, which was of no value.
ADMISSION AND DENIAL DOCUMENTS
6. Admission and denial of documents was carried out on 08.09.2005 where defendant no. 7 and 8 admitted the following documents :
Sl no. Name of document Exhibited as
1. Dishonouring memo of defendant no. 7 Ex. P-D7/1
dated 05.02.1998
2. Dishonouring memo of defendant no. 7 Ex. P-D7/2
dated 07.02.1998
3. Dishonouring memo of defendant no. 7 Ex. P-D7/3
dated 09.02.1998
4. Dishonouring memo of defendant no. 7 Ex. P-D7/4
dated 06.02.1998
5. Dishonouring memo of defendant no. 7 Ex. P-D7/5
dated 10.02.1998
6. Debit advise of defendant no. 8 dated Ex. P-D8/1 07.02.1998
7. Debit advise of defendant no. 8 dated Ex. P-D8/2 09.02.1998
8. Debit advise of defendant no. 8 dated Ex. P-D8/3 12.02.1998
9. Debit advise of defendant no. 8 dated Ex. P-D8/4 11.02.1998
10. Letter no. ADMN:SM:CLB:331/98 dated Ex. P-D8/5 17.03.1998 CS no.57506/16 Page no. 14 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. ISSUES
7. Vide order dated 07.11.2006 following issues were framed:
1. Whether the present suit filed by the plaintiff is bad for mis-joinder of parties? OPD7
2. Whether the present suit filed by the plaintiff is not maintainable in view of Principle of Estoppel? OPD8
3. Whether the suit has not been properly valued for the purposes of Court fees? OPD8
4. Whether the plaintiff is entitled to a decree for a sum of Rs.8,96,119/- against defendants no. 1,2,3,4, 7 and 8, jointly and / or severally? OPP
5. Whether the plaintiff is entitled to a decree for a sum of Rs.6,22,680/- against defendants no. 1,2,3, 5, 7 and 8 jointly and / or severally? OPP
6. Whether the plaintiff is entitled to a decree for a sum of Rs.29,36,806/- against defendants no. 1,2, 3, 6, 7 and 8 jointly and / or severally? OPP
7. Whether the plaintiff is entitled to any interest on the aforesaid amount? If so, on what amount, at what rate and for what period? OPP
8. Relief PLAINTIFF EVIDENCE
8. To prove its case, the plaintiff examined its Director, Sh. S.C. Girdhar as PW1 who tendered his evidence by way of affidavit Ex. PW-1/A alongwith following documents:
Sl. no. Document Exhibited /
marked as
1. Memorandum of Article of Ex. PW1/1
Association of the plaintiff company
CS no.57506/16 Page no. 15 of 37
M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.
2. Attested true copy of resolution Ex.PW1/2 (OSR)
3. True copy of license no. Ex. PW1/3 EC/DEL/FFMC/81/96 dated (OSR) 20.09.1997
4. Letter of defendant no. 6 dated Ex. PW1/4 24.01.1998
5. True copy of cash memo dated Ex.PW1/5 24.01.1998 for Rs.6,72,560/-
6. Letter of defendant no. 5 dated Ex. PW1/6 27.01.1998
7. Cash memo dated 27.01.1998 for Ex.PW1/7 Rs.5,98,280/-
8. Letter of defendant no. 4 dated Ex. PW1/8 02.02.1998
9. Cash memo dated 02.02.1998 for Ex.PW1/9 Rs.2,75,450/-
10. Letter of defendant no. 4 dated Ex. PW1/10 02.02.1998
11. Cash memo dated 02.02.1998 for Ex.PW1/11 Rs.5,90,250/-
12. Letter of defendant no. 6 dated Ex. PW1/12 04.02.1998
13. Cash memo dated 04.02.1998 for Ex.PW1/13 Rs.2,85,065/-
14. Letter of defendant no. 6 dated Ex. PW1/14 04.02.1998
15. Cash memo dated 04.02.1998 for Ex.PW1/15 Rs.4,60,790/-
16. Letter of defendant no. 6 dated Ex. PW1/16 04.02.1998
17. Cash memo dated 04.02.1998 for Ex.PW1/17 Rs.2,42,110/-
CS no.57506/16 Page no. 16 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.
18. Letter of defendant no. 6 dated Ex. PW1/18 06.02.1998
19. Cash memo dated 06.02.1998 for Ex.PW1/19 Rs.6,25,600/- bearing signatures of Sh. Sanjeev Khanna, Director of the plaintiff company
20. Letter of defendant no. 6 dated Ex. PW1/20 06.02.1998
21. Cash memo dated 06.02.1998 for Ex.PW1/21 Rs.5,47,400/- bearing signatures of Sh. Sanjeev Khanna, Director of the plaintiff company
22. Cheque bearing no. 000738 dated Ex. PW1/22 24.01.1998 for Rs.6,72,560/- also Ex. DW1/A
23. Cheque bearing no. 000750 dated Ex. PW1/23 27.01.1998 for Rs.5,98,290/- also Ex. DW1/B
24. Dishonouring memo of defendant no. Ex. PW1/24 7 dated 06.02.1998 also Ex. P-D7/4
25. Dishonouring memo of defendant no. Ex. PW1/25 7 dated 09.02.1998 also Ex. P-D7/3
26. Debit Advise of defendant no. 8 dated Ex. PW1/26 12.02.1998 also Ex. P-D8/3
27. Cheque bearing no. 000763 dated Ex. PW1/27 31.01.1998 for Rs.8,63,200/-
28. Dishonouring memo of defendant no. Ex. PW1/ 28 7 dated 05.02.1998 also Ex. P-D7/1
29. Debit Advise of defendant no. 8 dated Ex. PW1/29 07.02.1998 also Ex. P-D8/1 CS no.57506/16 Page no. 17 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.
30. Cheque no. 415245 dated 05.02.1998 Ex. PW1/30 for Rs.9,87,965/-
31. Dishonouring memo of defendant no. Ex. PW1/31 7 dated 07.02.1998 also Ex. P-D7/2
32. Debit Advise of defendant no. 8 dated Ex. PW1/32 09.02.1998
33. Cheque no. 0415246 dated 06.02.1998 Ex. PW1/33 for Rs.11,73,000/-
34. Dishonouring memo of defendant no. Ex. PW1/34 7 dated 10.02.1998 also Ex. P-D7/5
35. Debit Advise of defendant no. 8 dated Ex. PW1/35 11.02.1998 also Ex. P-D8/4
36. Letter dated 10.02.1998 of defendant Ex. PW1/36 no.1
37. Newspaper report dated 28.02.1998 Ex. PW1/37
38. Letter dated 03.03.1998 Ex. PW1/38
39. Letter dated 05.03.1998 Ex. PW1/39
40. Complaint dated 10.03.1998 Ex. PW1/40
41. Letter of defendant no. 8 dated Ex. PW1/41 06.03.1998
42. Letter of defendant no. 8 dated Ex. PW1/42 17.03.1998
43. Letter of the plaintiff dated 18.03.1998 Ex. PW1/43
44. List of UPC Ex. PW1/43A
45. Letter of RBI dated 06.03.1998 Ex. PW1/44
46. Letter of RBI dated 22.04.1998 Ex. PW1/45
47. Certified copy of FIR no. 109/98 dated Ex. PW1/46 21.03.1998
48. Statement of account of the plaintiff Ex. PW1/47 with defendant no. 8 CS no.57506/16 Page no. 18 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.
49. Copy of instrument bearing no. Ex. DW1/A 000738 dated 24.01.1998 for Rs.
6,72,560/-
50. Copy of instrument bearing no. Ex. DW1/B 000750 dated 27.01.1998 8.1 PW2 Sh. Vijay Dutt Sharma brought the print out taken from micro film archive of Economic Times dated 28.02.1998 as Ex. PW2/1 to prove the public notice which was issued.
8.2 PW3 Sh. A. Mukhopadhyay, Manager, Urban Banks Department, RBI sought time to bring the original records pertaining to Imperial Cooperative Bank Ltd., if the same were not destroyed. But subsequently, PW4 Sh. R.K. Pandey, General Manager, Urban Banks Department, RBI brought the original records pertaining to Imperial Cooperative Bank Ltd. and deposed that letter as Ex. PW1/38 was received by RBI from the plaintiff and public advertisement as Ex. PW2/1 was issued by RBI.
8.3 PW5 Sh. Pankaj Setiya, Assistant General Manager, NCC, RBI tendered the original statement of account pertaining to clearance of cheques no. 000738 and 000750 as Ex. PW5/1, copy of codified procedure for clearance of cheque adopted by RBI as Ex. PW5/2, uniform regulations and rules for bankers clearing houses as Ex. PW5/3 and copy of letter seeking permission for opening branch as Ex. PW5/D1.
CS no.57506/16 Page no. 19 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. 8.4 All the witnesses were extensively cross-examined on behalf of Ld. Counsel for defendants no. 7 and 8.
DEFENDANT EVIDENCE
9. Defendant no. 7 examined ASI Subhash Tiwari, PS Vasant Kunj North as DW7/A. He brought the summoned record pertaining to FIR no. 111/98 of PS Vasant Kunj, North as Ex. DW7/1 (OSR). He stated that he could not bring the documents seized as per the seizure memo dated 02.06.1998.
9.1 Sh. Umesh Kumar Jayant tendered his evidence by way of affidavit Ex. D7W1/A and relied upon following documents:
S.no. Documents Exhibit 1. Copy of Power of Attorney Ex. DW7/1
2. Certified copy of account opening Ex. DW7/2 form of defendant no. 1 dated 24.06.1997
3. Certified copy of letter dated Ex. DW7/3 24.06.1997
4. Certified copy of Bye laws of Ex. DW7/4 defendant no. 1 (objected to the mode of proof being copy of a copy)
5. Certified copy of copy of Letter Mark DW7/5 dated 02.04.1997
6. Certified copy of copy of Board Mark DW7/6 Resolution dated 23.06.1997 CS no.57506/16 Page no. 20 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.
7. Certified copy of copy of Letter Mark DW7/7 dated 06.08.1997
8. Certified copy of copy of Letter Mark DW7/8 dated 31.07.1997
9. Certified copy of copy of letter dated Mark DW7/9 04.02.1998 -(in affidavit) (However it is dated 02.02.1998 in exhibit)
10. Certified copy of copy of Letter Mark DW7/10 dated 05.02.1998
11. Letter dated 13.02.1998 Mark DW7/11 (objected to on the mode of proof being copy of copy)
12. Certified copy of copy of Letter Mark DW7/12 dated 11.02.1998
13. Certified copy of copy of Public Mark DW7/13 notice dated 12.02.1998 (objected to the mode of proof being copy of copy)
14. copy of Bye laws of defendant no. 1 Mark D7W1/2
10. Defendant no. 8 examined Sh. Karan Singh Verma, Assistant Manager who tendered his evidence by way of affidavit Ex. DW8/A relying upon following documents :
S. no. Name of document Exhibited as /
marked as
1. Copy of defendant no. 8's reply Ex. DW8/1 also dated 17.03.1998 Ex. DW8/5
2. Letter dated 05.03.1998 Ex. DW8/P1 CS no.57506/16 Page no. 21 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. 10.1 He was cross examined by Ld. Counsel for the plaintiff. Vide a separate statement of Ld. Counsel for defendant no.8, defendant's evidence was closed.
FINAL ARGUMENTS
11. Final arguments have been advanced by Ld. Advocates, Sh. Irfan Ahmed on behalf of the plaintiff, Sh. B.K. Mishra on behalf of defendant no.7 and Sh. Lalit Kumar on behalf of defendant no. 8. Written submissions have been filed on behalf of the parties.
REASONING AND APPRECIATION OF MATERIAL ON RECORD
12. This Court has considered the submissions and material on record.
ISSUEWISE FINDINGS A. Whether the present suit filed by the plaintiff is bad for mis- joinder of parties? OPD7 (Issue no.1)
13. The onus to prove this is upon defendant no. 7.
13.1 No arguments have been advanced on this issue by either parties.
CS no.57506/16 Page no. 22 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. 13.2 Even though, it has so been pleaded in preliminary objections, it has not been elucidated as to how mis-joinder has happened. Rather, the plaintiff has brought the suit for recovery premised upon alleged collusion between the defendants arising out of series of acts or transactions whereby they may be jointly, severally or alternatively liable and it has not been demonstrated how any of the defendants are not a proper or necessary party in view of the averments in the plaint. Therefore, as defendant no. 7 has failed to discharge the onus, the issue is decided against it.
B. Whether the present suit filed by the plaintiff is not maintainable in view of Principle of Estoppel? OPD8 (Issue no.2)
14. The onus to prove this issue was upon defendant no. 8.
14.1 It has been argued on behalf of defendant no. 8 that it is evident from the plaint that in lieu of the dishonoured negotiable instruments, the plaintiff had acquired FDRs from defendant no. 1 and therefore, at that stage itself, had given up its claim qua defendant no. 8 and therefore, defendant no.1 is estopped from raising a claim against defendant no. 8.
14.2 Per contra, it has been submitted on behalf of the plaintiff that it is not estopped from making its claim against the defendants as the FDRs were of defendant no.1, itself, and therefore, were inconsequential.
CS no.57506/16 Page no. 23 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. 14.3 Estoppel as enshrined in Section 115 of the Indian Evidence Act, 1872 provides as under :
"115. Estoppel - When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing."
14.4 It is a rule of evidence to secure justice between parties by promotion of honesty and good faith. Merely because the plaintiff accepted FDRs from defendant no.1 to 3, would not by itself be sufficient to invoke estoppel until and unless, by such act, defendant no. 8 was caused or permitted to believe something to be true and also on such belief caused defendant no. 8 to act. Therefore, since defendant no. 8 was not made to believe in something so as to cause it to act, there is no ground made out that the plaintiff is estopped from raising its claim against defendant no. 8. The plaintiff has explained that the FDRs accepted from defendants no. 1 to 3 were also of defendant no. 1 which did not have the banking licence and so the FDRs were of no value.
14.5 Hence, issue is decided against defendant no. 8.
(C). Whether the suit has not been properly valued for the purposes of Court fees? OPD8 (Issue no.3)
15. The onus to prove this issue was upon defendant no. 8.
CS no.57506/16 Page no. 24 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. 15.1 Once again no arguments have been led on this aspect.
15.2 Even though, an objection has been taken, it has not been explained. On the contrary, the plaintiff has valued the suit @ Rs. 44,55,605/- upon which it states that requisite court fees of Rs. 40,870/- has been deposited.
15.3 Therefore, the issue is decided in favour of the plaintiff.
(D) Whether the plaintiff is entitled to a decree for a sum of Rs.8,96,119/- against defendants no. 1, 2, 3, 4, 7 and 8, jointly and / or severally? OPP (Issue no. 4) (E) Whether the plaintiff is entitled to a decree for a sum of Rs.6,22,680/- against defendants no. 1, 2, 3, 5, 7 and 8 jointly and / or severally? OPP (Issue no. 5) (F) Whether the plaintiff is entitled to a decree for a sum of Rs.29,36,806/- against defendants no. 1, 2, 3, 6, 7 and 8 jointly and / or severally? OPP (Issue no. 6) (G) Whether the plaintiff is entitled to any interest on the aforesaid amount? If so, on what amount, at what rate and for what period? OPP (Issue no. 6)
16. These issues are taken up for discussion together as they involve similar questions of law and fact.
16.1 The onus to prove these issues was upon the plaintiff.
16.2 It has been argued on behalf of the plaintiff that it has been established from the examination of Sh. Umesh Kumar Jayant (D7W1) that at the time of entering into the clearing arrangement CS no.57506/16 Page no. 25 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. with defendant no.1, defendant no. 7 had not conducted the due diligence and acted as per rules as no enquiries had been made from RBI qua letter dated 02.04.1997 (Mark DW7/5) and the fulfillment of conditions imposed, therein. It has been submitted that neither defendant no. 7 made enquiries whether defendant no.1 had membership of 6000 and whether it had Rs.70,00,000/-. Thus, it has been adumbrated that the opening of the current account for clearing arrangement was negligent and out of ordinary course. Drawing the attention of the Court to the testimony of Dr. R.K. Pandey (PW4), it has been submitted that the witness has also established that no banking licence had been granted by RBI to defendant no.1. Thereafter, it has been argued that Dr. R.K. Pandey (PW4) has also proved that there are no records available with RBI which shows that any sub- membership of clearing house was sought by defendant no. 7 for defendant no.1. Further, through examination of Sh. Pankaj Setiya (PW5) who has tendered Uniform Regulations and Rules for Bankers' Clearing Houses (Ex. PW5/3) it has been proved that defendant no. 7 did not adhere to the rules for introducing defendant no.1 as a sub-member of the clearing house. It has been submitted that defendant no. 1 was also not assigned a unique MICR code as a sub-member of the clearing house. Then, attention of the Court has been drawn to manner in which pay orders bearing nos. 000738 and 000750 (Ex. PW1/22 and Ex. PW1/23, respectively) were collusively retained till 09.02.1998 to fraudulently induce the plaintiff to accept further pay order CS no.57506/16 Page no. 26 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. bearing no. 000763 (Ex. PW1/27), cheques no. 415245 and 415246 (Ex. PW1/30 and Ex. PW1/33, respectively). It has been argued that pay orders bearing nos. 000738 and 000750 (Ex. PW1/22 and Ex. PW1/23, respectively) have been replaced as according to the testimony of Sh. Pankaj Setiya, Assistant General Manager (PW5) and in view of statement of account pertaining to clearance of cheques (Ex.PW5/1), the pay orders had been presented with the clearing house on 03.02.1998 and should have borne the sorting code like the other negotiable instruments, but are not bearing the same. Also, it has been argued that perusal of pay orders bearing nos. 000738 and 000750 (Ex. PW1/22 and PW1/23, respectively) shows that if they had been sent for clearing, they would bear the stamp of defendant no. 8 as is apparent from the remaining negotiable instruments Ex. PW1/30 and Ex. PW1/33, the pay orders bear the stamp of Canara Bank. This coupled with the fact that the return memo (Ex. PW1/24) is dated 06.02.1998 and the instruments were returned to defendant no. 8 on 09.02.1998, suggests that defendant no. 7 had been colluding with defendant no. 1 to induce the plaintiff to accept further pay order and cheques.
16.3 Defendant no. 7 has maintained that it had acted in ordinary course of business and has denied all allegations of collusion with remaining defendants and of negligence. The Court has been led through cross examination of S.C. Girdhar (PW1) to show that plaintiff was dealing with defendants no. 4 to CS no.57506/16 Page no. 27 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. 6 since prior to the transactions in question and during those transactions, pay orders of defendant no.1 were received and duly honoured. It has been argued that the witness admitted that defendant no. 7 had cancelled the clearing arrangement with defendant no.1 and that the plaintiff had accepted FDRs from defendant no. 1. It has also been submitted that Sh. S.C. Girdhar (PW1) also admitted that public notice had been issued by defendant no. 7. Thereafter, it has also been sought to be demonstrated that there was no negligence on its part but that defendant no. 8 had without information to the plaintiff, re- presented the pay orders bearing nos. 000738 and 000750 (Ex. PW1/22 and Ex. PW1/23, respectively) despite their return at the first instance. Therefore, it has been argued that defendant no. 7 cannot be saddled with any liability. Reference has been made to the statement of Sh. S.C. Girdhar (PW1) that he had no knowledge on 04.02.1998 whether pay order bearing nos. 000738 and 000750 (Ex. PW1/22 and Ex. PW1/23, respectively) were bearing the stamp of Canara Bank overleaf, and the admission that no FIR had been lodged regarding replacement of pay orders and also that in FIR (Ex. PW1/46), there was no averment of replacement of cheques, the allegations are an after thought. Further, considering that as per the testimony of PW 1 none of the officials of defendant no. 7 were facing trial in FIR (Ex. PW1/46), it has been submitted that negligence on the part of officials of defendant no. 7 was never established. It has been argued that defendant no. 7 has been able to establish that there CS no.57506/16 Page no. 28 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. has been lack of due diligence or negligence on its part.
16.4 Ld. Counsel for defendant no.8 has argued that it has merely acted as the agent of the plaintiff and in the due course of of business credited the amount of Rs. 12,70,850/- which was debited on receipt of the return memo, as per rules. It has been argued that the plaintiff has failed to establish that defendant no.8 had replaced the pay orders bearing nos. 000738 and 000750 (Ex. PW1/22 and Ex. PW1/23, respectively). Placing reliance upon cross examination of Sh. S.C. Girdhar (PW1) on 20.04.2010 by Ld. Counsel for defendant no. 8, it has been submitted that the plaintiff has admitted that there is no active role of defendant no. 8 or any loss caused by it to the plaintiff.
16.5 So far as defendants no. 1 to 6 are concerned, they have chosen not to defend themselves. As such, the affirmations of the plaintiff against them and genuineness of the documents have remained uncontroverted.
16.6 However, the issue which now remains is whether defendants no. 7 and 8 colluded with the remaining defendants and also whether they can be held liable vicariously for the acts of their officials?
16.7 The plaintiff has sought to set up a case of collusion between the defendants no1. 1 to 6 and defendant no. 7 on two CS no.57506/16 Page no. 29 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. accounts :
(a) That defendant no. 7 entered into a clearing arrangement with defendant no.1 without following the rules and conducting due diligence.
(b) That thereafter, pay orders bearing nos. 000738 and 000750 (Ex. PW1/22 and Ex. PW1/23, respectively) were replaced and returned belatedly on 09.02.1998 with the intention of keeping the plaintiff in dark to induce him to continue to believe that the clearing arrangement between defendant no 1 and defendant no.
7 was continuing so as to fraudulently induce the plaintiff to accept pay order on 31.01.1998 (Ex. PW1/27), cheques dated 05.02.1998 and 06.02.1998 (Ex. PW1/30, Ex.PW1/33, respectively). It is here that even the role of defendant no. 8 in replacement of pay orders and delayed intimation of dishonour and subsequent debit of Rs. 12 lacs on 12.02.1998 has been alleged.
16.8 There are thus, two stages at which fraud has been alleged (1) at the stage of opening of account and (2) at the stage of clearance of instruments i.e. pay orders bearing nos. 000738 and 000750 (Ex. PW1/22 and Ex. PW1/23, respectively).
16.9 This Court is persuaded to conclude that had there been an intention of defendant no. 7 to defraud the plaintiff in collusion with defendant no.1, there is no explanation why the instruments issued prior to pay orders bearing nos. 000738 and 000750 (Ex.
CS no.57506/16 Page no. 30 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. PW1/22 and Ex. PW1/23, respectively) would have been honoured in various transactions, in the ordinary course of business.
16.10 Further, as regards replacement of pay orders, indeed as per the testimony of PW5 and in specific original statement of account (Ex. PW5/1), it is emanating that the pay orders were presented on 03.02.1998 for clearance but merely because the MICR sorting number is not appearing overleaf is not sufficient to infer that the same have been replaced, in specific because the witness has also explained that there is a possibility that "the said cheques do to bear any imprint of any unique identification number could be that the cheque was stuck to another while going through the MICR sorter machine and the unique identification number was not imprinted on the cheque in question. It could have also faded on the cheque considering the age of the cheque. It is not possible that the cheque was not put in MICR sorter machine."
16.11 Also, when Sh. S.C. Girdhar (PW-1) was cross examined qua the stamp of Canara Bank overleaf the pay orders, he stated that :
"It is not within my knowledge that the above two instruments dated 24.01.1998 and 27.01.1998 while being presented to defendant No. 7 on 4.2.1998 were bearing stamp of Canara Bank at the back of the instrument. The said fact that the instrument was bearing stamp of Canara Bank at the back came to my knowledge only on 10/12.02.1998 when the instrument was returned to me.
CS no.57506/16 Page no. 31 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.
The instruments dated 24.01.1998 and 27.01.1998 bearing stamp of Canara Bank at the back are Ext. DW1/A and DW1/B. When these instruments came back to me I realized that these are not the same instruments which I had deposited with defendant No.8. It is correct that I have not lodged any separate complaint/FIR with regard to the change of above instruments. (Vol. while lodging a complaint against defendant No.1 I had specifically made a mention about the said instruments and their change. I do not remember the date when the said complaint/FIR was lodged. The witness is referring to photocopy of FIR dated 21.03.1998 which is already exhibited as Ext. PW1/46. It is correct that there is no specific reference as to the change of instrument in the FIR dated 21.03.1998. Though I have stated that a fraud has been committed and numbers of the instruments have been changed. However, the I am unable to read the said document since the same is illegible and would be able to confirm from the original. I do not remember as to whether in FIR NO. 109/98, PS Pahar Ganj Ex. PW1/46 I mentioned or not that the two instruments which were deposited by me with defendant no. 8 who had forwarded to defendant no. 7 were changed when they were returned to me by defendant no. 8 as dishonored.
At this stage, witness has been asked by learned counsel for defendant no. 7 to point out as to at which place the said instrument number is mentioned in the copy of the FIR. However, the said photocopy is not legible and it has been told to the Court that no translated or clear typed copy of the said FIR has been filed on record. COURT OBSERVATION The issue as to the effect of non-filing of the clear typed copy of the FIR shall be decided later as the main counsel for the plaintiff is not available today and learned counsel for defendant no. 7 may continue with his cross examination qua other aspects.
XXXX continues.
It is correct that on the back of pay order Ex. PW1/22 and Ex. PW1/23 there is stamp of Canara Bank, R. K. Puram branch. I am not aware as to whether on account of these stamps the Punjab and Sind Bank sent the said two pay orders to Canara Bank, R. K. Puram branch 04.02.1998 again on 06.02.1998. I do not know as to whether upon return of the two pay orders from Canara Bank, the Punjab and Sind Bank after checking the other details forwarded them to Vijaya Bank on 06.02.1998 itself."
CS no.57506/16 Page no. 32 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.
*** "I do not know as to whether instruments Ex. PW1/22 and Ex. PW1/23 were sent to Canara Bank by Vijaya Bank or not. It is correct that Vijaya Bank had sent a letter Ex. PW1/42 informing me that Punjab and Sind Bank had wrongly sent the two pay orders to Canara Bank. The letter is dated 17.03.1998. It is wrong to suggest that there was no collusion and connivance between the officials of defendant no. 8 i.e. Vijaya Bank either with defendant no. 7 bank or defendant no. 1 to 6. Pursuant to FIR Ex. PW1/46 trial is going on against the officials of defendant no.1 bank only. I do not know whether Vijaya Bank officials and Punjab and Sind Bank officials are also facing trial in the said criminal case or not. I have attended the hearings of the said criminal case."
16.12 Therefore, it has not been conclusively established that sending of pay orders to Canara Bank, R.K. Puram was intentional or by way of mistake. In the considered view of this Court to saddle defendants no. 7 and 8 for "collusion" in specifi with defendants no. 1 to 6, the material is not sufficient as mere negligence would not qualify as "collusion" at the stage of clearing of the negotiable instruments.
16.13 Be that as it may, a question also arises qua the acts and omissions of defendant no. 7 at the time of entering into clearing arrangement with defendant no. 7. It can be observed that defendant no. 7 has heavily relied upon certified copy of letter dated 02.04.1997 (Mark DW7/5) which is purportedly issued by the RBI in favour of defendant no.1 granting temporary licence. However, RBI itself got FIR no. 109/98 dated 21.03.1998 registered stating that defendant no. 1 was enjoying banking CS no.57506/16 Page no. 33 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. facilities from defendant no. 7 on the basis of fake documents and misleading particulars. Sh. R.K. Pandey (PW4) has clearly testified that as per RBI no banking licence had been given to defendant no.1. During cross-examination, the testimony of PW4 was sought to be controverted by Ld. Counsel for defendant no. 7 on the basis of document i.e. certified copy of letter dated 02.04.1997 (Mark DW7/5). However, the authenticity of Mark DW7/5 has not been established and registration of FIR no. 109/98 dated 21.03.1998 only suggests that according to RBI the banking facility with defendant no. 7 was on the basis of fabricated documents. As per uniform regulations and rules for bankers clearing houses (Ex. PW5/3), defendant no. 7 at the time of entering into clearing arrangement and affording opening of current account was required to adhere to certain rules. To that extent, there is sufficient material on record to observe that due diligence had not been conducted by the officials of defendant no.7 and defendant no. 7 would be liable for wrongful act of its officials. Reliance is placed upon Pradeep Kumar and Another Vs. Post Master General and Others.1 16.14 As can be seen from the documents procured at the time of opening of current account, the Punjab and Sind Bank has only obtained the account opening form of defendant no.1 dated 24.06.1997 (Ex. DW7/2), board resolution dated 23.06.1997 (Mark DW7/6) and letter dated 02.04.1997 (Mark DW7/5). No enquiry has been conducted whether defendant no.1 was 1 Civil Appellate Jurisdiction, Civil Appeal Nos. 8775-8776 of 2016 decided on 07.02.2022 CS no.57506/16 Page no. 34 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. registered with the co-operative society or whether defendant no.1 complied with the requirements of letter dated 02.04.1997 (Mark DW7/5) or whether RBI had even issued letter dated 02.04.1997 (Mark DW7/5). Hence, the requisite caution at the stage of opening and entering into clearing arrangement, officials of defendant no. 7 have not been diligent. This view is further fortified from the evidence brought on record that defendant no. 7 did not introduce defendant no.1 as a sub-member of the clearing house. So, negligence on the part of defendant no.1 has led the general public including the plaintiff to believe about the financial stability of defendant no.1 being backed by it. Defendant no. 7 has canvassed that on the fraud of defendants no. 1 to 3 being revealed, on 04.02.1998 vide letter Mark DW7/10, the clearing arrangement had been cancelled and on 05.02.1998, vide a letter mark DW7/10, extension for 15 days had been sought by defendant no.1 which was only acceded to for that date i.e. 05.02.1998. However, the documents have been merely marked in evidence as they are copy to copy of the originals. Neither were the originals of these documents evre produced nor the author was examined. Therefore, defendant no. 7 was unable to establish conclusively that since 06.02.1998, it had cancelled the clearing arrangement with defendant no.1. Also, Mark DW7/9 and Mark DW7/10 are communications only between defendant no.7 and defendant no. 1 of which the plaintiff could not have had personal knowledge and public notice was only issued on 12.02.1998. In this scenario, as since till then, it was CS no.57506/16 Page no. 35 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd. held out to the plaintiff that defendant no. 7 had a clearing arrangement with defendants no. 1 to 3, defendant no. 7 cannot evade joint liability with defendants no. 1 to 3. Thus, till then the clearing arrangement was in place and so defendant no. 7 ought to have cleared the pay order.
16.15 The plaintiff has claimed pendente lite and future interest @24% per annum. It is so stated in the affidavit Ex. PW1/A to be the usual and customary rate of interest prevalant in the market. However, no such customary practice has been established. Admittedly, there is no contractual rate of interest. However, keeping in view the commercial nature of the transaction, it is ordered that rate of interest @12% per annum shall be reasonable as pendente lite and future interest upon the decreetal amount.
RELIEF
17. In view of the above discussion the suit of the plaintiff is decreed alongwith costs as under :
(a) The sum of Rs.8,96,119/- is jointly and severally liable to be recovered from defendants no. 1, 2, 3, 4 and 7.
(b) The sum of Rs.6,22,680/- is jointly and severally liable to be recovered from defendants no. 1, 2, 3, 5 and 7.
(c) The sum of Rs.29,36,806/- is jointly and severally liable to be recovered from defendants no. 1, 2, 3, 6 and 7.
CS no.57506/16 Page no. 36 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.
(d) Plaintiff is also entitled to pendente lite and future interest @ 12% per annum from the date of filing of suit till its realization.
18. Decree sheet be prepared, accordingly.
19. File be consigned to records.
Pronounced in open Court (Vijeta Singh Rawat) on 13.12.2023 Additional District Judge-01, New Delhi District, Patiala House Courts, New Delhi CS no.57506/16 Page no. 37 of 37 M/s New Foundland Enterprises Pvt. Ltd. vs. Imperial Cooperative Bank Ltd.