Delhi District Court
State Bank Of India vs M/S Avm Health Care Pvt. Ltd on 17 January, 2014
IN THE COURT OF MS.RICHA PARIHAR, CIVIL JUDGE06 (CENTRAL),
TIS HAZARI COURTS, DELHI
CS no. 133/10/2002
Unique Case ID No. 02401C015452003
In the matter of:
State Bank Of India
Service Branch,
New Delhi110 001 .....Plaintiff
VERSUS
1. M/S AVM Health Care Pvt. Ltd.
Through its Director Shri Anil S. Chadha
67/4, Madras House, Darya Ganj,
New Delhi110 002
2. Union Bank of India
Rajouri Garden Branch,
New Delhi110 027. ......Defendants
DATE OF INSTITUTION : 15/07/2002
DATE OF RESERVING JUDGMENT : 19/12/2013
DATE OF PRONOUNCEMENT : 17/01/2014
JUDGMENT :This is suit for recovery. Brief facts of the case are as follows: SBI vs. M/S AVM Health Care Pvt. Ltd. & Ors. CS No. 133/10/02 Page No. 1 of 12
1. Case of plaintiff:
State Bank of India is plaintiff in present suit . Defendant no. 1 is M/S AVM Health Care Pvt. Ltd. who is managing the accounts with defendant no. 2 i.e. Union Bank of India.
Plaintiff submits that defendant no. 1 lodged with defendant no. 2, two demand drafts bearing no.679609 and 679610 both for Rs. 45,000/ (Rupees Forty Five Thousand only) and both dated 08/07/1999 allegedly drawn by Gaya Branch of State Bank of India . That aforesaid demand drafts were lodged by defendant no.2 for realization in the clearing house and as per the normal practice prevailing in banking industry for payment of the amounts of drafts immediately on presentation, the plaintiff bank honoured the said drafts in the normal course of the business of the bank and paid a sum of Rs. 90,000/ (Rupees ninety thousand only) in good faith for credit in the clearing account of defendant no. 2 through clearing house.
It is submitted by plaintiff that it is the normal prevailing practice in banking industry that the amounts of drafts are immediately paid on presentation and the entries thereof are reconciled later on during the internal house keeping of the bank. That during the normal course of internal house keeping maintained by plaintiff bank, the Gaya Branch of SBI on receipt of the draft reconciliation IOA memo informed the plaintiff bank that the said drafts forms were not issued by that Branch and on reconciliation it was found that the said drafts were infact amongst various drafts looted from the Parwal Pur Branch Bihar. Thus the said drafts of Parwal Pur Branch, Bihar, which were paid by the plaintiff bank to defendant no. 2 on 14/07/1999 through clearing house are in fact not valid and legal instruments. SBI vs. M/S AVM Health Care Pvt. Ltd. & Ors. CS No. 133/10/02 Page No. 2 of 12 That plaintiff bank immediately informed defendant no. 2 regarding the alleged forgery of the blank security forms looted from SBI, Parwal Pur Branch Bihar and also requested the defendant no. 2 to refund the amount of Rs. 90,000/ immediately to plaintiff bank. That defendant no. 2 did not make payment of same amount to plaintiff bank informed that the amounts have been withdrawn by defendant no. 1 from its account.
Plaintiff further submits that defendant no. 1, M/S AVM Health Care Pvt. Ltd. was not the true and bonafide owner of the alleged stolen drafts as the same were forged documents and defendant no. 1 knew fully about the same but deposited the fraudulent instrument and wrongly received the payment for which it was not entitled. That as the defendants are not entitled to retain the payments which were made by the plaintiff bank bonafide and in good faith hence defendants are liable to refund the same with interest.
That the payment of Rs. 90,000/ made by plaintiff bank on 14/07/1999 to defendant no. 2 was wrongly withdrawn and used by defendant no. 1. That defendants are also liable to make payment of interest @ of 16.75% per annum with quarterly rest in Clean Overdraft Accounts which is the prevalent rate of interest in banking industry for Clean Overdraft.
According to plaintiff cause of action accrued in favour of the plaintiff bank and against the defendant on 14/07/1999 when the said drafts had been presented for the payment in clearing house by defendant no. 2 for and on behalf of defendant no. 1, M/S AVM Health Care Pvt. Ltd. being its Account holder and the amount of Rs. 90,000/ was wrongly paid by the plaintiff bank to defendant no. 2 in good faith.
SBI vs. M/S AVM Health Care Pvt. Ltd. & Ors. CS No. 133/10/02 Page No. 3 of 12 According to plaintiff, defendants are liable to pay Rs. 1,33,872/ in total out of which Rs. 90,000/ is the total value of both the drafts and Rs. 43,200/ being the interest @ 16.75 per annum from 14/07/1999 till 12/07/2002. Hence plaintiff has filed present suit praying for following relief:
"PRAYER:
(a) pass a decree of Rs. 1,33,872/ (Rupees one lakh thirty three thousand eight hundred seventy two only) in favour of the plaintiff bank and against the defendants on the grounds stated in the plaint;
(b) allow the cost of the suit and other expenses incurred by the plaintiff bank;
(c) award pendentilite and future interest @ 16.75% per annum with quarterly rest from the date of the filing of the suit and till the actual realization of the decreetal amount; and
(d) pass such other or further orders as this Hon'ble Court may deems fit and proper in the facts and circumstances of the present suit in favour of the plaintiff bank and against the defendants."
2. Stand of defendant no. 1 :
Defendant no. 1, M/S AVM Health Care Pvt. Ltd. has filed its written statement taking various preliminary objections that there is no cause of action,that suit is timed barred,that suit is not maintainable both on law and facts, that plaint is not signed, verified and instituted by the competent person,that there is no privity of contract between plaintiff and defendant no.1,that plaintiff has no right to institute this suit, that suit suffers from misjoinder of parties for not impleading the persons who got the drafts issued,that suit is not maintainable because SBI vs. M/S AVM Health Care Pvt. Ltd. & Ors. CS No. 133/10/02 Page No. 4 of 12 of non issue of notice of defendant no. 1,that suit suffers from estoppel and thus not maintainable under provisions of Order 7 Rule 11 (a) and Section 115 and 60 of Evidence Act, that the suit has been filed only to protect the erring officials of the bank,that suit has not been properly valued for the purpose of court fees and jurisdiction and plaintiff has no locus standi to implead the answering defendant.
In reply on merits, defendant no. 1 submits that the drafts in question were received by defendant no. 1 from Sh. Sumer Singh of National Pharma, Patna in regard to the oral order placed on 06/07/1999, that cash payment of Rs. 6,600/ was received along with the drafts issued by SBI, Gaya Branch on SBI, New Delhi Branch on 12/07/1999. That the goods in regard to the order placed on 05/07/1999 were delivered to Sh. Sumer Singh of National Pharma, Patna only on 14/07/1999 after being satisfied and receipt of the full payment of the orders so placed. That the payments of drafts was made for the genuine trade transaction and accordingly the payment thereof was received. That there is no negligence on part of defendant no. 1 and drafts were received by defendant through genuine trade transaction in good faith and were presented through their Bankers for clearing and cleared through the Banking Channel due course and the payment thereof received, as aforesaid, through the above process, is legal, valid, admittedly in good faith and without negligence. That the payment has been made due to the negligence of the paying officials of the plaintiff bank for which neither the defendant no. 1 nor the defendant no. 2 are responsible for the wrongs committed by the SBI staff. It is submitted that the reconciliation of the entries is the system of internal house keeping of the plaintiff bank and defendant no. 1 has got no knowledge and SBI vs. M/S AVM Health Care Pvt. Ltd. & Ors. CS No. 133/10/02 Page No. 5 of 12 nothing to do with it. That defendant no. 1 has received the drafts in question in good faith without negligence and it became the holder in due course and the same were cleared through the clearing by the trade transaction, in good faith tendered the aforesaid drafts for payment through their Banker defendant no. 2 being holder in due course.
It is denied that defendant no. 2 has withdrawn any amount from the account of defendant no. 1 for payment to the plaintiff on this account however it is submitted that defendant no. 2 has illegally marked lien for the drafts amount in the current account of defendant no. 1 without the information, knowledge and consent of defendant no. 1.That there is no privity of contract between defendant no. 1 and plaintiff bank and plaintiff bank has no legal right to make responsible defendant no. 1 for the negligence committed by its officials. That there is no cause of action against defendant no. 1 hence suit of plaintiff should be dismissed.
3. Stand of defendant no. 2 Defendant no. 2 has filed the written statement taking preliminary objection that suit of plaintiff does not disclose any cause of action against defendant no. 2. That there is no privity of contract between plaintiff and defendant no.2 in respect of the account of defendant no.1. That suit is barred by Section 3 of Limitation Act. That both the demand drafts in question were issued by SBI, Gaya Branch were deposited by defendant no. 1 and were presented for payment to plaintiff through clearing house and the same were duly cleared and paid by plaintiff on 14/07/1999. As both the demand drafts were paid by the plaintiff bank for the payment of Rs. 90,000/ which was credited by defendant no. 2 in the account of SBI vs. M/S AVM Health Care Pvt. Ltd. & Ors. CS No. 133/10/02 Page No. 6 of 12 defendant no. 1 in the normal course of Banking and defendant no. 2 had no reason to withhold the payment of defendant no. 1 hence defendant no. 2 is no way liable to pay any amount claimed in the suit. Further the contents of plaint are denied by defendant no. 2. It is submitted by defendant no. 2 that sufficient time is given by the clearing house for the Bank to verify the details /correctness or otherwise of the demand draft/cheque etc. That plaintiff bank had not mentioned anywhere when the internal clearance was taken place and more than 2 month's time has been taken by plaintiff bank to come to a conclusion that the drafts were robbed/looted from the Parwal Pur Branch Bihar . That such case of theft of drafts should have been notified by the Central office or any other Governing Body of the plaintiff bank and its present branch should have been recorded such draft/cheque nos to avoid such type of mishappening as stated to be said by the plaintiff bank in the suit. If there is any error/mistake on the part of the plaintiff bank, it cannot throw its responsibility on defendant no. 2. Thus, defendant no. 2 had denied any liability and submit that suit of plaintiff should be dismissed.
4. Plaintiff has filed replication to the written statements of defendants no.1 and 2 wherein he has denied the averments of written statements and reaffirmed the contents of plaint as correct.
5. On completion of pleadings of parties, following issues were framed on 18/01/2005:
(i) Whether the plaintiff is entitled to get a decree of recovery for a sum of Rs. 1,33,872/ against the defendant as prayed? OPP
(ii)Whether the plaintiff is entitled to get any interest upon the aforesaid amount, if so at what rate and for what period? OPP SBI vs. M/S AVM Health Care Pvt. Ltd. & Ors. CS No. 133/10/02 Page No. 7 of 12
(iii)Whether the plaintiff has not disclosed any cause of action against the defendant? OPD
(iv)Whether there is no privity of contract between the opposite parties? OPD
(v)Whether the suit has not been signed, verified and instituted by the duly authorized person? OPD
(vi)Relief.
6. Evidence brought on record:
Plaintiff has led the evidence through PW1, Sh. N. Nagrajan, Manager of Draft Paid Section of plaintiff bank vide affidavit Ex. PW1/A and has relied upon documents Ex. PW1/1 to Ex. PW1/7.
Further, plaintiff has produced as witness PW2, Sh. Binod Kumar Roy, Assistant General Manager of plaintiff bank and has relied upon Ex. PW2/1 which is the certified copy of FIR as received from Police Station Parwalpur.
On behalf of defendant no. 1, Sh. Vipin Chaba one of the Directors of defendant no. 1 has deposed as D1W1 vide affidavit Ex. D1W1/A and he has been cross examined by Ld. counsel for the plaintiff.
On behalf of defendant no. 2, Sh. Akshay Kumar Jain Authorised signatory of defendant no. 2 has deposed as D2W1 vide affidavit Ex. D2W1/1 and he has been cross examined by Ld. counsel for the plaintiff.
7. I have heard the arguments as advanced by Ld. Counsels for both the parties and carefully perused the records and the case laws supplied.
SBI vs. M/S AVM Health Care Pvt. Ltd. & Ors. CS No. 133/10/02 Page No. 8 of 12
8. My findings on issues are in following order : Issue No. (iv):
Whether there is no privity of contract between the opposite parties? OPD The onus to prove this issue was on defendant. Plaintiff has already stated in its plaint that defendant no.1 has account with defendant no.2 bank. Also during his cross examination PW1 has admitted that plaintiff bank has no relation with defendant no.1 in any case or in any manner and has further admitted that there is no privity of contract between plaintiff bank and defendant no.1. Thus it is proved that there is no privity of contract between plaintiff bank and defendant no.1. Issue accordingly decided against plaintiff. Issue no. (v):
Whether the suit has not been signed, verified and instituted by the duly authorized person? OPD The onus to prove this issue was on defendant. According to plaintiff the plaint has been signed and verified by its Chief Manager and principal officer as authorised by the gazzette notification published in 1987. Defendant has not led any evidence to contrary to prove this issue. Thus it is not proved that the suit has not been signed, verified and instituted by the duly authorized person. Hence this issue is decided in favour of plaintiff. Issue Nos. (i) and (ii):
Whether the plaintiff is entitled to get a decree of recovery for a sum of Rs. 1,33,872/ against the defendant as prayed? OPP Whether the plaintiff is entitled to get any interest upon the aforesaid amount, if so at what rate and for what period? OPP SBI vs. M/S AVM Health Care Pvt. Ltd. & Ors. CS No. 133/10/02 Page No. 9 of 12 Ex.PW1/D1and Ex. PW1/D2 are the drafts in question both dated 08/07/1999. These drafts were encashed/honoured on presentation by plaintiff bank on 14/07/1999. Ex.PW1/1 is the letter dated 04/09/1999 vide which plainitff informed defendant no. 2 that these two drafts were prepared on lost drafts and requested for refund of that amount. Ex. PW1/2 is the letter dated 06/09/1999 vide which defendant no.2 had informed that a lien to the extent of Rs. 90,000/ has been created on the account of defendant no.1.Ex. PW1/3 is the legal notice dated 25/07/2001 and Ex PW1/6 is the reply to said notice.
PW1 has deposed in his cross examination that whenever the blank draft forms are received in any branch for issuance of the drafts same are checked and verified by the concerned branch and entered in a register. It is admitted by PW1 that in case of missing drafts a circular is issued to the bank branches to not to clear the said drafts on presentation and upon receiving of such circular the branch makes an entry in the stop payment register. However PW1 has denied knowledge of fact if any stop payment was recorded in respect of the drafts in question. PW1 has deposed that within two to three months the communication with respect to the the lost draft is circulated all over India at the branches of plaintiff bank. It is pertinent to mention here that the drafts in question were stolen from the Parwalpur Branch of plaintiff bank and FIR in this regard was lodged on 29/09/98 which is Ex. PW1/2. The drafts in question are dated 08/07/1999 and were cleared for payment by plaintiff bank on 14/07/1999. Thus the drafts were presented for clearance after approximately 9½ months. This is quite sufficient time for the plaintiff bank to have received notification for stop payment of said draft. There is no explanation given to justify why the information regarding theft of the SBI vs. M/S AVM Health Care Pvt. Ltd. & Ors. CS No. 133/10/02 Page No. 10 of 12 said drafts was not received by plaintiff bank in time. Further plaintiff has also not disclosed the date when it received the information regarding the drafts being invalid or stolen.
Defendants in this case can not be supposed to have prior knowledge that the drafts were stolen. No fraud on part of defendants has been proved by plaintiff. It is not proved that the defendants had presented the cheque for encashment knowing that same were stolen with the intention to cause unlawful loss to plaintiff or unlawful gain to themselves. Defendants have acted in normal course of business and no malafide on part of defendant is proved. On the other hand the person ought to have the first hand knowledge that the drafts in question are invalid or stolen was plaintiff who had failed to show that it had acted with due diligence prior to clearing the said drafts. Further plaintiff has neither taken any steps to trace out or make party to present suit Sh. Sumer Chand who had got the drafts issued from Gaya Branch of plaintiff bank nor plaintiff has initiated any criminal action for the alleged fraud or forgery against defendants or against the person who had got the drafts issued. In my considered opinion plaintiff has been unable to show diligence on its part to clear the drafts and is trying to take benefit of its own negligence and lapse by way of present suit hence plaintiff is not entitled to recover the suit amount from defendants. Accordingly these issues are decided against plaintiff.
Issue No. 3 : Whether the plaintiff has not disclosed any cause of action against the defendant? OPD In view of findings on issues no 1 and 2 no cause of action is disclosed against defendants. Issue accordingly decided against plaintiff.
SBI vs. M/S AVM Health Care Pvt. Ltd. & Ors. CS No. 133/10/02 Page No. 11 of 12
9. Relief:
In view of findings on issues no. (i) and (ii), suit of plaintiff stands dismissed. No orders as to cost.
Decree sheet be prepared accordingly.
File be consigned to record room as per rules.
th Announced in open court on this day of 17 of January, 2014 (Richa Parihar) CJ06/Central 17/01/2014 Certified that it contains 12 (twelve) pages signed by me.
(Richa Parihar) CJ06/Central 17/01/2014 SBI vs. M/S AVM Health Care Pvt. Ltd. & Ors. CS No. 133/10/02 Page No. 12 of 12