Delhi District Court
In Re vs Punjab And Sind Bank on 13 February, 2017
IN THE COURT OF SH. HARISH KUMAR : ADDL. DISTRICT
JUDGE -13 : CENTRAL DISTRICT ; TIS HAZARI COURTS : DELHI
I CS. NO. 613986/16
In re :-
M/s New India Export House
Proprietor, Sh. Harbhajan Singh
9-Chowk Qutub Road,
Delhi - 110 006
........ Plaintiff
Versus
1. Punjab and Sind Bank
H-Block, Connaught Circus,
New Delhi - 110 006
2. Smt. Joginder Kaur @ Rani Arora
Wd/o Sh. Surjit Singh Arora
3. Simon Arora
S/o Sh. Surjit Singh Arora (minors represented through
mother and natural guardian)
4. Bobby Arora
D/o Sh. Surjit Singh Arora
All R/o 34/35, Dutton Street,
Manchester - 3 (G.B.) .......... Defendants
Date of institution of present suit : 19.12.1980
Date of receiving in this court : 03.02.2016
Date of hearing arguments : 11.01.2017
Date of Judgment : 13.02.2017
Suit for Recovery of Rs. 6,56,000/-
AND
II CS NO. 613988/16
In the matter of :-
Punjab and Sind Bank
(A government of India undertaking)
Having its branches throughout India & one
amongst them at 'H' Block, Connaught Circus,
New Delhi - 110 006
CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank
CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 1 of 23
........ Plaintiff
Versus
1. M/s New India Export House
9-Chowk Qutub Road,
Sadar Bazar, Delhi - 110 006
2. Sh. Harbhajan Singh, Proprietor
M/s New India Export House
9-Chowk Qutub Road,
Sadar Bazar, Delhi - 110 006
.......... Defendants
Date of institution of present suit : 24.11.1982
Date of receiving in this court : 03.02.2016
Date of hearing arguments : 11.01.2017
Date of Judgment : 13.02.2017
Suit under Order XXXVII CPC for the recovery of Rs.4,90,767.71 paise
consisting of principal, interest and other charges due as on October 4,
1982, payable by the defendants to the plaintiff bank together with
interest pendente lite and future interest
JUDGMENT
By this common judgment two suit one filed by "M/s New India Export House through its proprietor against Punjab and Sind Bank and Surjit Singh Arora (since deceased)" and another filed by "Punjab and Sind Bank against M/s New India Export House and its proprietor Harbhajan Singh" shall stands disposed of. Both the suits are in respect of decree for recovery of amount. Both suits were consolidated vide order dt 15.03.2001 and consolidated issues were framed. Suit filed by New India Export House bearing No. 613986/16 was treated as lead case. As the suit bearing No. 613986/16 was lead case therefore the term "plaintiff" means "M/s New India Export House and its proprietor" and the term "bank" means Punjab and Sind Bank.
CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 2 of 23 Stand of plaintiff M/s New India Export House in its plaint in the suit No. 613986/16 and in the written statement in the suit bearing No. 613988/16 is same. Similarly stand of the bank as plaintiff in suit No. 613988/16 and as defendant in suit No. 613986/16 is same.
PLAINTIFF'S VERSION
1. Plaintiff M/s New India Export House is a sole-proprietorship concern of Harbhajan Singh and engaged in the business of export of readymade garments and other handicrafts. Plaintiff opened a current account with defendant No. 1 on 28.05.1977 with Rs 500/-. Plaintiff before December 1977 had already exported out of India goods worth about Rs.9,50,000/- and secured export documents. Plaintiff approached the defendant No. 1 the bank in the month of July, 1977 for loan of Rs. 5,50,000/- against export bills but it was refused for want of security. Again plaintiff approached bank in October 1977 for sanction of loan of Rs. 50,000/- against sight bills, packing credit and DA bills but the loan was not sanctioned for want of adequate security. The loan application form signed by the plaintiff and two three fulls sets of forms with promissory notes (blank) signed by the plaintiff remained with the bank. On 03.10.1977 plaintiff applied to bank for loan of smaller amount of Rs. 50,000/- which too was turned down on the ground that the same was not accompanied with statement of accounts, trading accounts, balance sheet, profit and loss accounts and also for want of income tax assessment orders. Bank had sanctioned loan of Rs. 28,722.80p against invoice no. 1310 but vide letter dated 21.11.1977 bank asked the plaintiff to deposit back in the bank as the foreign buyer had sought extension of 60 days in respect of the said invoice.
2. It is further stated that Sh. Surjit Singh Arora/defendant No.2 (in suit No. 613986/16) the foreign buyer of plaintiff was in Delhi till 11.01.1978 who was very well known to the Manager of bank. Sh. Surjit Singh Arora approached plaintiff for a loan of Rs. 50,000/-. Plaintiff was not having money CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 3 of 23 in his hand nor having any money in bank. He had no credit facility nor any over draft arrangement, however, to please the foreign buyer plaintiff issued a blank cheque in favour of Sh. Surjit Singh Arora, defendant no. 2 on 11.01.1978. Defendant no. 2 could not receive the money as there was debit balance against the plaintiff in the bank and he left the cheque with the bank and left Delhi on 11.01.1978 at night. The Manager, Assistant Manager and officials of bank colluded among themselves and withdrew huge amount of Rs. 8,50,000/- from the bank on the basis of said blank cheque by making debit entry in the account of plaintiff. The bank had refused small loans but showed to have given Rs. 8,50,000/- loan to the plaintiff without any security. Servants, agents of bank illegally encashed cheque of Rs. 8,50,000/- inspite of the fact that plaintiff had debit balance and the plaintiff had not given any security nor pledged any movable or immovable property to secure the amount of Rs. 8,50,000/-. Sh. Surjit Singh Arora/defendant no. 2 had left India on 11.01.1978 at midnight, therefore, could not be said to have collected the amount on 12.01.1978.
3. On 13.01.1978 bank through its servants and agents debited a further sum of Rs.50,000/- in the account of the plaintiff while plaintiff was not in Delhi but was at Bombay. On 23.01.1978, bank credited to the account of plaintiff Rs.7,00,000/-. The plaintiff had no money with him and he did not deposit this amount in the bank. The plaintiff did not have any transaction after 23.01.1978 except that plaintiff withdrew a sum of Rs.15,000/-. The bank through its agents withdrew a sum of Rs.7,00,000/- on 25.01.1978 though in the statement of account given to the plaintiff in the month of May 1978 this withdrawal of Rs.7,00,000/- was not shown. The bank/defendant No. 1 through servants defrauded huge amount of the plaintiff as the bills of goods exported to Sh. Surjit Singh Arora Firm M/s World Wild Crafts matured and as money was remitted by foreign buyers to India, bank/defendant no. 1 made credit of his overseas earnings to the fictitious loans shown to the debit of plaintiff and his entire earnings have been held up by the bank and thus CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 4 of 23 defrauded a sum of Rs. 4,82.569.00 of the plaintiff. The plaintiff prayed for recovery from bank of Rs. 4,82,569/- along with interest @ 18% per annum i.e. Rs.1,73,431/-. Hence, plaintiff had filed the suit for recovery of said amount with interest and on similar stand plaintiff is defending the suit filed by bank.
BANK'S VERSION
4. As per bank, M/s New India Export House through its sole- proprietorship through Harbhajan Singh approached the bank and opened a current account on 28.05.1977. In the said current account, Harbhajan Singh as proprietor of M/s New India Export House requested the bank that he may be granted temporary overdraft facility being casual availments. This was acceded to by the bank and the plaintiff was granted adhoc overdraft facility in the said current account from time to time and in the course of operation of the said account by the said defendants, on 20.09.1977 Harbhajan Singh as proprietor of plaintiff requested the bank for overdraft facility to the extent of Rs.45,000/- including the then subsisting advance. This was acceded to by the Bank. Harbhajan Singh as proprietor of plaintiff executed and delivered demand promissory note, agreeing to pay the sum due on demand with interest @ 3-1/2% over and above the rate of interest fixed by the Reserve Bank of India, with the minimum of 12-1/2% per annum, with monthly rests. He also executed form No. 106, form No. 216 and form No. 126.
5. It is further averred that on 03.01.1978, Harbhajan Singh as proprietor of plaintiff approached the bank and requested for overdraft facility to be enhanced to Rs. 4,00,000/- and also requested to grant Bill Purchase facility to the extent of Rs.7.5 lakhs. This too was acceded to by the bank and in consideration thereof Harbhajan Singh as proprietor of M/s New India Export House executed and delivered fresh loan on 03.01.1978 for a sum of Rs.11,50,000/-, agreeing to pay the sum due on demand, with interest @ 12- 1/2% per annum, with quarterly rests. Other loan documents were also CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 5 of 23 executed and delivered by the plaintiff to the bank. Harbhajan Singh and M/s New India Export House are jointly and severally liable to pay a sum of Rs.4,90,767.71 paise with future interest @ 19.50% per annum w.e.f. 05.10.1982 till the date of realisation in full. Plaintiff was served with a telegraphic legal notice but despite that plaintiff has not cared to pay the amount due from them to the plaintiff bank.
6. As per bank instead of liquidating his liability plaintiff has chosen to file suit against bank. It was denied that in July 1977 or in October 1977, the plaintiff or its proprietor applied for grant of loan of Rs.5,50,000/- or Rs.50,000/-which were not sanctioned for want of security as alleged. It was denied that any loan application forms signed by the plaintiff in July, 1977 accompanied by any alleged blank promissory notes and two three full sets of forms necessary for sanction of loan remained with the bank. It has been submitted that in September, 1977 a current over draft limit to the extent of Rs.45,000/- and a bill purchase limit of Rs.1,00,000/- was applied by the plaintiff and these facilities were granted invariably by the bank. It is further stated that a bill of Rs. 28,722.80 was purchased on 02.06.1977 and funds to the extent of Rs.17,162.80 were realised. Part payment of Rs.13,861.84 was received on 09.11.1977. The plaintiff and its proprietor had represented that the bill shall be paid immediately on its presentation. Since the payment was not forthcoming the bank called upon the plaintiff and its proprietor to liquidate their liability. In the alternative plaintiff was advised to get the said bill paid immediately. The balance payment of this bill was received on 13.01.1978.
7. It was denied that Mr. Surjit Singh Arora, defendant no. 2 was in Delhi in the month of January, 1978 or that he was very well known to the Branch Manager or had any contacts with him or other persons in the bank. It was further denied that the plaintiff had no credit facilities or overdraft arrangement. It was pleaded that on 11.01.1978 Harbhajan Singh/plaintiff CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 6 of 23 approached the bank at its office and requested for a cheque of Rs. 8.50 lakhs to be encashed as the money was urgently required. He was accompanied by a person who was introduced as Surjit Singh Arora, defendant no. 2. Plaintiff further requested that foreign bills of Rs. 6,80,050.24 may be purchased by the bank and the proceeds thereof be credited to the current account maintained in the name of the plaintiff and also requested that a packing credit advance/current overdraft limit to the extent of Rs.4,00,000/- be also allowed. Keeping in view his past relationship with the bank, the cheque was sanctioned/credited on 11.01.1978 itself. The cheque was duly filled in for a sum of Rs. 8,50,000/- and carried the mandate of Mr. Harbhajan Singh, proprietor of the plaintiff. On 12.01.1978 the said cheque was duly encashed. The bills worth Rs. 6,80,050.25 were purchased and the proceeds thereof were credited to the current account on the same day. After all adjustment a sum of Rs.4,90,767.91 is due from the plaintiff which plaintiff did not clear despite having confirmed such outstanding by confirmation letter, therefore bank has filed its suit for recovery of Rs.4,90,767.71 against plaintiff. On the same ground bank is also defending the suit of the plaintiff.
8. Both plaintiff and bank have filed their respective replication in their respective suits denying each other's versions and reiterating their own.
9. Surjit Singh Arora the defendant No.2 in the suit filed by M/s New India Export House has chosen not to contest the suit filed by plaintiff M/s New India Export House, though he was duly served and communicated from UK, with Court as well regarding non supply of plaint and documents.
ISSUES
10. On the pleadings of the parties following consolidates issues were framed while consolidating both suits vide order dated 15.03.2001:
1. Whether the suit filed by the bank is barred by limitation?
2. Whether any bill of purchase and overdraft facilities were being CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 7 of 23 availed by the New India Export House?
3. Whether any documents had been executed in furtherance of any facility being granted and availed by the New India Export House and if so, to what effect?
4. Whether the bank has forged and fabricated any documents as alleged by the plaintiff, New India Export House?
5. Whether the bank authorities withdrew an amount of Rs.8,50,000/- as alleged and if so, to what effect?
6. Whether the bank officers were in collusion with Sh. Surjit Singh Arora and made false entries as alleged and if so, to what effect?
7. Whether the bank discounted any foreign bills without being asked to do so and whether New India Export House applied for any loans?
8. Whether the suit in the name of plaintiff, New India Export House is maintainable?
9. Whether New India Export House did not execute and did not confirm the amount of Rs.6,45,081.439 as due and payable to bank and if so, to what effect?
10. Whether a sum of Rs.4,90,767.71 is due and recoverable by the bank?
11. Whether New India Export House is entitled to any amount and interest and if so, from which defendant?
12. Whether the bank is entitled to any amount and if so, at what rate of interest?
13. Relief.
EVIDENCE
11. In support of its case, plaintiff examined Sh. Harbhajan Singh as PW1 who tendered his affidavit Ex.PW1/A in examination-in-chief and relied upon following documents:-
CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 8 of 23
1. Letter bearing no. FCC/112/2476/22069/77 dated 03.11.1977 Ex. PW1/1
2. Letter bearing no. FCC/122/2776/22069/77 dated 03.11.1977 Ex. PW1/2
3. Letter dated 21.11.1977 Ex. PW1/3
4. certified copy of cheque dated 03.01.1978 Ex. PW1/4, certified copy of cheque dated 11.01.1978 Ex. PW1/5 and certified copy of cheque dated 25.01.1978 Ex. PW1/6
5. Letter dated 19.06.1978 Ex. PW1/7 and Letter dated 09.10.1981 Ex. PW1/8
6. certified copy of voucher/debit note dated 13.01.1978 Ex.PW1/9
7. Bank Statement from 23.01.1978 to 23.10.1978 Ex. PW1/11
8. Bank Statement from 30.05.1978 to 26.12.1978 Ex. PW1/12
9. Bank Statement from November 1978 to 31.12.1978 Ex.
PW1/13 and
10. Bank Statement from September 1980 to October 1980 Ex.PW1/14
11. copy of certificate issued by Northern Railway regarding traveling from Delhi to Bombay in reserved berths along with Harjit Kaur and Amarjeet Kaur on 12.01.1978 Mark A He was cross-examined by the bank/defendant no. 1.
12. Plaintiff also examined Smt. Amarjeet Kaur as PW2 who tendered her affidavit Ex.P-2 in examination-in-chief. She was cross examined by the defendant no. 1.
13. In its defence, bank/defendant no. 1 examined Sh. Surjit Singh Kakkar as DW1 who tendered his affidavit Ex. DW1/A in examination-in-
chief and relied upon Account Opening Form Ex. DW1/1, Statement of CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 9 of 23 account Ex. DW1/2, Telegraphic Notice Ex. DW1/3, receipt of telegraphic notice Ex. DW1/4 and Power of Attorney Mark DW1/5. He was cross- examined by the plaintiff. Defendant also examined Sh. J.S. Chopra as DW-2 who tendered his affidavit Ex.DW2/A in examination-in-chief and relied upon application dated 20.09.1977 Ex. DW2/1, plaintiff through its proprietor executed the loan documents viz promissory note Ex. DW2/2, Form no. 106 Ex. DW2/3, Form no. 216 Ex. DW2/4, Form no. 126 Ex. DW2/5, loan application dated 03.01.1978 Ex. DW2/6, Promissive Note executed by the plaintiff Ex. DW2/7, Form no. 106 Ex. DW2/8, Form no. 216 Ex. DW2/9, Form no. 126 Ex. DW2/10, balance confirmation statement signed by the plaintiff on 17.01.1980 Ex. DW2/11, Power of Attorney Ex. DW2/12 and authorisation letter dated 19.10.1981 Ex. DW2/13. He was cross-examined by the plaintiff. Defendant also examined Sh. H.S. Kareer as DW-3 who tendered his affidavit Ex.DW3/A in examination-in-chief. He was cross-examined by the plaintiff. Defendant also examined Sh. S.S. Kundral as DW-4 who tendered his affidavit Ex.DW4/A in examination-in-chief. He was cross- examined by the plaintiff. Defendant also examined Sh. Darshan Singh as DW-5 who tendered his affidavit Ex.DW5/A in examination-in-chief. He was cross-examined by the plaintiff. Defendant also examined Sh. Amarjit Singh Nirwan as DW-6 who tendered his affidavit Ex.DW6/A in examination-in- chief. He was cross-examined by the plaintiff. Thereafter defendant evidence was closed.
14. Plaintiff examined Sh. Harbhajan Singh in rebuttal who tendered his affidavit Ex. PR1 in examination-in-chief. He was cross- examined by the defendant.
FINDINGS
15. Ld. Counsels for the parties have been heard and record perused. After going through the arguments, pleadings, evidence and materials on record, issues wise findings are as under (however for convenience sake issues CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 10 of 23 have not been taken up in order in which they have been framed):-
ISSUE NO. 2:- Whether any bill of purchase and overdraft facilities were being availed by the New India Export House?
16. From the way issue has been framed onus to prove this issue is upon the bank. It has been the case of the bank that the plaintiff has been enjoying ad-hoc facility of bill purchase and over draft facilities. To the same effect witness of the bank DW1 and DW2 deposed in examination in chiefs.
17. In cross examination DW1 deposed that so far as he remembers first loan was of Rs 45,000/- was granted but prior to that some OD of small amounts were also sanctioned from time to time on the request of Harbhajan Singh/plaintiff. He did not remember the exact amount but it was below Rs 1 lakh and some time it was Rs 40,000/. No suggestion was given to him or to any other witness of the bank that no facility of bill purchase or overdraft (ad- hoc) were being availed of by plaintiff.
18. Plaintiff though not specifically denied about availing of temporary overdraft or bill purchase facilities but in cross examination categorically admitted that he had been availing ad-hoc limits only in over draft and he also volunteered that that ones temporary limit in bill purchase was availed.
19. From the pleadings of the parties particularly of plaintiff, plaintiff is seriously disputing entries/ transaction in his current account after 3.01.1978 or 11.01.1978. Therefore entries in the current account prior to 3.01.1978 or say 11.01.1978 are not in dispute. Bank has proved the ledger (Ex DW1/2) of current account of the plaintiff.
20. It is not in dispute that plaintiff opened current account with defendant bank on 28.05.1977 with cash Rs 500/-. As noted above there is no CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 11 of 23 dispute with respect to entries in the current account prior to 3.01.1978. Perusal of the said ledger Ex DW1/2 shows that after opening of the account with Rs 500/- on 28.05.1977, first transaction was on 3.06.1977 with withdrawal of amount of Rs 17,000/- in cash against cheque 308053, again there was withdrawal of Rs 45/- by way of transfer on 3.06.1977 by cheque No. 308051, again withdrawal of Rs 2000/- on 3.06.1977 against cheque No.308054, again withdrawal of Rs 2000/- against cheque No.308055 on 24.06.1977, then there were more withdrawal of smaller amounts, then on 1.07.1977 there was withdrawal of Rs 41,000/- in cash against cheque No. 308056 followed by charges of Rs 43/- (shown as debit entry). On 3.7.1977 after above noted so many withdrawals, a sum of Rs 42,170/- was credit "by Bill" means amount was realised on account of bill which plaintiff might have deposited with bank for collection/payment.
21. Above noted entries are not in dispute. Thus, plaintiff with the deposit of Rs 500/- at the start was able to withdraw almost about Rs 62,000/- in all excluding minor amounts as interest or other charges without depositing any single penny in his current account in any form till 3.07.1977. This itself proves that these withdrawals would not have been possible if the bank had not granted credit overdraft and bill purchase facilities to the plaintiff.
In view of the above discussion and reasoning issue No. 2 is hereby decided in favour of bank and against the plaintiff.
ISSUE NO. 4:- Whether the bank has forged and fabricated any documents as alleged by the plaintiff, New India Export House?
22. The way issue has been framed leaves none of the parties in doubt that it is the plaintiff who carries the onus to prove the same. It has been claimed by the plaintiff that he had approached the bank in July 1977 for grant of loan of Rs 5,50,000/- but was refused. He again approached the bank in October 1977 for sanction of loan of Rs 50,000/- against the sight bills, packing credit and DA but same was also not sanctioned for want of security CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 12 of 23 and the bank loan application accompanied with blank promissory note signed by him and to be filled with amount sanctioned by bank, remained with bank as same are not normally returned to the borrower. Two or three full sets of forms necessary for sanction of loan remained with bank. It is the case of the plaintiff that these sets of loan papers were subsequently misused by the defendant bank and filled in later to cover up fraud that loan was given against the sale of bills. Though in the plaint filed by the plaintiff, plaintiff has not alleged any collusion between the Surjit Singh Arora the foreign buyer and officials of the bank but in the written statement to the suit filed by the bank present plaintiff has alleged collusion between the said Surjit Singh Arora and officials of the bank. This itself creates a suspicion in the case as set up by the plaintiff.
23. Plaintiff in examination in chief deposed on the lines of plaintiff but apart from oral allegation plaintiff did not place on record any material to prove that he had applied for loan of Rs 5,50,000/- in July 1977 or for Rs 50,000/- in October 1977. Moreover in cross examination he categorically admitted that there was no application on record to show that he had applied for loan of Rs 5,50,000/-. He also admitted that he had never applied for loan of Rs 50,000/- in October 1977.When attention of plaintiff was drawn to his affidavit, he admitted that same was wrongly mentioned in his affidavit.
24. Plaintiff initially denied having taken temporary facility (loan) of Rs 45,000/- but in cross examination he admitted that he availed the said facility of Rs 45,000/- and also admitted that documents Ex P-4, P-5 and P-6 were executed and bears his signature. He also admitted that these documents were filled in before signing though he again deposed that it were not filled in his presence. He also admitted that loan application for Rs 45,000/- Ex P-2 (DW2/7) bears his signature. Documents Ex P-3, P-4, P-5 and P-6 were documents relating to loan of Rs 45,000/- which admittedly plaintiff has availed and therefore, these documents cannot be said to have been misused CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 13 of 23 by bank or forged by the bank.
25. Next is the document pertaining to loan relating to 11.5 lacs by which (as per bank) plaintiff through its proprietor again requested on 3.01.1978 to enhance the overdraft facility to Rs. 4 lakh and desired that he may be granted bill purchase facility to the extent of Rs. 7.5 lakh. As per bank request was acceded by the bank and plaintiff executed fresh loan document on 03.01.1978 for a sum of Rs. 11,50,000/- @ 12½% per annum with quarterly rest. As per the case of the plaintiff no such loan was applied on 3.10.1978 and availed. As per plaintiff loan application applied by him in July or October was misused by the bank officials to cover up the illegal withdrawal by the officials in collusion among themselves. Plaintiff has admitted his signature on the loan application form Ex P-7 (Ex DW2/6), Form No. 106 Ex P-8 (Ex DW2/8), form No.126 Ex P-9 (Ex DW2/9) and promissory note Ex DW2/7 (original of which stated to have been lost from the court file) but has deposed during cross examination that same were blank when he signed. He denied the suggestion that these documents were not signed in blank. Witness of the bank were not cross examined on the point that these documents were got signed from plaintiff blank or has been misused by the bank. In fact DW2 specifically deposed in cross examination that all documents were signed by plaintiff after same were duly filled up by the official. No contrary suggestion was given to this witness by the plaintiff. In these circumstances it cannot be held that documents Ex P-7 (Ex DW2/6), Form No. 106 Ex P-8 (Ex DW2/8), form No.126 Ex P-9 (Ex DW2/9) and promissory note Ex DW2/7 were misused or forged and moreover plaintiff failed to prove that he had applied for loan in July 1977 or in October 1977 which in turn could have been misused by the bank. In fact plaintiff in his cross examination admitted that averments regarding applying of loan of Rs 50,000/- in October 1977 was wrongly mentioned. Therefore, on the scale of preponderance of probability it stands proved that these documents were not signed blank by plaintiff.
CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 14 of 23 In view of the above discussion, issue No. 4 is decided against the plaintiff and in favour of defendant. However, it is made clear that it only means that plaintiff had applied to the bank for grant of loan and had signed all these documents not blank.
ISSUE NO. 3:- Whether any documents had been executed in furtherance of any facility being granted and availed by the New India Export House and if so, to what effect?
26. Issue No. 3 has been taken up after issue No. 4 as findings recorded on issue No. 2 and 4 were to have bearing on the findings on issue No.3. While deciding issue no. 2 it has been found that plaintiff was availing credit overdraft and purchase facility otherwise he would not have been able to withdraw amount amounting to Rs.60,014/- with initial deposit of Rs.500/-. It was also seen that an amount of Rs.42,197/- was credited by way of purchase of bill. It was also noticed that plaintiff has not disputed the entries in the ledger account Ex. DW1/2 prior to 03.01.1978. Bank has not placed on record any documents except the ledger qua the overdraft and bill purchase facilities prior to 03.01.1978 except for loan of Rs.45,000/-. The necessary conclusion could be that plaintiff availed overdraft and bill purchase facilities till 03.01.1978 without executing any document except for the loan of Rs.45,000/- for which necessary documents Ex. P2 (Ex. DW2/7), Ex. P3 (Ex. DW2/2), Ex. P4 (Ex. DW2/3), Ex. P5 (Ex. DW2/4) and Ex. P6 (Ex. DW2/5) were executed in furtherance of facility availed by the plaintiff for Rs.45,000/-.
27. As far as loan for Rs. 11.5 lakhs vide application Ex. P7 (Ex. DW2/6) is concerned it has already been held while deciding issue No. 4 that plaintiff did apply for loan but bank failed to prove the sanction. Therefore, the document Ex. P7, Ex. P8 and promissory note for Rs.11,50,000/- cannot be said to have been executed in furtherance of any facility availed of by the plaintiff.
Accordingly, issue no. 3 is decided partly in favour of the bank and partly in favour of the plaintiff in aforesaid terms. CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 15 of 23 ISSUE NO. 5:- Whether the bank authorities withdrew an amount of Rs.8,50,000/- as alleged and if so, to what effect?
28. Onus to prove this issue is upon the plaintiff. It has been found above that plaintiff had applied for loan of Rs 4 lacs for packing/credit over draft facility and for Rs 7.5 lacs for bill purchase facility. But mere applying for sanction of loan does not automatically means that loan was also approved. Unless loan was approved, amount cannot be withdrawn. It is the case of the bank that on 11.01.1978 plaintiff accompanied with one person who plaintiff introduced as Surjit Singh Arora, came with cheque for Rs 8.5 lacs and requested for discounting/encashing the same as money was urgently required. Plaintiff had requested that foreign Bills of Rs 6,80,050.24 may be purchased by the bank and proceeds thereof be credited to the current account. It is the case of bank that credit advance/current overdraft to the extent of Rs 4 lacs for which application was also pending with the Bank, was later on approved by higher authorities. It was the case of the Bank that this request was made after banking hour and plaintiff was advised to come next day, however, he explained his difficulty and requested that Shri Surjeet Singh Arora would come and collect the payments as he was busy with other buyers who were in town at that time. Bank in view of his past relations accepted his request on 11.01.1978 itself so that Surjit Singh Arora who was to collect the payment next day may not face any difficulty and said cheque was duly encashed on 12.01.1978 and bills worth Rs 6,80,050.24 were purchased and the proceeds thereof were credited in the account.
29. It is an admitted case of the plaintiff that he had issued cheque to Surjit Singh Arora who was in need of money but it is the case of the plaintiff that since he was not having fund or credit over draft facility so the cheque was not honoured and Surjit Singh Arora left the unencashed cheque in bank and flown out of India on the night of 11.01.1978. The said unencashed cheque was misused by the officials of the bank and amount was withdrawn CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 16 of 23 by them.
30. Perusal of the ledger Ex DW1/2 does not show any credit of amount in the account of plaintiff pursuant to sanction of loan of Rs 11.5 lacs. Witness of bank DW1 in examination in chief deposed exactly on the lines of the stand of bank, he, however, in cross examination deposed that sanction was in writing and action was confirmed by the higher official in writing. Nothing has been placed on record to suggest that loan as applied by plaintiff for Rs 4 lakhs and 7.5 lakhs were sanctioned or approved. Moreover in the loan application form Ex DW2/6 itself limit has been mentioned as not exceeding Rs 10 lakh, then how bank sanctioned Rs 11.5 lacs has not been explained at all by the bank. In the absence of any credit entry of loan amount in the current account and in the absence of sanction/approval letter it is difficult to hold that any such loan of Rs 11.5 or 10 lakhs was sanctioned by the bank. In these circumstance when plaintiff account was having debit balance it was not possible for bank to honour cheque for Rs 8.5 lacs. Bank has not produced the original cheque allegedly stating that original was with Income Tax Authorities but no witness from Income Tax department was examined to prove the custody of the original cheques. Cheque was honoured without issuing token. But the moot question remained unanswered that where is the sanction for grant of loan of Rs 11.5. Unless bank proves sanction of loan to the tune of Rs 11.5 lakhs, it cannot be held that funds were available in the account of plaintiff. If funds were not available in the account, amount cannot be withdrawn. When funds cannot be withdrawn as same was not available it cannot be held that any one has taken it out. These appears to be just only paper entry without any actual transaction.
31. Loan of Rs 11.5 lac as applied on 03.01.1978 was not sanctioned is also apparent from the way it has been pleaded by bank. Bank in its plaint pleaded that on 03.01.1978, plaintiff through its proprietor requested to enhance the overdraft facility to Rs. 4 lakh. He also desired that he may be CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 17 of 23 granted bill purchase facility to the extent of Rs. 7.5 lakh. Request was acceded by the bank and plaintiff executed fresh loan document on 03.01.1978 for a sum of Rs. 11,50,000/- @ 12½% per annum with quarterly rest. Manner of aforesaid averment/pleading conveys that loan was sanctioned on 3.01.1978 and accordingly loan papers were executed on 3.01.1978 but it has come in evidence from the side of bank itself that loan was not approved till 11.01.1978 otherwise bank had no difficulty in accepting the request of the plaintiff on 11.01.1978 when he approached for discounting of his cheque for Rs 8.5 lacs. It was the case of bank that the then manager DW1 himself went to the Head Office and obtained approval in writing on 11.01.1978 and disbursed the amount on 12.01.1978. But since the approval/sanction which was in writing has not been placed and proved on record, therefore, sanctioning of the loan was not proved. Hence, question does not arise that cheque for Rs. 8.5 lakh would have been discounted/encahsed in favour of the plaintiff. However, if any amount has been withdrawn from the bank it must have been withdrawn by the officials by fudging the account of the plaintiff, may be taking advantage of the loan application as well as the blank cheque available with the bank. No doubt it is true that plaintiff has set up the case that original cheque issued by him was handed over to Surjit Singh Arora who flown out of India on the night of 11.01.1978. Though, no evidence has come on behalf of the plaintiff that Surjit Singh Arora had flown out of India on the night of 11.01.1978 but examination of this issue is not relevant as onus upon the plaintiff did not shift because bank failed to prove sanctioning of loan to the tune of Rs. 11.5 lakhs or Rs. 10 lakh. What bank has proved is the application that plaintiff had applied for the loan but bank did not prove the sanctioning of the loan which was material in this case. In these circumstances though withdrawal of the amount by the plaintiff is not possible and it can definitely be held that plaintiff has not withdrawn the said amount and in these circumstances, if at all any amount has been withdrawn from the bank then possibility cannot be ruled out that the same must have been withdrawn by the officials with their collusion among themselves.
CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 18 of 23 Issue No.5 stands accordingly decided in aforesaid terms.
ISSUE NO. 6:- Whether the bank officers were in collusion with Sh. Surjit Singh Arora and made false entries as alleged and if so, to what effect?
32. As is apparent onus to prove this issue is upon the plaintiff. In his entire plaint plaintiff had not leveled any allegation of collusion between bank officers with Surjit Singh Arora. It was only in written statement to the suit filed by the bank that plaintiff at one place alleged collusion between the bank officials and Surjit Singh Arora. But again in examination in chief plaintiff was silent as to such allegation. Once there is no evidence nor any averment to this effect in evidence, it cannot be held that there was any collusion of bank officials with Surjit Singh Arora.
Accordingly issue No. 6 is decided against the plaintiff and in favour of bank.
ISSUE NO. 7:- Whether the bank discounted any foreign bills without being asked to do so and whether New India Export House applied for any loans?
33. Onus to prove this issue is upon the plaintiff as is explicit the way issue has been framed. Plaintiff has alleged that bank had discounted certain bills and credited/adjusted the amount in the fictitious loan. Plaintiff maintain said allegation in his examination in chief but did not give details of bills or the amount or the foreign supplier nor did place on record any document showing that plaintiff was entitled to receive any amount by way bill nor did he placed on record any record showing that any amount was likely to come. No doubt in the ledger Ex DW2/1 produced by the bank an amount of Rs 5,52,296.05, Rs 1,27,094.19 and Rs 1492.54 was shown realised and adjusted against debit balance but plaintiff cannot prove his case solely through the record of bank particularly when plaintiff has alleged that bank officials were operating the account and were debiting and crediting the said account of the plaintiff at their own sweet will. It is well settled law that CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 19 of 23 each party has to stand on his own legs. Thus plaintiff was required to bring on record material which could show that certain bill were deposited by the plaintiff with the bank for realising the same and amount was realised. In the absence of any material it is not possible for the court to render findings in favour of the plaintiff.
As far as question whether plaintiff applied for loan is concerned, it has already been held above while deciding issue No. 3 that plaintiff did apply for loan of Rs 11.5 lakh.
Accordingly issue No. 7 is decided against the plaintiff and in favour of bank.
ISSUE NO. 8:- Whether the suit in the name of plaintiff, New India Export House is maintainable?
34. Onus to prove this legal issue is upon the plaintiff. Bank has raised objection that admittedly New India Export House is a proprietorship concern and proprietorship concern not being a legal entity cannot sue in its own name. This objection is not sustainable in view of clear cut ruling of the Hon'ble Supreme Court in Ashoka Transport Agency v. Avadhesh Kumar & Ors, 1999 AIR SC 1484 wherein it was held that when proprietorship firm sues or is sued in its own name it is in fact the proprietor who sues or is sued and upon demise of proprietor not being sued in his own name but in firms name, can be substituted by his legal heirs. Thus suit in the name of proprietorship firm is maintainable.
Accordingly, issue No.8 are decided in favour of plaintiff and against the bank.
ISSUE NO. 9:- Whether New India Export House did not execute and did not confirm the amount of Rs. 6,45,081.439 as due and payable to bank and if so, to what effect?
35. Onus to prove this issue is upon the plaintiff as is apparent from the tenor of the issue. There is no dispute that confirmation Ex. DW2/11 bears the signature of plaintiff Harbhajan Singh but he had submitted that number of CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 20 of 23 documents used to be got signed from him whenever he had applied for the loan and those set of documents used to be retained by the bank as even in case of refusal of loan the documents were never returned and the confirmation letter was alleged to be one of the said document. The contention of the bank regarding the signing of documents by the plaintiff has already been noted.
36. In the background of the present case where bank has failed to prove that any loan amount to the tune of Rs.11.5 lakhs was sanctioned, the confirmation letter is of no relevance for the reason that when amount has not been disbursed bank cannot recover the same, even if there is any acceptance. Attention of this Court has gone to the promissory note Ex. DW2/7 which was issued on 03.01.1978 for Rs.11,50,000/- whereby plaintiff is stated to have promised to pay sum of Rs.11,50,000/- for value received with interest thereon @ 7% per annum.
37. Therefore, as per promissory note Ex. DW2/7 plaintiff has availed the amount on 03.01.1978 and had promised to repay the same whereas it is the case of the bank itself that the loan for Rs.11,50,000/- was not sanctioned till 11.01.1978 otherwise the Manager of the bank would not have required to rush to the Head Office for seeking approval for discounting the cheque for Rs.8.5 lakhs which plaintiff had brought along with one Surjit Singh Arora. It shows that bank were getting documents executed fastening liability upon the executor even before any amount was disbursed. Seen in this background it cannot be ruled out that confirmation letter might have also been got executed from plaintiff at the time when plaintiff applied for loan. In any case, since bank has failed to prove grant of loan this confirmation letter is of no use. Accordingly, issue no. 9 is decided against the bank and in favour of the plaintiff.
ISSUE NO. 10:- Whether a sum of Rs. 4,90,767.71 is due and recoverable by the bank?
CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 21 of 23
38. In view of the findings recorded on issues above discussed where bank failed to prove sanctioning of the loan, bank cannot be held entitled to recover the aforesaid amount. Accordingly, issue no. 10 is decided against the bank and in favour of the plaintiff.
ISSUE NO. 11:- Whether New India Export House is entitled to any amount and interest and if so, from which defendant?
39. In view of the finding recorded on issue no. 7 where plaintiff failed to prove that any purchase bill were discounted and adjusted by bank against the fictitious debit and since plaintiff failed to stand on his own legs despite being under obligation to do so, issue no. 11 is hereby decided against the plaintiff and in favour of the bank.
ISSUE NO. 12:- Whether the bank is entitled to any amount and if so, at what rate of interest?
40. The present issue is only in respect of interest. However, inadvertently the word "amount" has come in place of interest as is clear from the expression "and if so, at what rate of interest" followed after the word "amount".
41. Since bank has not been held entitled to any principal amount, therefore, bank is not entitled to any interest thereon. Accordingly, issue no. 12 is decided against the bank and in favour of the plaintiff.
ISSUE NO. 1:- Whether the suit filed by the bank is barred by limitation?
42. This issue has been taken up in the last as findings on issue of limitation was inseparably linked with the question whether bank had sanctioned loan of Rs 11.5 lakhs following which bank allegedly realised certain payments which were credited into the account of the plaintiff and further pursuant to his liability plaintiff had allegedly deposited a sum of Rs 4 lakh on 26.091980 as reflected in ledger Ex DW1/2. Plaintiff had denied any CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank CS No. 613988/16 Punjab and Sind Bank vs. M/s New India Export House Page No. 22 of 23 transaction after 23.01.1978 and had specifically alleged that a sum of Rs 4 lakh in cash was not deposited by him on 26.09.1980.
43. It has already been held herein before that it might be possible that confirmation letter Ex DW2/11 was got signed from plaintiff when he applied for loan and therefore same is of no use for the purpose of limitation. Even otherwise bank failed to prove sanction of loan of Rs 11.5 lakhs. Bank also did not bring any evidence to show that sum of Rs 4 lakh on 26.09.1980 was deposited by plaintiff. If bank had been able to prove sanction of loan of Rs 11.5 lakh or deposit of cash of 4 lakh by plaintiff, bank's suit probably would have been within limitation. But since bank failed to prove grant of loan, hence bank is not entitled to recover the same and therefore question of limitation does not arise. In any case since bank failed to prove deposit on 26.09.1980 and confirmation letter Ex DW2 /11 was held to be of no use, hence suit of the bank was not within limitation.
Issue No.1 is decided accordingly in favour of plaintiff and against the bank.
RELIEF In view of the above, suit filed by the plaintiff titled as "New India Export House vs. Punjab & Sind Bank & Ors." bearing suit no. 613986/16 and suit filed by the bank titled as "Punjab & Sind Bank vs. New India Export House" bearing suit no. 613988/16 are hereby dismissed.
Parties to bear their own cost.
Separate Decree sheet be prepared accordingly.
This judgment be placed on each file.
File be consigned to Record Room after necessary compliance.
(Harish Kumar)
Announced in open Court ADJ-13(Central)/THC
(Judgment contains 23 pages) Delhi/13.02.2017
CS No. 613986/16 M/s New India Export House vs. Punjab and Sind Bank
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