Bangalore District Court
Hongkong And Shanghai Banking ... vs Kiran Kumar K.V on 17 January, 2025
KABC010003792013
IN TIN THE COURT OF THE XLI ADDL.CITY CIVIL AND
SESSIONS JUDGE : AT BANGALORE [CCH-42]
:PRESENT:
SMT. SUMANGALA CHAKALABBI, B.A. LL.B. (Hons.), LL.M.
XLI Addl. City Civil and Sessions Judge,
Bengaluru
Dated this the 17th day of January 2025
O.S. NO.3739/2013
PLAINTIFF : HongKong and Shanghai Banking
Corporation, No.84, Gandhi Bazaar
Main Road, Basavangudi,
Bangalore-560004
Represented by its Assistant Manager
and Power of Attorney holder Mr.
Lyson Valanteen.,
(By Sri. Mahabaleshwara T.S., Advocate)
V/s.
DEFENDANTS : 1). Mr.K.V.Kiran Kumar,
S/o Vijay Kumar,
Aged about 30 Years,
Residing at, No.35,
2nd Main, 3rd Cross,
APC Layout,
Vidyaranyapura Post,
O.S. NO.3739/2013
2
Bangalore - 560098.
2). Mr. Vijaya Kumar K
S/o Kendagannaswamy,
Aged about 55 Years,
Temple Quarters, Temple Road,
M.M. Hills, Kollegal,
Chamarajanagar.
3) Mr.D.Pratap
Aged about 35 years
Fathers Name Not known
#33, 5th Cross,
Ganganagar
Bangalore-560029
(By Sri C.V.S., Advocate)
Date of Institution of the Suit: 27.04.2013
Nature of the suit
(Suit on Pronote, suit for Money Suit
declaration & possession, suit
for injunction)
Date of commencement of 02.02.2015
recording of evidence:
Date on which the Judgment 17.01.2025
was pronounced:
Total Duration: Year/s Month/s Day/s
11 08 21
JUDGMENT
O.S. NO.3739/2013 3 The plaintiff has filed this suit against the defendants for recovery of a sum of Rs.77,00,000/- together with interest at the rate of 12% p.a. from the date of suit till its realization.
2. The brief facts of the case of the plaintiff are that :
2.1 The plaintiff is a Banking Company duly incorporated under the provisions of Banking Regulation Act, 1949 and also registered under the Companies Act, 1956. The activities of the Bank are governed by Reserve Bank of India Act.
2.2 The 1st defendant was working with the plaintiff Company as Premier Relationship Manager at Basavanagudi Branch, Bengaluru.
During his course of employment the 1st defendant used to interact with high net worth customers on O.S. NO.3739/2013 4 behalf of the Company and provide management advise and Canara HSBC Life Insurance advise to the customers.
2.3 The 2nd defendant is the father and 3rd defendant is the friend of 1st defendant. The 1st defendant being a Premier Relationship Manager of the plaintiff used to interact and collect payments against investments from the customers of the plaintiff.
2.4 It is further submitted by the plaintiff that on 16.09.2011 one of the customers of plaintiff by name Pushpa Kalsey had visited M.G. Road branch of the plaintiff enquired about two cashier order transactions in the joint savings A/c No.071-213490-006 held by Sri Gulu Lalwani and herself. In the statement, transaction of Rs.15 Lakhs each on 18th and 20th of June 2010 were issued in favour of 3rd defendant. Upon O.S. NO.3739/2013 5 clarification, it came to know that said customer also provided Wealth Management System Investment Statement, showing Rs.30 Lakhs in capital market through 3rd defendant and the customer also submitted statement pertaining to their investments with Canara HSBC Life Insurance for Rs.2 Lakhs which was given to them by 1st defendant and in this regard said customers have given written representation disputing that they have so instructed the 1st defendant.
2.5 The plaintiff verified the records maintained by them with respect to Wealth Management and Canara HSBC Life Insurance transactions and the plaintiff has not come across any investments from its records.
2.6 It is specifically stated by the plaintiff that on verification the plaintiff came to know that Wealth Management System and Canara HSBC O.S. NO.3739/2013 6 Life Insurance statements given to customer by 1st defendant were fabricated and were not in actual statements of account of plaintiff.
2.7 Thereafter, the plaintiff contacted all the customers who were interacting with 1st defendant and revealed that there are few more customers whose account transactions were also not reflected in the records of plaintiff.
2.8 Likewise Mr. Sridhar Venkataraman and Smt. Uma Sridhar having joint accounts were made to transfer Rs.40 Lakhs to the account of 2nd defendant maintained in S.B.M. and the amount was transferred through RTGS on 11.08.2011. On verification 1st defendant interacted with customers and transferred Rs.40 Lakhs to the account of 2nd defendant, who is none other than his father.
O.S. NO.3739/2013 7 2.9 Likewise one Sri Gottigeri Nanjundaiah Srinivas also brought to the notice of plaintiff that Rs.4,50,000/- was debited from his account by way of cashier order on 08.02.2011 maintained at S.B.M., in the name of 2nd defendant, but said Gottigeri Nanjundaiah Srinivas has denied the said transaction.
2.10 Further one Murali Mohan was surprised to see that Rs.10 Lakhs was debited from his account in favour of Sri Ravi Venkataraman on 04.08.2011, but the said customer has denied the said transaction. Thereafter said Ravi Venkataraman's account was debited for a sum of Rs.10 Lakhs and the same was debited favouring the 2nd defendant on 22.06.2011 and Mr. Ravi Venkataraman has denied the whole transaction.
O.S. NO.3739/2013
8
2.11 Further the customers by name
Rathna Sarah Thomas and Mrs. Anupama
Christine Thomas having joint Savings account have brought to the notice of plaintiff that their accounts were debited by one cashier order and four cheques maintained by defendant and transferred Rs.38,50,000/- in December 2009 between 14th and 26th.
2.12 The said transfers effected by 1st defendant were not within the knowledge of plaintiff. The 1st defendant being the employee of plaintiff has misused his position and enriched himself by crediting the amount of customers to his personal account and the account of his father and friend i.e. defendants No.2 and 3. By the act of defendant No.1 and in collusion with defendant NO.2 and 3 the defendants altogther O.S. NO.3739/2013 9 unauthorizedly conducted the transactions in the account of above said customers.
2.13 In this regard the plaintiff had filed a complaint before Basavanagudi Police in Cr.No.382/2011 for the offences punishable under Sections 403, 408, 468, 471, 420 read with Section 120(B) of IPC and in the said investigation the 1st defendant was arrested and the police had recovered Rs.13,48,425.61, which was later released to the interim custody of the plaintiff.
2.14 The cause of action for the suit arose on 16.09.2011, when the plaintiff received information from Pushpa Kalsey and on 03.12.2011 when plaintiff had given complaint.
2.15 The defendants have caused total loss of Rs.1,33,00,000/- to the plaintiff Company and in total they are due to a sum of Rs.1,53,61,500/-.
O.S. NO.3739/2013 10 Further, the plaintiff has restricted its claim to Rs.77 Lakhs.
3. In pursuance of suit summons, the defendants appeared before the court through common counsel and have contested the claim of the plaintiff.
3.1 The 1st and 3rd defendants have filed their separate written-statements on 03.10.2013 and 21.07.2014 respectively. The 2nd defendant has adopted the written-statement of the defendant No.1 by filing a Memo.
The written-statement of the 1st defendant runs as follows:
3.2 The 1st defendant has denied each and every averment of the plaint and further contended that the suit of plaintiff is false and vexatious.
O.S. NO.3739/2013 11 3.3 It is further submitted by the 1ª Defendant that he had taken loans from some of following friends, who happened to be customers of the plaintiff Bank. The Defendant No. I had also paid interest to those friends from whom he had taken loan; in some cases he had also made repayments of the same and in other cases he had paid major portion of loans along with interest 3.4 The Defendant No. 1 submits that he had taken loan from the following 5 persons on an oral agreement with a promise that interest will be paid to them regularly and the principal will be returned in due course.
(1) Mr. Gulu Lalvani & Pushpa Kalsey holding Joint Savings A/c bearing No. 071-
213490-006.
O.S. NO.3739/2013 12 (2) Mr. Sridhar Venkatraman & Smt. Uma Sridhar holding Joint Savings A/c bearing No. 092-113703006.
(3) Mr. Ratna Sarah Thomas & Mrs. Anupama Christine Thomas holding Joint Savings A/c No. 132-379033-006 & 004-319604- 006.
(4) Mr. Gottigere Nanjundaiah Srinivas holding A/c No. 132- 348152-006.
(5) Mr. Ravi Venkataraman holding A/c. No. 071-154157-006.
It is contended that the above referred customers in pursuance of the loan transaction had consented and permitted the defendant no.1 for the withdrawal of the amount from their accounts. The 1st defendant has paid major portion of loan amount to them and is also paying interest to them regularly to the above lenders and the said facts are evident from the bank O.S. NO.3739/2013 13 statement of Defendant No. 1 maintained at HDFC Bank, Basavanagudi, Gandhi bazaar Branch, Bangalore, & Bank Statement of Defendant No. 2 maintained at State Bank of Mysore, market branch at Mysore, which disclose the payment of interest & principle amount in part to the lenders account. The 1st defendant submits that the entire principle amount along with interest has been paid to Mr. Ravi Venkataraman by transfer & by cash as is evident from the Bank statements of the defendants.
3.5 It is contended that since there was a little delay in payment of interest to some of the lenders they have joined hands with the plaintiff Bank, and the Plaintiff Bank has filed a false Complaint dated 03.12.2011 before the Basavanagudi Police Station in Crime No. 382/2011 for the alleged offence punishable U/s.
O.S. NO.3739/2013 14 403, 408, 468, 471, 420 r/w 120B of IPC by joining hands with the above persons with the malafide intention to spoil the career of the Defendant No.1, & other two defendants. The same has resulted in registration of C.C. No:
7299/2013. The 1st and 2nd Defendants have challenged the proceedings and the F.I.R. in the above criminal case before the Hon'ble High Court of Karnataka, Bangalore in Criminal Petition No:3229/2013, which is still pending.
3.6 The 1st defendant submits that the Plaintiff threatened the 1st Defendant that he will be terminated from service provided he deposits entire amount in their Bank and obtained the 1st Defendant's signatures on the blank papers though the 1st Defendant informed the plaintiff Bank that he has taken loan from the above persons and has also returned some of the alleged O.S. NO.3739/2013 15 principal amount along with interest yielding to the pressure of the plaintiff bank and under its instructions,the 1st Defendant deposited approximately Rs. 45,00,000/- into the Plaintiff Bank, according to the Banks instructions.
Despite the same the Bank has filed the complaint before the Police after the lapse of 2½ months by manipulating records according to their convenience and in connivance of the above persons with a malafide intention, without explaining the reason for delay in filing the Complaint (FIR).
3.7 The Plaintiff has suppressed the facts that the 1st Defendant has deposited about 45,00,000/- into bank accounts of 1st Defendant and part of same has been withdrawn by the plaintiff bank. Thus the Plaintiff has not approached this Court with clean hands and has O.S. NO.3739/2013 16 suppressed the material facts and has filed this false suit. With these allegations, the defendant No.1 has sought to dismiss the suit.
The written-statement of the defendant No.3 runs as follows:
3.8 The third defendant has denied the plaint averments. The averments in the plaint that the 1st defendant being the employee of the plaintiff in collusion with defendant no.2 and 3 had misused official position and enriched himself by crediting the amount of the customers of the plaintiff's bank to his personal account, his father's account and his friend's account i.e. 3rd Defendant's account is denied as completely false and misleading.
3.9 It is further submitted by the defendant No.3 that all the money advanced to him as loan was transferred by defendant No.1, to his Savings O.S. NO.3739/2013 17 account and he has been returned to the 1 st Defendant and 2nd Defendants. Therefore, he is not liable to pay any amount claimed by the Plaintiff.
Further he has denied all the averments of the plaint in toto and sought to dismiss the suit.
4. In view of the rival contentions raised by both the parties the following Issues have been framed :
ISSUES
1. Whether the plaintiff proves that on enquiry it found that the defendants had obtained more money from the customers and had debited the accounts of the customers of the plaintiff bank stating that the same will be invested in Canara HSBF life insurance and Wealth Management but they had not done so, and they had furnished the fabricated statement to the customers of the plaintiff?
2. Whether the plaintiff further proves that the defendant No.1 being the O.S. NO.3739/2013 18 employee of the plaintiff had misused his official position and had enriched himself by crediting the amount of others to his personal account and to his father's account that is defendant No.2 and his, friends account that is defendant No.3 and that the defendants No.1 to 3 in collusion had conducted the transactions of the account of the customers and had misappropriated the amount and had committed breach of trust and had defrauded the customers and the bank ?
3. Whether the plaintiff proves that the defendants totally have caused the loss of Rs. 1,33,00,000/- to the bank ?
4. Whether the first defendant proves that he had taken loans from some of the persons and friends who happened to be the customers of the plaintiff bank and he had paid the interest and he had also made some repayments and there was a delay in repayment of the amount and in mean while those customers have colluded with the plaintiff bank and have filed the complaint against him?
5. Whether the plaintiff bank is entitled to recover an amount of Rs. 770000/-
from the defendants with interest at O.S. NO.3739/2013 19 12%p.a from the date of suit till recovery ?
6. What decree or order?
ADDITIONAL ISSUES FRAMED ON 07.09.2017
1. Whether the plaintiff has no cause of action to institute this suit as contended by the defendants?
2. Whether the court has territorial jurisdiction to try this suit as contended by the defendants?
5. In order to prove the case of the plaintiff, the plaintiff has examined its Officer and Power of Attorney Holder as PW.1 and also examined its Assistant Manager and Power of Attorney Holder as PW.2 and got marked documents at Ex.P.1 to Ex.P.12 and closed its side.
On the other hand, to prove their defence, the defendants No.1 to 3 have examined themselves as O.S. NO.3739/2013 20 Dws.1 to 3 respectively and got marked documents at Ex.D.1 to D.10 and closed their side.
Thereafter, the matter was set down for arguments.
6. Heard the arguments. Perused the records.
7. My answer to the above points are as under:
Issue No.1 - In the Negative Issue No.2 - In the Negative Issue No.3 - In the Negative Issue No.4 - In the Negative Issue No.5 - In the Negative Addl. Issue No.1 - In the Negative Addl. Issue No.2 - In the Negative Issue No.6 - As per the final order for the following:
REASONS
8. Issue Nos.1 to 5 and Addl.Issue No.1:- It is the specific case of the plaintiff 1st defendant being the O.S. NO.3739/2013 21 employee of plaintiff has misused his position and enriched himself by crediting the amount of customers to his personal account, the account of his father and friend i.e. defendants No.2 and 3 herein. The defendant No.1 in collusion with defendant No.2 and 3 had unauthorizedly conducted the transactions in the account of some of the customers referred in the plaint.
9. The plaintiff after coming to know about the misappropriation committed by the defendants had filed a complaint before Basavanagudi Police in Cr.No.382/2011 for the offences punishable under Sections 403, 408, 468, 471, 420 read with Section 120(B) of IPC and in the said investigation the 1st defendant was arrested and the police had recovered Rs.13,48,425.61, which was later released to the interim custody of the plaintiff.
10. Per contra the defendant No. 1 submits that he had taken loan from the following 5 persons on an oral O.S. NO.3739/2013 22 agreement with a promise that interest will be paid to them regularly and the principal will be returned in due course.
(1) Mr. Gulu Lalvani & Pushpa Kalsey holding Joint Savings A/c bearing No. 071- 213490-006.
(2) Mr. Sridhar Venkatraman & Smt. Uma Sridhar holding Joint Savings A/c bearing No. 092-113703006.
(3) Mr. Ratna Sarah Thomas & Mrs. Anupama Christine Thomas holding Joint Savings A/c No. 132-379033-006 & 004-319604- 006.
(4) Mr. Gottigere Nanjundaiah Srinivas holding A/c No. 132- 348152-006.
(5) Mr. Ravi Venkataraman holding A/c. No. 071-154157-006.
11. It is contended that the above referred customers in pursuance of the loan transaction had O.S. NO.3739/2013 23 consented and permitted the defendant no.1 for the withdrawal of the amount from their accounts. The 1st defendant has paid major portion of loan amount to them and is also paying interest to them regularly .
12. It is specifically contended by the plaintiff that the defendant No.1 was serving as the Premier Relationship Manager and in his capacity as a Manager used to interact with High Net Worth Customers providing wealth management advise and Canara HSBC Life Insurance Advise to the customers of the bank.
13. Upon a meticulous scrutiny of the materials on record it is noted that the plaintiff's plea for claiming the recovery of the loss against the defendants is premised on mis use of official position of the first defendant by commission of act of fraud, misappropriation and breach of trust by non investment of the funds collected. In the light of the above, in the first place, it is noted that the plaintiff O.S. NO.3739/2013 24 has not clearly indicated the duties and functions of the post of Premier Relationship Manager in the plaintiff bank. No particulars of the job description and responsibilities, which were required to be complied by the designate who was interacting with net worth clients, have been provided. A bald and vague allegation has been made that the defendant No.1 has effected transfers of the amount which was lying in the account of the customers of the plaintiff bank by misusing his official position and in furtherance of the same has enriched himself by transferring the amount to his account and to the account of defendants No.2 and 3 and thereby has committed fraud but these allegations are not sufficient to establish the liability of the defendants.
14. Order VI Rule 2 of CPC lays down some general principles regarding pleadings and provides that pleadings should state facts and not law, the facts stated should be material facts. But, in the present case the plaintiff bank O.S. NO.3739/2013 25 has sought the relief of recovery of money by indicating the liability of the defendants in the plaint by referring to the complaint of one Pushpa Kalsey. Thereafter the plaintiff bank has averred that an internal enquiry was conducted on the basis of the complaint of Pushpa Kalsey and on verification it had come across that the investments and transactions which were allegedly made by the defendant No.1 did not correspond with the account of the plaintiff bank and fabricated statements of accounts of the wealth management and HBSC insurance were issued by the first defendant. The plaint does not indicate that the defendant no.1 in his capacity as a Premier Relationship Manager in providing financial advise to the customers had to maintain records with reference to the same and should necessarily correspond with bank statements. The plaintiff bank which is desirous of the court to give judgment as to its legal right must plead and prove on the existence of O.S. NO.3739/2013 26 material facts to demonstrate the liability of the defendant no.1.
15. If it is the case of the plaintiff bank that the defendant no.1 had unauthorizedly conducted the transactions in the account of some of the customers referred in the plaint and thereby had committed fraud, in the first place the plaintiff had to necessarily and mandatorily narrate the the banking norms/regulation/law/ code of conduct which govern the conduct of the defendant no.1 and thereafter plead that the defendant no.1 has acted illegally and inconsistent with his legal duties and therefore he is answerable . There are absolutely no material pleadings vis a vis the legal duties of the defendant no.1 and the consequent breach of the same . In Colonel Shrawan Kumar Jaipuriyar @ ... vs Krishna Nandan Singh in Civil Appeal NO. 6760 OF 2019, the Supreme Court referring to Court in Church of Christ O.S. NO.3739/2013 27 Charitable Trust and Educational Society Represented by its Chairman v. Ponniamman Educational Trust Represented by its Chairman/ Managing Trustee (2012) 8 SCC 706 and A.B.C. Laminart Pvt. Ltd. and Another. A.P. Agencies, Salem, (1989) 2 SCC 163 the Apex court has sought to explain that the cause of action means every fact which, if traversed, would be necessary for the plaintiff to prove in order to seek a decree and relief against the defendant. Cause of action requires infringement of the right or breach of an obligation and comprises of all material facts on which the right and claim for breach is founded, that is, some act done by the defendant to infringe and violate the right or breach an obligation and further it was held that there does not exist any legal right which the plaintiff or the first respondent is entitled to invoke and enforce. For a right to exist, there must be a corelative duty which can be enforced in a law suit. A right cannot exist without an enforceable duty. In the present case, the O.S. NO.3739/2013 28 pleadings fail to establish violation of a statutory right or breach of a contractual obligation which creates an enforceable right in the court of law. In the absence of any disclosure of such right or even a claim, the plaint would not disclose cause of action.
16. A further careful scrutiny of the aforesaid averments of the plaint disclose that the allegations of fraud misappropriation, breach of trust are not based on misrepresentation by the first defendant that he in the guise of securing investment from the customers had misrepresented to the customers and had eventually diverted the funds for his benefit. A bald and vague allegation of non investment of funds collected by the first defendant and misuse of his official position is made.
17. At this stage it is appropriate to refer to Section 17 of the Indian Contract Act O.S. NO.3739/2013 29 Section 17: 'Fraud' defined.--
'Fraud' means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent', with intent to deceive another party thereto or his agent, or to induce him to enter into the contract:--(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;(2)the active concealment of a fact by one having knowledge or belief of the fact;(3)a promise made without any intention of performing it;(4)any other act fitted to deceive;(5)any such act or omission as the law specially declares to be fraudulent.
The above provision provides the foundational parameters to decide the act of fraud. But in the above case though the plaintiff has alleged fraud the details of the commission of the fraud and the in manner in which fraud was alleged to have been committed is not pleaded at all. The description and the manner of commission of fraud by pleading the necessary causal facts as to how the funds collected from the customers lead to misuse of official position are not pleaded. No doubt the plaintiff has pleaded that the wealth management statements and Canara HSBC Life Insurance Statements given to the first defendant were O.S. NO.3739/2013 30 not in line with the actual statements account of the plaintiff bank but such averment is not sufficient unless material averments on the plea of fraud are specifically pleaded. Equally is the case with the allegation of misappropriation of money and breach of trust by the first defendant. The plaint averments do not state as to how the first defendant whose role was limited to that of the Premier Relatioship Manager was entrusted with the funds of the customers of the plaintiff and how he was able to misappropriate the amount causing loss to the customers. The modus operandi of the defendants in securing transfers of amount from the account of the customers is not explained. It is an established principle of law that the pleadings form the platform on which the edifice of the case is erected and the evidence presented in trials is the construction carried out on the said platform or plinth. The element of fraud alleged in the plaint must state those facts which together taken as a whole, if proved, would O.S. NO.3739/2013 31 show and establish the same . The pleading of fraud should necessarily be conspicuous and palpable, and should not be predicated on mere suspicion and conjecture.
18. Fraud, coercion and misrepresentation being intangible and abstract facts , heavy duty is cast upon the plaintiff to plead and prove the same by cogent evidence and attending circumstances.
At this stage it is appropriate to refer to Order VI Rule 4 CPC provides:
"In all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, willful default, or undue influence, and in all other cases in which particulars may be necessary beyond such as are exemplified in the forms aforesaid, particulars (with dates and items if necessary) shall be stated in the pleading."
Therefore there is a legal requirement under Order VI Rule 4 of C.P.C. that whenever a party alleges fraud, breach of trust, willful default, or undue influence, and in O.S. NO.3739/2013 32 all other cases in which particulars may be necessary beyond such as are exemplified in the forms aforesaid, particulars (with dates and items if necessary) shall be stated in the pleading. But in the instant case the plaintiff bank has only used the words fraud, misappropriation of money, and breach of trust but the necessary particulars as indicated at Ex.P2 and P5 are not specifically averred in the plaint. The pleadings as narrated by the plaintiff bank are incomplete and do not clearly and clinchingly point to legal right of the plaintiff bank and the corresponding liability of the defendants. Except pleading that the first defendant has transferred the amount from the accounts of the customers to his personal account and to the accounts of the other defendants the plaintiff has not pleaded about the misrepresentation and inducement to demonstrate and establish the right to sue to fetch a relief of recovery of the loss. The Apex Court in A.C.B. Laminart Pvt. Ltd. vs. A.P. Agencies, Salem in the decision reported in 1989 AIR 1239, O.S. NO.3739/2013 33 the Hon'ble Apex Court has explained the meaning of "cause of action" as follows:
" 12. A cause of action means every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff."(Emphasis supplied).
19. In this context it is appropriate to refer to the judgment of the Apex Court in the case of C.S.Ramaswamy v. V.K.Senthil in Civil Appeal No. 500/2022 dtd. 30.9.2022, has held that mere using the word fraud as opposed to O.S. NO.3739/2013 34 making specific averments was not sufficient and the same has to be substantiated by particulars of fraud. It is well settled that a mere contemplation or possibility that a right may be infringed without any legitimate basis for that right, would not be sufficient to hold that the plaint discloses a cause of action. Therefore in the absence of material particulars of the allegations of fraud mis appropriation of funds and breach of trust, a vague plea cannot be considered and in this behalf also there is non disclosure of cause of action. Hence On an overall conspectus of the pleadings referred and discussed above it is evident that the plaintiff has failed to make out a clear cause of action with reference to the relief sought by it.
20. Now coming to evidence relied upon by the plaintiff bank, it is relevant to note that Section 104 of the Bharatiya Sakshaya Adhiniyam 2023 provides : Whoever desires any Court to give judgment as to any legal right or O.S. NO.3739/2013 35 liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. Section 105 of the said Act provides that the burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.Section 106 of the said Act provides that the burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.
21. If the evidence adduced by the parties is examined in the light of the above provisions it is relevant to note that the plaintiff has alleged that the customer by name Pushpa Kalsey had complained that the investment made at Canara HSBC Life Insurance for a sum of Rs.2 Lakhs was against her instruction and in this regard a O.S. NO.3739/2013 36 separate written representation was given to the plaintiff but the plaintiff has very surprisingly not produced this material document before the court. It is not the case of the plaintiff that the said document has been lost or misplaced. Absolutely no explanation is offered for the non production of the same. PW.2 has clearly admitted that defendant No.1 was required to advise the customers with regard to investments, handling customers' queries and other needs of the customers as a Premier Relationship Manager and has further admitted that customers of the bank had given complaint to the Manager regarding misappropriation of first defenant. But PW2 states that he is not sure if the said copy is produced before the court. The complaint by Pushpa Kalsey was a significant and crucial document which ought to have been produced by the plaintiff bank as according to plaintiff the said document unraveled the illegalities committed by the first defendant in active collusion with the other defendant.
O.S. NO.3739/2013 37 Nothing prevented the plaintiff bank to produce the same from its custody.Similarly, the customers who have complained about the alleged misconduct of the defendant no.1 are surprisingly not summoned. When the entire case of the plaintiff bank is founded on the allegations of misconduct of the defendant no.1 and these customers have been indemnified by the plaintiff bank the plaintiff bank ought to have examined them to substantiate their case.
22. Further, no doubt, the plaintiff has produced the account statements of the customers referred in the plaint at Ex.P.6 to P.11. But, no complaint of such customers and internal enquiry report are produced by the plaintiff to substantiate its contention that the defendant No.1 had not made the investment and the amount withdrawn from the account of the aforesaid persons was used by the defendant No.1 and his allies to make a O.S. NO.3739/2013 38 wrongful gain. The fabricated statements of accounts of Wealth Management and Canara HSBC which were found to be fabricated by the first defendant during the internal enquiry are also not produced. Dw1 during the cross examination has denied that he had given Wealth Management system investment statement showing that the investment of Rs 30,00,000/- in capital market through the third defendant and he has denied that Smt Pushpa Kalsey and Gulu Lalvani had invested in Wealth Management through two cashier order transactions. In the background of the allegation that the first defendant had issued fabricated statements it was necessary to confront the same during the cross examination of DW1 . DW1 has further denied that he has misused the letter of instructions given by two customers and credited two cashier orders to the accounts of defendant no.3. DW1 has denied that he has transferred a sum of RS 40, 00, 000/- to the account of his father as investment .But the letter of O.S. NO.3739/2013 39 instructions referred by the counsel for the plaintiff and investment document of Rs.40Lakhs are not confronted or produced. No material documents touching the point in issue are produced or confronted by the plaintiff. The enquiry officer who conducted the enquiry is also not examined before the court. PW.2 has stated that the security and Fraud Risk Department is empowered to enquire regarding the internal fraud committed in the bank but no person from the said department is summoned by the plaintiff to support the case of the plaintiff. It is also noted that PW.2 who was examined before the court has clearly stated that one Ramakrishna B. was working as a Manager in Basavanagudi Branch during the alleged misappropriation, but the said Manager has not been examined before the court.
23. Further, the transactions referred by the plaintiff refer to for the period from 2009 to 2011. But the O.S. NO.3739/2013 40 above case is filed in the year 2013. It is elicited from DW1 he is required to send monthly report to his higher authority and his performance was assessed by his reporting Manager Ms. Jayashree Nagaraj . DW1 has categorically stated that he used to report about the details of the parties, product sold and investments made to his higher authorities.DW1 has further deposed that he was having access to see the investors bank accounts and such investor will give letter of instructions to transfer funds from their accounts for investment and DW1 has denied that he has shown in his report as product sold. DW1 has admitted that whenever a product is sold the bank comes to know as the statement reflects the same . The evidence of DW1 clearly and clinchingly depicts that every transaction carried out by the first defendant was reflected in the bank statement and if there were unauthorised transactions at the instance of the plaintiff the same would have been certainly reflected in the audit report. But the O.S. NO.3739/2013 41 plaintiff has not stated as to the details of any audit conducted during the said period and further if any discrepancy was found in the audit with reference to the suit transactions.. If there were unauthorized debits from the accounts of the customers, certainly the customers would have complained about the same immediately by filing a written complaint to the Head Office and seeking recovery of money but there is no pleading or evidence with reference to such complaint
24. The plaintiff has primarily relied upon Ex.P.2, P.3 and P.5, which are the FIR, complaint and charge sheet filed with reference to the complaint filed by the plaintiff bank against the defendants No.1 to 3 for the offences punishable under Sections 403, 408, 468, 471, 420 read with Section 120(B) of IPC before Basavanagudi Police in Cr.No.382/2011.
25. On perusal of the complaint allegations produced at Ex P.3, it is evident that the complaint was O.S. NO.3739/2013 42 filed against the defendant No.1 by stating that on the basis of the internal enquiry it was found that the defendant No.1 had unauthorizedly conducted transactions and had misappropriated Rs.1,33,00,000/-. The gist of the FIR produced at Ex.P.2 indicates that the complaint was filed against the defendant No.1 on the ground that he had induced the customers of the plaintiff bank by falsely representing that the amount would be invested in investment schemes and had induced the customers to sign on blank cheques, blank RTGS forms along with Dds. and later on personally diverted the funds to his personal account and to the accounts of defendants No.2 and 3, who are his father and friend.
26. The gist of the complaint in Ex.P.2(Column NO. 10 of the FIR) is an improvisation of complaint made by the plaintiff bank at Ex.P.3. No doubt the substance of the complaint addressed to the Station House Officer dated O.S. NO.3739/2013 43 3.12.2011 was founded on the un authorised transfers from the accounts of the customers of the plaintiff bank but if during the course of preliminary enquiry by the police a case of inducement and misrepresentation by the defendant no.1 was made out as provided in column no. 10 of the FIR dated 3.12.2011 in Crime NO. 382/2011 then nothing prevented the plaintiff bank to plead the same in the plaint . The substance of the allegations as made out in column no. 10 of the FIR is entirely based on a different footing as against the plaint averments. It is the fulcrum of the case of the plaintiff that the defendant No.1 had diverted the funds of the customers of the plaintiff bank without due authorization of the customers of the plaintiff bank but while prosecuting the criminal case it has taken a different stand by contending that the customers of the bank were induced to sign on blank cheques and RTGS forms which were utilized by the defendant No.1 for misappropriation of funds. It is also relevant to state that O.S. NO.3739/2013 44 the chargesheet against the defendants produced at Ex.P5 is also founded on the complaint allegations indicated in column no. 10 of the FIR at Ex.P2. Therefore though the charge sheet filed by the Basavanagudi police officials in CC.NO. 7299/2013 is consistent with the gist of the complaint narrated in column no. 10 of the FIR produced at Ex.P2 but these material documents are highly inconsitent with the plaint allegations. It is well settled principle of law that the evidence of the parties cannot travel beyond the pleadings. In Kashi Nath (Dead) through L.Rs. v.Jaganath,Kashi Nath (Dead) Through Lrs v. Jagannath,(2003) 8 SCC 740. it was held that where the evidence is not in line with the pleadings and is at variance with it, the evidence cannot be looked into or be depended upon. Along these lines it has been held by the Supreme Court in Bachhaj Nahar v. Nilima Mandal & Ors, AIR 2009 SC 1103 that no amount of evidence, on a plea that is not suggested in the pleadings,can be looked into to grant any O.S. NO.3739/2013 45 relief . Hence the contentions raised by the defendants during the course of evidence or arguments cannot be looked into. Therefore in the absence of material pleadings in terms of the substance of allegations as borne out from Ex.P2 and 5, it is clear that the documentary evidence produced by the plaintiff in form of FIR and charge sheet at Ex.P2 and Ex.P5 are contrary and inconsistent with the pleading and therefore they cannot be taken into consideration. At this stage it is material to note that issue no.1 raised by the court places the burden on the plaintiff to prove that the defendants had obtained money from the customers and had debited the amounts of the customers by stating that the same would be invested in Canara HSBC Life Insurance and Self Management Scheme and had further failed to prove that the defendant No.1 being an employee of the plaintiff bank had misused his official position in collusion with defendants No.2 and 3 and thereby had defrauded plaintiff bank. But as recorded O.S. NO.3739/2013 46 above these are no averments in the plaint that the defendants had obtained money from the customers and had debited the amounts of the customers by stating that the same would be invested in Canara HSBC Life Insurance and Self Management Scheme and the said issue has been framed based on the documents relied upon by the plaintiff and produced along with plaint in the form of FIR and charge sheet now marked at Ex.P2 and P5 . Undoubtedly, the power of the court while framing issues need not be confined the pleadings and the court can very well rely upon the contents of the documents produced by the parties as provided under Order 14 Rule 3 CPC but when parties are put on trial on the said issue the parties would still be confined by the pleadings and any evidence beyond the pleadings would not be relied upon. Here in the instant case though the issue no.1 was framed by the court relying on the plaint documents, the plaint did not utilize the O.S. NO.3739/2013 47 opportunity to amend the plaint and bring the pleadings in confirmity with the complaint allegations made at Ex.P2 .
27. The only other material documents that remain for consideration are the account statements of the customers, who alleged diversion of funds by the first defendant. It is relevant to state here that the account statements at Ex.P6 to 11 by themselves do not establish the alleged fraud, misappropriation of funds of breach of trust unless they are supported by pleadings and therefore they cannot be relied upon.
28. It is specifically contended in para No.16 that plaintiff being a banker has indemnified the customers against the loss suffered by them by crediting the am s so misappropriated by the 1st defendant. In support of the said plea, the plaintiff has not produced any iota of evidence to demonstrate that the customers of the bank O.S. NO.3739/2013 48 who had suffered loss at the hands of the 1 st defendant employee were indemnified to the extent of the loss suffered by them. When admittedly the suit is for recovery of money against the defendants, it was obligatory on the part of the plaintiff bank to provide material details regarding the indemnification made by the plaintiff bank to the customers. When is legal right is asserted by the plaintiff basing upon the legal obligation on the part of the defendants to indemnify the plaintiff bank then the said fact has to established on the principle of preponderance of probabilities by leading cogent evidence. No documentary evidence is placed on record in this regard except the oral evidence of PW2. PW.2 has stated that he cannot recollect if any notice was issued to the defendants before indemnifying the customers.If the plaintiff bank had indemnified the customers then certainly they would have maintained records in their usual course of business, which they ought to have produced to establish the loss O.S. NO.3739/2013 49 sustained by them but the plaintiff bank has not endeavoured to do the same. In the case of Manager, Reserve Bank of India, Bangalore vs. S.Mani, (2005) 5 SCC 100 that mere pleadings of a party cannot be treated as substitute for proof. It is equally well settled that if a party withholds from court the best evidence or some material evidence (document) or witness, adverse presumption against such party can be drawn u/s. 114(g) of the Evidence Act as held in M/s. Sri Ram Industrial Enterprizes Ltd. vs. Mahak Singh, AIR 2007 SC 1370. Therefore the plaintiff has failed to demonstrate the loss sustained by it as claimed by it.
29. Thus , on an overall assessment of the materials on record, it is clear that the plaintiff has failed to prove that defendant No.1 being the employee of the plaintiff had misused his official position and had enriched himself by crediting the amount of others to his personal account and O.S. NO.3739/2013 50 to his father's account that is defendant No.2 and his, friends account that is defendant No.3 and that the defendants No.1 to 3 in collusion had conducted the transactions of the account of the customers and had misappropriated the amount and had committed breach of trust and had defrauded the customers, the bank has failed to prove that the defendants totally have caused the loss of Rs. 1,33,00,000/- to the bank and further the plaintiff bank is entitled to recover an amount of Rs. 770000/- from the defendants with interest at 12%p.a from the date of suit till recovery.
30. The next question that arises for consideration is whether the first defendant has proved that he had taken loans from some of the persons and friends who happened to be the customers of the plaintiff bank and when there was a delay in repayment of the amount those customers have colluded with the plaintiff bank and have filed the O.S. NO.3739/2013 51 complaint against him. The Defendant No. 1 in his written statement has contended that he had taken loan from the customers of the plaintiff bank on an oral agreement with a promise that interest will be paid to them regularly and the principal will be returned in due course and in support of the same he has produced the bank statement of the defendants and bank statements of two customers at Ex.D2 to 5, D7 and D9 and D10. It is material to note that the examination in chief of DW1 is consistent with his defense in the written statement . In the affidavit filed in lieu of the examination in chief it is clearly stated that the first defendant had himself borrowed loans from the customers of the plaintiff bank who were his friends but during the cross examination of PW1 has admitted that there is no document to show that there was an understanding between the customers and the defendants to pay interest on the loans borrowed. DW1 has further deposed that he has not shown the loan availed in his IT O.S. NO.3739/2013 52 Returns . It is significant to note that the defendant no.1 has contradicted his version in the written statement and chief examination during his cross examination on 18.12.2019 by stating that he has not availed any loan but the defendant no.2 and 3 have availed the loan and he has paid interest whenever they needed help from him.
31. The defendant no.1 in his capacity as GPA holder of the defendant no.2 has lead his evidence before the court as DW2. It is stated in the examination in chief of DW2 that second defendant was a PWD contractor at MM HILLS and executing road work, dam and tank bound repairs during 2009 ans subsequently. Further the second defendant approached the first defendant for the purpose of getting loan for utilising in his contract work and thereafter when the second defendant expressed that taking loan from the plaintiff bank is time consuming the first defendant introduced him to 3 to 4 friends who agreed to advance O.S. NO.3739/2013 53 loan to the second defendant with interest. The evidence affidavit of the second defendant demonstrates that he claims to have borrowed loans from Gottigere Nanjundaiah for a sum of RS. 4,50,000/- on 8.2.2011, Rs 40 Lakhs from Sridhar Venkataraman on 11.8.2011 and Rs. 10 Lakhs from Ravi Venkataraman on 22.6.2011, Out of the aforesaid amounts the second defendant claims to have repaid Rs.798521 to the account of Ravi Venkataraman on 19.8.2011 as per Ex.D5 and balance together with interest by cash and the same has been noted in the note book maintained by Ravi Venkataraman . Further the following payments are made to the account of Sridhar Venkataram and Uma Sridhar through the first defendant 1. Rs 98115 on 6.9.2011, Rs.84050 on 6.9.2011 and 32,533 on 16.9.2011 and has stated that he has paid part of the principal amount with interest in cash to the Gottigere Nanjundiah and Sridhar Venkataraman and the entire dues are not cleared.
O.S. NO.3739/2013 54
32. During the cross examination DW2 has stated that he cannot recollect if the loan transactions of the second defendant with the customers of the plaintiff bank were declared by the second defendant in his IT returns and has further stated that he cannot assure before this court if he can produce the IT returns of the second defendant of the relevant period. DW2 has denied that second defendant has not credited any amount of RS. 7,98,591 to the account of Ravi Venkataramu. DW2 has further admitted that there is no document to show the loan transaction referred in para no. 5(b) of the evidence affidavit of DW2, he has further deposed that the entire outstanding dues to the persons to whom the second defendant is liable is not repaid.
33. The defendant no.3 has adduced his evidence before the court as DW3 and has deposed during 2009 he was doing business of cable installations and operation of TV channels and with a view to expand his business he had O.S. NO.3739/2013 55 approached the first defendant, the first defendant advised him to obtain loan from the plaintiff bank but owing to the formalities the third defendant requested the first defendant to help him in getting loan from private parties and consequently the first defendant introduced him to the customers of the plaintiff bank who were his friends . DW3 has further deposed that he has received loan from Ratan Srah Thomas for a sum of RS.38,50,000/- and 30,00,000/- loan from Gulu Lalvani and Pushpa Kalse and thereafter he has returned the some of the amount to them through ATM transfer as referred para 4a of the evidence affidavit and the remaining amount was repaid by making payments to the accounts of the first and second defendant as stated para 4 (b) and 5 of the evidence affidavit as per the instructions of the first defendant. DW3 has deposed that he has paid all the balance amount by cash through first defendant and the said parties have noted in their receipt books but during the cross examination DW3 has stated O.S. NO.3739/2013 56 that he had no financial difficulties between 2009 and 2011 and he had no approached the first defendant for availing loan . DW3 has admitted that he has no document to show that there was a loan transaction between himself and Ratan Sarah Thomas, Gulu Lalvani and Pushpa Kalsey. He has further deposed that there is no letter/email/ whatsapp correspondence to show the loan transaction with the aforessaid persons and he has not declared the loan transaction in his IT Returns.
34.On an overall assessment of the evidence of the parties in this regard it is borne out from the records that though the witnesses of the defendants have categorically denied that the suggestions they have acted in collusion with an intention to cheat the plaintiff bank . However the averments made in the written statement of the first defendant is contrary to the evidence on record. In the written statement first defendant has stated that he had O.S. NO.3739/2013 57 borrowed loans from the customers of the plaintiff bank but in his cross examination he disputes the same and states that the second and third defendant had borrowed the loan amount and he has assisted them in paying interest. The written statement filed by the first defendant is adopted by the second defendant therefore the evidence of DW2 that he had approached the first defendant for the purpose of availing loan and thereafter he was introduced to the friends of the first defendant and they agreed to advance loan is also not part of the written statement of the first and se cond defendant. Similarly the third defendant had merely feigned ignorance regarding the plaint allegations in his written statement but surprisingly in the evidence affidavit the third defendant DW3 has contended that he had availed loan from the friends of the first defendant and repaid the said amount by affecting transfers their accounts directly or through the account of the first defendant.
O.S. NO.3739/2013 58
35.The transition found in the stand taken by the DW1 to DW3 is not supported by pleadings and as already stated any evidence beyond pleadings cannot be considered. Though the defendants have produced the accounts statements of to prove that the borrowed loans were repaid as per Ex.D3 and D5 which comprise of the account statement of the Sridhar Venkataraman and Ravi Venkataraman but in the light of the discrepancy found the pleadings and the oral evidence of the parties the documentary evidence is of no use. Therefore there is absolutely no cogent, corroborative and coherent evidence to establish that the first defendant had borrowed loan from some of the persons and friends who happened to be the customers of the plaintiff bank . Section 106 of the BSA provides that the burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person. But in the O.S. NO.3739/2013 59 instant case the defendants have not proved the same despite their specific defense before the court was that of the loan transaction. None of the customers of the bank from whom the loans were borrowed by the defendants to prove the transaction. Defendant witnesses have clearly admitted that the loan transactions were not documented and not reflected in the IT returns. Thus evidence of the defendants does not establish that the first defendant had borrowed loan from some of the persons and friends who happened to be the customers of the plaintiff bank and when there was a delay in repayment of the amount those customers have colluded with the plaintiff bank and have filed the complaint against him. The issue no.1, to 5 and additional issue no. 1 are answered in the negative.
36. Additional Issue No.2:- The defendants have taken up the contention that this court has no territorial jurisdiction to try this suit. But, during the course of trial O.S. NO.3739/2013 60 no such suggestions are made to the witnesses of the plaintiff in this regard. The defendants have not requested the Curt to decide the said Issue at the initial stage itself. Therefore, no grounds are made out by the defendants and hence, Additional Issue No.2 is answered in the Negative.
37. ISSUE No.6 :- In view of the findings on issue Nos.1 to 5, and additional issue no.1 and 2, this Court proceed to pass the following:
ORDER The suit of the plaintiff is dismissed.
No order as to cost.
Draw decree accordingly.
(Dictated to the Senior Shirestedar (Stenographer Grade-I), transcribed and typed by her, corrected, signed and then pronounced by me in the open court, on this the 17th day of January 2025).
(SUMANGALA CHAKALABBI) XLI Addl. City Civil and Sessions Judge, Bengaluru.
O.S. NO.3739/2013 61 ANNEXURE I. List of witnesses examined on behalf of :
a) Plaintiff's side:
P.W.1 - Jyothish Kumar - 02.02.2015 PW.2 - Lyson Valanteen - 08.06.2018
b) Defendant's side:
DW.1 - K.V. Kiran Kumar -09.01.2019 DW.2 - Vijaya Kumar K. - 04.04.2024 DW.3 - D. Prathap - 27.05.2024 II. List of documents exhibited on behalf of :
a) Plaintiff's side:
Ex.P.1 -- Power of Attorney
Ex.P.2 -- FIR in Crime No.382/2011
Ex.P.3 -- certified copy of the complaint
Ex.P.4 -- Deed of appointment of substitute
attorney
Ex.P.5 - Certified copy of charge sheet
Ex.P.6 to 11 - Account statements of customers
Ex.P.12 - Appointment letter
III. List of documents exhibited on behalf of :
b) Defendant's side :
Ex.D.1 -- Termination of service
O.S. NO.3739/2013
62
Ex.D,.2 -- Bank Statement of defendant No.1
Ex.D.3 -- Certified copy of bank account
statement of Sridhar Venkataraman
Ex.D.4 -- Bank statement of defendant No.2
Ex.D.5 -- Bank account of Ravi Venkataram
Ex.D.6 -- Copy of deposition of Ramakrishna B
in C.C.NO.7299/2013
Ex.D.7 -- Bank statement of defendant No.1
Ex.D.8 -- Original GPA copy dated 18.05.2023
Ex.D.9 -- Certified copy of account extract of
SB account of defendant No.3 at
HSBC Bank Ltd., from 25.04.2009 to
26.10.2011
Ex.D.10 -- Certified copy of statement of account
of Axis bank of defendant No.3
(SUMANGALA CHAKALABBI)
XLI Addl. City Civil and Sessions Judge, Bengaluru.
O.S. NO.3739/2013 63