Usha Mehra ( 1 ) STATE Bank of India filed this suit for the recovery of Rs. 1,36,123. 00 against Shri Suresh Kumar and others based on the facts that defendantno. 1 Suresh Kumar borrowed money from the plaintiff bank for the purchase ofa TATA open truck model 1980. On the request of defendant No. 1 and on theguarantee being furnished by defendant No. 2, a Medium Term Loan of Rs. l,45,000. 00 was sanctioned favouring defendant No. 1. The said truck afterpurchase was to be hypothecated with the bank as security. The bank was to charge interest at the rate of 4% per annum below State Bank of India s Advance Rate witha minimum of 12. 5% per annum. The said truck was comprehensively ensured withdefendant No. 3 i. e. the New India Assurance Co. Ltd. It was insured in the nameof defendant No. 1. and the plaintiff bank was shown as the pledgee of the vehicleas interested party. Defendant No. 2 pledged his special term deposit receipt forrs. 45,000 / - with the bank. It was duly discharged in favour of the plaintiff creatinga lien in favour of the bank. Usual and necessary banking documents were gotexecuted from the defendants. Term Loan was to be repaid in monthly instalmentsof Rs. 3,625/- each. But the defendnats failed to adhere to the same. On or about1st week of November, 1981, defendant No. 1 reported that the truck had beenstolen/lost. An FIR was lodged with Police Station Mehrauli, New Delhi. Claim was lodged with defendant No. 3 for the reimbursement of the loss suffered onaccount of truck in queson being stolen. Defendant No. 3 refused to makepayment inspite of all formalities having been completed. Police Station Mehrauliissued no Trace Certificate about the lose of this truck. This was communicatedto defendant No. 3. The defendant No. 3 did not settle the claim nor the Mediumterm Loan has been returned by the defendants 1 and 2. Hence the plaintiff afterdue notice adjusted and appropriated the Special Term Deposit deposited bydefendant No. 2 and for the balance outstanding amount, the present suit has beenfiled. ( 2 ) DEFENDANTS 1 and 2 in their written statement took the plea that the entireresponsibility for making payment was that of the Insurance Company as the truckwas insured with the said defendant. ( 2 ) DEFENDANTS 1 and 2 in their written statement took the plea that the entireresponsibility for making payment was that of the Insurance Company as the truckwas insured with the said defendant. After it was declared by the police nottraceable and it having been lost, defendnt No. 3 being an Insurance Company became liable to make payment. The authority of the person who filed the suit hasbeen denied. It is their case that the plaintiff bank could not encash the Special Termdeposit Receipt amounting to Rs. 45,000/- because the said defendant was notliable in any manner for the loss of the truck. ( 3 ) THE Insurance Company defendant No. 3 has challenged the locus standiof the plaintiff bank on the ground that there did not exist any privity of contract. Moreover, defendant No. 3 stood discharged as soon as the claim preferred bydefendant No. 1 was withdrawn by him. Defendant No. 1 being a policy holder discharged the Insurance Company by withdrawing the claim of the loss. As theclaim stood withdrawn by the policy holder, the Insurance Company stoodabsolved from the liability. ( 4 ) ON the pleadings of the parties, the following issues were framed : 1. Whether the plaint has been signed,verified and the suit instituted bya duly authorised person?2. Whether the defendant No. 3 is liable to pay any amount? If so, howmuch?3. What is the effect of withdrawal of the claim by defendant No. 1against defendant No. 3?4. Whether the suit is bad for mis-joinder of parties?5. To what amount is the plaintiff entitled and from which of thedefendants?6. Relief. ( 5 ) I have heard Mr. H. C. Dhall, Advocate for the plaintiff and Mr. J. P. Gupta,advocate for defendant No. 1. After perusing the documentary and oral evidenceproduced by the respective parties as well as after hearing their submissions madeat the bar, my considered decision on the above issues are as follow. Issue No. 1: ( 6 ) THE burden to prove this issue was on the plaintiff. To my mind, theplaintiff bank has discharged the same by the testimony of PW. I Mr. K. K. Chachra,branch Manager. He testified that vide a Notification dated 28th December,1985exhibit PW. 1/l he was authorised to sign, verify and institute this suit and also toissue power of attorney in favour of the Counsel. By virtue of exhibit PW. To my mind, theplaintiff bank has discharged the same by the testimony of PW. I Mr. K. K. Chachra,branch Manager. He testified that vide a Notification dated 28th December,1985exhibit PW. 1/l he was authorised to sign, verify and institute this suit and also toissue power of attorney in favour of the Counsel. By virtue of exhibit PW. I/l hewas competent to engage a lawyer and institute the suit This part of his testimonyhas not remained unrebutted on the record. Mr. Gupta s contention that authorisationcould not be retrospective, to my mind, has no force. Reading of exhibit PW. 1 /1shows that the power to sign, verify and institute the suit vested with the Branchmanagers. Mr. K. K. Chachra was working as Branch Manager since August, 1982. The fact that Branch Managers were competent to institute the suit was notifiedvide exhibit PW. I/l. Because the Notification appeared subsequently does notmean that being Branch Manager he had no authority to institute the suit. Ratherthe Notification exhibit PW. 1/2 empowered the Branch Managers to institute thesuit and engage the lawyer. Harmonous reading of exhibit PW. 1/1 and PW. I/2would lead to the conclusion that Mr. K. K. Chachra being Branch Manager wascompetent to sign, verify and institute the suit. Hence, this objection is notsustainable. The issue is accordingly decided in favour of the plaintiff and againstthe defendants. Issues 2,3 and 4: ( 7 ) THESE issues being inter-connected, therefore, taken up together. Burdenof ese issues was on defendant No-3. But no one appeared on behalf of Insurancecompany to discharge the burden. It was for the Insurance Company to prove thatthe defendant No. 1 withdrew the claim after having lodged the same. No suchwithdrawal letter alleged to have been issued by defendant No. 1 thereby withdrawing the claim has been produced. On the contrary, the plaintiff by thetestimony of Mr. K. K. Chachra, PW. I has proved that the vehicle in question wasinsured with defendant No. 3. Vide Insurance cover Exhibit P. 7 defendant No. 3insured the risk and loss of this truck. He also proved that at the time of grantingmedium Term Loan, a letter was obtained from defendant No. 1 containingparticulars of the vehicle. The same is Exhibit P. 3. This letter contained all the termsand conditions agreed to between the parties. The truck in question was inspectedand got verified because it was a second sale. He also proved that at the time of grantingmedium Term Loan, a letter was obtained from defendant No. 1 containingparticulars of the vehicle. The same is Exhibit P. 3. This letter contained all the termsand conditions agreed to between the parties. The truck in question was inspectedand got verified because it was a second sale. In case of second sale, verification isnecessary. Verification Report is Exhibit P. 4. These documents clearly show thatthe vehicle was in existence at the time term loan was given. The truck in questionwas available at the time it was got insured by defendant No. 1 from defendant No. 3. It has been proved on record that the truck was lost. After lodging FIR, the defendant No. 1 preferred claim on the Insurance Company. Bank also pursuedthe matter with the Insurance Company as it had interest in the truck. Copies of theletters exchanged between the plaintiff bank and defendant No. 3 have been provedon record as Exhibits PW. I/3 and PW. I/5 to PW. I/8. The Insurance Companyvide Exhibit PW. I/4 informed the plaintiff that the matter was under consideration. It has been proved that the bank had first charge over the truck. Shri B. R. Sharma, another Branch Manager of the bank appearing as PW. 2 corroborated thetestimony of Mr. K. K. Chachra, PW. I. He stated that the loan for the purchase ofthe truck was given. PW. 2 was present at the time the truck was sold by Shrikanwar Lal vide Exhibit PW. 2 /1. Loan amount was paid directly to Shri Kanwarlal the seller of the truck. This was done at the instance of defendant No. 1. Hefurther testified that he had seen the truck at that time. In reply to the question put in cross examination by Mr. S. M. Suri, Counsel for defendant No. 3, this witnessreiterated that the bank had a charge on the truck. It was the bank who got theinsurance amount paid through defendant No. 1. To another question put by Mr. Suri, Counsel for defendant No. 3 as to whether the bank had lodged any claim onthe Insurance Company after the loss of the vehicle, this witness, PW. 2 answeredin the affirmative. He stated that the bank did lodge the claim and the said claimhas not been paid by the Insurance Company. He further testified that even thedefendant No. 1 also lodged claim with defendant No. 3. 2 answeredin the affirmative. He stated that the bank did lodge the claim and the said claimhas not been paid by the Insurance Company. He further testified that even thedefendant No. 1 also lodged claim with defendant No. 3. From the set of questionsasked in the cross examination from Mr. B. R. Sharma, PW. 2, it clearly emerges thatdefendant No. 3 had not put its defence as set up in the written statement. In thewritten statement, defendant No. 3 had taken the plea that defendant No. 1withdrew the claim and thus absolved the Insurance Company. In fact there is nocross examination on this aspect of the matter to PW. 2. So far as Shri Suresh Kumar,dw. I is concerned, he also proved on record that he lodged the claim withdefendant No. 3 after the truck was stolen and that he never withdrew the claimfrom defendant No. 3. The suggestion that defendant No. 1 withdrew the claimhasbeen vehemently denied by defendant No. 1 when he appeared as his own witness. ,on the contrary, defendant No. 1 stated that the Insurance Company in factsanctioned the claim of Rs. 1,80,000/ -. He was assured that the amount wouldbe deposited by the Insurance Company directly with the plaintiff banic He deniedthat he ever gave in writing to withdraw the claim. Defendant No. 1 could not beshaken by the cross examination rather his testimony that he never withdrew theclaim has remained unshaken on record. It was for defendant No. 3 to haveproduced the letter alleged to have been written by defendant No. 1 asking towithdraw the claim. But no such writing has been produced nor confronted the same to defendant No. 1 when he appeared as his own witness. The defendant No. 3 has not produced any witness to prove that defendant No. 1 withdrew his claimat a later stage. From the unrebutted and uncontroverted testimony of theplaintiff s witnesses and that of defendant No. 1, it is fully established thatdefendant No. 1 did not withdraw his claim at any stage. Hence, the Insurancecompany is liable to pay the claim. Insurance Company s liability is joint andseverally. The question that there was no privity of contract between the plaintiffbank and Insurance Company is without merits. Plaintiff bank had interest andfirst charge over the vehicle in question. This fact finds special mention on Exhibitp. Hence, the Insurancecompany is liable to pay the claim. Insurance Company s liability is joint andseverally. The question that there was no privity of contract between the plaintiffbank and Insurance Company is without merits. Plaintiff bank had interest andfirst charge over the vehicle in question. This fact finds special mention on Exhibitp. 7 where it has been stated that State Bank of India, Khera Khurd, Delhi wasinterested. Insurance Company was thus fully aware of the fact that truck inquestion was pledged with the bank and, therefore, bank s interest. The plaintiffbank accordingly lodged the claim with the defendant No. 3. This has not beendenied. The only defence taken by defendant No. 3 that defendant No. 1 withdrewhis claim has not been proved on record. Hence to my mind, the defendant No. 3has miserably failed to discharge the burden of these issues. For the above reasons,these issues are decided against defendant No. 3. As the vehicle in question wasinsured with the defendant No. 3, therefore, defendant No. 3 i. e. Insurancecompany is a proper party. ( 8 ) THE plaintiff by the testimony of Mr. K. K. Chachra, PW. 1 has proved thatmedium Term Loan was granted to defendant No. 1 vide agreement exhibit P. I. This Term Loan was granted against the hypothecation of the Truck in question. Defendant No. 2 stood guarantee by executing a Deed of Guarantee Exhibit P. 5. Defendant No. 1 also executed an affidavit Exhibit P. 6. He not only executed thisaffidavit, but also signed the balance confirmation statement vide Exhibit P. 8. Asper exhibit P. 8, an amount of Rs. 1,79,032. 92 paise was due as on 5th October, 1983. Legal notice dated 28th February,1984 has been proved as Exhibit PW. 1/16whereby an amount of Rs. 1,84,784. 07 paise was claimed which amount includedinterest due on that date. Mr. B. R. Sharma, PW. 2 proved exhibits P. 1 to P. 3, P. 5 andp. 6 which according to him were executed in his presence. These documents weresigned bydefendants 1 and 2 in his presence. Defendant No. 1, Shri Suresh Kumaradmitted having taken the Medium Term Loan from the bank for the purchase ofthis truck. It has also come on record that the truck in question was insured andthe insurance amount was paid by the bank on behalf of defendant No. 1. These documents weresigned bydefendants 1 and 2 in his presence. Defendant No. 1, Shri Suresh Kumaradmitted having taken the Medium Term Loan from the bank for the purchase ofthis truck. It has also come on record that the truck in question was insured andthe insurance amount was paid by the bank on behalf of defendant No. 1. It has alsonot been disputed that the truck in question was stolen while in custody ofdefendant No. 1. Claim was lodged by the defendant No. 1 with the Insurancecompany which claim was never withdrawn by defendant No. 1. Insurance coverexhibit P. 7 clearly indicates that in case of theft or the truck being stolen. Insurancecompany would be liable to pay the insured amount. It is an admitted fact onrecord that the truck was insured for Rs. 2 lakhs and the insurance amount has notbeen paid either to defendant No. 1 or to the interested party i. e. the bank. Fromthese admitted facts, the only conclusion which can be arrived at is, that Insurancecompany alongwith other defendants would be liable jointly and severally. Thedefendantno. 1 being borrower and defendant No. 2 being guarantor. The plaintiffbank being interested in the truck as the same was pledged with the bank and thebank had first charge over the same, hence the plaintiff bank is entitled to recoverthis amount from defendant No. 3 also. Accordingly, I decree the suit for a sum ofrs. 1,36,123. 00 with costs in favour of the plaintiff bank and against the defendants. They shall be jointly and severally liable to pay the decretal amount alongwithsimple interest at the rate of 12% per annum from the date of institution of the suittill realisation.