Raigarh Khetriya Gramin Bank v. Taliram Gupta — 1998 DIGILAW 919 (MP)

JUDGMENT Dipak Mlsra, J. 1. In this appeal preferred under Section 96 of the Code of Code of Civil Procedure Raigarh Kshetriya Gramin Bank, the planitiff Appellant has assailed the judgment and decree passed by the learned Second Additional District Judge, Raigarh in Civil Suit No. 10-B/88 whereby he has dismissed the suit accepting the plea of limitation advanced by the Defendants, the loanee and guarantor. 2. The facts as have been brought on record are that the Defendant No. 1/ Respondent No. 1, Taliram has executed a pronote on 14-7-1983 for getting a term loan of Rs. 25,000/-. It was stipulated in the said pronote that he would pay 15% interest per annum. The Defendant No. 2/Respondent No. 2 stood as guarantor for the Defendant No. 1. After availing the loan the said Defendant No. 1 deposited certain sums at some intervals and the said amount was reflected in his account. The books of accounts reflected that as on 31-8-1988 the Defendant No. 1 was liable to pay Rs. 28,938.10 paise. Inspite of the reminders he did not pay the said amount. Eventually a notice was sent but no payment was made. Thereafter the present suit was filed for realisation of the said amount with interest thereon, it was putforth in the plaint that the cause of action arose on 14-7-1983 and again on 25-5-1987 when the Defendants executed the documents. 3. The Defendant No. 1 entered contest and filed the written statement. Defendant No. 2 chose not to resist the suit. Defendant No. 1 admitted the averments made in the plaint but opposed the claim advanced by the Plaintiff on the ground that document executed by him on 22-5-1987 was a document of renewal and, in fact, an acknowledgement one, and hence the suit filed in the year 1988 was barred by the law of limitation. 4. The learned trial Court framed as many as three issues. Issue No. 1 relates to the limitation and issue No. 2, pertains to claim of the Bank relating to the amount in question. The learned trial Judge on consideration of the matrial on record answered both the issues against the Plaintiff-Bank. 5. 4. The learned trial Court framed as many as three issues. Issue No. 1 relates to the limitation and issue No. 2, pertains to claim of the Bank relating to the amount in question. The learned trial Judge on consideration of the matrial on record answered both the issues against the Plaintiff-Bank. 5. Assailing the judgment of trial Court Mr, Greeshm Jain, learned Counsel for the Appellant has contended that the finding recorded with regard to the loan being time barred on the ground that the document executed is an acknowledgement is absolutely erroneous inasmuch as documents were executed indicating admission of a fresh loan and not acknowledging the previous one. It is further submitted by him that the conclusion arrived at by the learned trial Court is contrary to the settled legal position. In support of his contention he has placed reliance on the decisions rendered in the cases of Mawall Ramji v. Premji Kumbhabhal, AIR 1967 Ori 158 ; Tulsi Ram v. Same Singh, AIR 1981 Deli 165; Blshambhar Dayal v. Vishwanath Agarwal, AIR 1985 All 12 ; I (1991) BC 110 (M/sR. Suresh Chandra & Co. v. M/s Vadenare Chemical Works and Ors.) and Panicker v. Prabhakaran, I (1994) BC 179. The learned Counsel has also questioned the propriety of the finding of the learned tiral Judge relating to issue No. 2 which pertains to fastening the liability on the Defendant No. 1. 6. Mr. Kishore Shrivastava, learned Counsel for the Respondent No. 1 has, in his turn, submitted that the documents which have been relied on by the Bank are mere acknowldgements and, therefore, the finding of the learned trial Court in relation to limitation cannot be found fault with. It is his further contention that issue No. 2 has been correctly decided by the trial Court in asmuch as the books of account has not been properly proved by the Plaintiff -Bank. It is also submitted by the learned Counsel for the Respondent that if this Court is of the view that the Defendants are liable to pay then the rate of interest should be reduced and the Defendants should be exonerated from the payment of interst during the pendency of the suit. The last plank of argument is that in the event of fastening of liability suitable instalments may be fixed to satisfy the loan. 7. The last plank of argument is that in the event of fastening of liability suitable instalments may be fixed to satisfy the loan. 7. To appreciate the rival contention it is apposite to refer to the documents brought on record. The Defendant executed the pronote on 14-7-1983 to avail the loan of Rs. 25,000/-. Along with that document he had also executed some other documents. At that juncture one Damrudhar Naik was the guarantor. It is also not in dispute that the amount of loan availed by the Defendant was not paid and he again executed a pronote on 22-5-1987 in favour of the Bank. The said pronote has been marked as Ex.P/6. It is appropriate to reproduce the relevant portion of the pronote: The Defendant No. 1 the loanee and the Defendant No. 2 the guarantor also singed the document which reads as under: The Bank Manager, vide Ex.P/7 communicated to the Defendants that their loan of Rs. 29,603.50 paise was sanctioned on certain conditions. One such condition was payment of interest at the rate of 15% per annum. Ex.P/8 is the guarantee letter which was executed by one Padma Kumar Patel, the Respondent No. 2 herein. It is relevant to state that vide Ex.P-9 the Defendant No. 1 had requested for change of guarantor and vide Ex.P-10 Defendant No. 2 had submitted his willingness to become the guarantor. The Bank also has brought on record Ex.P/11 which reflects that Defendant No. 1 had availed a term loan of Rs. 25,000/- on 14-7-1983 and he had defaulted in payment. In the last paragraph the loanee has stated as under: I/We hereby agree, undertake and promise to pay to you the said sum of Rs. 29,603.50 paise with interest at the rates applicable and costs, charges expenses which you may incur due and becoming due under the Loan Account. Vide Ex.P/12 Defendants had also signed the D.P. Note delivery letter. Both documents show that earlier term loan has been converted into cash credit loan. 8. The heart of the matter is whether the aforesaid documents should be construed as mere acknowledgements of previous loan or sanguine promises to pay the loan which has been availed afresh. Vide Ex.P/12 Defendants had also signed the D.P. Note delivery letter. Both documents show that earlier term loan has been converted into cash credit loan. 8. The heart of the matter is whether the aforesaid documents should be construed as mere acknowledgements of previous loan or sanguine promises to pay the loan which has been availed afresh. In this context, I may refer to Section 25(3) of the Contract Act which reads as under 25 (3) Existing obligations as consideration: (1) Promise to pay what the promisor is already under an obligation to pay is without consideration. Any separate promise to pay the amount at a particular place must be supported by consideration before it can be legally enforced. (2) No right of suit arises, where a person promises a pleader and extra money for winning the case, after his remuneration is fixed and he has been engaged on his behalf. The promise has no consideration. The afforesaid Section came to be interpreted by the Division Bench of Orissa High Court in Mawali Ramji's case (supra) wherein it has been laid down as under: .... Under Section 25 (3) of the Contract Act an agreement made without consideration but in writing and signed by the person to be charged therewith to pay wholly a debt of which the creditor might have enforced payment but for the law for the limitation of suits is a contract. Thus, Ex. 1 though renewed after he expiry of the period of limitation of the previous promissory note in 1954 is valid and enforceable in law. In The case of Tulsi Ram (supra) is was held that in order to constitute promise to pay within meaning of Sub-section (3) of Section 25 promise to pay must be an express promise and there must be some indication in the writing itself to show that the writer agreed to pay debt though it may be barred by time. It was further held therein as follows: Where the endorsement by a promisor under a promissory note, made on the back of the note after expiry of three years from the execution of the pronote, only admitted the pronote and stated that it was valid for three years but did not contain any words expressing any promise to pay, the endorsement could not be construed as a contract falling within the scope of Section 25 (3). (Quoted from placitum) In the case of Bishambhar Dayal (supra) it was held as follows: Where the contents of the promissory note in question bear out the express promise to pay certain debt which was time barred, it is not required under the law that the promissory note mentions that this was in lieu of time barred debt or even hat the executors should have been conscious that the debt had become barred by limitation. (Quoted from placitum) In the case of M/s R. Suresh Chandra & Co. (supra) the learned Single Judge of the Bombay High Court while interpreting the scope of Section 25 (3) of the Contract Act held as under: ....I understood that after the expiry of the period of limitation nothing sort of a clear promise can provide a fresh period of limitation. But such a promise can also be inferred by necessary implication. The Supreme Court in (Hiralal v. Badkulal), AIR 1963 SC 225 quoted with approval a Privy Council decision in (Maniram v. Seth Rupchand) 33 Ind. Appeals 165 (PC) (C), that an unconditional acknowledgement was sufficient to furnish a cause of action for it implied a promise to pay. A decision of the Allahabad High Court to the contrary (AIR 1935 All. 129) was held as not laying down good law. There is nothing ambiguous about Ex.D. It says that as on 13-11-1974 Defendant 1 is indebted to Plaintiff to the extent of Rs. 3,40,652.26 Ps. The balance-sheet is signed by the Defendant 3 who is a partner of the firm. Her competence to bind the firm is not disputed. Being thus, clear, it amounts to a promise within the meaning of Section 25(3) of the Conract Act. If so, the suit is plainly within time. In case of Panicker (supra) the High Court of Kerala has an occasion to deal with such a situation. It has been held as under: .... Under Section 25(3) of the Contract Act, it is not necessary that the person under liability himself should make the promise. The promise could be made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised in that behalf. Here, the advocate was authorised to send the reply notices and it was on the basis of that authorisation, Exts.A 10 and A 9 were issued. Therefore, the contention that Exts. The promise could be made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised in that behalf. Here, the advocate was authorised to send the reply notices and it was on the basis of that authorisation, Exts.A 10 and A 9 were issued. Therefore, the contention that Exts. A 9 and A 10, even if they contain promises, will not bind the Defendant or they do not constitute 'promise' as contemplated by Section 25(3) of the Contract Act cannot be accepted. From the aforesaid pronouncement of law it is abundantly clear that if an express promise has been made to pay certain debt which was time barred, the liablity to pay survives. In the case at hand, on a close persual of the documents which have been referred to above it can be unhesitatingly held that it was not a renewal of previous debt but, a promise was made to pay the debt and in fact, a new debt was created. The Defendant-loanee not only made an express promise to pay the debt but also changed the guarantor. Taking into consideration the facts in entirety, I am of the considered view that the conclusion arrived at by the trial Court on this score, is absolutely vulnerable and does not withstand scrutiny. 9. The next ground of attack by Mr. Jain is that the finding recorded by the learned trial Judge partaining to issue No. 2 is untenable. He has referred to para 10 of the plaint which states that the payments made by the Defendant has been kept in the books of account which are maintained in regular course of business. In the written statement this paragraph is admitted... Certified copy of books of account has been brought on record as Ex.P/13. The said book of account reflect that as on 31-8-1988 the Defendant No. 1 was liable to pay Rs. 28,938.10 Ps. The said Defendant has nowhere stated in the written statement that he had not executed the document dated 22-5-1987. in the said document he has admitted that he had availed a loan of Rs. 29,603.50 Ps. He has also not taken a positive plea that he has paid any sum and that particular sum is not due to the Bank. The said Defendant has nowhere stated in the written statement that he had not executed the document dated 22-5-1987. in the said document he has admitted that he had availed a loan of Rs. 29,603.50 Ps. He has also not taken a positive plea that he has paid any sum and that particular sum is not due to the Bank. Except making a single line rebuttal that 'the demand made is denied' nothing has been putforth in the written statement. The trial Court has rejected the claim of the Bank on the ground that books of accounts have not been proved by the Plaintiff. Mr. Kishore Shrivastava, learned Counsel for the Defendant No. 1 has contended even if the suit is held to be within limitation the liability cannot be created in absence of proper proof of books of accounts merely on the production of books of account. In this context, he has drawn my attention to the decision rendered in the case of Chandradhar v. Gauhati Bank, AIR 1967 SC 1058 wherein it has been held that no person can be charged with liability merely on the basis of books of account even the books of account are kept in regular course of business. Their Lordships have observed that there has to be further evidence to prove payment of the money which may appear in the books of account in order that person may be charged with liability thereunder except where the person to be charged accepts the correctness of the books of account and does not challenge them. He has also referred to recent decision of the Apex Court in Central Bureau of Investigation Vs.V.C. Shukla, AIR 1998 SC 1406 wherein their Lordships after referring to the case of Chandradhar (supra) observed that in the case of Chandradhar it has been held that the Bank has to prove the fact of such payment and cannot rely on entries made in the books of account even if they are regularly kept in the course of business. Their Lordships have also held that where the entries are not admitted it is the duty of the Bank, if it relied on such entries to charge any person with liability, to produce evidence in support of the entries to show that the money was advanced as indicated therein and, thereafter the entries would be of use as corroborative evidence. Their Lordships have also held that where the entries are not admitted it is the duty of the Bank, if it relied on such entries to charge any person with liability, to produce evidence in support of the entries to show that the money was advanced as indicated therein and, thereafter the entries would be of use as corroborative evidence. Both the decisions are to the effect that in absence of proof as to the correctness and authenticity of entries in books of account the mere production of books of account are not sufficient enough to get the liability proved. In the present case, the fact situation is quite different. There is categorical and unequivocal acceptance of liability of Rs. 29,603.50 Ps. by the Defendant No. 1. Exs.P-6 and P-12 go a long way to show that the loanee had accepted his liability to pay a sum of Rs. 29,603,50 Ps. In the written statement there has been no dispute to the assertion that the payments made by the Defendant were entered in the accounts book of the Plaintiff. This fact was not disputed. No positive stand has been taken that the amount paid by the Defendant has not correctly been entered in the account book, it is clearly evident that while conceding to the averments in the plaint the Defendant has not resisted the fact that the books of accounts have been properly kept. While cross-examining the Bank Manager nothing has been suggested. In this context, I may profitably refer to the decision rendered in the case of Maheshchandra Shivanand Singh and Anr. v. Dhanpal Umedchand Patni and others, 1976 MPLJ 544 wherein this Court distinguished the ratio in the case of Chandradhar Goswami (supra) and held that where the correctness of the accounts is not disputed the ratio laid down in Chandradhar Goswami's case would not be applicable. I may profitably refer to paras 24 and 25 of the said decision, which read as under: 24 The decision in Chandradhar Goswami v. Gauhati Bank Ltd, (supra), is distinguishable. There, the mortgagor not only disputed the correctness of the accounts, but went to the extent of alleging that they were fraudulent. I may profitably refer to paras 24 and 25 of the said decision, which read as under: 24 The decision in Chandradhar Goswami v. Gauhati Bank Ltd, (supra), is distinguishable. There, the mortgagor not only disputed the correctness of the accounts, but went to the extent of alleging that they were fraudulent. In dealing with evidentiary value of such entries, is such circumstances, their Lordships, referring to Section 34 of the Evidence Act, stated- It is clear from a bare perusal of the section that no person can be charged with liability merely on the basis of entries in books of account, even where such books of account are kept in the regular course of business. There has to be further evidence to prove payment of the money which may appear in the books of account in order that a person may be charged with liability thereunder, except where the person to be charged accepts the correctness of the books of account and does not challenge them. In the present case, however, the Appellant did not accept the correctness of the books of account. We have already indicated that they went to the length of saying that the accounts wee not correctly kept, and were fraudulent. They also said that no money had been taken by them after March 1, 1947. 25. In dealing with Section 4 of the Bankers' Books Evidence Act, their Lordships observed: It will be clear that Section 4 gives a special privilege to banks and allows certified copies of their accounts to be produced by them and those certified copies become prima facie evidence of the existence of the original entries in the accounts and are admitted as evidence of matters, transactions and accounts therein, but such admission is only where, and to the same extent as, the original entry itself would be admissible by law and not further or otherwise. Original entries alone under Section 34 of the Evidence Act would not be sufficient to charge any person with liability and as such copies produced under Section 4 of the Bankers Books Evidence Act obviously cannot charge any person with liability. Therefore, where the entries are not admitted it is the duty of the bank if it relies on such entries to show that the money was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. Therefore, where the entries are not admitted it is the duty of the bank if it relies on such entries to show that the money was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. But no person can be charged with liability on the basis of mere entries whether the entries produced are the original entries or copies under Section 4 of the Bankers' Evidence Act. That was a case which turned on its own facts. The observations have to be read, in the context in which they were made. This is brought out in the following passage: We have already pointed out that the Appellants did not admit the correctness of the accounts produced specially after March 1, 1947. In the present case, the correctness of the debit entry of Rs. 27,425/14 was never disputed. That being so, from the observations of their Lordships quoted above, it logically follows that no other evidence other than the entry was needed. This indeed, is a converse case. In view of the aforesaid discussion, I am of the considered view that the liability created the Defendant No. 1 is to be accepted and this is the only conclusion which can be arrived against the factual backdrop of the case. 10. The next contention advanced by the learned Counsel for the Respondents relates to grant of interest. It is vehemently contended that 15% interest should not be imposed and Court should intervene to decrease the rate of interest. Taking into consideration the facts and circumstances, I am of the considered view that there is no justification to reduce the rate of interest that the agreed rate of interest in view of the fact it was purely a commercial transaction. 11. The last plank of argument of Mr. Shrivastava is that the Defendant No. 1 be granted easy instalments. Mr. Jain has no objection to the same. Mr. Shrivastava suggested that the Defendant No. 1 may be permitted to pay at the rate of Rs. 3000/- per month. The prayer is accepted. 12. In the result, the appeal succeeds. The judgment and decree of the trial court are set aside and suit of the Plaintiff is decreed. However, parties shall bear their respective costs throughout.