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Madhya Pradesh High Court · body

2006 DIGILAW 480 (MP)

Dena Bank v. Ashok Traders

2006-04-03

S.L.JAIN

body2006
Judgment ( 1. ) INVOKING appellate jurisdiction of this Court under Section 96 of the Code of Civil Procedure, 1908 appellant Dena Bank has filed this appeal challenging the legality, validity, propriety and correctness of the judgment and decree dated 4-7-91, passed by Additional District Judge, Hoshangabad in Civil Suit No. 1-B/90. ( 2. ) FACTS leading to the filing of this appeal in nutshell are that appellant-plaintiff Dena Bank filed a suit against the defendants alleging that respondent Tharumal was doing business in the name and style of Ashok Traders. He made an application on 6-1-82 to the Branch Manager of the Harda Branch of the plaintiff Bank for grant of loan of Rs. 3,300/- for the purpose of purchasing some machine and a loan of Rs. 20,000/- as working capital loan. ( 3. ) ON 13-1-82 the said Branch Manager sanctioned a term loan of Rs. 3,300/- in favour of the Bank. For the repayment of sanctioned term loan of Rs. 3,300/- defendant Tharumal duly executed a term loan agreement of hypothecation. On the same day, Prem Shanker Pandit (since deceased) and Bhojraj respondent No. 3 executed the documents Exs. P-9 and P-10 respectively in favour of the bank. They jointly and severally agreed and guaranteed for due payments of the aforesaid two loan amounts with agreed interest and all expenses. ( 4. ) THARUMAL was permitted to operate two separate accounts in the name of M/s. Ashok Traders, in respect of each loan facility with effect from 13-1-82 itself. ( 5. ) THEREAFTER, on 13-1-84 all the defendants-respondents duly acknowledged the outstanding balance of Rs. 29,168. 65 vide Ex. P-l 1. On 9-1 -87, defendant/respondent No. 1 duly acknowledged the outstanding balance of Rs. 30,352. 70 vide Ex. P-12 which was binding on deceased guarantor Prem Shanker and respondent No. 3 Bhojraj also. ( 6. ) IT is also the case of the plaintiff that as the borrowers amount remained static, legal notices were sent to all the defendants-respondents on 18-8-89 demanding the outstanding amount with interest. Defendant No. 1 refused to accept the notice. Defendant No. 3 was duly served. Defendant No. 2 also refused to receive the notice. As the defendants did not respond to the notice, the plaintiff Bank filed a suit in the Court of District Judge, Hoshangabad. Defendant No. 1 refused to accept the notice. Defendant No. 3 was duly served. Defendant No. 2 also refused to receive the notice. As the defendants did not respond to the notice, the plaintiff Bank filed a suit in the Court of District Judge, Hoshangabad. The plaint was duly signed and verified by K. V. Shenoy, Regional Manager of the Bank. ( 7. ) THE suit was contested by the respondents. It was pleaded that K. V. Shenoy and D. N. Ojha who signed the plaint were not authorized on behalf of the bank to file the suit. The defendants denied all the allegations made in the plaint including the fact that any money was advanced by the Bank to defendant No. 1. The rate of interest was also denied and it was pleaded that the suit is barred by limitation. ( 8. ) DEFENDANT Nos. 2 and 3 denied the execution of the guarantee agreements. ( 9. ) THE Trial Court framed as many as nine issues and recorded a finding that defendant No. 1 borrowed Rs. 3,300/- from the plaintiff Bank and executed a hypothecation deed. A sum of Rs. 20,000/- was advanced as working capital loan. Defendant Nos. 2 and 3 stood as guaranteers for defendant No. 1. The Trial Court also held that defendants did not pay the loan amount with interest but it found that the suit is barred by limitation as the acknowledgment Ex. P-12 has not been properly proved. ( 10. ) THE suit was dismissed mainly on the grounds that the person who signed the plaint was not authorized to sign the plaint on behalf of the Bank and the suit is barred by limitation. ( 11. ) IT is this judgment and decree of the Trial Court which is the cause of grievance of the appellants. ( 12. ) I have heard Shri K. P. Munshi, Senior Counsel with Shri Rajesh Nema, Counsel for the appellant and Shri Ashish Shroti, Counsel for the respondents and perused the record. ( 13. ) DURING the pendency of this appeal respondent Prem Shanker Pandit one of the guarantors died. His L. Rs. were not brought on record and on the application of the appellant Bank his name was deleted from the array of respondents. ( 14. ( 13. ) DURING the pendency of this appeal respondent Prem Shanker Pandit one of the guarantors died. His L. Rs. were not brought on record and on the application of the appellant Bank his name was deleted from the array of respondents. ( 14. ) LEARNED Counsel for the respondents in this regard submitted that on the death of Prem Shanker Pandit one of the three defendants, the right to sue did not survive against the surviving defendants and as L. Rs. of deceased respondent were not brought on record, the appeal is abated against all the defendants. ( 15. ) THE contention is not acceptable. The death of Prem Shanker Pandit does not make it impossible to proceed with the appeal against the rest, therefore, the appeal cannot be dismissed in toto. It is not a case where the plaintiff could not file the suit excluding the deceased-defendant. The decree that may be passed in the case if the plaintiff succeeds the same will not be rendered ineffective in the absence of L. Rs. of deceased Prem Shanker Pandit and there is no likelihood of conflicting decrees coming into existence. It will not be impossible to proceed with this appeal due to the death of Prem Shanker Pandit. Appeal will not become imperfectly constituted for want of necessary or essential parties. The appellant could have brought the action against the remaining respondents alone, therefore, the appeal against the remaining respondents does not abate. In the facts of the present case, the appeal will not abate in its entirety but the same abates only as far as deceased respondent is concerned. Due to death of Prem Shanker Pandit the appeal does not become imperfectly constituted. ( 16. ) ON the basis of the evidence of Durlabh Ram, P. W. 1 and on the basis of certain documents proved to have been executed by the defendants, Trial Court recorded a finding that a sum of Rs. 23,300/- was borrowed by defendant No. 1 and deceased respondent No. 2 Prem Shanker Pandit and respondent No. 3 Bhoj Raj stood as guaranteer for him. It was also found that the rate of interest as agreed was 12. 5 % per annum. These findings of the Trial Court have not been challenged by the respondents either by filing any cross appeal or by raising cross-objections and the same have attained finality. ( 17. It was also found that the rate of interest as agreed was 12. 5 % per annum. These findings of the Trial Court have not been challenged by the respondents either by filing any cross appeal or by raising cross-objections and the same have attained finality. ( 17. ) SO far as the question of non-maintainability of the suit on the ground that the person who signed the plaint on behalf of the Bank was not authorized to sign the suit is concerned, the appellants have filed an application under Order 41 Rule 27 of the CPC with a request to take the power of attorney dated 25-4-89 in favour of Shri K. V. Shenoy and the minutes of the meeting of the Board of Directors of Dena Bank on record. The application has been filed on the ground that the mere technical plea was raised in the pleadings of the respondents. ( 18. ) THE application has been opposed by the respondents. The Counsel for the respondents submitted that the general principle is that the Appellate Court should not travel outside the record of the Lower Court and cannot take any evidence in appeal. It is the basic principle of admission of additional evidence that the person seeking such admission should be able to establish that with the best efforts such additional evidence could not have been adduced at the first instance. In the present case admittedly the plaintiff-appellant had been absolutely negligent. It has failed to establish that after the exercise of due diligence, the documents could not be produced by it at the time when the decree appealed was passed. ( 19. ) THE Counsel for the appellant submitted that due to a regrettable oversight and gross negligence on the part of the bank officials and the Banks Counsel, easily available evidence both oral or documentary, was not tendered in Court and this regrettable lapse and the oversight resulted in the passing of the decree under appeal. ( 20. ) THE Counsel for the appellant also submitted that the plaintiff Bank is a public institution. Its money is public money. Unfortunately the plaintiff bank did not receive the favour of a vigilant eye of the Court below to see and watch that justice is done at all costs and injustice is not allowed to flourish at its hands. ( 21. Its money is public money. Unfortunately the plaintiff bank did not receive the favour of a vigilant eye of the Court below to see and watch that justice is done at all costs and injustice is not allowed to flourish at its hands. ( 21. ) AFTER hearing the parties on application under Order 41 Rule 27, CPC, I am of the opinion that the interest of justice requires that the application should be allowed. ( 22. ) THE Courts exists for justice. Law of procedure is handmaid of justice. Owing to a lacuna or defect in the evidence, I find myself unable to pronounce judgment. Without allowing the application this Court will not be able to pronounce judgment satisfactorily. The nature of the document being sought to be filed is not such that they can be prepared at any time. Their genuineness does not appear to be suspicious. The documents which arc sought to be introduced as additional evidence would have material bearing on this case. The opposite party would not be prejudiced in any manner. The documents which are being filed will turn the scale in favour of the party, or is likely to materially affect the decision. ( 23. ) THE additional evidence sought to be adduced will remove the cloud of doubt over the case and interest of justice clearly rendered it imperative that it be allowed to be brought on record. Therefore, I am of the opinion that the additional evidence must be allowed. I therefore, allow the application. ( 24. ) THE suit of the plaintiff was dismissed mainly on the ground that the person who signed the plaint was not authorized to sign the plaint. The copy of power of attorney reveals that a power of attorney was executed in favour of K. V. Shenoy by the Dena Bank. Under Clause (9) of the power of attorney Shenoy has been permitted to sign the pleadings, applications or petitions and to make affidavits for the proper initiation, conduct or defense of such suit or proceedings. Thus, Shenoy who admittedly signed the plaint was authorized to sign the pleadings and was also authorized to appear and represent the bank in any Court. Therefore, the dismissal of the suit on the ground that the person who signed the pleadings was not authorized to sign the plaint is not defensible. ( 25. Thus, Shenoy who admittedly signed the plaint was authorized to sign the pleadings and was also authorized to appear and represent the bank in any Court. Therefore, the dismissal of the suit on the ground that the person who signed the pleadings was not authorized to sign the plaint is not defensible. ( 25. ) A copy of the resolution which has been filed alongwith the application under Order 41 Rule 27, CPC also authorizes the Regional Managers, Development Managers, Chief Managers, Branch Managers or any other officer of the Bank to institute suit in any Court, or in any other legal proceedings and to sign and verify plaints and other applications relating thereto against any person. ( 26. ) K. V. Shenoy was the Regional Manager and D. N. Ojha was the Branch Manager of the plaintiff-Bank. Both of them were authorized to sign the pleadings and institute the suit or other legal proceedings against any other person, therefore, the dismissal of the suit on the ground that the plaint was not signed by the person authorized to sign the pleadings is not defensible and the same is set aside holding that K. V. Shenoy who signed the plaint on behalf of the bank was authorized to sign the pleadings. ( 27. ) THIS brings us to the another important question as to whether the suit is barred by limitation. ( 28. ) THE Trial Court dismissed the plaintiffs suit as barred by limitation on the ground that acknowledgment Ex. P-12 was not proved by the plaintiff. ( 29. ) P. W. 1 Durlabh Ram has stated that he knows the signature of Tharumal because Tharumal signed the document in his presence earlier also. The witness has stated that the signatures marked as A to A on Ex. P-12 are of Tharumal. There was no reason for the Trial Court to disbelieve the evidence of Durlabh Ram. From the evidence of Durlabh Ram it is established that on 9-11-87 defendant Tharumal acknowledged the debt. The perusal of the document reveals that the acknowledgment is of subsisting liability and existing jural relationship. An unqualified acknowledgment of liability in respect of a debt necessarily implies a promise to pay the debt. ( 30. ) AN acknowledgment of liability under Section 18 of the Limitation Act in respect of a debt must be made before the expiry of the period of limitation. An unqualified acknowledgment of liability in respect of a debt necessarily implies a promise to pay the debt. ( 30. ) AN acknowledgment of liability under Section 18 of the Limitation Act in respect of a debt must be made before the expiry of the period of limitation. The loan was advanced on 13-1-82, thereafter, within three years acknowledgment Ex. P-11 was signed on 13-1-84, i. e. , within two years from the date of advancing loan. Thereafter, document Ex. P-12 was signed on 9-1-87, i. e. , within three years from 13-1-84. Therefore, the acknowledgments were made within limitation. ( 31. ) THE effect of acknowledgment under Section 18 of the Limitation Act is that the plaintiff is entitled to a fresh period of limitation from the time when the acknowledgment is signed. The fresh period is to be computed from the date when the acknowledgment was signed. Acknowledgment Ex. P-12 was signed on 9-1-87 and the suit was filed within 3 years thereafter, i. e. , on 20-12-89, therefore, the suit is within limitation and the finding of the Trial Court that the suit is barred by limitation cannot be countenanced. ( 32. ) IT is true that the acknowledgment was signed by the principal debtor and not by the guaranteers but as provided under Section 128 of the Contract Act the liability of the surety is co-extensive with that of the principal debtor unless it is Ors. wise provided by the contract. As has been held in United Commercial Bank v. B. M. Mahadeva Babu AIR1992 Kant 294 , AIR1992 KAR 294 , [1994 ]80 Compcas845 (Kar ), 1991 (4 )Karlj200 , in a suit for recovery of debt against guarantors and principal debtor the acknowledgment of debt by principal debtor binds guarantors. Even where the principal debtor expired during the pendency of the suit, the suit is within limitation not only against the principal debtor but also against surety. ( 33. ) ON the basis of above discussion, I am of the opinion that the Trial Court committed grave error in dismissing the suit on the ground that the person who signed the plaint was not authorized to sign the pleadings and on the ground that the suit is barred by limitation. ( 33. ) ON the basis of above discussion, I am of the opinion that the Trial Court committed grave error in dismissing the suit on the ground that the person who signed the plaint was not authorized to sign the pleadings and on the ground that the suit is barred by limitation. Therefore, the finding of the Trial Court in this regard is set aside and it is held that Shri K. V. Shenoy was competent to sign the pleadings, applications or petitions and handle the suit or proceedings on behalf of the bank and the suit is within limitation. ( 34. ) THE Trial Court has already recorded a finding that M/s. Ashok Traders and Bhoj Raj are liable to pay the suit amount. I, therefore, allow this appeal and direct that the respondent Nos. 1 and 3 jointly and severally pay a sum of Rs. 57,101/- to the plaintiff. The plaintiff shall also be entitled to interest @ 12. 5 % per annum from the date of the filing of the suit till the date of realization of the suit amount. ( 35. ) ACCORDINGLY, the appeal is allowed and the suit filed by the plaintiff is decreed. Party shall bear their own costs.