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Gauhati High Court · body

2010 DIGILAW 285 (GAU)

State Bank of India v. T. Bardhan

2010-04-26

TINLIANTHANG VAIPHEI

body2010
JUDGMENT T. Vaiphei, J. 1. This civil appeal is directed against the judgment and decree dated 11.3.2004 passed by the learned Assistant District Judge, Shillong in Money Suit No. 4(H) of 1999 decreeing a sum of Rs. 4,87,890 with interest @ 18% per annum with effect from 1.10.1999 till realization of the decretal amount in full in favour of the respondent. 2. The facts of the case, as pleaded by the plaintiff-respondent, are that he is a registered Valuer of immovable properties with the Central Board of Direct Taxes, New Delhi and is, presently, carrying on the profession of Consulting Engineer and Valuer and is rendering his services to the Government Department, Nationalized Banks and the general public on payment of professional fees as his professional services are found to be untarnished. On 15.3.1997, the appellant-Bank engaged him for evaluating fair market value of two plots of land belonging to M/s. Eastern Mining and Allied Industries Ltd., Shillong ('the company') for the purpose of creating an equitable mortgage as security for the financial assistance being accommodated to the latter. These lands are situated at Maingmawdar in the West Khasi Hills District of Meghalaya. On completion of the valuation, he submitted his report along with the bill for his professional fee to the appellant-Bank for payment. When no response was received from the appellant, he on 6.4.1998 wrote to the appellant demanding payment of the fee as per the bill submitted by him. The Chief Manager of the appellant-Bank by his letter dated 27.8.1998 informed him that they had already directed the company to settle the payment. According to the respondent, the appellant-Bank was in this manner trying to avoid their liability and resorted to dilatory tactics to that end by needlessly asking the company to authorize them to deduct the amount from their account. It is the case of the respondent that as he was engaged by the appellant-Bank, the responsibility for the payment squarely fell on them inasmuch as they never instructed him in their letter of appointment to realize the fee from the company. It is also the contention of the respondent that the appellant used to make such payment to him for carrying out similar assignments on earlier occasions and that they were also aware of the scale of fees prescribed by the Central Board of Direct Taxes for undertaking the job of valuation. It is also the contention of the respondent that the appellant used to make such payment to him for carrying out similar assignments on earlier occasions and that they were also aware of the scale of fees prescribed by the Central Board of Direct Taxes for undertaking the job of valuation. As the company was in no way involved in the issue of payment of such fees, he could not legally claim the fee from them. It is claimed by the respondent that the amount of fee payable to him in accordance with the scale of fees prescribed by the Central Board of Direct Taxes, Government of India, is Rs. 3,75,300 and that this amount together with the interest calculated from the date of submission of bill up to 1.10.1999 is Rs. 1.12.590. This, thus, resulted in instituting the money suit for a decree of Rs. 4,87,890 plus interest pendente lite @ 18% per annum with effect from 1.10.1999 till realization of the decretal amount. 3. The appellant-Bank contested the suit by filing their written statement of defense. In their written statement, they deny that the suit is not maintainable; that there is no cause of action; that the court has no jurisdiction to try the suit; that the suit is improperly valued and proper court-fees not paid; that the suit is barred by limitation as well as by the principles of estoppel, waiver and acquiescence; that the suit is bad for mis-joinder of parties and for non-joinder of necessary parties and that the suit is based on misrepresentation of facts. It is averred by the appellant-Bank that the respondent was asked to evaluate the fair market value of the two plots of land belonging to the company on their behalf as the plots were offered as security by them against the loan being taken from the appellant-Bank, but his letter of appointment was not signed by the Chief General Manager of the appellant-Bank but on his behalf and that there was no indication/offer/agreement for payment of fees by them. According to the appellant-Bank, when a surveyor/consultant/assessor is engaged for the purpose of evaluation like when a lawyer is engaged for legal opinion in respect of properties which are offered for collateral securities, the fees for the services rendered by them are to be paid by the customer/client and not by the Bank, which is why the respondent had in the first instance billed the company. On receipt of the bill dated 31.1.1998, the Bank wrote to the company to settle the fee of the respondent' and a reminder to that effect was also sent to the company on 15.9.1998. The bill was not paid by the Bank as there was no contract for such payment On 28.8.1998 a meeting was held between the officials of the Bank and the company at the State Bank of India, Main Branch, Shillong wherein Shri M.S. Jayaram, the Managing Director of the company had agreed to settle the bill; thus, the onus of payment of the bill lies with the company who offered the plots as collateral securities for the loan obtained by them. This practice is well-known by the respondent, who claimed to be in such profession for a long time. The appellant-Bank denies of having made any payment for similar services rendered by him; it might have paid the fees through Banker's cheque issued by them on the authority of the party to do so. The appellant-Bank, therefore, contends that they are not liable to pay fee or any interest claimed by the respondent. 4. On the pleadings of the parties, the following issues are framed by the trial court: (1) Whether the suit is maintainable? (2) Whether there is any cause of action for the suit? (3) Whether this Court has the jurisdiction to try the suit? (4) Whether the suit is barred by limitation? (5) Whether the suit is bad for mis-joinder and non-joinder of necessary parties? (6) Whether the plaintiff was engaged by the defendant on 15.3.1997 for valuation jobs of two pieces of land belonging to the Eastern Mining & Allied Industries Ltd., Shillong situated at Miangmawdar, West Khasi Hills District of Meghalaya which was offered as security against the loan obtained from the Bank? (7) Whether the plaintiff is entitled to his professional fees from the defendant? (7) Whether the plaintiff is entitled to his professional fees from the defendant? (8) Whether there was any contract between the plaintiff and the defendant to pay the plaintiffs fees towards evaluation of the market value of Eastern Mining & Allied Industries Ltd. property at Miangmawdar? (9) To what relief the parties are entitled to? 5. The plaintiff-respondent examined himself as PW1 while the appellant-Bank examined as many as four witnesses to prove their respective cases. On issues Nos. 1, 2, 3, 4, 5 and 6, the trial court answered them in the affirmative. It may, however, be noted that the trial court first discussed issue No. 8 and thereafter took up issue No, 7 for consideration. Its findings in respect of issue No. 8 are that there was no document on record to show that the Eastern Mining & Allied Industries Ltd. ever requested the respondent-plaintiff to evaluate their properties for a bank loan from the appellant-Bank nor is there any document to show that the appellant-Bank ever requested the respondent-plaintiff on behalf of the Eastern Mining and Allied Industries Ltd. to evaluate their properties for the sake of Bank loan from the appellant-Bank and that Ext. 1 is a request to the respondent-plaintiff to advice the appellant-Bank on the present market value of the landed property. According to the trial court, there was no doubt a request made by the appellant-Bank to the respondent to advice them the present market-value of the landed property of Eastern Mining and Allied Industries, and this proposal had been accepted by the respondent, who accordingly undertook the assignment. The trial court from the aforesaid circumstances came to the conclusion that a contract was created between the appellant-Bank and the respondent to do a certain act and that in doing so, the appellant-Bank became liable to pay the respondent for the services rendered by him. Thus, issue No. 8 was decided in favor of the respondent and against the appellant-Bank. Thus, issue No. 8 was decided in favor of the respondent and against the appellant-Bank. On issue No. 7, the trial court took note of the statement of DW1, who deposed that the respondent had on many occasions evaluated the market value of the properties belonging to different parties, who had taken loans from the appellant-Bank and at no point of time, they paid the professional fees in such cases as the respondent-plaintiff always realized the fees from the parties themselves for whose benefits the landed properties were valued and to whom those properties belonged. The trial court observed that the statement of PW1 was corroborated by the evidence of DW2, DW3 and DW4, but took the view that the evidence of these witnesses was not supported by any documentary evidence. The trial court observed that as its findings in respect of issue 7 were against the appellant-Bank, he did not feel it necessary to discuss further evidence of these witnesses and accordingly concluded that the respondent-plaintiff was entitled to his professional fee from the appellant-Bank. It was on the basis of these findings and conclusion that the trial court decreed the suit. The correctness of these findings is called into question in this appeal. 6. Mr. S.S. Sharma, the learned senior counsel for the appellant, submits that the trial court has completely overlooked the fact that the respondent, as a registered valuer, was aware of the position that he was obliged to submit the bill and recover the same from the property-owner and that the respondent had in the past been realizing his fees from the owners of the properties offered for equitable mortgage. It is the contention of the learned Counsel that the trial court ought to have considered the fact that the appellant had discharged its obligation by informing the respondent in writing that it had instructed the Eastern Mining and Allied Industries Ltd. to settle his bill, and conclusion of the trial court to the contrary is not justified. The learned Counsel maintains that the fees for the reports of surveyors, valuers, advocates, etc., as per the established practice, were always paid by the borrowers/customers and not by the bankers, which ought to have been taken into account by the trial court, which has in the process grossly erred in law. According to the learned Counsel, the trial court did not consider Ext. According to the learned Counsel, the trial court did not consider Ext. "A", which is the letter written by the respondent to the appellant-Bank, in the proper perspective, which clearly indicated that the former was basically aggrieved by the non-payment of his dues by the borrower and that he knew the position that the fee would be paid to him by the borrower and not by the Bank. It is also contended by the appellant-Bank that the fee demanded by the respondent is abnormally high and is not commensurate with the time, labor and expertise involved in submitting such report and that before undertaking the assignment, it was incumbent on the part of the respondent to apprise the customer about his fees and had he done so, the customer might or might not have opted to avail of his services after knowing the fees demanded by him. The learned Counsel also vehemently assails the finding recorded by the trial court that the evidence of DW1 was corroborated by the evidence of DWs 2, 3, and 4 but nevertheless held that there was no documentary evidence to substantiate their evidence and contends that such findings are perverse and put the burden of proof wrongly on the appellant-Bank. Contending that the decree is contrary to law, he strongly urges this Court to allow the appeal and set aside the impugned decree. Per contra, Mr. H.S. Thangkhiew, the learned Counsel for the respondent, supports the impugned judgment and decree and contends that the trial court rightly fastened the liability to satisfy the fee in question upon the appellant, more so, when there is no privity of contract between the respondent and Eastern Mining and Allied Industries Ltd. to demand payment of the fee from the appellant-Bank at whose instruction the assignment was carried out by him. Alternatively, he submits that as the respondent has already carried out the job entrusted to him by rendering his service, he is entitled to recover the fee on a quantum meruit. 7. I have given my anxious consideration to the rival submissions made by the learned Counsel appearing for the parties. Alternatively, he submits that as the respondent has already carried out the job entrusted to him by rendering his service, he is entitled to recover the fee on a quantum meruit. 7. I have given my anxious consideration to the rival submissions made by the learned Counsel appearing for the parties. The sole question which falls for consideration in this appeal is whether there is contract between the appellant-Bank and the plaintiff-respondent for payment of the fees demanded by the latter for evaluating the landed-properties of the Eastern Mining and Allied Industries Ltd. for the purpose of equitable mortgage as collateral security for the repayment of the loan being offered to the latter. To substantiate his case, the plaintiff-respondent relies on Ext. 1 whereas the appellant-Bank relies on Ext. 'A' to defend their case. Ext.1 is the letter dated 15.3.1997 addressed to the plaintiff-respondent by the appellant for valuation of the landed property in question. Ext. 'A' is the letter dated 31.1.1998 written by the plaintiff-respondent to the appellant-Bank. Before proceeding further, it will be useful to reproduce below both the documents: Shri T. Bardhan, Regd. Valuer Near Hyderi Park Shillong-1 Dear Sir, VALUATION OF LANDED PROPERTY EASTERN MINING AND ALLIED INDUSTRIES LIMITED, Nongrim Hills, Shillong, a company registered under the Company's Act has approached us for some financial assistance. In this context, they have offered to create an Equitable Mortgage over their landed property situated at Miangmawdar, Nongstoin Syiemship, Nongstoin. 2. In this connection, they have submitted a photocopy of Deed of Sub-Lease, which enclose for your necessary action. In case you require any other document or particulars the same can be obtained from the party who has been asked to maintain a close liaison with you for the purpose. 3. We shall be glad if you will kindly advise us the present market value of the Landed Property covered by the said Lease Deed. Yours faithfully, Chief General Manager (C&I), Shillong Branch. To The AGM, SBI, Shillong. Dear Sir, Sub: Pending fee Chief Manager (C&I) had in his memo C&I/ADV/96/343, dated 15.3.97, requested the undersigned for valuation of lands belonging to M/s. Eastern Mining and Allied Industries Ltd., Shillong. The valuation report was submitted long back and your Bank has dealt with the matter. Since the Party have (sic) not made payment of professional fee as yet, I am submitting a Bill to you for realization of fee. The valuation report was submitted long back and your Bank has dealt with the matter. Since the Party have (sic) not made payment of professional fee as yet, I am submitting a Bill to you for realization of fee. I shall be highly obliged to you if you cause payment at your earliest/consideration of any further sum to the Party. A copy of Scale of Fee as prescribed under Wealth Tax Rules is attached. The fee has been calculated accordingly. A copy of appointment letter is also attached for your ready reference. Thanking you in anticipation. 8. The letter dated 15.3.1997 at Ext.1 will indicate that a request was made by the appellant-Bank to the respondent to advise them of the prevailing market value of the landed property covered by the Deed of Sub-Lease referred to therein. There is, however, no whisper of statement made therein by the appellant offering the payment of fee to the respondent for the advice tendered by him. The respondent examined himself as PW1, but no other witness was examined by him to substantiate his case. In his evidence, he deposed that he was given the assignment by the Bank for valuation of the two plots of land belonging to Eastern Mining and Allied Industries Ltd. and that on completion of his assignment, he submitted his report to the Bank and submitted the bill later, but despite repeated reminders, the Bank did not pay his bill. He further testified that the Chief Manager of the Bank by his letter dated 27.8.1998 informed him that he had directed the company to settle his bill or to authorize the Bank to debit the amount from their account. According to him, the Bank never asked him to receive the payment of his bill from the company and it was only the Bank which had the duty to pay his bill as he was engaged by them and not by the company. He deposed that the total amount payable by the Bank was Rs. 4,87,890 including the accrued interest till 1.10.1999 and that he was further entitled to pendent elite interest @ 18% per annum from 1.10.1999 till realization of the decretal amount. He deposed that the total amount payable by the Bank was Rs. 4,87,890 including the accrued interest till 1.10.1999 and that he was further entitled to pendent elite interest @ 18% per annum from 1.10.1999 till realization of the decretal amount. In his cross-examination, he disclosed that he had been practicing as valuer for about 20 years but did not remember the works he had done with the Bank regarding valuation of properties and that very seldom the Bank issued appointment letters to him for such assignments and that whoever approached him for valuation, he charged the fee from them only. He admitted that he did not know if the Bank had made payments of fees to him in respect of valuation of the lands of their clients by debiting the same from the accounts of their clients maintained by them, He also admitted in his evidence that in the letter at Ext. 1, it was nowhere written that the Bank would pay his fee. Thus, from the aforesaid evidence of the respondent, there is nothing to indicate that the Bank made a promise to him to pay his professional fees for valuation of the landed properties belonging to the Eastern Mining and Allied Industries Ltd., who had offered such properties for security against the loan applied for by them. The respondent himself did admit the absence of such promise orally or otherwise. He is also unable to substantiate his case with documentary evidence that he used to charge his professional fees directly from the Bank for such assignments. In fact, he testified that he did not know the norms of the Bank as to whether the Bank or the party was to pay the fee for evaluation of such properties. In my opinion, as a professional and prudent person, he was expected to ascertain from the party as to who was to pay his professional fee before accepting the assignment. Caveat Subscriptor. The fact that, he himself was aware of the liability of the company to satisfy his fee is evident from the letter at Ext. 'A' wherein he stated that "Since the Party have not made payment of professional fee as yet, I am submitting a Bill to you for realization of fee". Caveat Subscriptor. The fact that, he himself was aware of the liability of the company to satisfy his fee is evident from the letter at Ext. 'A' wherein he stated that "Since the Party have not made payment of professional fee as yet, I am submitting a Bill to you for realization of fee". Now, if he was certain that the bill was to be honored by the Bank, why should he complain that the party had not made payment of his professional fee and then proceeded to submit his bill to the Bank for realization of his fee. The term "the Party" in the context only mean the company and not the Bank as evidenced from the following words "I am submitting a Bill to you for realization of fee". In other words, the respondent evidently knew that it was the company which should pay his bill but when he failed to realize from them, he submitted the bill to the Bank for realization thereof; he was seeking the assistance of the Bank to realize his fees from the company. Had the respondent produced a documentary evidence including contemporaneous documents to prove that there has in the past been a consistent practice followed by the Bank in their dealing with him while undertaking similar assignments that such fees had been paid to him by the Bank, there would have been no difficulty in fastening the liability to pay his professional fee upon the Bank by invoking implied contract. 9. Coming now to the evidence of the Bank, DW1, who was the then Chief Manager (CN and I) of the appellant-Bank, in his evidence, deposed that as per Ext. 1, there was no indication or offer or any sort of agreement or contract with him that the Bank would pay the professional fee to him nor did he check as to who would pay his fee, which is demonstrated by the fact that the bill was submitted by him to the Bank ten months later. 1, there was no indication or offer or any sort of agreement or contract with him that the Bank would pay the professional fee to him nor did he check as to who would pay his fee, which is demonstrated by the fact that the bill was submitted by him to the Bank ten months later. He further deposed that as the Bank was not liable to pay the fee, it wrote to Eastern Mining and Allied Industries Ltd. to settle the matter by paying directly to the respondent or to authorize it to pay him by debiting the amount from their account and that there was a meeting with the Managing Director of Eastern Mining and Allied Industries Ltd. on 28.8.98 in the chamber of Assistant General Manager, SBI, Shillong where the Managing Director agreed to settle the valuation charge of the respondent vide the minute of the meeting at Ext. 'F'. He also testified that though there were many correspondences between the Bank and the company, the party neither paid directly nor authorized the Bank to debit the amount from its account and that at no point of time, the Bank had expressly or impliedly agreed to make the payment to the respondent. It is also the evidence of DW1 that the respondent had on many occasions evaluated the market value of the properties belonging to different parties who took loans from the Bank and offered such landed properties as security against the loan, but at no point of time, the Bank ever paid professional fees to the respondent for such services. This statement of DW1 is corroborated by the evidence of DWs 2, 3 and 4. In fact, DW2, in his deposition, categorically stated that the respondent had valued properties of other borrowers of the Bank, a list whereof was given in Ext. E, and payment of his fees was settled/paid by the borrower themselves and not by the Bank. He cited an example that one Suchil Kurbah whose property at Mawlai had been valued by the respondent as that property was given as security against the loan taken by him, and payment of his professional fee was made by Suchil Kurbah. This statement remains unrebutted in his cross-examination; in fact, not even an attempt was made to discredit his evidence. This statement remains unrebutted in his cross-examination; in fact, not even an attempt was made to discredit his evidence. From the evidence of DWs 1, 2, 3 and 4, it can be safely concluded that there is no enforceable contract between the Bank and the respondent for the payment of his professional fee for evaluating the landed properties of the company. On the contrary, it is reasonable to infer that the respondent was quite aware, at the time of accepting the assignment, of the fact that the fee for undertaking such assignment was to be paid by the company and not by the Bank. He should have taken care of his own interest by requiring the company to pay his fee before undertaking the assignment and if the company refused to oblige him, he should not have carried out the assignment; this would have prevented the mischief of privity of contract. Having failed to do so, he has only to blame himself for his fate. 10. It is, however, contended by Mr. H.S. Thangkhiew, the learned Counsel for the respondent, that even if it is assumed that there is no enforceable contract for the payment fee by the Bank to the respondent for the report made by him, he is entitled to reasonable compensation for the work done by him on the principle of quantum meruit. A claim under quantum meruit arises where work is done or goods are supplied, not in pursuance of an express or tacit contract, but under circumstances which would import in law an obligation to for services or goods. Quantum meruit is reasonable compensation awarded on implication of a contract to remunerate, and an express stipulation under a contract be displaced by assuming that stipulation is not reasonable. Compensation quantum meruit is awarded for work done or service rendered when price thereof is not fixed by contract. Seemingly, the principle is applicable to this case. However, on a closer scrutiny, it is doubtful if the principle can actually apply in this case. A comparative reading of Ext. 1 and Ext. A will reveal that there is no consensus ad idem between the Bank and the respondent for payment of the professional fee. Secondly, which is more important, this is not the pleaded case of the respondent. A comparative reading of Ext. 1 and Ext. A will reveal that there is no consensus ad idem between the Bank and the respondent for payment of the professional fee. Secondly, which is more important, this is not the pleaded case of the respondent. The respondent never claimed payment of compensation; be merely claimed payment of his professional fee purportedly on the basis of scale of fee as prescribed under Wealth-Tax Rules. As already found by me earlier, he at first sent the bill directly to the Eastern Mining and Allied Industries Ltd. for payment of his fee and when the latter did not oblige, he forwarded the bill to the appellant-Bank for realization of his fee from the company. Therefore, there was never meeting of mind between the Bank and the respondent that the fee was to be paid by the former. As the respondent did not base his case on the principle of quantum meruit, the plea taken by the respondent at this belated stage cannot be entertained. Proper foundation for invoking the principle of quantum meruit should have laid in the plaint. He should have also clearly indicated the amount of compensation to which he was entitled on this principle. On the basis of such pleadings, an opportunity would then be given to the Bank to answer such claims whereafter the trial court would be in a position to determine as to whether the principle of quantum meruit would be applicable and, if so, what would be the compensation payable to him. In Babu Raja Mohan Manucha v. Babu Manzoor Ahmad Khan AIR 1943 PC 29, it is held that ordinarily, the relief of quantum meruit will not be granted without pleading, but the court may allow relief if justified by sufficient reasons, viz., relief would be granted to the plaintiff where defendant pleads that the contract was void. In the instant case, it has never been pleaded by the Bank that the contract was void; it merely pleaded that it has no contractual obligation, expressly or impliedly, to pay the professional fee of the respondent. 11. For what has been stated above, the appeal succeeds. The judgment and decree dated 11.3.2004 passed by the learned Assistant District Judge. Shillong in Money Suit No. 4(H) of 1999 decreeing the suit is hereby set aside. However, on the peculiar facts of the case. 11. For what has been stated above, the appeal succeeds. The judgment and decree dated 11.3.2004 passed by the learned Assistant District Judge. Shillong in Money Suit No. 4(H) of 1999 decreeing the suit is hereby set aside. However, on the peculiar facts of the case. I direct the parties to bear their respective costs. Transmit the L.C. record forthwith.