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2017 DIGILAW 1292 (KER)

Canara Bank, Bangalore v. T. K. Lakshmi Narayanan

2017-10-13

DEVAN RAMACHANDRAN, P.N.RAVINDRAN

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JUDGMENT : DEVAN RAMACHANDRAN, J. A suit is laid on file by a Bank against its erstwhile employee alleging that he had misappropriated certain sums of money -not an unusual scenario, except that the suit is filed over thirty years after the alleged misappropriation was concededly detected by the Bank. The explanation of the Bank for this is that they had initiated criminal proceedings against him which took more than thirty years to conclude travelling all the way to the Hon'ble Supreme Court and being finally concluded by an acquittal of the employee. 2. The legal assertion of the Bank is that their cause of action to sue the employee arises only after the criminal proceedings concluded and they rely on Section 10 and Article 58 of the Limitation Act in support. We, however, are persuaded to find against this and we will record reasons for our view presently after detailing essential facts. 3. This appeal has been filed by the Canara Bank, which is a nationalised bank, against the judgment and decree of the Sub Court, Sulthan Bathery in O.S.No.93 of 1996, filed by them against the respondent herein, Sri.T.K.Lakshmi Narayanan, who was earlier in their service. For the purpose of convenience, we will refer to the parties as they are arrayed in the civil court. We will, therefore, refer to Canara Bank as the plaintiff and Sri. T.K. Lakshmi Narayanan as the defendant. 4. The apercus of the allegations made by the plaintiff against the defendant is that on 6.6.1973, while the latter was working as a Senior Clerk in the service of the plaintiff bank at Sulthan Bathery branch, during the period from 19.4.1973 to 8.10.1974, thus attending to the cash and other routine work, he illegally opened a savings account in the name of a certain Sri.T.R.Raman with account number 627. According to the allegations of the bank, this Sri.T.R.Raman, is a fictitious person and the address furnished in the account namely “Teacher, Aided Upper Primary School, Cheeral” was also fictitious and that this was done deliberately by the defendant with an intention of misappropriating funds with the aid of such account. According to the allegations of the bank, this Sri.T.R.Raman, is a fictitious person and the address furnished in the account namely “Teacher, Aided Upper Primary School, Cheeral” was also fictitious and that this was done deliberately by the defendant with an intention of misappropriating funds with the aid of such account. As per the Bank, the modus employed by the defendant in making such misappropriation was that he fabricated 20 numbers of mail transfer advices, which showed several dates, and which were shown to have been issued from the various branches of the plaintiff bank, including the Mysore main branch. The allegation continues that these advices were credited into the aforementioned account, opened in the name of Sri.T.R.Raman, and that an amount of Rs.7,400/- was withdrawn by the defendant on 8.10.1973 through two cheques. The bank further says that the defendant similarly fabricated 19 other mail transfer advices, again purported to have been originated from several branches of the bank, and that a total amount of Rs.2,90,000/- was thus credited in to the account of Sri.T.R.Raman, which was eventually withdrawn in its full by the defendant using cheques drawn on the said account. It is the specific case of the bank that the entire amount of Rs.2,90,000/- was withdrawn by 7.10.1974. 5. The bank says that on detection of this defalcation, it immediately placed a complaint before the Central Bureau of Investigation, Cochin and that the competent Inspector who conducted the investigation searched the room at Kakkodan's Tourist Home, Sulthan Bathery, where the defendant was residing. The bank says that the Investigating Officer recovered certain valuable movable items from the said room and that on the basis of the statement of the defendant, recoveries were made from another house owned by a certain Sri.Lakshmanan. The pleadings in the plaint would show that the Investigating Officer thereafter filed a charge sheet in the Court of the Special Judge, Ernakulam who found the defendant guilty of the charges levelled against him. However, the judgment of the Special Judge, CBI Court, Ernakulam was set aside by this court in appeal, and the appellate judgment was, thereafter, confirmed by the Honourable Supreme Court in a further criminal appeal. 6. However, the judgment of the Special Judge, CBI Court, Ernakulam was set aside by this court in appeal, and the appellate judgment was, thereafter, confirmed by the Honourable Supreme Court in a further criminal appeal. 6. On the defendant being acquitted by the criminal court in such fashion, the Bank filed the suit on 12.03.1996 praying that the items recovered by the investigating officer and placed in the custody of the criminal court be released to them on the allegation that such articles were purchased by the defendant using the amounts that was misappropriated by him from the Bank. Pending the suit, an amendment was made by the Bank for introducing an alternate plea for recovery of an amount of Rs.16,33,949/-, being the amount of Rs.2,90,000/- allegedly misappropriated by the defendant along with interest @ 20.5% from 01.01.1974 till the date of suit. 7. The court below took the suit to trial and five witnesses were examined as witnesses for the plaintiff as PW1 to PW5 and Exts.A1 to A89 were marked on his side. The defendant herein was examined as a witness on his side as DW1 and exhibits B1 to B6 were marked in his defence. The court below, after an elaborate assessment of the materials available, documentary evidence and testimony of the witnesses, entered the finding that even though the suit was not barred by limitation, as was contended by the defendant, the plaintiff had not been able to prove that either the defendant had misappropriated the sums as alleged, or that any such amounts were used for the purpose of purchase of the articles recovered by the investigating officer in the criminal case against the defendant. The plaintiff has filed this appeal assailing the judgment and decree of the court below. 8. We have heard Smt.Shahna Karthikeyan, learned standing counsel appearing on behalf of Canara Bank and Sri.N.Haridas assisted by Sri.Antony Mathew, learned counsel for the respondent/defendant in the suit. 9. On an examination on the various factors involved in this appeal, we are in no doubt that the plaintiff has filed the suit essentially on the plea that the defendant has committed larceny of an amount of Rs.2,90,000/- in the year 1974. 9. On an examination on the various factors involved in this appeal, we are in no doubt that the plaintiff has filed the suit essentially on the plea that the defendant has committed larceny of an amount of Rs.2,90,000/- in the year 1974. All other allegations are edified on this one assertion and unless they are able to show, with some amount of reasonableness, that the defendant had, in fact, defalcated this amounts none of the other prayers in the suit can be allowed. 10. The court below saw that the suit was filed only on 12.03.1996, even though the specific allegation of the plaint is that an amount of Rs.2,90,000/- was misappropriated by the defendant in various dates, the last of it being 07.10.1974. The question that arose before the court below, as was asserted by the defendant also, was whether the suit itself is barred by limitation. The plaintiff's case against the plea of limitation was two fold, on one hand they said that since the criminal case was pending against the defendant, which finally culminated only in the judgment of the Hon'ble Supreme Court on 11.08.1994, they are entitled to file a suit invoking Article 58 of the Limitation Act within a period of three years from 11.08.1994. They further contend that since the suit was thereafter filed on 12.03.1996, well within the period of three years from the judgment of the Hon'ble Supreme Court, their suit cannot be found hit by limitation. The alternate contention, which is more or less in the nature of a second limb to the one above, is that since the defendant had misappropriated the money belonging to the Bank, he should be treated to be a trustee in custody of such amounts and, therefore, that since the amount represents a trust in the hands of the defendant, Section 10 of the Limitation Act would apply, thereby indicating that there is no period of limitation at all in recovering the same. 11. The court below, we see, has examined both these contentions quite in detail. 11. The court below, we see, has examined both these contentions quite in detail. As regards the first contention is concerned, the submission that the plaintiff was entitled to wait for a period of three years from the date of the judgment of the Hon'ble Supreme Court to initiate the suit was found by the court below in favour of the plaintiff whereas the latter contention that the defendant is in the nature of a trustee with respect to the amounts defalcated by him was found against. 12. We have also examined the two contentions on limitation independently, since the findings of the court below are vehemently assailed before us by the counsel on either side to the extent to which they are against their respective clients. 13. The plaint averments and the evidence on record are to the effect that the defendant allegedly misappropriated the entire amount of Rs.2,90,000/- in tranches on several dates and finally on 07.10.1974. Normally, going by the rules of limitation, the period of three years should have started from 07.10.1974 or from such date on which the Bank would allege that they became aware of such embezzlement. The Bank does not have a case that they came to be aware of the theft later and, therefore, it would only be justified that we go by the date 07.10.1974, which is the date on which the Bank says the last of the withdrawal was allegedly made by the defendant. Therefore, going by Article 58 of the Limitation Act, the legal issue before us is whether the right to sue would accrue to the Bank only after the criminal case was over. The criminal case travelled through all several stages, finally culminating in the judgment of the Hon'ble Supreme Court on 11.08.1994. Can we, therefore, say that the Bank was justified in waiting all the time till 11.08.1994 for the criminal processes to complete against the respondent so as to file a suit and that too after two years after the Supreme Court delivered the final judgment. 14. Article 58 of the Limitation Act refers to the right to suits filed to obtain any other declaration and fixes the period as three years after the right to sue first accrues. This article resides in Part III of the Schedule to the Act, which prescribes the periods of limitation, and relates to suits relating to declaration. 14. Article 58 of the Limitation Act refers to the right to suits filed to obtain any other declaration and fixes the period as three years after the right to sue first accrues. This article resides in Part III of the Schedule to the Act, which prescribes the periods of limitation, and relates to suits relating to declaration. Articles 56 and 57, which are the other two articles in the said part prescribes the periods of limitation for suits filed to declare the forgery of an instrument and to obtain a declaration that an alleged adoption is invalid respectively. After providing for these two specific instances, Article 58 fixes three years as the period of limitation to obtain any other declaration from the date when the right to sue first accrues. 15. It is ineluctable that Article 58 provides a period of three years to seek a declaration, after the right to sue has first accrued in favour of the plaintiff. The question is whether the plaintiff can maintain that they have filed the suit for declaration against the respondent that amounts are due from him to them and contend that their right to sue commenced only after the judgment of the Hon'ble Supreme Court had been delivered. 16. We are unable to comprehend this contention of the Bank, because the suit has been filed by them seeking a decree for recovery to certain sums of money on the allegation that the respondent has misappropriated such sums while he was serving under them. This being indisputably so, we are a loss to understand what declaration they can seek against the respondent and how they take refuge under Article 58 of the Act to assert that their cause of action arose only after the judgment of the Hon'ble Supreme Court, that too confirming the respondent's acquittal by this Court earlier. 17. In fact these contentions run counter to the law declared by the Hon'ble Supreme Court in Khatri Hotels (P) Ltd. and another v. Union of India and another (2011) 9 SCC 126 . Their Lordship while scrutinizing the bounds of Article 58 lucidly said as under: 30. While enacting Article 58 of the 1963 Act, the legislature has designedly made a departure from the language of Article 120 of the 1908 Act. The word “first” has been used between the words “sue” and “accrued”. Their Lordship while scrutinizing the bounds of Article 58 lucidly said as under: 30. While enacting Article 58 of the 1963 Act, the legislature has designedly made a departure from the language of Article 120 of the 1908 Act. The word “first” has been used between the words “sue” and “accrued”. This would mean that if a suit is based on multiple causes of action, the period of limitation will begin to run from the date when the right to sue from accrues. To put it differently, successive violation of the right will not give rise to fresh cause and the suit will be liable to be dismissed if it is beyond the period of limitation counted from the day when the right to sue first accrued. 18. The view of the Hon'ble Supreme Court being so precise, it is indubitable that the period of limitation for the Bank, to file a suit even assuming that there are multiple causes of action available to them would begin to run from the date when the right to sue accrued to them. We are certain that the right to sue for the Bank first accrued immediately after the alleged defalcation by the defendant had been detected by the Bank. Any other cause of action that they may claim is only subsequent to it and could not extend the periods of limitation for filing the suit. 19. In any event, the only reason, as is indubitable even from their admission, as to why they waited so long to file a suit was because the criminal case was pending. Article 58 of the Limitation Act, in our view, would not come to their aid in excluding the period, during which the criminal case was continuing, to contend that the period of limitation would arise only after the judgment of the Hon'ble Supreme Court. At the best, the Bank can only maintain that the delay during which they waited for the criminal proceedings to conclude be condoned under Section 5 of the Limitation Act, by filing an appropriate application for such purpose along with the suit, which they did not do. We cannot, therefore, for a moment countenance the submission of the plaintiff that the period of limitation would arise only after the judgment of the Hon'ble Supreme Court, i.e., after 11.08.1994. We cannot, therefore, for a moment countenance the submission of the plaintiff that the period of limitation would arise only after the judgment of the Hon'ble Supreme Court, i.e., after 11.08.1994. We are definite that the period of limitation would arise from the date on which either the Bank knew about the misappropriation or the date on which the alleged embezzlement actually took place. The further period they spent awaiting the conclusion of the criminal proceedings would amount to delay, thus running the risk of the suit being found hit by Laws of Limitation. 20. We have no doubt, therefore, that the finding of the court below that the period of limitation under Article 58 of the Limitation Act would arise only after 11.08.1994, being the date on which the Hon'ble Supreme Court delivered judgment, cannot obtain forensic support. 21. As regards the second limb of the contention regarding limitation on the assertion that the amounts in the hands of the defendant should be construed to be a trust in favour of the plaintiff and thus that Section 10 of the Limitation Act would apply is concerned, we are in complete confirmation with the view of the court below that neither would this amount represent a trust in the hands of the defendant, nor would, therefore, Section 10 of the Limitation Act apply. It is rather incomprehensible how the Bank impells such a contention because the amounts, being alleged to be stolen by the defendant can, by no stretch of imagination, be treated as amounts as held in trust by him for the plaintiff. 22. After answering the question of limitation as above, we would normally not be required to continue any further in this appeal because once we have concluded that the suit is hit by limitation, nothing further would remain. However, since we see that even though the suit was filed on 12.03.1996 without a petition to condone the delay it was still decided on its merits by the court below and we, therefore, deem it necessary and appropriate to consider the merits of the appeal also so as to dispel any grievance that may arise in the minds of the plaintiff if we are to dismiss this appeal as grounds of limitation alone. 23. 23. As already recorded above, the constitutive case of the plaintiff is that the defendant opened an account in the name of a certain Sri.T.R.Raman and that twenty fabricated mail transfer advices were presented under the said account for encashment. Further accusation is that after such encashment of the advices, the amounts were withdrawn by the defendant using cheque leaves drawn on the said account, signing as Sri.T.R.Raman and thus misappropriating the funds. The allegations being as above, the plaintiff has, certainly, to brace several hurdles in proving it; They have to first prove that the above mentioned Sri.T.R.Raman is a fictitious person; they have to establish that it was the defendant who opened the account in the name of the allegedly fictitious person; they have to prove that all the mail transfer forms were fictitiously fabricated by the defendant and presented by him into the said account; they have to establish and show that the amounts so credited into the account of the allegedly fictitious person was withdrawn by the defendant forging the signature; and finally the plaintiff has to show and establish beyond reasonable doubt that the articles confiscated by the investigating officer in the criminal case were in fact, articles purchased or acquired by the defendant using the amount of Rs.2,90,000/- that he had misappropriated from the Bank. 24. We must at first say that many of the above have not been proved by the plaintiff at all. For the first, the question as to whether Sri.T.R.Raman is a fictitious person or otherwise has not been proved at all. Interestingly this is not an issue that was considered even by the criminal court, as we can seen from Exts.A3 and A4 judgments. This was perhaps because the criminal proceedings were pursued on the premise that Sri.T.R.Raman was a fictitious person. However, when it comes to the adjudication of a civil liability to be cast upon the defendant, it would be incumbent upon the plaintiff to first prove this and then to move forward. 25. We are afraid that the plaintiff has not led any substantial evidence in support of their allegations that this above mentioned Sri.T.R.Raman is a fictitious person. The only evidence available is that of PW5, Smt.Valsa Abraham, who was the head mistress of the Aided Upper Primary school, Cheeral. 25. We are afraid that the plaintiff has not led any substantial evidence in support of their allegations that this above mentioned Sri.T.R.Raman is a fictitious person. The only evidence available is that of PW5, Smt.Valsa Abraham, who was the head mistress of the Aided Upper Primary school, Cheeral. PW5 was called as a witness by the plaintiff because the address shown in the account opening form in the name of Sri.T.R.Raman was that of a teacher in her school. The said witness produced and marked Ext.A84, the attendance register of the school, and testified that nobody by the name of Sri.T.R.Raman was serving the school or had been serving the school at any time as a teacher. The relevance of this line of evidence is obvious because the address of Sri.T.R.Raman declared in the Bank was 'Teacher, Aided Upper Primary School, Cheeral'. So, therefore, what was attempted to be shown by the plaintiff through Ext.A84 and through the testimony of PW5 is that the address of Sri.T.R.Raman was not genuine. An axiomatic inference was then sought to be drawn that if the address was fictitious, then Sri.T.R.Raman is also fictitious. We cannot, however, find this to be a reasonable way of establishing that a particular person is fictitious. Even going by the plaint allegations, the account was opened in the name of Sri.T.R.Raman either by him or by somebody else, with a specific intention to commit misappropriation. It is therefore only logical that a person who opened such an account would not give his address or name correctly. Merely because the address is found to be incorrect, a hypothesis cannot be drawn as an automatic inference that the person is also fictitious. We are distressed that nothing has been lead in evidence even in this proceedings or even before the court below in establishing that the aforementioned Sri.T.R.Raman is a fictitious person. We leave it there. 26. Secondly to establish that the defendant had committed any embezzlement or misappropriation, the plaintiff was enjoined to show that the account was opened in the name of Sri.T.R.Raman by the defendant illegally. The plaintiff has sought to prove this allegation by examining PW1, who was admittedly the then manager of the Sulthan Bathery Branch of the plaintiff's Bank. 26. Secondly to establish that the defendant had committed any embezzlement or misappropriation, the plaintiff was enjoined to show that the account was opened in the name of Sri.T.R.Raman by the defendant illegally. The plaintiff has sought to prove this allegation by examining PW1, who was admittedly the then manager of the Sulthan Bathery Branch of the plaintiff's Bank. On an examination of the testimony of PW1, it becomes more or less luculent that his testimony would not in any manner support the allegations made in the plaint. This is because PW1 concedes, without leaving any case for doubt, that he signed the account opening form as also the specimen signature card for the purpose of opening the account in the name of Sri.T.R.Raman. He does not say why he did that except by stating that he did so to avoid an audit objection. According to him, these papers were presented before him by the defendant for the purpose of opening an account and that he signed the same as a manager without verifying its contents. Even though it is his specific assertion in his testimony that he did not know who this Raman was, he concedes and admits without any reservation that he has signed the account opening form as well as the specimen signature card showing the signature of Sri.T.R.Raman. This can only lead us to an inference that the allegation that the account was opened by the defendant in a clandestine and surreptitious manner, with an intention to create a mechanism for misappropriation has not been proved, even on the preponderance of possibility doctrines, against the defendant. 27. The third hurdle that the plaintiff obviously encounters is to show that the defendant had fabricated 20 sets of mail transfer forms marked in evidence as Exts.A9 to A28. These forms were, in fact, forensically examined during the criminal proceedings under orders of this Court and the report of the handwriting experts had also been obtained. Unfortunately for the plaintiff, the opinion of the handwriting expert is contrary to their assertion and this Court in Ext.A3 has found that there is absolutely no tangible evidence to establish that the said credit slips had been tampered or fabricated by the defendant. 28. Unfortunately for the plaintiff, the opinion of the handwriting expert is contrary to their assertion and this Court in Ext.A3 has found that there is absolutely no tangible evidence to establish that the said credit slips had been tampered or fabricated by the defendant. 28. Be that as it may, even assuming that the credit slips had been fabricated or manipulated by the defendant, the Bank was obligated to show that the cheques that were used to withdraw the amount from the account in the name of Sri.T.R.Raman was, in fact, signed and presented by the defendant. The cheques that were used for this purpose are marked in evidence as Exts.A47 to A83. The evidence on record in purported substantiation of this is the testimony of PW2 to PW4. PW2, an officer of the Bank, has deposed that the signature of the defendant appears to him to be similar to those that were obtained in these cheques. However he admits that it is only an opinion that he arrived at by an examination of cheques by himself and he concedes that he did not depose before the criminal court that the signatures in the cheques are that of the defendant. PW4 also in his testimony asserts that these cheques are signed by the defendant. However, while he was cross examined, he resiled from this and admitted that he had no method to conclude that the signatures in Ext.A47 to A83 were actually signed and created by the defendant. We do not find any other evidence on record to even indicate that the defendant could be linked to the cheques that were presented, namely Exts.A47 to A83. The evidence of PW1, as we have already discussed above, would also not come to the aid of the defendant since he unequivocally states all these cheques and the mail transfer advices were passed by him without following any of the requisite formalities. 29. In such view, we find no reason but to concur with the findings of the trial court that there is nothing to establish the defendant having presented the credit slips, namely Exts.A29 to A46, or that he had presented the cheques, in the account in the name of Sri.T.R.Raman, namely Exts.A47 to A83. 30. 29. In such view, we find no reason but to concur with the findings of the trial court that there is nothing to establish the defendant having presented the credit slips, namely Exts.A29 to A46, or that he had presented the cheques, in the account in the name of Sri.T.R.Raman, namely Exts.A47 to A83. 30. When the plaintiff Bank has not been able to prove any of the above criteria satisfactorily or substantially, it does not require further explication to conclude that the very edifice of the claim against the defendant would necessarily fall. 31. The singular allegation of the Bank against the defendant is that he has misappropriated Rs.2,90,000/- and that he has used that amount to purchase and acquire the articles taken into custody by the investigating officer and placed in the custody of the criminal court. Apart from making such an accusation, there is hardly any thing in the plaint averment to establish these facts and the plaint does not even say on what basis these allegations are made. The plaintiff virtually concedes that these allegations have been made only because of the recovery made by the investigating officer in the criminal case and that they have built this claim singularly on the basis of the list of articles placed before the criminal court by the investigating officer. 32. Pertinently, it is also clear from the records in this case as well as the criminal proceedings that the alleged recovery was not made under Section 27 of the Indian Penal Code, but that it was made on the basis of a raid conducted by the investigating officer in a room occupied by the defendant as also from the residence of a friend of his, namely, a certain Sri.Lakshmanan, who was examined as PW51 in the criminal court. Interestingly, this Sri.Lakshmanan was originally arrayed as an accused, was allowed to be an approver and thus thereafter examined as a witness in the criminal proceedings. 33. The allegedly recovered articles, therefore, obtain the character and colour of “material objects” before a criminal court and once the defendant was acquitted of all charges therein, those articles will be dealt with, as per the provisions of the Criminal Procedure Code. 33. The allegedly recovered articles, therefore, obtain the character and colour of “material objects” before a criminal court and once the defendant was acquitted of all charges therein, those articles will be dealt with, as per the provisions of the Criminal Procedure Code. We are told by the learned counsel for the defendant that the Hon'ble Supreme Court has already ordered return of these articles to the defendant as per Ext.B1 order, after rejecting the objections raised by the plaintiff therein. This submission is particularly pertinent because the criminal appeal before the Hon'ble Supreme Court was initiated and concluded at the instance of the plaintiff themselves since the prosecution had not filed such an appeal. The reason why the prosecution did not file such an appeal is also obvious from Ext.A3 judgment, which records that the prosecution had given up the allegation that the defendant was guilty of misappropriation of Rs.2,90,000/-, but that they confined the charge only to the misappropriation of an exiguous sum of Rs.4,000/- allegedly drawn by the defendant through a particular cheque dated 06.10.1973, which has been marked in evidence in this case as Ext.A50. Once this Court, in Ext.A3 judgment, found that the prosecution has given up the charges against the defendant except Rs.4,000/- it was quite natural that the prosecution did not deem it necessary to take up the matter in a further appeal before the Hon'ble Supreme Court. The plaintiff, however, took the burden and prosecuted the appeal before the Honourable Supreme Court but unsuccessfully. 34. In such circumstances it would not be justified for a civil court to hold that the recovery made by the investigating officer are the articles obtained by conversion of the amounts allegedly misappropriated by the defendant and we find no reason to conclude that these articles represent the amounts allegedly misappropriated, the factum of such misappropriation itself being unproved. We, therefore, find that the court below has arrived at conclusions through a cogent and reasonable assessment of the materials and evidence on record and we see no cause in this appeal to disturb the same. 35. We, therefore, find that the court below has arrived at conclusions through a cogent and reasonable assessment of the materials and evidence on record and we see no cause in this appeal to disturb the same. 35. In a conspectus of all that we have said above and for the reasons recorded supra, we dismiss this appeal but in the specific nature and circumstances involved in this case, we deem it appropriate not to order any costs and leave the parties to suffer their respective costs in this appeal. Needless to say all interim orders, if any, in this file will also stand vacated.