Case Laws :Central Bank of India vs Geetaji Chemical Industries

Sub : The Bankers Evidence Act, 1891 IN THE HIGH COURT OF DELHI AT NEW DELHI RFA No. 595/2001 Date of Decision: October 10, 2006 CENTRAL BANK OF INDIA ..... Appellant ! Through : Mr. Vinay Sharma, Adv. versus M/S GEETAJI CHEMICAL INDUSTRIES and ORS. .... Respondents Through : Mr. B.L. Chawla, Adv. 10.10.2006 CORAM:HON'BLE MR. JUSTICE T.S. THAKUR HON'BLE MR. JUSTICE S.L. BHAYANA 1. Whether reporters of local papers may be      allowed to see the judgment? NO 2. To be referred to the Reporter or not? NO 3. Whether the judgment should be    reported in the Digest? NO Per THAKUR, J : This is a plaintiff's appeal arising out of a suit for  recovery of money which the Additional District Judge, Delhi has  dismissed by the impugned judgment and decree. The facts giving rise  to the institution of the suit and the present appeal may be summarized as under : 2. The defendant respondent No. 1 herein is  a partnership concern with respondents No. 2 to 4 as its partners.  The plaintiff bank's case as set out in the plaint was that defendant No. 1 firm  approached the plaintiff for the grant of a loan facility in connection with the latter's  business against collateral securities of Life Insurance Policies, shares  of Joint Stock Companies, properties and farm land.  The plaintiff accordingly sanctioned a cash credit facility of Rs.50,000/- against hypothecation of stock  of dyes, chemicals etc. as well as against the collateral securities mentioned  above worth Rs.70,875/-. Requisite documents necessary in this connection  were executed by the defendant borrowers which included a Demand Promissory  Note for Rs.50,000/-, a letter of continuity, a letter of waiver and an agreement  of hypothecation to secure Demand Cash Credit against goods, all dated  20th June, 1983. The payment of loan was guaranteed by defendant No. 5 who  executed a letter of guarantee in favour of the plaintiff. 3. A fresh set of documents was executed by the  defendants in June, 1987. Since however the defendants were not  regular in making payments, they were informed that they should make payments  regularly which did not evoke any response. Communications dated 31st August, 1987  and 11th September, 1987 were in that connection sent to the defendants  in response to which defendants 1 to 4 by their letter dated 18th September, 1987  assured the plaintiff that they would submit regular statement of stocks in time  and adjust the outstanding dues of the plaintiff in the near future as they were  expecting their payment very soon. Letters dated 5th October, 1987, 23rd November, 1987,  3rd December, 1987 and 19th December, 1987 pointed out the failure  of the defendants to bring down the debit balance, submit balance sheet and  trading account and furnish statements of hypothecated stocks. 4. The plaintiff's further case is that defendant No. 3,  acting as partner of Defendant No. 1 acknowledged the  debit balance against the firm in a sum of Rs.1,09,944/- as on 31st December, 1987  by signing a debit balance confirmation on the same date, i.e., 31st December, 1987.  Communications sent to the defendants thereafter to liquidate the  outstanding dues also evoked no response forcing the plaintiff to recall the  advance in terms of a notice dated 2nd September, 1988. In response, defendants  No. 2 and 3 executed a fresh set of documents including a Demand Promissory  Note, a Letter of Continuity and a Letter of Hypothecation all dated 29th January, 1990  for a sum of Rs.1,41,346.80. Defendant No. 5 once again stood  surety for the said amount by issuing a letter of continuing guarantee dated  29th January, 1990. An acknowledgment dated 29th January, 1990  executed in favour of the plaintiff clearly acknowledged a sum of Rs.1,41,346.80  inclusive of interest upto 30th June, 1989 to be due and payable by the defendants. 5. The plaintiff's case in the above backdrop  was that a sum of Rs.1,96,834/- was outstanding against the  defendants as on 19th September, 1991 as evidenced by a copy of the statement of  account filed with the plaint. The defendants having failed to repay the said  amount despite demands, institution of the suit for recovery of the amount with interest  pendente lite and future by sale of hypothecated stocks had become  unavoidable. 6. In the written statement filed on behalf of  the defendants, it was not disputed that defendant No. 1 was a partnership  concern, though it was alleged that the same stood dissolved long back.  It was also admitted that the defendants had approached the plaintiff for  a loan facility for Rs.50,000/- in the year 1983 which was granted against  the security of LIC policies, share certificates etc. The allegation that the  defendants had signed the documents in consideration of the said facility was  denied.  According to the defendants, they had signed blank forms and papers at  the instance of the bank officials at the time of grant of the facility.  Similarly the averment regarding renewal of the said documents and execution of  fresh documents in the year 1987 was denied as the documents referred to in the  said para were, according to the defendants, signed by them while the same were blank.  It was alleged that the defendants had  instructed the bank to dispose of the share  certificates and adjust the accounts or in the  alternative to return the certificates to the  defendants to enable them to dispose the  same and to deposit the amount with the  bank, but the plaintiff bank had failed to  act in the matter causing financial loss to the defendants.  The allegation that the defendants had  acknowledged the debit balance of Rs.1,09,944/- as on 31st December, 1987  was also denied.  It was alleged that blank forms and papers were  signed at the instance of the bank officials in the year 1987 only. 7. Similarly the averment in the plaint that the  documents were renewed by execution of a fresh set of documents in 1990  was also denied and an allegation made to the effect that the documents relied  upon were actually signed blank in June, 1983 at the time the loan facility was extended.  The acknowledgment of the outstanding amount in June, 1989 was also  similarly questioned on the ground that the same had been created by making use of some blank form which the plaintiff had obtained at the time of extending the loan facility. 8. On the pleadings of the parties, the trial court framed the following issues on 6th September, 1997 : i.Whether the defendants signed on blank form  and papers as alleged ? OPD ii.Whether the defendants acknowledged the  liability? OPP iii.Whether the plaintiff is entitled to the suit  amount? OPP iv.Whether the plaintiff is entitled to the interest?  If so, at what rate? OPP v.Relief 9. In support of its case, plaintiff examined  PW-1 Sh.R.C. Poria. The defendants did not, however, lead any evidence  nor appeared to argue the matter. The court below was, all the same, of the opinion  that the plaintiff had failed to substantiate its claim for recovery of the  suit amount.  The court was of the view that it was for  the plaintiff to first prove that the documents  relied upon by the plaintiff had been executed  by the defendants in which event alone,  the defendant could be called upon to  establish that the same had been signed blank. The statement of Sh.R.C. Poria did not, according  to the trial court, help the plaintiff inasmuch as the same was limited  to the signing and verification of the plaint. Aggrieved by the dismissal of the suit,  the plaintiff bank has filed the present appeal, as already noticed earlier. 10. Appearing for the appellant, Mr. Sharma  argued that the view taken by the trial court was erroneous in law.  The court below had, according to the learned counsel, failed to appreciate that  the signatures on the documents relied upon by the plaintiff had not been disputed  by them. All that the defendants had alleged was that the documents were  signed when the same were blank. The onus to prove that assertion was  upon the defendants as indeed issue No. 1 clearly placed the onus of proof in regard  to the said allegation on the defendants. Defendants having failed to adduce  any evidence and having failed even to step into the witness box to support the  allegation made by them, there was no option but to hold that the documents  had been duly signed by the defendants. 11. Mr. Sharma further argued that the court  below had failed to notice the fact that the plaintiff had proved the duly  certified copy of the statement of account marked Ex.PW1/1 and that the said  statement was admissible in evidence by itself without any further proof.  The court had also, according to the learned counsel, failed to notice that the  plaintiff had been permitted to produce secondary evidence by order  dated 8th December, 1999 in view of the fact that the original documents had been lost and could not,  therefore, be placed on record. The statement of Sh. R.C. Poria, the certified  copy of the statement of account showing a debit balance as on the date  of the institution of the suit and the documents filed on record pursuant  to the order of the trial court dated 8.12.99 coupled with the failure of the  defendants to lead any evidence to show that the same were signed blank had,  according to the learned counsel, made out a case for passing a decree in favour  of the plaintiff. 12. On behalf of the respondents, it was on the  other hand argued that the evidence on record was insufficient to justify a  decree and that the trial court was correct in holding that the plaintiff bank  had not proved the execution of the documents on the date they were alleged  to have been signed and executed. 13. We have given our anxious consideration  to the submissions made at the bar and perused the record.  The statement of PW-1 Sh. R.C. Poria not only proves the authority of Sh. C.D. Kashyap to  sign and verify the plaint but also a certified copy of the statement marked Ex.PW1/1.  The defendants did not, as noticed earlier, produce any evidence in rebuttal.  None of them appeared even to support the theory that the documents in question  on which the signatures were admitted had been signed while the same were blank.  The result was that the allegation that the documents relied upon by  the plaintiff had been signed while they were still blank remained unsubstantiated.  The onus of issue No. 1 framed on the basis of that  allegation was clearly upon the defendants.  This implied that in case defendants failed to prove  the allegation, the documents would betaken as  having been executed on the dates on which  they purport to have been executed.  There was, therefore, no option but to hold  issue No. 1 against the defendants.  The necessary corollary from that  finding would be that the documents had been executed not on the  date and in the manner alleged by the defendants, but as the documents themselves  purported to have been executed. Such being the position, there was no room for  dismissing the suit filed by the plaintiffs. The documents relied upon by the  plaintiffs supported by the certified copy of the statement of account  constituted sufficient proof for the plaintiff to succeed in its claim.  Section 4 of The Bankers Evidence Act, 1891 makes a certified copy of the statement of  account admissible in evidence without any formal proof. It reads : 4. Mode of proof of entries in banker's books ?  Subject to the provisions of this Act, a certified copy of any entry in a banker's  book shall in all legal proceedings be received as prima facie evidence  of the existence of such entry, and shall be admitted as evidence of the matters,  transactions and accounts therein recorded in every case where, and to the  same extentas, the original entry itself is now by law admissible,  but not further or otherwise. 14. In the light of the above, the suit filed by  the plaintiff ought to have been decreed against the defendants  jointly and severally. In as much as the court below took a different view,  it committed a mistake that needs to be corrected in appeal. 15. In the result, we allow this appeal; set aside  the impugned judgment and decree the suit filed by the plaintiff for a  sum of Rs.1,96,834 with interest @ 6% pendente lite and till realization.  The plaintiff shall beentitled to the costs  of the suit also.  We further direct that the plaintiff shall be free  to recover the  amount in question by  sale of the hypothecated stocks and the shares pledged to the bank  by way of collateral securities. T.S. THAKUR, J S.L. BHAYANA, J. October 10, 2006