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 | 
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