M.Y. Eqbal, J.
1. This appeal is directed against the judgment and decree dated 30.9.1999 passed by Subordinate Judge-II, Seraikella in Money Suit No. 03 of 1997 whereby the suit filed by the plaintiff-appellant for recovery of a sum of Rs. 2,75,321=48 has been dismissed mainly on the ground that the same was barred by limitation.
2. The plaintiff-Bank of India having its Adityapur branch, filed the aforementioned suit against the respondents for recovery of the loan amount together with interest taken by them. The plaintiff-appellants case inter alia was that defendant- respondent No. 2 as proprietor of defendant-respondent No. 1 M/s. Aswi Electricals, approached the plaintiff-bank for financial assistance by way of loan and cash credit facility. On the request of the respondents, the plaintiff-bank sanctioned a loan of Rs. 1,10,000/- and a cash credit facility to a limit of Rs. 60000/-. Respondent No. 2 for self and as proprietor of defendant No. 1 executed number of documents on 08.10.1987 including demand promissory notes, agreement of hypothecation, continuing security, letter of lien, agreement of guarantee, etc. Defendant-respondent No. 3 became the surety and executed letter of continuing guarantee in favour of the Bank. The plaintiff's further case was that the defendants defaulted in liquidating the amount taken from the Bank. The plaintiff by notice dated 24.10.1997 requested the respondents to repay the outstanding dues, but the latter did not pay any heed. Further case of the plaintiff was that the respondents executed letters of acknowledgement acknowledging their liability, but they have not liquidated the dues. Hence, suit was filed.
3. The defendants-respondents contested the suit by filing written statement. The defendants' case was that the suit as framed was not maintainable as because the plaint was not properly signed and verified. They have admitted the taking of loan and execution of documents in favour of the plaintiff-Bank, but according to the defendants, neither they have received any notice from the bank nor they have acknowledged their liability. The defendants' case is that the signatures of the respondents were obtained in blank documents which have been used as per the convenience of the bank.
4. The trial Court framed as many as 11 issues which are as under:
1) Is the suit as framed maintainable?
2) Has the plaintiff got any valid cause of action for the suit?
3) Is the suit time barred?
4) Has the plaint been properly signed and verified by competent person according to the provisions of Order 6 Rules 14 and 15 of the C.PC?
5) Whether the suit is barred under Order. 7 Rule 4 C.P.C.?
6) Whether the defendants executed properly and legally documents in favour of the plaintiff Bank to secure the aforesaid two loans from the plaintiff Bank?
7) Is the statement of account correct?
8) Whether the suit is barred under the provisions of Section 10 of Indian Contract Act?
9) Whether the plaintiff Bank in collusion with B.S.F.C. violated the order of Hon'ble Court passed in C.W.J.C. No. 111 of 1998(R)?
10) Whether the plaintiff is entitled to a decree for the amount claimed with interest and other charges pendente lite and future till realisation?
11) To what other relief or reliefs any the plaintiff is entitled to get?
5. Issue No. 3 regarding limitation has been discussed at length by the trial Court and finally came to the conclusion that the suit was barred by limitation.
6. Mr. A. Allam, learned Counsel appearing for the appellant-Bank assailed the impugned judgment and decree as being illegal, contrary to facts on record and is wholly without jurisdiction. Learned Counsel submitted that the defendants-respondents have not disputed rather admitted the grant of loan and cash credit facility and execution of documents. The Court below has committed serious illegality insofar as it held that these documents cannot be relied upon as the signatures of the respondents did not bear any date below the signature in the said document. Learned Counsel submitted that the Court below has committed grave error of law in holding that the suit was barred by limitation.
7. Mr. Anoop Kumar Mehta, learned Counsel for the respondents, on the other hand, submitted that these documents which were the basis of the suit were not filed along with plaint nor any leave was taken to file these documents at a later stage. Learned Counsel submitted that the letters of acknowledgement proved by the plaintiff-Bank particularly Ext.8/b cannot be relied upon in view of the finding recorded by the trial Court
8. First of all, I will discuss the finding recorded by the trial Court on issue No. 3.
9. The trial Court found that the last transaction in the account was made on 31.8.1993 and the suit was filed in the year 1997. The trial Court further noticed the averments made in the plaint that the defendants executed letters of acknowledgement on various dates including 09.3.1996. The statement of account was exhibited as Ext.11. All the documents including letters of acknowledgment executed by the respondents were proved and marked exhibits in the suit. On the letters of acknowledgement (Exts.8 to 8/C), the trial Court recorded the following findings:
21. Acknowledgment of liability merely renews the statement or statements on which the plea of acknowledgement is based most relating to a present subsisting liability. The acknowledgement must be before the claim has become time barred and that is the prescribed period. Exts. 8 to 8/c have been marked with objection. These three documents are acknowledgement of debt securities said to have been executed by the defendants in favour of the plaintiff Bank. Ext.8 is said to have been executed by defendant No. 3 on 25.7.90, there is no date below his signature. Moreover, many spaces have been left unfilled. Ext.8/a is the an other acknowledgement of debt security dt. 10.7.93 said to have been executed by defendant No. 3 S.P. Singh in favour of the plaintiff Bank. Many of the spaces in it have been left unfilled and there is no date below the signature of S.P. Singh defendant No. 3. Ext.8/6 is the another acknowledgement of debit security said to have been executed by S.P. Singh defendant No. 3 on 9.6.96. Many of the spaces in it have been left unfilled. Moreover it has been written as 'Asu Electrical'. Ext.8/c is the another acknowledgement of debit of the security said to have been executed by Rekha Singh defendant No. 2 on 25.7.90. In it also many spaces have been left unfilled and also there is no date below the signature of Rekha Singh.
22. This suit was filed on 17.11.97. The plaintiff Hank has heavily relied on Ext.8/b dt. 9.3.96 that it has been executed by the defendant No. 2 and so it is said that the suit is within time. I have already said above that there is no date below her signature in Ext.8/b. As noticed above, the defendants have alleged that their signatures were obtained by the plaintiff bank in numerous printed forms of the Bank and those documents have been converted for the purpose of the suit. Now it has to be seen whether the allegations of the defendants have been controverted and denied by the plaintiff Bank or not. B.N. Patil, P.W.1 is the Deputy Manager of the Plaintiff Bank. He has proved Exts. 1 to 11 filed by the plaintiff Bank. He has stated in para-10 of his evidence that acknowledgement of debt and security (Ext.8) was filled up by Goutam Day which bears the signature of Rekha Singh and S.P. Singh. He has further stated that another acknowledgement of debt and security Ext.8/a was filled up by N.R. Pochari Manager and it bears the signature of defendants 2 and 3. He has further stated that Ext.3/b was filled up by B.B. Ray which bears the signature of Goutam Day and defendant Nos. 1 and 2. Ext.8/b has been seriously challenged by the defendants and it is dated 9.3.96. If Ext.8/b is genuine and valid acknowledgement of debt by defendants 2 and 3, then the suit will not be barred by limitation. P.W.1 has submitted in para. 18 of his evidence in cross examination that acknowledgement Exts.8 to 8/c were not filled upon, signed and executed in his presence. He has admitted that there is no date below the signatures of the executants in any document. He has nowhere stated and denied that the acknowledgement of debt and security (Ext.8 to 8/c) were properly filled up by the officials of the Bank, as the instance of defendant Nos. 2 and 3 and the contents of which were explained to them. He has also not stated that the defendants themselves read the contents of Exts.8 to 8/c. He has also not stated as to why the dates were not given below their signatures in Exts.8 to 8/c. In my opinion the allegation of defendants that they were asked to put their signatures in numerous blank and unfilled papers go unchallenged and unrebutted. In my opinion Ext. particularly Ext.8/b is anti dated N.R. Pochari who is said to have been filled up Ext.8/b has not been examined nor it has been said that he is no more in service. P.W.1 has wrongly stated that Ext.8/b was executed on 10.9.96 because it bears the dated as 9.3.96.
10. It is also worth to quote here para-24 of the judgment which is the concluding portion of the finding arrived at by the trial Court on issue No. 3:
24. In this connection it is necessary to examine the statement of account. Earlier the statement of account was filed for Rs. 3,22,396. or paisa. I have already stated above that the defendants in their W.S. in paras 7 and 6 have alleged that the statement of account was not filed along with the plaint and the statement of the account was filed later on after the filing of W.S. by them on 22.3.99 and after the amendment of the plaint they filed Addl. W.S. stating in para-2 (D) that certified copy of the statement of account bears no date as to when it was prepared The learned Counsel for the defendants has submitted that from the perusal of the C.C. it appears that the last transaction took place in between the parties lastly on 31.8.93 and from that date the suit is time barred. The statement of account Ext.11 has been marked ext. with objection and the last transaction took place between the parties on 31st August 1991 and not on 31.8.93. Ext.11 does not bear the date as to when it was prepared by the Bank Manager. The notices Exts.12 and 12/a have been refused to have been received by the defendants. Though postal receipts 13 and 13/a have been filed but A/D has not been filed therefore even if it is assumed that the notices were served on the defendants, then also the suit was barred on 20.10.97 from 31.8.91. It is a settled principle of law that when a person says that I have signed a blank paper the onus is on the other side to prove by cogent evidence that he or she has signed a filled up paper. Plaintiff has not discharged its onus that deft No. 2 signed and executed Ext.8/b duly. No official of the plaintiff-Bank who filled it has not been examined to deny the allegation of the defts with regard to Ext.8/b.
11. From perusal of the findings recorded by the Court, it is evidently clear that the Court below did not rely on these documents on the ground that there are many spaces in the documents left unfilled and there is no date below the signature of the respondents. The Court below further held that the letters of acknowledgement were not filled up at the time when the defendants put their signatures. On these grounds, the suit was dismissed. In my view, the Court below has committed grave error of law in dismissing the suit on the aforesaid grounds.
12. At this stage, I would first like to refer Section 20 of the Negotiable Instruments Act, 1881 which reads as under:
20. Inchoate stamped instruments,--Where one person signs and delivers/to another a paper stamped in accordance with the law relating to negotiable instruments then in force in 15 and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima fade authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount: provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.
13. From perusal of the aforesaid provision, it is manifestly clear that the provision confers an authority to the holder of the instrument to make or complete the instrument. It is well settled that when the negotiable instrument contains a date, then it shall be presumed that those instruments have been executed on the same date. Merely because the executant of the document has not put the date below his signature does not take away the right of the holder of the document to recover the amount from the persons who have signed those documents.
14. Similarly, Section 118 gives a presumption as to the negotiable instrument. Section 118 reads as under:
118. Presumptions as to negotiable instruments.--Until the contrary is proved, the following presumptions shall be made:
(a) of consideration.--that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
(b) as to date.--that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance.--that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(d) as to time of transfer.--that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of indorsements.--that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stamp--that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course--that the holder of a negotiable instrument is a holder in due course:Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
15. It is, therefore, clear that every negotiable instrument is made or drawn for consideration. The presumption is based upon the principle and not on a mere technical provision. In the case of Bharat Barrel and Drum Manufacturing Co. v. Amin Chand Pyarelal 1999(2) Bank CLR 334 (SC), the Supreme Court after considering various decisions held as under:
12. Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can he either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist. We find ourselves in the close proximity of the view expressed by the Full Benches of the Rajasthan High Court and the Andhra Pradesh High Court in this regard.
16. From perusal of the impugned judgment, it further appears that the Court below has further committed grave error of law in holding that the onus is on the holder of the instrument to prove by cogent evidence that he or she has signed a filled up paper. The Court further committed error in holding that the plaintiff-Bank has not discharged its onus. The aforesaid findings arrived at by the Court below also cannot be sustained in law.
17. In the result, the findings on issue No. 3 that the suit is barred by limitation cannot be sustained in law. I further find that issue No. 9 has also not been correctly decided by the Court below having regard to the fact that no evidence, oral or documentary, were adduced by the defendants-respondents showing that the appellant was also party to the taking over of the unit by the Bihar State Financial Corporation.
18. Besides the above, admittedly, defendant-respondent No. 3 executed a continuing guarantee giving an undertaking to pay the amount that may be found due against the borrower. No evidence was led by the defendants-respondents that either the loan account or the cash credit account against which a continuing guarantee was given became dead. In such circumstances, the limitation will run from the date when the respondents refused to pay the dues. In the case of Margaret Lalita Samuel v. Indo Commercial Bank Ltd. : [1979]1SCR914 , their Lordships observed as under:
10. We may first consider the question of limitation. As already mentioned by us, the submission of Shri Bal was that every item of an overdraft account was an independent loan, limitation for the recovery of which was determined by Article 57 of the schedule to the Limitation Act, 1908. Limitation, according to the learned Counsel, started to run from the date of each loan. He relied on Basanta Kumar Mitra v. Chota Nagpur Banking Association Ltd; Brojendro Kishore Roy Chowdhary v. Hindustan Cooperative Insurance Society Ltd. National and Grindlays Bank Ltd. v. Tikam Chand Daga and Uma Shankar Prasad v. Bank of Bihar Ltd. In our view it is unnecessary for the purposes of the present case to go into the question of the nature of the overdraft account. The present suit is in substance and truth one to enforce the guarantee bond executed by the defendant. In order to ascertain the nature of the liability of the defendant it is necessary to refer to the precise terms of the guarantee bond rather than embark into an enquiry as to the nature of an overdraft account. Ex. 57 is the guarantee bond executed by the defendant and her husband on October 23, 1944. It is addressed to the Indo Commercial Bank Ltd, Madras, and is in the following terms:
Dear Sirs,
In consideration of your having agreed to allow overdraft accommodation up to Rs. 10,00,000 (Rupees Ten Lakhs only) to the Modern Hindustan Food Products Ltd., Poona, We, C.B. Samuel and M.L. Samuel, the undersigned do hereby jointly and severally guarantee to you, the Indo Commercial Bank Limited the repayment of all money, which shall at any time be due to you from the said Modern Hindustan Food Products Ltd., on the general balance of their accounts with you or on any account whatever such balances to include all interest, charges, commission and other expenses which you may charge as bankers and also the due payment at maturity of any promissory note or other negotiable instrument on the security or in respect of which any credit or advance shall be made.
And we hereby declare that this guarantee shall be a continuing guarantee to the extent at any one time for Rs. 10,00,000 (Rupees Ten Lakhs only) and shall not be considered wholly or partially satisfied by the payment at any one time or at different times of any sums of money due on such general balance of account but shall extend and cover and be a security for every and all further sums at any time due to you thereon. And we further declare that you may grant to the Modern Hindustan-Food Products Ltd., any indulgence without discharging our liability.
The guarantee is seen to be a continuing guarantee and the undertaking by the defendant is to pay any amount that may be due by the company at the foot of the general balance of its account or any other account whatever. In the case of such a continuing guarantee, so long as the account is a live account in the sense that it is not settled and there is no refusal on the part of the guarantor to carry out the obligation, we do not see how the period of limitation could be said lo have commenced running. Limitation would only run from the date of breach under Article 115 of the schedule to the Limitation Act, 1908. When the Bombay High Court considered the matter in the first instance and held that the suit was not barred by limitation, J.C. Shah, J., speaking for the Court said:
On the plain words of the letters of guarantee it is clear that the defendant undertook to pay any amount which may be due by the Company at the foot of the general balance of its account or any other account whatever.... We are not concerned in this case with the period of limitation for the amount repayable by the Company to the bank. We are concerned with the period of limitation for enforcing the liability of the defendant under the surety bond.... We hold that the suit to enforce the liability is governed by Article 115 and the cause of action arises when the contract of continuing guarantee is broken, and in the present case we are of the view that so long as the account remained live account, and there was no refusal on the part of defendant to carry out her obligation, the period of limitation did not commence to run. ' We agree with the view expressed by Shah, J. The intention and effect of a continuing guarantee such as the one with which we are concerned in this case was considered by the Judicial Committee of the Preview Council in Wright v. New Zealand Farmers Cooperative Association of Canterbury Ltd. The second clause of the guarantee bond in that case was in the following terms:
This guarantee shall be a continuing guarantee and shall apply to the balance that is now or may at any time hereafter be owing to you by the William Nosworthy and Robert Nosworthy on their current account with you for goods-supplied and advances made by you as aforesaid and interest and other charges as aforesaid. A contention was raised in that case that the liability of the guarantor was barred in respect of each advance made to the Nosworthys on the expiration of six years from the date of advance. The Judicial Committee of the Privy Council expressed the opinion that the matter had to be determined by the true construction of the guarantee. Proceeding to do so, the Judicial Committee observed (at p. 449):
It is no doubt a guarantee that the Association will be repaid by the Nosworthys advances made and to be made to them by the Association together with interest and charges; but it specifies in column 2 how that guarantee will operate -- namely, that it will apply to (i.e. the guarantor guarantees repayment of) the balance which at any time thereafter is owing by the Nosworthys to the Association. It is difficult to see how effect can be given to this provision except by holding that the repayment of every debit balance is guaranteed as it is constituted from time to time, during the continuance of the guarantee, by the excess of the total debits over the total credits. If that be the true construction of this document, as Their Lordships think it is, the number of years which have expired since any individual debit was incurred is immaterial. The question of limitation could only arise in regard to the time which had elapsed since the balance guaranteed and sued for had been constituted Later it was again observed (at p. 450):That document, in their opinion, clearly guarantees the repayment of each debit balance as constituted from time to time, during the continuance of the guarantee, by the surplus of the total debits over the total credits, and accordingly at the date of the counter-claim the Association's claim against the plaintiff for payment of the unpaid balance due from the Nosworthys, with interest, was not statute-barred.
19. Having regard to the principle laid down by the Supreme Court, the suit filed by the plaintiff-appellant ought not to have been dismissed on the ground of limitation and on other grounds.
20. For the reasons aforesaid, this appeal is allowed and the impugned judgment and decree passed by the Court below is set aside.
21. Consequently, the suit is decreed.
22. However, in the facts of the case, there shall be no order as to costs.