Judgment:
K. Ramamoorthy, J.
(1) Suit No. 495/80 is filed by M/s National Marketing Company and the second plaintiff is the proprietor of the concern against the three defendants i.e. defendant No. I Bank of India, Chandi Chowk, Delhi, defendant No. 2 Delhi Faridabad Textile (P) Ltd. and defendant No. 3 is Shri B.M. Jain. The suit is for recovery of Rs-1,87,075.00 from the first defendant (Bank of India) and Rs. 1,37,075.00 from defendants 2 and 3.
(2) Suit No. 458/81 is filed by the Bank of India against three defendants, i.e. defendant No. I M/s National Marketing Company, defendant Nos. 2 and 3 are the partners of defendant No. I, for recovery of Rs. 2,19,740.94.
(3) I do not propose to set out the pleadings in the two cases because it is wholly unnecessary to put burden on this judgment with the averments in the pleadings which have absolutely no relevance in deciding the issues between the parties.
(4) The fact that the National Marketing Company had dealings with Bank of India is not disputed.
(5) The parties had led evidence in Suit No. 495 / 80 and the documents had been marked.
(6) In Suit No. 458/81 the plaintiff has filed the documents Exhibits P-l to P- 8 which would show the dealings between the parties and in particular Exhibit P- 8 the statement of account would show the liability of the National Marketing Company to the Bank of India. The statement of account is also duly certified by an officer of the Bank.
(7) 7. Exhibit Dwi /1 is a copy of the power of attorney issued by the Bank of India in favor of Mr. Ganesh Pandharinath Jategaonkar. (8) Public Witness I /1 is the partnership deed dated May 16,1978 between the defendants. Pw 1/10 is the letter dated 31.3.1979 from the Bank of India to M/s. National Marketing Company requesting for regularizing the account within 15 days. Exhibit Public Witness 1/11 is the letter dated October 15,1979 from M/s. National Marketing Co. to the Bank of India to reverse the entry made by the Bank. Exhibit Public Witness I/12 is a letter dated 17.10.1979 from the Bank of India to M/s. National Marketing Co. stating in the following terms;
YOU are indebted to the Bank to the amount of Rs. 1,68,855.61 as on 16.10.1979, it is imperative for the Bank to have the goods insured and as such entry cannot be reversed by us. As regards to your letter dated 23.4.1979, we have advised earlier orally that the matter has been referred to our higher authorities and it is still under consideration with them. We observe that you have neither submitted any stock statement nor operated upon your account since long. We again request you to regularize submission of stock statements and your account with us.
Exhibit Public Witness 1/13-is a letter dated 5.11.1979 from the Bank of India to the National Marketing Company requesting the latter to regularize the accounts and also requesting the Company to execute stamped document for the change of rate of interest and requesting all partners to execute the document. Exhibit Public Witness 1/14 is the letter dated 26.12.1979 by the Bank of India to the National Marketing Company sending a reminder to the Company to comply with the request made earlier.
(9) Exhibit PW1 /8is a notice dated 12.5.1980 from the Counsel of M/s National Marketing Co. to the Bank of India that between 6.5.1977 and 11.6.1977 the Company lodged with the Bank cheques drawn on Bank of India, Faridabad Branch to the value of Rs. 1,49,196.36 giving details of the cheques and the amounts in the following terms:
S.No. Ch.No. Value of Lodged date of date of the Ch. on cheque return 1. 0183511 6948.75 6.5.77 7.5.77 3.6.77 2. 0183517 10907.92 7.5.77 9.5.77 3.6.77 3. 0183518 10000.00 9.5.77 10.5.77 3.6.77 4. 0183519 10000.00 10.5.77 11.5.77 3.6.77 5. 0183520 11000.00 13.5.77 14.5.77 3.6.77 6. 0183521 9000.00 14.5.77 16.5.77 3.6.77 7. 0183522 9686.68 16.5.77 17.5.77 3.6.77 8. 0183544 11000.00 16.5.77 17.5.77 3.6.77 9. 0183545 11000.00 18.5.77 19.5.77 8.6.77 10. 0183546 11000.00 19.5.77 20.5.77 8.6.77 11. 0183547 11000.00 20.05.77 21.5.77 8.6.77 12. 0183550 10372.26 24.05.77 25.5.77 8.6.77 13. 0183591 8803.00 07.06.77 8.6.77 23.6.77 14. 0172190 8772.74 09.06.77 10.6.77 23.6.77 15. 0172191 9705.01 11.06.77 13.6.77 23.6.77
According to the National Marketing Company, there was negligence on the part of the Bank and, thereforee, called upon the Bank of India to pay a sum of Rs. 2,12,075.00 towards damages, by the document marked (C) dated 14.7.1980 the Union Bank of India had written to the National Marketing Company requesting it to get a No Objection Certificate from the Bank of India. The document marked B is a letter.from National Marketing Company to the Union Bank of India relating to the above request of the National Marketing Company. Why I am referring to this is, owing to the attitude of the Bank of India, the National Marketing Company states that it business activities were affected and could not get any assistance from the Union Bank of India and, thereforee, the Bank of India is liable to pay damages.
(10) Mr. K. Rajagopalan, Deputy Chief Manager, Bank of India was examined as DW-1 in Suit No. 495/80 on 20th September 1991. In the chief examination Mr. K. Rajagopalan would speak about the transaction between the Bank of India and M/s National Marketing Company and has also would prove the documents. He would also speak about the clearance of cheques given to the Bank from out-station. He states that ' Ex. Pi to P-7 were executed by M/s National Marketing Company and its partners Shyam Sunder Goela and Rajeev Goela in my presence. All the documents bear my initials. I tender in evidence the duly certified statement of account Ex. P-8 (I to 87). The statement of account shows the amount due to the Bank from the National Marketing Company. The statement includes the interest which had accrued from the National Marketing Company and its partners. The rate of interest had been revised from time to time. In the case of out station clearings the clearing is generally obtained in a month's time. In the present case the cheques of M/s National Marketing Company were send by debit notes to our Faridabad Branch and the National Marketing Company was credited with the cheque amount. Ordinarily the party is not allowed to draw against uncleared cheques unless the fate advise is received but in this case we had afforded the facility of crediting the amount before actually knowing the fate of those cheques. This credit was given in the cash credit facility. I do not remember whether at the time when the cheques were presented or the amounts were credited National Marketing Company was a proprietorship concern or a partnership-firm.' He was very elaborately cross-examined by the learned Counsel for M/s National Marketing Company..He was also asked about Exhibit DW-I / Pa a Newspaper advertisement issued by the Bank of India about the swift collection of amounts in respect of outstation cheques. The thrust of the cross-examination is that the Bank of India had committed an error in not collecting the amount for the cheques or informing the National Marketing Company about the dishonour of the cheque, which had occasioned loss to the National Marketing Company. It is also attempted to show that owing to the delay on the part of the Bank of India' M/s National Marketing Company was supplying the materials to the Delhi Faridabad Company and if due intimation had been given by the Bank of India to National Marketing Company, the said Company would not have supplied materials, to that Company. The witness states in the cross-examination in the following manner:
I have seen dishonoured memo EX. P15 dated 16.6.1977. It pertains to cheques Ex. P-16, P-17 & P-18. The dishonoured memo Ex. P-10 relates to cheques Ex. P-11 to P-14. The dishonoured slip Ex. P-l pertains to cheques Ex. P-2 to P-9. The bank maintained complete with regard to the out station cheques and in the said records the date of the receipt of the cheques and the date of dispatch is recorded. Generally cheque lodged by a party for out station is sent on the same day or the next day. Then said it is dispatched in a reasonable time. By reasonable time I say that within a week's time. I do not remember as to when cheques in dispute were actually received and sent for collection.
(11) A complete statement of details, when cheques were issued, when cheques were dishonoured and when intimation was given to the National Marketing Company as per the evidence of DW-I are given in the following statement given by the Bank of India.
Ex. No. Cheque Cheque Cheque Date of dispatch Date of Date of Date of Date of Date of No. of No. Amount Lodged dispatch Delayed by Receipt Dishonour dispatch Receipt ' Intimation days Rs. on to Fari- Deft-I by Fari- Memo of from of dish- intimate taken to dabad by for dabad Faridabad Faridabad on our Memo to Delt.-I. Branch Branch to Deft-I. by Deft-I Pitff. to pitff 2S P-2 0183511 6948.75 Fri Mon 3 days Defl.l Sat. Defl.l Fri 06.5.77 09.5.77 failed 28.5:77 failed failed 03.6.77 27 F-3 0183517 10907.92 Sat Tiles 3 days to -do- to to -do- 07.5.77 10.5.77 produce produce produce 2S P-4 0183518 101100.00 Moil Wed 2 days records -do- records records -do- 401 24 P-5 0183519 10000.00 105.77 -do- 1day -ilo- -do- -do- -do- -do- Tues 21 P-6 0183520 11000.00 Fri Fri Nil -do- -do- -do- -do- -do- 135.77 13.5.77 20 P-7 0183521 9000.00 Sat Tues 3 days -do- -do- -do- -do- -do- 14.5.77 175.77 18 P-g 0183522 9686.68 Mon -do- Iday -do- -do- -do- -do- -do- 165.77 18 P-9 0183544 11000.00 -do- -do- Iday -do- -do- -do- -do- -do- P-l Dishonour memo dt.285.77 issued by Faridabad Branch pertaining to 8 equals P-2 to P-9 Rs.78543.35p. 21 Pjii 018354S 11000.00 Wed 'Iliurs Iday -do- Wed -do- -do- Wed 185.77 195.77 01.6.77 8.6.77 20 P-12 0183546 11000.00 Thins Fri Iday -d -do- -do- -do- -do- 195.77 205.77 19 P-13 0183547 11000.00 Fri Man 3 days -do- -do- -do- -do- -do- 205.77 235.77 15 P-14 0183550 10372.26 Tues DeftJ -do- -do- -do- -do- - -do- 245.77 failed to produce record P-IO Dishonour memodt.l .6.77 pertaining to Pitffs A/c 4 cheques P-ll to P-14 worth Rs.43,372.26p. debited by DeftJ on 14 P-16 0183591 8803.00 Tues -do ^o- Thurs -do- Tues 23.6.77 07.6.77 16.6,77 21.6.77 Thurs 12 P-17 01721 W 8772.74 Thurs -do- -do- -do- -do- -do- -do- 09.6.77 W P-18 0172191 9705.01 Sat. -do- -do- -do- -do- -do- -do- -do- 11.6.77 P-IS Dishonour inenio dt 16.6.77 pertaining to 3 cheques P-l 6 toP-18 worth Ks. 27,280.75p.
(12) He had categorically stated that the time for clearance had taken a reasonable time and nobody could be blamed for the delay. Whenever the outstation cheques come for collection normally they take sometime and intimation cannot be given to the Bank immediately. On that score the witness would state, it cannot be said that there was any collusion between the Bank of India and the Faridabad Branch and the party who had drawn the cheque in favor of the National Marketing Company. The witness was also asked about PW-1/20 the letter dated 19th August, 1978 wherein the National .Marketing Company had stated that the Bank had not taken any steps in presenting the cheque to the drawer immediately on presentation and on that account M/s National Marketing Company incurred loss. The letter dated 12.7.1978 written by the Bank of India to M/s. National Marketing Company marked as DW1/PB wherein the Bank of India had written in the followingmanner:
TWO cheque bearing N.No. 175590forRs. 15887.95and 175591 for Rs-7084.17 drawn on Bank of India, Faridabad deposited by you for the credit of your cash credit A/c on 15.2.1977.. your cash credit account was credited with Rs. 22972.12 for the captioned cheques arid these cheques were sent to our Faridabad Branch for the realization thereof. But sometime back we came to know from our Faridabad Branch that they did not receive any cover containing the said cheques so the account of drawers of the cheques could not be debited. Earlier also we had asked you over the telephone and in person in this matter. We request you to make your sincere efforts in getting the duplicate cheques from your party in Faridabad and authorise us to debit your account with us. We hope the other party will not hesitate in giving duplicate cheques to you, as their account has not been debited so far. Please pursue the matter with your party.
(13) The witness had also denied that the Bank was negligent and careless in despatching the cheques and in following up their clearance or in ultimately intimating about the dishonour of the cheques. A question was put to the witness that on account of the delay the National Marketing Company continued supplying the goods to defendants 2 and 3 in Suit No. 495/80. The witness said that no delay was caused on the part of Bank. No assurance was given to the firm that the cheques would be cleared. It was for the Company to decide as to how it would deal with cheques. The Bank had nothing to do with the dealings of the Company with its own customers.
(14) Mr. S.S. Goela the second plaintiff in Suit No. 495/80 was examined on 25.9.1991 after Mr. K.Rajagopalan was examined as DW-1. Mr. Goela would state:
I used to lodge those cheques with the defendant-Bank Chandni Chowk Branch where the plaintiff firm had an account. The defendant-Bank used to give me credit facility for the cheques so lodged even before their clearance. The cheques in suit were the cheques given by defendants 2 and 3 to me towards the price of the goods supplied. The details of those cheques, their dates and dates of their lodging with the defendant-Bank are mentioned in the plaint and the same are correct. With regard to the cheques a dispute after the lodging of those cheques I used to remain in constant touch with Mr. Bhardwaj who was the then Manager of the defendant Bank, Chandni Chowk Branch and with Mr. K. Rajgolapan, DW. In respect of all these cheques I used to enquire from them almost every day and I was assured by both of them that after nothing had been heard about the cheques for about 7 days they should have taken to have been cleared and that I should proceed taking them as having been cleared. Plaintiff- firm usually used to wait for a week after the lodging of the cheques and on assurance from the persons named above that the cheques be taken to have been cleared I used to make further supply to defendants 2 and 3. Had I not been assured that the cheques should have taken to have been cleared I could not have made further supply to defendants 2 and 3.'
According to him, he was not intimated about the dishonoured cheques in a reasonable time and there was inordinate delay. He would admit Exhibit P-l to P-7. According to him the delay was caused intentionally by the defendant-Bank as its Faridabad Branch was in collusion with defendants 2 and 3. He would also speak about Exhibit PW1 /8 which was given in 1980. He also states that because of the act of the Bank of India he could not get credit facility from the Union Bank of India. He would also admit that Exhibits PW1/10 to PWI/14 are correct. He is claiming, according to him, damages on account of negligence on the part of the Bank. He would also state in the examination in Chief that he did not receive any intimation about the change in the rate of interest. He would also speak about Exhibit PW1/15 postal receipt and Public Witness 1/16 for giving notice to the Bank of India to produce a few documents. In the cross-examination he would admit ' whatever arrangements we had with regard to the accounts and the clearance of the cheques that was only with the Chandni Chowk Branch of the defendant-Bank'. We have no understanding with Faridabad Branch of the defendant-Bank. He also admits that he was regularly getting the copies of the accounts of the partnership firm.He further admits that ' at the time when the proprietorship concern became a partnership concern there was a outstanding'. Then the witness voluntarily says 'the witness has volunteered that it was with regard to dishonour of cheques.' He would also admit that 'the old balance of Rs. l,42,000.00 was brought over to the partnership-firm.'
(15) On 18.11.1982 this Court framed the following issues in S. No. 495/80:
(1)Whether the plaintiffs have no locus standi or right to raise any dispute pertaining to any debits or credits having been effected in the sole proprietorship concern up to April 18, 1978? OPD? (2) Whether the plaintiff is entitled to recover a sum of Rs. 71,450.84 or any other lesser amount from defendant No. 2 as the price of the goods supplied? O.P.D. (3) Whether defendant No. 3 has given a personal guarantee for the payment of the amount due from defendant No. 2? If so, to what effect? Opp (4) Whether the plaintiff is entitled to the grant of interest against defendants 2 and 3? If so, at what rate? Opp (5) Whether defendant No. I was negligent in not presenting 15 cheques mentioned in para 9 of the plaint on time and also in not intimating the effect of the cheques promptly? If so, to what effect? Opp (6) Whether there was any collusion or connivance of defendant No. I with defendants 2 and 3? If so, to what effect? Opp (7) Whether the plaintiff is entitled to recover any damages against defendant No. 1? If so, to what amount? Opp (8) Whether the plaintiff is entitled to recover interest against defendant No. 1? If so, at what rate? Opp (9) Relief.
(16) The learned Counsel for the parties have filed their respective written submissions. I have perused the same.
(17) Suit No. 495/80 has been filed by M/s National Marketing Company & Anr in anticipation of the suit that may be filed by the Bank of India for recovery of money due and the claim against the Bank of India for damages is totally frivolous one. There is nothing on record to show that the Bank of India, the first defendant, was in anyway responsible for the delay in intimation to the plaintiff about the dishonour of the cheques. The obligation for clearance of the cheques drawn by the second defendant is obviously on the second defendant. When the second defendant had not provided sufficient funds in his Bank and cheques were dishonoured on that account the plaintiff cannot seek any damages from the Bank of India. The statement showing the details would show that there was no delay on the part of the Bank of India in informing about the dishonour of the cheques. The argument on behalf of the plaintiff that if the Bank of India had kept National Marketing Company informed about the dishonour of cheques the plaintiff would not have had any further dealing with the second defendant is not at all tenable. When the plaintiff had dealings with the second defendant, the plaintiff must have taken care to see that the second defendant behaved properly and if the second defendant is guilty of any act of omission or commission the plaintiff cannot seek to fasten liability on the Bank of India. There is no material produced by the plaintiffs to show the negligence on the part of Bank of India. Several cheques were presented by the plaintiff and money had been collected on those cheques. With reference to cheques issued to the second defendant, they were dishonoured. thereforee, I am not able to accept the case of the plaintiff that there is any negligence on the part of Bank of India. thereforee, the Bank of India is not liable to pay damages. Issue No. 5 is answered against the defendant and in favor of the Bank of India. Issue No. 6 is about the collusion between the first defendant and defendants 2 and 3. There is absolutely no evidence adduced by the defendants and accordingly this issue is answered in favor of the first defendant and against the plaintiffs. Issue No. 7 is also answered in favor of the first defendant and against the plaintiffs. Issue No. 8 is with reference to the claim of interest against the first defendant. In view of my findings in the main issue, this issue is also found in favor of the first defendant and against the plaintiffs.
(18) So far as the claim of the plaintiffs against defendants 2 and 3 is concerned, there is no difficulty because defendants 2 and 3 have been set exparte. PW-1 Mr. Goela has stated in his evidence spoken about the transaction and has also proved the documents Public Witness 1/2 dated 18.5.1977, Public Witness 1/5 dated 30.7.1977, Public Witness 1/3 dated 17.1.1970, Public Witness 1/9 statement showing the money due from the second defendant, Pw 1/6 dated 30.7.1978 wherein defendants 2 and 3 had accepted their liability to the plaintiff, Public Witness I/7 dated 1.8.1977 letter from defendants 2 and 3 to the plaintiff and Pw 1/4.
(19) On accepting the evidence of PW-1 Along with documents produced by the plaintiffs, I find that the claims of the plaintiffs against defendants 2 and 3 are proved and accordingly, I am satisfied that the plaintiffs are entitled to a decree against defendants 2 and 3.
(20) On Issue No. I in Suit No. 495/80 about the locus standi of the plaintiffs to file the suit, I find that the plaintiffs are entitled to file the suit. On Issue No. 2 about the amount that is recoverable from the second defendant and third defendant, I accept the case of the plaintiffs that the plaintiffs are entitled to sum of Rs. 1,37,075.00 from defendants 2 and 3. On Issue No. 3 whether the third defendant had given a personal guarantee for the amount due from the second defendant in the light of evidence of DW-1, the third defendant is also liable to pay the amount to the plaintiff Along with the second defendant. Issue No. 4 relates to rate of interest on the amount claimed by the plaintiff against defendants 2 and 3. The plaintiff has claimed rate of interest @ 24% per annum on a sum of Rs. l,37,075.00 from the date of the suit till the date of realization. Though the transactions are commercial in nature the rate of interest claimed by the plaintiff is on the higher side and in the interest of justice, I feel that the rate of interest could be fixed @ 15% per annum from the date of the suit till the date of realization. Accordingly, there shall be a decree in suit No. 495/80:
(A)dismissing the suit of the plaintiffs against first defendant Bank of India; (b) Directing the plaintiffs to pay to the 1st defendant the costs of the suit; (c) Directing defendants 2 and 3 to pay to the plaintiff a sum of Rs. 1,37,075/ - with interest @ 15% per annum from the date of suit till the date of realization; (d) Directing defendants 2 and 3 to pay costs of the suit to the plaintiffs.
(21) This Court has framed the following issues in Suit No. 458/81:
(1)Whether the suit is liable to be stayed because of the pendency of Suit No. 495/80? Opp (2) To what amount is the plaintiff entitled towards the amount advance to the defendants in the cash credit facility? OPD (3) What is the agreed rate of interest between the parties in the cash credit facility? Opp (4) Relief.
(22) Issue No. I relates to the stay of suit No. 495/80. That is no longer necessary in view of the disposal of the suit No. 495/80. Issue Nos2 and 3 relate to the amount due to the plaintiff-Bank and also the rate of interest.
(23) As already mentioned earlier the plaintiff-Bank has filed the statement of account i.c. Exhibit P-8 and the same has not been disputed and thereforee, the plaintiff is entitled to claim the same in the suit. The plaintiff. Bank of India claimed interest @ 18.35% per annum from the date of filing of the suit till the date of realisation. I do not find any reason as to why the interest claimed by the plaintiff should not be granted. The defendants should have thought over the matter before dragging the Bank of India to Court for filing a suit of damages and also protracting the proceedings without paying the money borrowed from the Bank of India. thereforee, I am of the view that the plaintiff-Bank of India, is entitled to interest @ 18.35% per annum on the sum of 2,19,740.94.
(24) Accordingly, there shall be a decree in Suit No. 458/81:
(A)directing the defendants to pay to the plaintiff a sum of Rs. 2,19,740.94 with interest @ 18.35% per annum on that amount from the date of suit till the date of realisation.
(B)directing the defendants to pay the costs of the suit to the plaintiff.