i.C.i.C.i. Bank Limited Vs. Dena Bank and Another - Court Judgment

SooperKanoon Citationsooperkanoon.com/1103109
CourtMumbai High Court
Decided OnDec-12-2012
Case NumberWrit Petition No.2143 of 2005
JudgeS.J. VAZIFDAR & R.D. DHANUKA
Appellanti.C.i.C.i. Bank Limited
RespondentDena Bank and Another
Excerpt:
recovery of debts due to banks and financial institutions act, 1993 - section 19 - comparative citation: 2013 (3) all mr 179s.j. vazifdar, j. respondent nos.2 and 3 are insutech india limited and one devendra tibrewala. the petitioner has challenged an order dated 25.2.2005 passed by the debt recovery appellate tribunal (drat) dismissing appeal no.180 of 2003 filed by it against an order dated 11.7.2003 passed by the debt recovery tribunal (drt) allowing o.a. no.344 of 2000 filed by respondent no.1 ordering the petitioner and respondent no.2 to pay a sum of rs.30,48,550/- with further interest at the rate of 18% p.a. on the sum of rs.28,00,000/- from the date of filing of the application till payment. 2. sangli bank limited by a scheme of amalgamation sanctioned by an order of the reserve bank of india dated 18.4.2007 in exercise of powers under section 44a(4) of the banking regulation act, 1949 amalgamated with the petitioner. respondent no.1 had filed a suit on 19.9.1996 in this court against the sangli bank limited and respondent nos.2 and 3 for recovery of the said sum, which stood transferred to the drt. 3. in september, 1995, respondent no.2 availed of an overdraft facility from the petitioner. on 22.9.1995, respondent no.2 signed and executed a demand promissory note, a letter of continuity, a letter of lien and set off and a letter of pledge. on 27.9.1995, respondent no.3 executed a personal guarantee. 4. on 17.3.1996, respondent no.2 issued in favour of the petitioner a cheque in the sum of rs.28,00,000/- towards the repayment of the amounts due under the said facility. the cheque was drawn on respondent no.1. the petitioner presented the cheque to respondent no.1 through the clearing house of the reserve bank of india. the sasoon dock branch of respondent no.1 received the cheque on 18.3.1996 as 17.3.1996 being a sunday, was a holiday. 5. it is alleged in the petition that as the said cheque was not returned by 1.00 p.m. on 18.3.1996, the petitioner presumed that the cheque was honoured and accordingly credited the account of respondent no.2 in the said sum. the petitioner alleged having posted in the loan ledger entries crediting respondent no.2's account. it is further alleged that the petitioner passed on the benefit showing that the overdraft facility granted by respondent no.2 had been fully paid. these however, are the averments in this writ petition. the written statement which was filed in this court on 18.1.2002 however, does not contain averments to this effect. the only defence in the written statement was that the cheque ought to have been returned on 18.3.1996 itself and that as the same was not returned on that day, the petitioner was entitled to presume that it had been honoured. failing to return the cheque on the same day is alleged to be an act of negligence disentitling respondent no.1 from recovering the amount on account of the cheque not having been subsequently cleared. we will refer to these averments in detail later. 6. on 19.3.1996, respondent no.1 returned the cheque. it is contended that by then the petitioner had altered its position by passing the benefits to respondent no.2. 7. we will for the purpose of this writ petition proceed on the basis that the cheque was in fact returned by respondent no.1 to the petitioner only on 19.3.1996. this in fact appears to be so. respondent no.1 by a letter dated 19.3.1996 stated that it had returned the cheque to the petitioner as the account on which it was drawn had been closed on 18.3.1996 itself but that due to internal problems at its branch it was not able to return the same in the fort area clearing. by a further letter dated 15.5.1996, respondent no.1 stated that the cheque instead of being received by the petitioner in the normal course by 6.00 p.m. on 18.3.1996, was received at 10.00 a.m. on 19.3.1996. we will therefore, presume that the cheque was received by the petitioner only on 19.3.1996. we will also presume that if the petitioner had in fact credited the second respondent's account on 18.3.1996, it would have a valid defence to the first respondent's claim, which was based on a mistake. for, as contended on behalf of the petitioner, in that case the petitioner could not be held liable for the first respondent's negligence in not having returned the cheque in time by 18.3.1996 and the petitioner having credited the second respondent's account before the receipt of the dishonoured cheque, had altered its position to its detriment. this however, was not the defence in the written statement. 8. the contention that the petitioner had credited the second respondent's account in the sum of the said cheque on 18.3.1996 and had thereby altered its position to its detriment, was not raised in the written statement. the contention in the written statement was as under :- "6. i say that the defendant no.1 presented the said cheque to the applicants through clearing house on 16.3.1996 which was received at the plaintiffs branch at sasoon dock on 18.3.1996, since the 17th march was sunday and since the cheque was not returned through the proper time zone clearing, it was deemed to be honoured as per the normal norms/rule of the bankers clearing house. the defendant no.1 had no way of knowing that the account of defendant no.2 with the applicants was closed. it is total negligence on the part of the plaintiffs to return the cheque late. the defendant no.1 cannot be penalised for the negligence on the part of the plaintiffs. the applicants are entitled to recover the amount of the cheque and interest from these defendants and their claim if any, thereon is against the defendant no.2 and/or defendant no.3. 10. with reference to para 4 of the plaint under reference these defendants state that the cheque bearing no.969201 on 17th march,1996 was not wrongly included in the micr clearing dated 16.3.1996." "the cheques lodged in micr clearing are presented the respective paying banks on next dates only and as such it has been permitted to lodge next date cheques in the micr clearing of preceding date. the 17th march 1996 being sunday the cheque was received at plaintiffs bank in the morning of 18th march, 1996. the plaintiffs ought to have returned the said instrument through fort area, return clearing on 18th march, 1996 in which case the cheque would have been received by these defendants at 1 p.m. on 18th march,1996 but instead they chose to return the cheque through micr clearing dated 18.3.1996 which in normal course is received on the next day morning i.e. 19th march, 1996. thus they were late in returning the instrument. therefore the said instrument was not accepted by these defendants as per bombay bankers clearing house rules. therefore, the act of not accepting the dishonoured cheque was not wrong on the part of these defendants but in fact the action of these defendants was very much proper, perfect and as per banker's clearing house rules. the applicants herein being bank are well aware of this procedure laid down by bombay bankers clearing house conducted by reserve bank of india." 9. it is of vital importance to note that in paragraph 8 of the plaint, respondent no.1 expressly pleaded that though the cheque was returned late by respondent no.1, the same did not cause any prejudice to the petitioner, as it had notice of the dishonour of the said cheque before commencement of the earliest time for any transaction to take place. paragraph 13 of the written statement deals with paragraph 8 of the plaint. the petitioner had not denied the averment that no prejudice was caused to it on account of the return of the cheque. there is a mere denial of the liability. 10. in this view of the matter, the averments in the plaint to the effect that the petitioner had wrongly refused to accept the dishonoured cheque is well founded. the clearing house had debited the first respondent's account in respect of the said cheque and credited the same to the petitioner's account. the petitioner had thus received the money from respondent no.1 under a mistake. absent anything else, such as negligence, the petitioner is bound to return the sum to the first respondent. 11. the petitioner however, produced a copy of its ledger account in respect of respondent no.2, the last entry wherein indicates the amount of the cheque was credited by the petitioner to the second respondent's account. the averments in this regard were made in the memo of appeal filed before the drat. that by itself however, would make no difference. there was no application for amendment of the written statement. there was no application for adducing further evidence. there is no application for clarification or speaking to the minutes of the impugned order contending that such applications for amendment or for adducing further evidence were made. the drat in the impugned judgment has therefore rightly not dealt with this issue. 12. the learned chairperson of the drat therefore, rightly accepted the first respondent's contention that the petitioner had not produced the record to establish that before it had received the information from the first respondent regarding the dishonour of the cheque it had given credit of rs.28,00,000/- to respondent no.2 towards the outstanding amount under the overdraft facility. it was also rightly held that the burden to prove this fact was on the petitioner and that it had not discharged the same. 13. in the circumstances, the impugned order cannot be faulted. 14. we did consider whether we ought to remand the matter to the drat or to the drt with liberty to the petitioner to make an application for amendment and for adducing further evidence. even if we had decided to do so, it would have been subject to various conditions including requiring the petitioner to deposit the entire decretal amount with the first respondent subject to the first respondent in turn being required to return the amount, if so directed. in that event, we would have also directed the petitioner to pay the entire actual costs incurred by the first respondent in prosecuting these proceedings irrespective of the outcome upon remand. this is for the reason that the first respondent ought not to be burdened on account of the petitioner's default. 15. we are however, not inclined to remand the matter, for an order of remand would cause respondent no.1 irreparable harm and injury. had this contention been raised in the first instance, the first respondent could have taken steps against respondent no.2. the suit was filed on 19.9.1996 i.e. over sixteen years ago. with the passage of time, the first respondent's ability to recover the amounts from the borrower i.e. respondent no.2 may well have been destroyed. further as a result of this lapse of time, the first respondent would find it difficult if not impossible to deal with the contentions even on merits. its officers who had dealt with the matter and who may have been privy to important information in this regard may not be in the services of the first respondent. thus this is therefore not a fit case to remand the matter. 16. the writ petition is therefore, dismissed. the petitioner had furnished a bank guarantee pursuant to an order dated 4th october, 2006. in view of the undertaking to keep the guarantee alive upto and including 31st march, 2013, the prothonotary and senior master is directed not to invoke the guarantee till 10th march, 2013. there shall be no order as to costs.
Judgment:

S.J. Vazifdar, J.

Respondent Nos.2 and 3 are Insutech India Limited and one Devendra Tibrewala. The petitioner has challenged an order dated 25.2.2005 passed by the Debt Recovery Appellate Tribunal (DRAT) dismissing Appeal No.180 of 2003 filed by it against an order dated 11.7.2003 passed by the Debt Recovery Tribunal (DRT) allowing O.A. No.344 of 2000 filed by respondent No.1 ordering the petitioner and respondent No.2 to pay a sum of Rs.30,48,550/- with further interest at the rate of 18% p.a. on the sum of Rs.28,00,000/- from the date of filing of the application till payment.

2. Sangli Bank Limited by a scheme of amalgamation sanctioned by an order of the Reserve Bank of India dated 18.4.2007 in exercise of powers under section 44A(4) of the Banking Regulation Act, 1949 amalgamated with the petitioner. Respondent No.1 had filed a suit on 19.9.1996 in this Court against the Sangli Bank Limited and respondent Nos.2 and 3 for recovery of the said sum, which stood transferred to the DRT.

3. In September, 1995, respondent No.2 availed of an overdraft facility from the petitioner. On 22.9.1995, respondent No.2 signed and executed a demand promissory note, a letter of continuity, a letter of lien and set off and a letter of pledge. On 27.9.1995, respondent No.3 executed a personal guarantee.

4. On 17.3.1996, respondent No.2 issued in favour of the petitioner a cheque in the sum of Rs.28,00,000/- towards the repayment of the amounts due under the said facility. The cheque was drawn on respondent No.1. The petitioner presented the cheque to respondent No.1 through the clearing house of the Reserve Bank of India. The Sasoon Dock Branch of respondent No.1 received the cheque on 18.3.1996 as 17.3.1996 being a Sunday, was a holiday.

5. It is alleged in the petition that as the said cheque was not returned by 1.00 p.m. on 18.3.1996, the petitioner presumed that the cheque was honoured and accordingly credited the account of respondent No.2 in the said sum. The petitioner alleged having posted in the loan ledger entries crediting respondent No.2's account. It is further alleged that the petitioner passed on the benefit showing that the overdraft facility granted by respondent No.2 had been fully paid.

These however, are the averments in this writ petition. The written statement which was filed in this Court on 18.1.2002 however, does not contain averments to this effect. The only defence in the written statement was that the cheque ought to have been returned on 18.3.1996 itself and that as the same was not returned on that day, the petitioner was entitled to presume that it had been honoured. Failing to return the cheque on the same day is alleged to be an act of negligence disentitling respondent No.1 from recovering the amount on account of the cheque not having been subsequently cleared. We will refer to these averments in detail later.

6. On 19.3.1996, respondent No.1 returned the cheque. It is contended that by then the petitioner had altered its position by passing the benefits to respondent No.2.

7. We will for the purpose of this writ petition proceed on the basis that the cheque was in fact returned by respondent No.1 to the petitioner only on 19.3.1996. This in fact appears to be so. Respondent No.1 by a letter dated 19.3.1996 stated that it had returned the cheque to the petitioner as the account on which it was drawn had been closed on 18.3.1996 itself but that due to internal problems at its branch it was not able to return the same in the Fort area clearing. By a further letter dated 15.5.1996, respondent No.1 stated that the cheque instead of being received by the petitioner in the normal course by 6.00 p.m. on 18.3.1996, was received at 10.00 a.m. on 19.3.1996.

We will therefore, presume that the cheque was received by the petitioner only on 19.3.1996. We will also presume that if the petitioner had in fact credited the second respondent's account on 18.3.1996, it would have a valid defence to the first respondent's claim, which was based on a mistake. For, as contended on behalf of the petitioner, in that case the petitioner could not be held liable for the first respondent's negligence in not having returned the cheque in time by 18.3.1996 and the petitioner having credited the second respondent's account before the receipt of the dishonoured cheque, had altered its position to its detriment. This however, was not the defence in the written statement.

8. The contention that the petitioner had credited the second respondent's account in the sum of the said cheque on 18.3.1996 and had thereby altered its position to its detriment, was not raised in the written statement. The contention in the written statement was as under :-

"6. I say that the Defendant No.1 presented the said cheque to the Applicants through clearing house on 16.3.1996 which was received at the Plaintiffs branch at Sasoon Dock on 18.3.1996, since the 17th March was Sunday and since the cheque was not returned through the proper time zone clearing, it was deemed to be honoured as per the normal norms/rule of the Bankers clearing house. The Defendant No.1 had no way of knowing that the account of Defendant No.2 with the Applicants was closed. It is total negligence on the part of the Plaintiffs to return the cheque late. The Defendant No.1 cannot be penalised for the negligence on the part of the Plaintiffs. The Applicants are entitled to recover the amount of the cheque and interest from these Defendants and their claim if any, thereon is against the Defendant No.2 and/or Defendant No.3. 10. With reference to para 4 of the Plaint under Reference these Defendants state that the cheque bearing No.969201 on 17th March,1996 was not wrongly included in the MICR clearing dated 16.3.1996."

"The cheques lodged in MICR clearing are presented the respective paying banks on next dates only and as such it has been permitted to lodge next date cheques in the MICR clearing of preceding date. The 17th March 1996 being Sunday the cheque was received at Plaintiffs bank in the morning of 18th March, 1996. The Plaintiffs ought to have returned the said instrument through Fort Area, Return Clearing on 18th March, 1996 in which case the cheque would have been received by these Defendants at 1 p.m. on 18th March,1996 but instead they chose to return the cheque through MICR clearing dated 18.3.1996 which in normal course is received on the next day morning i.e. 19th March, 1996. Thus they were late in returning the instrument. Therefore the said instrument was not accepted by these Defendants as per Bombay Bankers Clearing house Rules. Therefore, the act of not accepting the dishonoured cheque was not wrong on the part of these Defendants but in fact the action of these Defendants was very much proper, perfect and as per banker's clearing house rules. The Applicants herein being bank are well aware of this procedure laid down by Bombay Bankers Clearing House conducted by Reserve Bank of India."

9. It is of vital importance to note that in paragraph 8 of the plaint, respondent No.1 expressly pleaded that though the cheque was returned late by respondent No.1, the same did not cause any prejudice to the petitioner, as it had notice of the dishonour of the said cheque before commencement of the earliest time for any transaction to take place. Paragraph 13 of the written statement deals with paragraph 8 of the plaint. The petitioner had not denied the averment that no prejudice was caused to it on account of the return of the cheque. There is a mere denial of the liability.

10. In this view of the matter, the averments in the plaint to the effect that the petitioner had wrongly refused to accept the dishonoured cheque is well founded. The clearing house had debited the first respondent's account in respect of the said cheque and credited the same to the petitioner's account. The petitioner had thus received the money from respondent No.1 under a mistake. Absent anything else, such as negligence, the petitioner is bound to return the sum to the first respondent.

11. The petitioner however, produced a copy of its ledger account in respect of respondent No.2, the last entry wherein indicates the amount of the cheque was credited by the petitioner to the second respondent's account. The averments in this regard were made in the memo of appeal filed before the DRAT.

That by itself however, would make no difference. There was no application for amendment of the written statement. There was no application for adducing further evidence. There is no application for clarification or speaking to the minutes of the impugned order contending that such applications for amendment or for adducing further evidence were made. The DRAT in the impugned judgment has therefore rightly not dealt with this issue.

12. The learned Chairperson of the DRAT therefore, rightly accepted the first respondent's contention that the petitioner had not produced the record to establish that before it had received the information from the first respondent regarding the dishonour of the cheque it had given credit of Rs.28,00,000/- to respondent No.2 towards the outstanding amount under the overdraft facility. It was also rightly held that the burden to prove this fact was on the petitioner and that it had not discharged the same.

13. In the circumstances, the impugned order cannot be faulted.

14. We did consider whether we ought to remand the matter to the DRAT or to the DRT with liberty to the petitioner to make an application for amendment and for adducing further evidence. Even if we had decided to do so, it would have been subject to various conditions including requiring the petitioner to deposit the entire decretal amount with the first respondent subject to the first respondent in turn being required to return the amount, if so directed. In that event, we would have also directed the petitioner to pay the entire actual costs incurred by the first respondent in prosecuting these proceedings irrespective of the outcome upon remand. This is for the reason that the first respondent ought not to be burdened on account of the petitioner's default.

15. We are however, not inclined to remand the matter, for an order of remand would cause respondent No.1 irreparable harm and injury. Had this contention been raised in the first instance, the first respondent could have taken steps against respondent No.2. The suit was filed on 19.9.1996 i.e. over sixteen years ago. With the passage of time, the first respondent's ability to recover the amounts from the borrower i.e. respondent No.2 may well have been destroyed. Further as a result of this lapse of time, the first respondent would find it difficult if not impossible to deal with the contentions even on merits. Its officers who had dealt with the matter and who may have been privy to important information in this regard may not be in the services of the first respondent.

Thus this is therefore not a fit case to remand the matter.

16. The writ petition is therefore, dismissed. The petitioner had furnished a bank guarantee pursuant to an order dated 4th October, 2006. In view of the undertaking to keep the guarantee alive upto and including 31st March, 2013, the Prothonotary and Senior Master is directed not to invoke the guarantee till 10th March, 2013. There shall be no order as to costs.