JUDGMENT
A.K. Sikri, J.
1. By means of this suit, the plaintiff is
seeking to recover a sum of Rs.15,37,857.18p against
the defendant-State Bank of Patiala. The circumstances
which led the plaintiff to file this suit against the
defendant, as can be gathered from the plaint, are as
under:
That the plaintiff is owner/landlord of
premises No.C-31, C-32, Connaught Place, New Delhi.
The plaintiff had let out the second floor of C-31 and
C-32 Connaught Place New Delhi having a total covered
area of 2740 sq.ft. to the defendant initially for a
period of five years w.e.f. 1.9.1980 with one renewal
option for five years at 10% increase in the rent.
S.No.3026/91:
That similarly, the plaintiff also let out the
first floor of C-32, Connaught Place, New Delhi having
an area of 1950 sq.ft to the defendant w.e.f. 8.4.1981
for five years with one renewal option at 10%
enhancement.
That at the time of letting the second floor
of C-31 and C-32, as described above, the defendant
vide letter dated 29.9.1980, had agreed to grant to the
plaintiff an overdraft facility of Rs.15 lakhs at
interest rate of 14% p.a.Similarly at the time of letting first floor
C-32, the defendant vide letter dated 10.3.1981 agreed
to grant to the plaintiff overdraft facility of Rs.15
lakhs at interest rate of 15% p.a. plus interest tax.
The plaintiff had been enjoying both limits of
Rs.15 lakhs each. Later on the defendant bank withdrew
the first overdraft of Rs.15 lakhs which was granted at
the time of letting out second floor of C-31 and C-32,
Connaught Place, New Delhi and the plaintiff thereafter
enjoyed only one facility of overdraft limit of Rs.15
lakhs against letting out first floor of C-32,
Connaught Place, New Delhi. This was enjoyed by the
plaintiff at defendant’s Branch Office, Hauz Khas as
the premises which were let out by the plaintiff were
being used by the defendant as their Zonal office. It
is further alleged in the plaint that in respect of
aforesaid facilities, the plaintiff was to be charged
interest at the rate of 14% and 15% with interest tax,
respectively per annum at simple rate. However, it was
subsequently revealed that the defendant bank was
unauthorisedly charging interest at the rate of 16.5%
with quarterly rests for some time and at the rate of
17.5% with quarterly rests at that times and had
subsequently started charging the interest at the rate
of 19% per annum with quarterly rests. In this way the
defendant overcharged a sum of Rs.15,37,857.18 which
was against the terms of letter dated 29.9.1980 and
10.3.1981 in pursuance of which this overdraft facility
was granted to the plaintiff. It is because for this
reason the present suit had been filed for recovery of
overcharged interest in these two accounts.
2. The defendant bank filed written statement
contesting the suit alleging that the suit was not
maintainable and was merely an abuse of the process of
law as the plaintiff had filed Suit for vacation of the
premises in question against the defendant. The plaint
did not disclose any cause of action and that the
interest had been charged in accordance with the
Agreement and in accordance with the documents executed
by the plaintiff.
The plaintiff in its application reiterated
the stand taken in the plaint.
3. On the basis of the pleadings, following
issues were framed:
1. Whether the suit of the plaintiff as
framed is not maintainable as alleged in
paras 1 to 4 of the preliminary
objections of the written statement?
OPD.
2. Whether the suit of the plaintiff is
barred by limitation? OPD.
3. Whether the plaint does not disclose any
cause of action? OPD.
4. Whether the plaintiff is entitled to the
amount claimed? OPP.
5. Relief.
4. The matter was set down for trial. The
plaintiff examined one witness, namely, Mr.Pankaj Nakra
on 18.3.1996 and closed its evidence in the
affirmative. The case was listed on 19.3.1996 also on
which date defendant was required to produce witness.
However, counsel for the defendant requested for a
short adjournment and the case was accordingly
adjourned to 16.5.1996 for defendant’s evidence. On
that date the evidence could not be recorded and the
case was adjourned to 17.7.1996. On 17.7.1996 evidence
of defendant started with statement of Mr.Rajendra
Singhla, Assistant Manager of defendant bank.
Examination-in-Chief was partly recorded where after the
matter was adjourned. However, the matter was derailed
on defendant’s filing application (IA.231/97 under
Order XIII Rule 2 CPC) for permission to file certain
documents. It was allowed by order dated 6.1.1999 and
the matter was fixed for fresh evidence, if any, of the
plaintiff. By order dated 3.2.2000 matter was fixed
for trial on 22nd & 23rd August,2001. When the matter
was listed before the Joint Registrar for scrutiny the
plaintiff submitted that its evidence has already been
concluded. The defendant was accordingly directed to
file its list of witnesses within six weeks and it was
directed that he would produce its witness on the dates
fixed for trial. However, neither on 22.8.2001 nor on
23.8.2001 defendant appeared or produced its witnesses.
Right to lead evidence of the defendant was, therefore,
ordered to be closed and matter was directed to be
listed in the category of “Finals” on 3.9.2001. It
remained in the cause list of `Finals’ from 3.9.2001.
However, nobody appeared on behalf of the defendant.
The arguments were heard on 2nd November,2001 and
thereafter on 20.11.2001 and the judgment was reserved.
Thereafter it was listed for directions from time to
time. In none of these dates the defendant appeared.
5. The sequence of the events as disclosed
aforesaid would amply demonstrate that the defendant
has not led any evidence or appeared from 22nd
August,2001.
6. In the statement of Mr.Pankaj Nakra who was
examined as PW-1 on behalf of the plaintiff, he has
proved on record the certified copy of the form A as
Ex.PW-1/1 evidencing the registration of plaintiff as
partnership firm which includes Mr.Ashok Sarin who has
signed the present plaint and signed the vakalatnama.
He has also deposed to the effect that defendant bank
had advanced a loan of Rs.15 lakhs for each of the two
premises C-31 and C-32, Connaught Place, New Delhi at
the time of letting out these premises to the bank for
which no formal agreement was executed between the
parties and only letters dated 29.9.1980 and 10.3.1981
were exchanged which are Ex-.P-1 and Ex.P-2. He has
further deposed to the effect that in violation of the
Agreement regarding interest as mentioned in these
letters the defendant bank charged interest at the rate
of 16.75% to 19% with quarterly rests which was not
proper and the suit was filed for recovery of the
excess interest. Details of the excess interest are
given in Annexure-A to the plaint. He has also stated
that the plaintiff demanded the bank to refund the
excess interest by letters Ex.PW-1/2 and Ex.PW-1/3. In
cross-examination he has stated that the loan granted
by the bank was against letting out of the premises and
not an overdraft. Some blank documents were got
signed. It was for the first time in the end of 1990
when the plaintiff got the balance reconciled that it
realised that bank was charging more interest than the
agreed rate. He further stated that loan was repaid in
1991. He did not recollect if the loan was only for a
period of one year. He denied the suggestion that
fresh loan/overdraft limit was sanctioned to the
plaintiff in 1989. He also denied the suggestion that
interest had been charged according to the Agreement.
He admitted that the balance confirmation letter dated
July 6,1989 had been signed by the plaintiff and also
letters dated July 6,1989 and June 18,1992 which had
been signed by the plaintiff were marked as Ex.PW-1/X-1
to Ex.PW-1/X-3. He also admitted that the plaintiff
was receiving the statement of account regularly from
the bank. He also denied the suggestion that letters
Ex.P-1 and Ex.P-2 were never acted upon.
7. The issues framed in the suit are to be
decided on the basis of the aforesaid evidence and
documents proved on record. My findings thereon are as
under:
Issue No.2.
The overdraft facilities were granted to the
plaintiff by the defendant bank in the year 1980-81.
It is admitted by PW-1 in cross-examination that the
plaintiff has been receiving statement of account
regularly. In this statement of account debit entries
of the interest were made which were not objected to by
the plaintiff at that point of time. Thus, if
according to the plaintiff such debit entries in
respect of interest charged were at higher rate than
agreed upon, the cause of action arose in favor of the
plaintiff when the respective debit entries were made
and the suit could be filed within three years of the
said entries. In this suit which is filed on 25.9.1991
the plaintiff could challenge the debit entries made
only for last three years from the date of filing the
said suit i.e. w.e.f. 26.9.88. This suit for
recovery of alleged overcharged interest up to
25.9.1988 has thus become time barred.
8. However, learned counsel for the plaintiff
tried to urge that it was a mutual and open current
account. He tried to demonstrate that statement of
account would amply demonstrate that the said account
showed debit balance as also credit balance on
different occasions. On the basis of this fact he
sought to argue that the suit would be within time as
Article-1 of the Limitation Act would apply in such a
situation.
9. I am afraid this contention of the counsel for
the plaintiff is not tenable. Article-1 reads as
under:
Discription of suit Period of limitation Time from which
period begins to run
______________________________________________________________________
1. For the balance due Three years The close of the year
on a mutual, open in which the last item
and current account, admitted or proved is
where there have been entered in the account
reciprocal demands ;such year to be
between the parties. computed as in the
account.
10. This provision would be applicable when the
suit is filed for the “balance due” on a mutual open
and current account. The present suit is not filed for
the balance due based on this account. It is filed for
the interest allegedly overcharged from time to time.
11. It accordingly follows that the claim in the
suit for recovery of alleged overcharged interest up to
25.9.1988 is time barred and the claim for the period
26.6.1988 only would be within the period of
limitation. This issue is answered accordingly.
Issues No.1,3 and 4.
12. Issue No.1 is based on preliminary objections
1 to 4. In these objections the defendant has alleged
that the suit filed by the plaintiff is not
maintainable and is an abuse of the process of law and
the plaintiff has no right to file the suit at belated
stage and the interest has been charged by the
defendant in accordance with the agreement and in
accordance with the documents and the suit is filed to
check-mate the defendant from not claiming the amount
which was due on account of the limit availed by the
plaintiff. The points raised in these preliminary
objections on this issue framed are related to Issues
No.3 and 4. Therefore, all these issues are inter
related and are taken up together.
13. It is not in dispute that the plaintiff had
let out the premise at C-31 and C-32 Connaught Place,
New Delhi to the defendant-Bank. Letter dated
29.9.1980 Ex.P-1 lays down the stipulations on which
the premises at C-32 as well as a portion of building
at C-31 having a total covered area of 2600 sq.ft. was
let out to the defendant bank. After setting the
various conditions about letting out these premises,
para (ix) thereof deals with the loan in question
reading as under:
ix) “You will be disbursed six month’s
advance rent amounting to Rs.1,50,000/-
approximately which will be repaid by you
definitely within the first six months by
monthly appropriation of rent. In
addition to the above advance rent you
will be granted an overdraft to the
extent of Rs.15 lakhs on the following
terms and conditions:
a) The above loan will carry an interest
@ 14%.
b) After the advance rent of
Rs.1,50,000/- is adjusted the loan will
be liquidated by monthly appropriation of
entire rent (i.e. including the rent of
the premises presently with us) within a
total maximum period of 5 years interest
accrued on this loan (which will be
charged at quarterly rests) will be paid
separately. The advance rent will be
adjusted first and then adjustment of
overdrafts will start.
c) if feasible loan of Rs.15,00,000/-
will be secured by equitable mortgage of
the building hired to us”.
14. In the same manner letter dated 10.3.1981
Ex.P-2 deals with letting out of premises at C-32 and
also stipulates grant of over draft limit to the
plaintiff by the defendant bank in the following
manner:
“An overdraft limit of Rs.15 lakhs
bearing interest at the rate of 15% plus
interest tax will be granted to you”.
15. The aforesaid exhibits would show that over
draft limit was granted to the plaintiff by the
defendant bank at the time of letting of the premises
on rent by the plaintiff to the defendant Bank. On
this over draft limit the defendant had agreed to
charge interest at the rate of 14% and 15% respectively
plus interest tax. In view thereof, when the terms, on
which the over draft limit was sanctioned, were
specifically contained in these exhibits, it was not
open for the bank to charge interest at more than the
specified rate. The facility in this case was granted
at a fixed rate of interest. It was not a variable
rate dependent upon the rate prescribed by Reserve Bank
of India from time to time. The transaction between
the parties is specifically governed by the terms and
conditions contained in Ex.P-1 and Ex.P-2 and the
parties would be bound by these terms. When the
defendant charged more interest than permissible under
the law, the plaintiff shall have a cause of action to
file the present suit for the recovery of over charged
interest. Thus Issues 1,3 and 4 are decided in favor
of the plaintiff and against the defendant-Bank. It is
held that the plaintiff shall be entitled to refund of
the overcharged interest w.e.f. 26-9-1988 as the claim
for prior period is barred by limitation. As per the
details given by the plaintiff, the amount overcharged
by way of interest, for this period is Rs.261571.31p.
The plaintiff shall be entitled to decree for this
amount.
16. At this stage, it may be stated that although
the defendant has not led any evidence in support of
its case, in the cross-examination of the plaintiff’s
witness, three documents were put to him and the
witness had admitted those documents which were
exhibited as PW-1/X-1 to PW-1/X-3. However, it was
argued by learned counsel for the plaintiff that these
documents do not relate to the transaction in question
and in fact these relate to another overdraft facility
of Rs.15 lakhs granted in favor of the plaintiff for
which third party guarantee of M/s.Anant Raj Agencies
Pvt.Ltd. was also given. The submission of learned
counsel for the plaintiff appears to be correct.
Ex.PW-1/X2 which is a letter dated 6.7.1989 states that
on an application made by the plaintiff, overdraft
limit of Rs.15 lakhs had been sanctioned in favor of
the plaintiff subject to the conditions mentioned in
the said letter. Therefore, these documents relate to
same overdraft facility which was sanctioned in the
year 1989 whereas we are dealing with the transaction
relating to overdraft facility given to the plaintiff
in the year 1980-1981 that too when the plaintiff had
let out the premises No.C-31, C-32, Connaught Place to
the defendant. It is also mentioned in the letter
dated 6.7.1989 (Ex.PW-1/X2) that the equitable mortgage
of the property “already mortgaged” with the bank is
extended to this overdraft facility also. This shows
that the property was already mortgaged in respect of
previous transaction which was extended to the
transaction in question. It was explained by learned
counsel for the plaintiff that the previous transaction
was the overdraft facility of 1980-81. There appears
to be substance in what the learned counsel for the
plaintiff contends and in the absence of any evidence
in rebuttal, I am agreeable to accept this submission
of the learned counsel for the plaintiff. It is clear
from this that the documents which were put by the
defendant bank in cross-examination of the plaintiff
witness do not relate to the transaction in question.
17. Issue No.5. Relief:
In view of the foregoing discussion, the suit
is decreed in the sum of Rs.261571.31p with
proportionate costs. The plaintiff shall also be
entitled to interest at the rate of 9% per annum from
the date of filing of the suit till its payment.
Decree sheet be drawn accordingly.