JUDGMENT
K. Ramamoorthy, J.
1. The State Bank of India has filed a suit for the recovery of Rs. 1,80,527.96 from the defendant. The case of the plaintiff briefly stated is thus:
2. The defendant is a proprietorship concern maintaining a Current Account with the plaintiff requested for opening a letter of Credit for the sum of Rs. 76,500/- equivalent to Singapore dollars 20119.50 in favour of M/s Pratic his International, 121, Market Street, Singapore-I, against 10% margin on the 4the November 1978 for import of 15 metric tons of Copra.
3. The plaintiff opened the said letter of Credit No. FED/ND/78/638 dated 6th of November 1978 through Bank of India, Singapore, valid upto 5th of January 1979.
4. The letter of Credit was available by exporters draft drawn on the importers at 60 days after sight drawn for 100 per cent of the invoice value.
5. The defendant acknowledged on 16th of January 1979, the letter of the plaintiff Bank dated 13th of January 1979 regarding receipt of documents and accepted the draft. The defendant by letter dated 15th of March 1979 requested for handing over the documents relating to the shipment and also undertook to hold the goods as trustees for and on behalf of the plaintiff, the defendant also undertook to deposit the proceeds realised in the Current Account maintained with the plaintiff Bank for payment of bills drawn on defendant under the usnce letter of credit on the due date i.e. 16th of March 1979.
6. The defendant failed to make the payment of the accepted draft on the due date and with the result the Bill was retired by the plaintiff Bank on the due date by allowing overdraft on the account maintained by the defendant. On 17th of July 1979 the defendant executed a demand promissory note for a sum of Rs. 85,774.84 on account of over-draft facility granted in current account for payment of the Bill for import of copra under the said letter of Credit.
7. The defendant neglected to get goods released from Bombay Port Trust Authorities. Vide letter dated 6th of September 1979, the defendant informed the plaintiff that the Bombay Port Trust was going to put up the consignment in public auction. There upon the plaintiff wrote to the Bombay Port Trust on 7.9.1979, requesting the Port Trust not to put up the consignment for auction without any reference to the plaintiff. The defendant vide letter dated 29.9.1979 authorised their clearing agent that is Lalji J Thakkar Bombay to hand over all the relevant documents to the plaintiff and advised the to collect their charges from the plaintiff Bank.
The defendant vide letter dated 21st of November 1979 requested the plaintiff
Bank to take delivery of the consignment from the Bombay Port Trust and undertook
to reimburse and indemnify the plaintiff for the expenses incurred by the Bank. The
plaintiff paying all the dues to the Port Trust and got the delivery of the goods from
the Bombay Port Trust on behalf of the defendant. The consignment was sold by the
plaintiff through their Broker at the rate of Rs. 6150/- per metric ton that comes about
Rs. 76,163/- and the same was credited to the current account of the defendant after
adjusting the clearing agent storage charges and half per cent brokerage. The defendant was liable to pay a sum of Rs. 1,80,527.96 with interest @ 18% per annum till the
date of realisation.
8. The defendant filed written statement repudiated the claim of the plaintiff. The defendant has put the entire blame on the plaintiff to wriggle out this situation. A perusal of the written statement would show that the defendant was prepared to go to any length to defeat the claim of the plaintiff.
9. The plaintiff examined Mr. Mohd. Daud Munee, an officer of the Bank and he has spoken to about the facts and how the plaintiff filed the suit. PW-2 Mr. Anand Saroop Kalra was an officer working in the Foreign Exchange Department at the relevant time. He has proved the relevant documents in particular the application for Letter of Credit, Form No. 2 that is Exhibit PW 2/1 and also other documents. PW-3 is Mr. Chaman Lal Mehta, Partner of the firm Hans Raj Pragji and Sons. According to PW-3, the work of clearing consignment was entrusted to earlier M/s Lalji Thakkar but later on his firm was to do the job. He has clearly stated that the plaintiff had to pay the custom duty amounting to Rs. 59,433.44, penalty amount to Rs. 30,000/- and demurrage charges Rs. 47,676.44. He has also spoken to the arrival of the consignment in Bombay in January 1979 and because of the storage the quality had deteriorated. About the sale of the consignment, PW-3 has said “the representatives of the defendant as well as the present plaintiff were present. After discussion the price was fixed at Rs. 6150.00 per metric tonn. That was the maximum price which could be fetched. The same bill of entry which was prepared by the previous clearing agent was endorsed in favour of our firm and it was on that basis that the clearing was done. The original is with the customs department. We had taken out a photostat copy of the endorsement made by the defendant. The same is Exhibit PW3/1. The original was signed by me as well as the defendant Bhiku Ram Mittal proprietor M/s Ambey Enterprises Ext. PW 1/1, PW1/10, PW 1/17, PW1/D.1 and Ex. PW1/D.2 and 3 were issued by our firm and I identify the signature”.
10. PW-4 is Shri J.L. Sangal, Deputy Manager of the State Bank of India. He has spoken to the money spent by the plaintiff in the transaction. He has also proved Exhibits PW 4/5 and PW 4/6. Letters written by the defendant authorising the plaintiff to get the goods cleared.
11. Mr. B.C. Mitta proprietor of the defendant Company was examined. He admits that he never contacted the Bombay Port Trust for realising of the consignment. He admits the issuance of the letter Exh. PW 4/7. He also admits that he did not pay custom duty. He also admits the plaintiff had paid demurrage charges about Rs. 49,000/-. He would say that he did not instruct the plaintiff Bank to get the consignment cleared through Hans Raj Pragi & Sons. When he confirmed Exh. PW3/1 where he had signed which contains encircled red and marked as Ex. PW 3/1A “handed over to M/s Hans Raj Pragi & Sons”. He would state that it was not there when he put his signatures. This only shows that DW 1 is uttering false hand.
12. This court has framed the following issues on 21.5.1982:
1. Whether the plaintiff Bank is a duly incorporated and is a legal entity? if not, its effect. O.P.P.
2. Whether the plaint has been instituted signed and verified by a duly authorised person?
3. Whether the contract in question was hit by Section 56 of the Indian Contract Act and if so to what effect? O.P.D
4. Whether the Bombay Branch of the plaintiff Bank was not competent to make payment for and on behalf of the New Delhi Branch of the plaintiff Bank?
5. Whether the plaintiff Bank had no locus standi to file the suit in question?
6. Whether the plaintiff Bank paid the amount of Rs. 76,500/- in
ion of the order and if so, what is its effect? O.P.D.
7. Whether the plaintiff Bank is not entitled to any amount over and above Rs. 76,500/- O.P.D
8. Whether the defendant is entitled to pay interest?
9. Whether the agreed interest is excessive and exhorbitant?
10. Whether this court has no territorial jurisdiction to try this case?
11. Whether the defendant was entitled to pay only the market price of the copra as alleged in additional plea No. 1?
12. To what amount, if any, is the plaintiff entitled?
13. Whether the plaintiff Bank is entitled to special costs?
14. Relief.
On Issue No. 1, I have no difficult in coming to the conclusion that the plaintiff Bank is duly incorporated and legal entity and this issue answer in favour of the plaintiff.
On Issue No. 2, the plaint has instituted, signed and verified by a duly authorised person and, therefore, this issue answered in favour of the plaintiff.
On Issue No. 3, the contract was not hit” by Section 56 of the Indian Contract Act, 1872 and therefore, this issue is also answered in favour of the plaintiff and against the defendant.
On Issue No. 4, the State Bank being one of the units of the main State Bank of India having different branches and there is no question of one branch being not competent to make any payment and this issue is answered in favour of the plaintiff and the case of the defendant is not at all tenable in law.
On Issue No. 5, the plaintiff Bank is entitled to file the suit therefore, this issue is also answered in favour of the plaintiff and against the defendant.
On Issue No. 6, the plaintiff Bank has not any order and the case of the defendant is not at all tenable in law and this issue is answered in favour of the plaintiff.
On Issue No. 7, the plaintiff Bank is entitled to a sum of Rs. 76,500/-.
On Issue No. 8 the defendant is bound to pay interest.
On Issue No. 9 the agreed rate of interest is not excessive and exhorbitant.
On Issue No. 101 find that this court has territorial jurisdiction to entertain the suit.
On Issue No. 11, this issue does not arise for consideration and the plea raised by the defendant is absolutely frivolous.
On Issue No. 13, the plaintiff Bank is entitled to exemplary costs.
13. I am very clear in my mind that the Bank has established his case. The defendant had committed fraud on the plaintiff Bank and had cheated the Bank and in guilty of utilising public money and, therefore, the claim of interest @ 18% per annum is certainly reasonable.
14. Accordingly, there shall be a decree directing the defendant:
1) to pay to the plaintiff Bank a sum of Rs. 1,80,527.96 with interest @ 18% per annum from the date of suit till the date of payment.
2) to pay costs of the suit.
3) to pay to the plaintiff Bank a sum of Rs. 10,000/- towards exemplary costs.