JUDGMENT
J.B. Goel, J.
(1) Plaintiff is a Banking company and has filed the present suit for the recovery of Rs. 1,19,904.59 comprising of Rs. 79,601.99p. as Principal amount, alleged to have been paid to defendant No. 1 by mistake and Rs. 40,302.60p. as interest thereon at the rate of 17-1/2% per annum for the period 28th April, 1983 to March 18, 1986 against the defendant No. 1 and in the alternative against defendant No.2.
(2) Briefly, the case of the plaintiff is that a Telex message dated 10 February, 1983 was received by the plaintiff from Union Bank of Switzerland, Geneva to credit the account of defendant NO. 1 with plaintiff on behalf of defendant No. 2 in the sum of Us $ 8,000. In pursuance of this on 14th February, 1983 a sum of Rs. 78,817.84 as equivalent of this amount was credited in the Savings Bank Account No. SF/61800/1 of defendant No. 1 with plaintiff bank.
(3) Subsequently, inadvertently another sum of Rs. 79,601.99p. being equivalent of identical amount of Us $ 8,000 was again credited to defendant No. 1’s account on 28th April, 1983.
(4) On realising the mistake the plaintiff approached the defendant No. 1 to refund it but the latter has failed to refund the same inspite of repeated demands. A notice of demand sent through Counsel was also served on defendant No. 1 calling upon the latter to pay the aforesaid amount alongwith interest at the rate of 17-1/2% per annum but they failed to do so.
(5) The plaintiff claims interest at the rate of 17-1/2% per annum “as per custom, usage and trade practice “amounting to Rs. 40,302.60p.
(6) In the alternative the plaintiff claims this amount from defendant No. 2 on the plea that they have availed said payment made to defendant No. 1 on their behalf.
(7) Accordingly, the present suit has been filed for recovery of Rs. 1,19,904.59p. with future interest at the rate of 17-1/2% per annum.
(8) Both the defendants have filed separate written statements denying the claim of the plaintiff.
(9) Defendant No. 1 in their written statement have pleaded that a Memorandum of Understanding was entered into by them with defendant No. 2 for study of Associations to Promote Participatory Development in India for which defendant No. 2 were to pay a sum of Us $ 15,000 to them. The payments were received by them through the plaintiff bank in pursuance of this arrangement and on receipt of the payment payable under the said agreement, they had submitted their report to defendant No. 2. The payment was made by plaintiff to defendant No. 1 in discharge of the liability of defendant No. 2 and so defendant No.1 is not liable to refund any amount to the plaintiff. Liability to pay any interest and the rate of interest are also denied. It is alleged that there is no cause of action and the suit is not maintainable. Authority of the person who has signed, verified and instituted the suit, has also been denied.
(10) Defendant No. 2 in a separate written statement have admitted that instructions were given to the plaintiff on their behalf by their Bank, namely, Union Bank of Switzerland, only for payment to defendant No. 1 of a sum of 8000 Us dollars on 10.2.1983 and it is denied that any further instructions were given by the defendant No. 2 to the plaintiff for giving a second credit of Us $ 8000 in the account payment was made by them inadvertently and not on behalf of defendant No.2. The fact of second payment was also not brought to their notice before filing the suit. Accordingly, the liability to pay either the principal amount or interest thereon is denied. Authority of the person to sign, verify and institute the suit has also been denied.
(11) Replications have been filed by the plaintiff to both the written statements denying the averments made by the defendants and reasserting their claim against the defendants.
(12) On the pleadings of parties following issues were framed on 17.3.1989 :- 1. Whether the plaint has been signed, verified and suit filed by duly authorised person? 2. Whether the sum of Rs. 76,601.99 was credited in the account of Defendant No. 1 by inadvertence on 28th April, 1983? 3. Is the defendant No. 1 was not liable to return the suit amount of Rs. 76,601.99 even if issue No. 1 was found due in favour of the plaintiff. 4. Whether the defendant No. 2 had availed the amount of Rs. 76,601.99 credited in the account of Defendant No. 1 and was liable to pay this amount to the plaintiff? 5. Is the plaintiff entitled to interest? If so, at what rate? 6. To what amount if any the plaintiff is entitled and from whom? 7. Relief.
(13) The plaintiff has examined two witnesses, namely, Public Witness . 1, Shri P.N. Malhotra and Public Witness .2 Shri S.P. Kohli, both formerly employees of the plaintiff bank, whereas defendant No. 1 has examined one witness namely Shri Rajiv Jain, one of the Director of defendant No. 1 defendant No. 2 has not examined any witness.
(14) I have heard learned counsel for parties, Issue wise findings are as under :- Issue No. 1 : Whether the plaint has been signed, verified and suit filed by duly authorised person?
(15) Initially plaint was signed and verified and suit instituted by Shri P.N. Malhotra, claiming to be Manager of the Plaintiff Company, subsequently, plaint was amended which was signed and verified by Shri R. K. Ghosh, Branch Manager of the plaintiff bank.
(16) PW1 Shri P.N. Malhotra has deposed that he was Manager of the plaintiff bank at its Connaught Place Branch in March, 1986 that he was authorised by virtue of general Power of Attorney dated 24.11.1985 executed on behalf of the plaintiff bank to act on behalf of the plaintiff bank, copy of which has been proved by his as Ex. Public Witness 1/1. He has also deposed that the plaint is signed, and verified by him. He has not been cross-examined on this aspect on behalf of both the defendants.
(17) Pw 2 Shri S.P. Kohli, has deposed that Shri R. K. Gosh was formerly working as Manager of the plaintiff bank, he had worked under him and had seen him signing and writing. He has identified the signatures of Shri R.K. Ghosh on the amended plaint signed and verified by Shri R.K.Ghosh. He was also not cross-examined on this aspect. No evidence in rebuttal has been produced Ex. Public Witness 1/1 General Power of Attorney in favour of Shri Prem Nath Malhotra has been duly executed before, attested and authenticated by a Notary Public whereby he has been authorised to institute, commence and prosecute the suits etc. on behalf of the plaintiff in court of law. There is no reason to disbelieve the testimony of Public Witness 1 and Public Witness 2 No argument were also addressed on behalf of defendant on this issue, this issue has thus been duly proved from testimony of Public Witness 1 and Public Witness 2 and Power of Attorney Ex Public Witness 1/1 and is decided in favour of plaintiff. Issue NO. 2 : Whether the sum of Rs. 76,601.99 was credited in the account of Defendant No. 1 by inadvertence on 28th April, 1983?
(18) It is not disputed on behalf on defendant No. 1 that first a sum of Rs. 78,817.75p. as equivalent to 8000 Us Dollars was credited by the plaintiff in their Savings Bank Account No. SF/61808/1 on 14.2.1983. It is not the case of defendant No. 1 that this amount was paid in discharge of any liability of plaintiff towards defendant No. 1 It is not disputed by the parties that this first amount was credited by the plaintiff in the account of defendant No. 1 on the instructions of the Union Bank of Switzerland, Geneva on behalf of defendant No. 2 Ex. Public Witness 2/1 is the telex message dated 10.2.1983 received from the aforesaid bank of Geneva whereby plaintiff was required to credit the Savings Bank account No. SF/61808/1 with the plaintiff in the sum of 8000 Us Dollars. That this amount has been duly credited in the said account of defendant No. 1 with plaintiff is also proved by Statement of Account Ex. Public Witness 2/2.
(19) It is specifically mentioned in this telex message that the amount is to be credited to the specified bank account of defendant No. 1 This payment must have been so made at the instance and with the knowledge of defendant No. 1.
(20) It is also not disputed by defendant No. 1 that the plaintiff had also credited their account with them second time on 28.4.1983 in the sum of Rs. 79,601.99p. being equivalent of 8000 Us Dollars. This payment is also proved by entry in the statement of account Ex. Public Witness 2/2.
(21) PW.2 Shri S.P.Kohli has deposed that he was working as Incharge of Centralised Foreign Remittances of the plaintiff bank during August, 1984 to July, 1993: and on being pointed out by their Reconciliation Department that an entry was outstanding in the Agency Account, he investigated it in 1985 when it came to his knowledge that duplicate payment of the amount equivalent to Us 8000 dollars had been made in the account of defendant No. 1 in April, 1983; that on this mistake being discovered, he and various other persons of the bank contacted defendant No. 1 and requested them for refund of this amount. He has also deposed that first payment was made to defendant No. 1 on instructions received from Union Bank of Switzerland, Geneva on 10.2.1983 vide telex Ex. Public Witness 2/1 but on 28.4.1983 duplicate payment was made by mistake and inadvertently. In cross-examination of Public Witness 2 on behalf of defendant No. 1 it is suggested that this payment on 28.4.1983 was made by plaintiff bank to defendant No. 1 on the basis of instructions received vide telex message dated 22.4.1983 Mark A (later on marked as Ex.PW2/1) to which it is stated that it was mistaken and duplicate payment was made. He has further stated that except two telex messages Ex. Public Witness 2/A and Ex.PW2/1 there is no other document with the plaintiff received from defendant No. 2. On further cross-examination of behalf of defendant No. 2 he has again deposed that they were not instructed by the Bank of defendant No. 2 for the second payment. There is no suggestion to this witness by defendant No. 1 that this second payment was made under any instructions received by the plaintiff on behalf of defendant No. 2. There is also nothing in the Statement of Diwi examined on behalf of defendant No. 1 that this second payment was made in pursuance to the demand made by defendant No. 1 on defendant No. 2 for releasing the two balance installments. In his cross-examination on behalf of defendant No. 2 Diwi has admitted that they had never approached defendant No. 2 to remit the second installment in advance or urgently.
(22) Diwi Shri Rajiv Jain examined on behalf of defendant No. 1 stated that under the memorandum of understanding (Mark D.1/1) entered into between defendants No. 1 & 2 the total amount payable was 15000 Us Dollars. First he stated that it was payable in two installments but later on he admitted that the amount of 15000 Us Dollars was payable in three installments of 8000 Us Dollars on 31.1.1983, 5000 Us Dollars on 31.7.1983 and 2000 Us Dollars on or before 31.1.1984. He has also admitted that second and third installments had not become due when the second remittance was credited in their account by the plaintiff.
(23) It is not explained either in the written statement or by Diwi as to how they have appropriated 1000 Us Dollars paid in excess of the agreed amount in as much as, against the total agreed amount of 15000 Us Dollars 16000 Us Dollars have been credited to their account. Obviously they have been wrongfully enriched to this extent at least which amount even they have not offered to refund to the plaintiff which shows lack of bonafides on their part. In view of this oral and documentary evidence or record the only reasonable inference that arises is that the second remittance of Rs. 79,601.99 p. being equivalent of 8000 Us Dollars was credited by the plaintiff in the account of the defendant No. 1 by mistake and inadvertently, and most probably as explained on behalf of the plaintiff during arguments this second payment was made due to misreading the second telex message dated 22.4.1983 (Ex. Public Witness 1/A) as for second remittance to defendant No. 1. This second telex message was an intimation sent to the plaintiff that they are taking steps to credit plaintiffs account for 8000 Us Dollars paid by them to defendant No. 1 on behalf of defendant No. 2 earlier. Issue No. 2 is accordingly decided in the affirmative in favour of the plaintiff.
(24) It is, however, noticed that the amount of second remittance was Rs. 79,601.99 and not Rs. 76,601.99 as wrongly mentioned in issues No. 2 & 4 which are hereby corrected. Issue No. 3 : Is the defendant No. 1 was not liable to return the suit amount of Rs. 76,601.99 even if issue No. 1 was found due in favour of the plaintiff? Issue No. 4 : Whether the defendant No. 2 had availed the amount of Rs. 76,601.99 credited in the amount of Defendant No. 1 and was liable to pay this amount to the plaintiff?
(25) These two issues are inter connected and are being dealt with together. Diwi has deposed that in January, 1983 a Memorandum of Understanding Mark D/1/1 was entered into between defendants No. 1 & 2. By this agreement it was agreed that defendant No.1 was to undertake a study and report to defendant No. 1 was to undertake a study and report to defendant No 2 to identify certain Associations and Non-Governmental Organisations to Promote Participatory Development in India. The work was to be done in 4 phases, duration of first two phases was 6 months and that of third phase was 2 month and of the 4th phase the duration was one month. The duration of the whole project was from 1st February, 1983 to 31st December, 1983 and interim report was to be submitted 15 days after completion of Phase Ii and the final report was to be submitted 30 days after completion of Phase IV. As already noticed the remuneration of 15000 Us Dollars was payable by defendant No. 2 to defendant No. 1 in three installments. This is admitted by Diwi in his statement.
(26) Defendant No. 2 in their written statement have not pleaded whether or not defendant No.1 had submitted their report and after submission what happened to it. However, it is denied by them that they had availed the benefit of the second payment wrongly make by the plaintiff to defendant No. 1 by 8000 Us Dollars.
(27) Pw 1 and Public Witness 2 in their statements have not stated anything on this aspect. Obviously, they had no knowledge about it. No suggestion has also been put to them whether the work of this project was done by defendant No. 1 in accordance with agreed terms.
(28) It is admitted by Diwi in his statement that the work assigned by defendant No. 2 was to be completed by the end of the year 1983, that they had not stuck to the agreed time schedule and had submitted the report to defendant No. 2 in August, 1984 and that only one report was submitted by them, Diwi has stated that from their side this was the final report subject to approval of defendant No. 2 but he has not produced any documents that the report was final from their side. He has not stated if this report was accepted by defendant No. 2 In his cross-examination he first stated that after the report was submitted they were informed by defendant No. 2 that the report was submitted very late and it was of no use to them. But in the next sentence he tried to correct and stated that he had not stated that defendant No. 2 had informed that the report was of no use. By this latter statement obviously, he has tried to wriggle out of his first statement admitting that the report which was submitted by them was not accepted by defendant No. 2. He has not placed on record the correspondence which had taken place between defendant No. 1 and defendant No. 2 which would have shown whether the report was accepted by defendant No. 2 or not. By its nature the burden of this issue No. 3 lies on defendant No. 1 in as much as to successfully escape the liability and their remuneration of the work done by defendant No. 1, the defendant No. 1 has to prove that a valid report was submitted by them in time and the report submitted by them was accepted by defendant No. 2 which they have failed to prove. It thus cannot be said that defendant No. 1 had performed their part of the contract with defendant No. in accordance with the terms and conditions as agreed in Memorandum of Understanding mark D/1/1 and as such it cannot be said that they would have earned their remuneration for the work from defendant No. 2.
(29) It also thus cannot be said that defendant No. 2 had availed the benefit of the second remittance of Rs. 79,601.99 wrongly make by plaintiff in the account of defendant No. 1 and this necessarily follows that the defendant No. 1 is not entitled to retain this amount.
(30) Learned counsel for defendant has relied on United Bank of India Ltd. Vs. M/S A.T. Ali Hussain & Co. Air 1978 Calcutta and Lohia Trading Company Vs. Central Bank of India & Anr. in support of the contention that the defendant No. 1 had submitted the report and thus they had not enriched themselves by the second payment made to them.
(31) In the case of Lohia Trade Company it was held that Section 72 of the Contract Act was not attracted in that case. In the other case of United Bank of India Ltd. it was held that it was not correct to say that every sum paid under mistake is recoverable no matter what the circumstances may be. There may in a particular case be circumstances which disentitle a plaintiff by estoppel or otherwise. After referring to case law it was laid down as under : “………..SOlong as the status quo is maintained and the payee has not changed his position to his detriment he must repay the money back to the payer. If, however, there has been a change in the position of the payee who, acting in good faith, parts with the money to another without any benefit to himself before the mistake is detected, he cannot be held liable. Equity disfavours unjust enrichment. When there is no question of unjust enrichment of the payee by reaping the benefit of an accidental windfall he should not be made to suffer, for he would be as innocent as the payer who paid the money acing under a mistake.”
(32) In this case a cheque of Rs. 5,200.00 purporting to be issued by M/s Metal Alloys Company Pvt. Ltd. a constituent of the plaintiff bank in favour of defendant No. 1 was presented to the plaintiff but defendant No. 1 through defendant No. 2 Union Bank of India. The plaintiff paid the said sum of Rs. 5,200.00 to the defendant No. 2 and the account of Metal Alloy Co. Pvt. Ltd. was debited. This cheque was found to be forged one. On demand being made by Metal Alloy Co. on their account being wrongly debited, the plaintiff filed the suit for recovery of the amount of the cheque against defendants No. 1 and 2. After referring to Section 72 of the Contract Act and English and Indian case law the aforesaid principle was laid down and it was held that defendant No. 2 Bank was merely a conduit pipe through which money passed to defendant No. 1 who did not drive any benefit and after receipt of intimation of the receipt of the money against the cheque defendant No. 1 delivered and parted with the goods to the alleged representatives of Metal Alloy Co. by whom the cheque was a genuine one or more otherwise it would not have been encashed by the plaintiff bank. Both the defendants No. 1 and 2 changed their position for worse before the mistake was detected by the plaintiff and communicated to them. Defendant No. 1 had parted with the goods after defendant No. 2 had created the account of defendant No. 1. In these circumstances, it was held that neither of the defendants could be said to have derived any benefit from the mistake committed by the plaintiff bank. In the facts and circumstances both from the point of view of equitable principle and the doctrine of estoppel the plaintiff was disentitled to recover the money from either of the two defendants as there was no unjust enrichment by either.
(33) In Mahabir Krishan Vs. State of Madhya Pradesh constructing Section 72 of the Contract Act it was held that this section is based on the doctrine of unjust enrichment. The principle of unjust enrichment requires (1) that the defendant has been ‘enriched’ by the receipt of a ‘benefit’,(2) that this enrichment is “at the expense of the plaintiff” and (3) that the retention and it was held that when money was paid by mistake refusal may result in unjust enrichment depending on the facts and circumstances of the case.
(34) The question thus arises whether in the circumstances, the defendant No. 1 can be allowed to retain the benefit and to enrich himself. As already held that payment of second installment was made by the plaintiff to the defendant No. 1 by mistake; defendant No. 2 on whose behalf this payment could be said to have been made has not derived or availed any benefit against this payment, it would thus be an unjust enrichment to allow the benefit of this to defendant No. 1. Issue No. 3 is accordingly decided against defendant No.1 and Issue No.4 is decided in favour of defendant No. 2 and against the plaintiff and defendant No. 1. Issue No. 5 : Is the plaintiff entitled to interest? If so, at what rate?
(35) Plaintiff has claimed interest at the rate of 17-1/2% per annum on the “principle of custom, usage, and trade practice” being the bank rate of interest. Plaintiff has not adduced any evidence as to what is the rate of interest prevalent and if there is any such trade practice or custom or usage. Plaintiff would have been entitled to interest under Interest Act, 1978 in case demand of interest had been made in a written notice sent to the defendants. Even such notice has also not been proved on record. As such plaintiff is not entitled to interest upto the date of institution of the suit.
(36) However, plaintiff would be entitled to interest under Section 34 of the Code of Civil Procedure from the date of institution of the suit till realisation of the amount. The amount is due from defendant No. 1 under a commercial transaction. The amount was credited to the account of defendant No. 1 in accordance with commercial activity of the plaintiff as well as on account of commercial transaction between the defendants. Plaintiff is granted interest at the rate of 12% per annum from the date of institution of the suit till realisation. Issue No. 5 is decided accordingly. Issue No. 6 : To what amount if any the plaintiff is entitled and from whom?
(37) Plaintiff is thus entitled to recover Rs. 79,601.99p. from defendant No.1 Issue No. 6 : Relief.
(38) In view of my findings on the above issues the plaintiff succeeds in part. Suit of the plaintiff is accordingly decreed for recovery of Rs. 79,601.99p. with proportionate costs against defendant No. 1 with interest at the rate of 12% per annum from the date of institution of the suit till decree and further interest at the same rate till realisation. Suit against defendant No. 2 is dismissed with no order as to costs.