JUDGMENT
Pratibha Upasani, Chairperson
1. This substantive appeal is filed by the appellant/original defendant J.R. Kanani being aggrieved by the judgment and order dated 23rd April, 2003 passed by the learned Presiding Officer of the D.R.T.-II, Mumbai in Original Application No. 2970 of 2000. By the impugned judgment and order, the learned Presiding Officer allowed the application in favour of the applicant bank and against the defendant and ordered the defendant to pay to the applicant bank various sums as mentioned in CIs. (b) and (c) of the operative portion of the impugned order. The learned Presiding Officer also gave certain consequential declarations and directed issuance of recovery certificate in the above stated terms. Being aggrieved, the present appeal is filed.
2. Few facts, which are required to be stated are as follows:
The bank sued the defendant by filing Original Application against him for recovery of:
1. Rs. 52,60,705/- with interest at the rate of 18 per cent per
annum with quarterly rests being due under CC
(hypothecation of book debts) facility;
2. Rs. 16,18,455/- with interest as above being dues under bill
purchase / bill discounting facility;
3. Rs. 2,99,769/- with interest as above being dues under Inland
Letter of Credit (Advance Bills) facility.
The defendant was carrying on business in the name and style of Pooja Enterprises. Prior to 14th May, 1996, it was a partnership firm, the defendant and one Ms. Hiraben Ramdas Kanani, being partners. The applicant bank had granted credit facilities to the firm on 23rd January, 1992. The facilities were lastly renewed on 15th December, 1994 for the period of one year. The facilities enjoyed by the firm were:
CC Hypothecation of Book Debts : Rs. 20 lacs Bills purchased/discounted : Rs. 08 lacs Inland LC advance bills : Rs. 02 lacs
The firm was dissolved by Deed of Dissolution dated 24th January, 1995. All assets and liabilities of the firm were taken up by the defendant who executed demand promissory notes, letter of continuity, letter of sale proprietorship, agreement of hypothecation in lieu of the facilities, etc. On his failure to clear the outstanding, acknowledgement of debt was executed on 18th December, 1998. The defendant did not clear the outstanding even thereafter in spite of several demands made by the bank. Hence, the present Original Application was filed by the bank.
3. The defendant appeared and contested the Original Application by filing written statement, inter alia contending that the Original Application did not disclose the cause of action, that the Original Application was barred by limitation and that the defendant was entitled to set off. The defendant admitted signatures on the documents but it was contended that he was made to sign when the documents were blank. The rate of interest was also denied.
Case of the defendant in the written statement, was that in the year 1996, he offered to sell office premises at Bhuleshwar and sought the applicant bank’s permission to sell the same. The applicant bank however did not grant the permission. It was contended by the defendant that if the bank had granted permission at that time, the property would have fetched Rs. 17 lacs, because thereafter the prices had come down at least by 40%.
Grievance of the defendant was that three hundies mentioned in para 17 of the written statement aggregating to Rs. 3,09,520/- drawn by the defendant were accepted by one Ganesh Anhydrite Limited. It was contended that the said hundies were returned unpaid by Canara Bank, the bank of the acceptors. However, the applicant bank did not return the hundies to the defendant and that in fact, the hundies got misplaced. It was contended that while the applicant bank informed to the defendant that hundies were with Canara Bank, the Canara Bank informed the defendant that they had been returned to the applicant bank. It was contended that these hundies were required to be produced in the action filed against the drawer but were not returned by the bank. The defendant contended that he therefore lost the remedy against the acceptors.
Another grievance of the defendant was that he had given three LIC policies, numbers of which were given in para 19 of the written statement for Rs. 2 lacs each to the applicant bank who however, did not give credit to the amount. The defendant had PPF account and credit was also not given to the balance in the same. The dismissal of the Original Application was sought on the above grounds by the defendant and in fact the defendant stated that he suffered loss because of calculations of the bank.
4. The applicant bank filed claim affidavit and produced evidence to support its claim like sanction letter dated 15th December, 1994, demand promissory note, letter of continuity, sole proprietorship, hypothecation of book debts, letter of bills purchase, letter of pledge, letter of acknowledgement and statement of accounts. The applicant bank also filed additional affidavit of Mr. M.M. Bhutani to which the copies of the letters from LIC had been annexed showing that the policies had lapsed. The said affidavit also stated that PPF account was there.
5. The defendant filed his claim affidavit and filed certain documents, which were annexed to the reply.
6. The learned Presiding Officer after hearing both the sides and after going through the plethora of evidence placed before him came to the conclusion that the applicant bank had succeeded in proving its case, that since no court-fee was paid by the defendant on the set off, there was no legal set-off. The learned Presiding Officer observed that the acknowledgement of debt was accepted. However, many facts like the applicant bank unnecessarily suppressed the permission for sale of the defendant’s office premises, that the defendant suffered loss due to lapse of LIC policies, etc. were accepted by the learned Presiding Officer. It was noted by the learned Presiding Officer that the defendant No.1 was handicapped person. However, all these facts were taken into consideration by the learned Presiding Officer only for reducing the rate of interest.
7. I have heard Mr. Rishabha Shah for the appellant and Mr. Satpute for the respondent bank. I have gone through the proceedings including the impugned order, and in my view, the learned Presiding Officer was not correct in allowing the Original Application of the applicant bank.
8. Mr. Rishabh Shah, the learned advocate appearing for the appellant vehemently argued that the statement of accounts for cash credit facility showed overdrawn limit beyond Rs. 20 lacs as on 1st July, 1995, the alleged acknowledgement of liability was dated 8th December, 1998 and the Original Application was filed on 6th September, 2000 and therefore, the claim of the bank was stale and time barred.
9. Having gone through the evidence, which is produced before me, factual position as pointed out by Mr. Rishabh Shah appears to be true. I therefore find force in his submission that the claim of the bank was time barred. The Original Application was indeed time barred. Therefore, on this ground alone, the appeal has to be allowed. However, for completeness of the judgment, other points are also dealt with.
10. Contention of the defendant is that in the year 1996, the defendant wanted to sell his office premises as there was a purchaser for Rs. 17 lacs at that time. The defendant therefore applied to the bank for permission to sell the said office premises. However, in spite of repeated requests made by the appellant, the bank did not grant requisite permission. If at that time, the bank had granted permission to sell the office premises, the burden of the defendant would have become much lesser but the bank did not grant the permission and because of this attitude of the bank, the defendant was put to loss. The learned Presiding Officer in para 11 of his impugned judgment has accepted this situation. It appears that the property was not mortgaged with the bank but still the defendant sought permission of the bank to sell the property, which was not granted by the bank.
11. With respect to three bills of exchange aggregating to Rs. 3,09,520/-, it was submitted that the bills were accepted by one Ganesh Anhydrites Limited but on presentment, the payment was not made and therefore, the defendant was requesting the bank to give the bills for taking action against the said acceptor, In fact, the defendant had filed company petition for liquidation of the said company in which the bills were required to be produced, but the bank did not return the said bills to the defendant. Consequently, the defendant lost his remedy against the acceptor. If the applicant bank had returned the bills to the defendant, it would have helped the defendant to successfully pursue the legal remedy against the acceptor of bills of exchange. This attitude of the bank was improper.
Even LIC policies, which were assigned in favour of the applicant, lapsed because nothing further was done with respect to those LIC policies by the bank. Policies could have been revived, had the proper attention been paid by the bank. Admittedly, policies had already lapsed and that the applicant bank was not obliged to pay premium. The bank could have certainly helped the defendant to revive the LIC policies, which ultimately would have benefited both the parties, but the bank avoided to do that.
The defendant’s further case was that he had PPF account with the applicant bank. In fact, the bank’s officer Mr. M.M. Bhutani in his affidavit admitted this factual position, but no credit was given to the defendant.
Set-off claimed by the defendant may not be the legal set-off, however, defences taken by the defendant had substance in them. They were not usual stock defences, which are usually taken by the defaulters. The learned Presiding Officer has also admitted to a certain extent that there was force in these defences but still the Original Application came to be allowed, which in my view, was not proper. As already observed, the Original Application was time barred.
For the reasons stated above, the impugned order will have to be set aside and the appeal will have to be allowed. Hence, following order is passed:
Appeal No. 119 of 2003 is hereby allowed. Impugned order dated 23rd April, 2003 is hereby set aside.
Appeal allowed
