1999(1) ALL MR 556
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
D.G. DESHPANDE, J.
The Sangli Bank Ltd., Vs. Kanishka Investments Pvt. Ltd. & Ors.
Suit No. 4632 of 1994
19th November, 1998
Petitioner Counsel: Mr. SHETYE with Mr. A.C. MAHIMKAR i/by MAHIMKAR & Co.
Respondent Counsel: Mr. V. Y. DIVEKAR i/by M/s. Divekar & Co.
(A) Civil P.C. (1908), O.29, R.1 - Suit by Bank - Authorisation to sign the plaint - Evidence and proof.
The plaint in the instant case was signed on the basis of power of attorney executed in his behalf by the Board of Directors of the plaintiffs-bank, and therefore, the plaintiffs in order to succeed has to prove the following things :-
[A] That the Board of Directors of the plaintiffs-bank passed a particular resolution in a meeting held for that purpose ;
[B] That the said resolution is duly placed on record by the bank and proved according to the provisions of law;
[C] That the signatures on the power of attorney are proved as per the provisions of law; and
[D] That the notarization of the power of attorney is also proved as required by the law.
When the defendant had specifically challenged the authority to sign the plaint and of to verify the plaint, it was incumbent on the plaintiffs to prove each fact in this regard separately, independently and also in legally permissible manner. However, the plaintiffs did not adduce any evidence in this regard. The plaintiffs did not prove passing of resolution in proper and legal manner, the plaintiffs did not examine the persons who were present in the said meeting, the plaintiffs did not examine the secretary who prepared the minutes of the said meeting, the plaintiffs did not produce original minutes regarding the said resolution, the plaintiffs did not examine any of the directors who were present in the said meeting and who passed the resolution, the plaintiffs did not examine the persons issuing certified copy of the minutes. Since the resolution passed by the Board of Directors of the plaintiffs-bank is not a public document it was necessary and obligatory on the plaintiffs to prove the fact of passing of the resolution in proper manner by adducing proper evidence and/or in the alternative to prove the copy of the resolution in proper manner. However, the plaintiffs bank has not discharged its obligation in this regard at all, and consequently, the resolution nor its copy is proved because officer who produced the copy of the resolution admitted that he was not present when the resolution was passed and he got the copy of the resolution by post from the head office. [Para 19,20]
(B) Power of Attorney Act (1882) S. 4 - Execution of power of attorney - Proof.
The Powers of Attorney Act 1882 lays down a procedure by which an instrument creating a power-of-attorney has to be deposited in the District Court within the local limits of whose jurisdiction the instrument may be. The person presenting the power of attorney for deposit will have to file affidavit about its execution, will have to file declaration in that regard, and after the District Court satisfied about due execution of the power of attorney on the basis of declaration, affidavit and verification, a note of the instrument so deposited will be taken in a separate file, and this will be open to the public for inspection and certified copy shall be delivered to any person on his request. As per Section 4 of the Act it appears that a person obtaining certified copy of the instrument has to present copy of the instrument so deposited and said copy may be stamped and marked as certified copy, which means that marking and certification can be done by the District Court only. In this Act it is nowhere laid down that the Special Executive Magistrate is empowered to affirm the power of attorney. [Para 24,27]
(C) Contract Act (1872), S.7 - Loan agreement with the bank - Interest clause - What is not agreed cannot be permitted to be claimed, charged and recovered.
Taking and giving loan by a borrower from the bank is a matter of agreement between the parties and the terms of the agreement stand concluded on issuing sanction letter and acceptance of the sanction letter by the borrower and thereafter the bank cannot be permitted to charge interest relying upon the execution of subsequent documents by the borrower. What is not agreed between the parties cannot be permitted to be claimed, charged and recovered. [Para 49]
(D) Civil P.C. (1908), O.6, R.4 - Suit by bank for recovery of loan with interest - Adjustment of loan claimed by defendant - Issue as to whether plaintiff bank gave due credit for the amount - Documents regarding adjustment in possession of the Bank - Plaintiff Bank trying to prove affirmative fact of adjustment in absence of amendment of plaint and requisite pleadings - Held plaintiff could not be allowed to prove adjustment without giving opportunity to defendants to meet the case of plaintiff well in advance. (Para 61, 62)
JUDGMENT :- This is a bank suit for recovering a sum of Rs. 59,33,000/- and odd from the defendants. It is the case of the plaintiff that the defendant No.1 was a company registered under the Indian Companies Act 1956 and defendant Nos. 2 and 3 were the directors of defendant No.1 and they are the guarantors in their personal capacity. Four different facilities were granted by the plaintiff-bank to the defendants. First was a secured term loan facility against hypothecation of the vehicle with a limit of Rs. 3,41,000/-; second was a term loan facility against mortgage of land and building with a limit of Rs. 18,42,000/-; third was again a term loan facility against hypothecation of machinery with a limit of Rs. 4,42,000/-; and fourth facility was a secured term loan facility against hypothecation of machinery with a limit of Rs. 4, 30, 000/-. According to the bank, the defendants, were executed all the necessary documents in favour of the plaintiffs-bank in respect of all these facilities and executed simple mortgage and lease and guarantee etc. as per the details given in the plaint. Further the defendants executed four separate letters of acknowledgments of dated 17-2-1992 in respect of the aforesaid four facilities. But the defendants, even though availing of the facilities, failed and neglected to repay the amount due under the aforesaid facilities, and therefore, the plaintiffs bank gave a letter dated 3-9-1994 calling upon the defendants to pay to the plaintiffs a sum of Rs. 55,54,597=45 together with interest thereon. But the defendants did not pay anything thereafter, and hence, the present suit is filed for recovery of sum of Rs. 59,30,554/-.
2. The defendants have raised various defence. Firstly, according to them, there is concealment and suppression of material facts. Secondly, according to them, the plaintiffs-bank filed this suit as a counter blast to the complaint filed by the defendants before the Consumers Dispute Redressal Federation, Maharashtra State for the deficiencies in services rendered by the plaintiffs, where the Commission was pleased to grant damages of Rs. 5,00,000/- and costs of Rs. 2,000/- to the defendants. The bank preferred an appeal before the National Commission and the matter was remanded after awarding costs of Rs. 10,000/- to the defendants. Thereafter the defendants filed complaint before the Commission in Maharashtra wherein order was passed on 12-3-1997 that such a dispute could not be entertained in summary way and the Civil Court would be proper to decide those disputes, and the complaint of the defendants was dismissed. However, the defendants could not make counter claim in respect of the loss and damages suffered by them because their business came to a stand still before six years back i.e. in 1991-92.
3. However, according to the defendants, the plaintiff bank is violating guide lines and norms prescribed and laid down by the Reserve Bank of India and the plaintiffs-bank has claimed and charged interest contrary to those guide lines and circulars issued by Reserve bank of India. Further according to defendants, on all the documents like letter of balance confirmation, letter of continuing security, promissory note etc., the signatures of the defendants were taken in blank, and that the entire statement of accounts annexed by the plaintiffs in respect of the four accounts mentioned in the plaint are false, fabricated and manipulated and the plaintiffs bank has arbitrarily and unilaterally changed the terms and conditions which were granted by the Board of Directors of the plaintiffs bank, that the interest is charged at the rate of Rs. 23.75% p.a. instead of 12.5% p.a. and this was against the circular issued by National Bank for Agriculture and Rural Development (NABARD).
4. Further according to the defendants, there was inordinate delay in disbursing the loan and this resulted in huge loss to the defendants, particulars of which are given by defendants in written statement. According to the defendants, this was a case of agricultural loan because according to them, poultry is ancillary to agriculture, and therefore, installments were paid annually and not with quarterly rests, and as such, the claim of the plaintiffs-bank in that regard was totally illegal. The defendants have also contended that an amount of Rs. 26/- lacs belonging to the defendants was lying with the plaintiffs-bank as a deposit, but the plaintiffs bank, according to its own whim and cryptic adjusted this amount towards loans without intimation to and consent of the defendants. Among other pleas raised by the defendants, authority of Vinayak Vasant Joshi to sign and verify the plaint was also challenged.
Whether the suit is barred by law of limitation ?
Whether the defendants
prove that they have executed blank documents ?
Whether the defendants
prove that plaintiffs are entitled to charge simple interest at the rate of 12.5 per cent per annum only ?
Whether the plaintiffs
prove that Mr. V.V. Joshi is duly authorized to sign the plaint ?
Whether the plaintiffs are
entitled to decree for a
sum of Rs. 59,30,554=00 with further interest ?
Whether the plaintiffs prove that they are entitled to charge interest at the rate prayed for in the plaint ?
Whether the defendants prove that plaintiffs have violated the guide lines of
the Reserve Bank of Indiaas well as the conditions of the sanction letter while
charging interest as stated in paragraph 5 of the written statement ?
Do defendants prove that plaintiffs did not give credit for Rs. 26/- lacks, Rs. 13,24,800/p and Rs. 5,05,000/- as pleaded by the defendants ?
Whether defendants prove that the loan documents have been obtained by the plaintiffs in blank ?
Whether the plaintiffs prove that there is any amount outstanding and due by the defendants to the plaintiffs ?
Whether the guarantee
executed by the defendant Nos. 2 and 3 have become void and the guarantee stand discharged in view of the plaintiffs violating terms of sanction ?
What decree & Order ?
|As per final order.|
6. The plaintiffs bank examined three witnesses; viz. Ramesh Japtiwale as P.W. No.1, Sunil Dattatray Redij as P.W. No.2, and one Vinayak Vasant Joshi as P.W. No.3 for proving its case. As against this the defendant No.2 examined himself only. After the evidence was over the arguments of the plaintiffs and defendants were heard by me at length. It was contended by the counsel for the plaintiffs-bank that bank has proved its case on the strong admissions given by the defendant and the documents executed by him, and therefore, the plaintiffs-bank was entitled to a decree as prayed for. It was also contended that so far as charging of interest is concerned, the defendants had agreed that the interest would be charged with quarterly rests, and therefore, the same was charged with quarterly rests and as per the guidelines and circulars issued by Reserve Bank of India and NABARD from time to time. The compilation of those circulars was filed by the plaintiffs' advocate during the course of arguments. So far as fixed deposit of the defendants is concerned, it was contended by the plaintiffs' counsel that the defendant himself has given authority in writing to the plaintiffs-bank for appropriating and adjusting the amount of the fixed deposit towards the four facilities given to the defendants, and even after the adjustment of amount of FDRs alongwith the interest, huge sum was payable by the defendants. Regarding power of attorney, signing and verification of the plaint, counsel for the plaintiffs relied upon a judgment of the Supreme Court reported in 1998 Bank J. 324 [United Bank of India Vs. Naresh Kumar & Ors.]; wherein the Supreme Court has held that public interest should not be permitted to be defeated on a mere technicality and procedural defects.
7. Whereas on the other hand counsel for the defendants has raised objection regarding signing and verification of the plaint, proof regarding power of attorney, admissibility of the documents, improper and illegal adjustment of the fixed deposit amount, causing loss to the defendant's account, illegal demand of interest, collecting and charging interest at a rate beyond the terms of the agreement and beyond the circulars of the Reserve Bank of India and NABARD. Therefore, he contended that the suit of the plaintiffs bank was liable to be dismissed.
As per this issue the plaintiff bank has to prove that Mr. V.V. Joshi was duly authorized to sign the plaint. However, with reference to this Issue Mr. Divekar for the defendants raised many other grounds and all of them will have to be considered while deciding this Issue.
10. Mr. Divekar contended that the plaint in this suit was signed by one officer and it was verified by other officer and this was not admissible under Code of Civil Procedure. He further contended that even after examining three witnesses the plaintiff did not and could not prove that Mr. V.V. Joshi and other officers were duly authorized to sign and verify the plaint respectively. Further, the evidence adduced by the plaintiff's witnesses i.e. power of attorney was not legal and admissible, and lastly, the resolution of the Board of Directors of the plaintiff being not proved in a proper manner was also not admissible, and therefore, for all these reasons the suit is liable to be dismissed. On the other hand it was contended by the plaintiff's advocate on the basis of ruling of Supreme Court reported in 1998 Bank. J. 324 [ United Bank of India Vs. Naresh Kumar & others ] that suits instituted by the bank were not liable to be rejected or defeated on mere technicalities, and therefore, according to the plaintiff's advocate firstly, there was no defect in signing and verifying the plaint. Secondly, the resolution of the Board of Directors and power of attorney were properly proved, and there was no defect in plaint and the objection raised by the defendant in that regard was liable to be rejected.
11. The plaintiffs-bank examined one Ramesh Ganesh Japtiwale as P.W. No.1. In the first sentence of his evidence P.W. No.1 stated that he was not conversant with the hand writing and signature of Mr. V.V.Joshi, the then Regional Manager. Admittedly, therefore, the evidence of this witness does not help the plaintiffs-bank in proving Issue No.4 and other objections raised by the defendants.
12. Thereafter, the plaintiffs-bank examined Sunil Dattatray Redij as P.W. No.2, the branch manager of the plaintiffs-bank at Girgaum. He was shown the plaint and he has stated that it was signed by Mr. V.V. Joshi and he can identify the signature. This witness also produced true copy of the power of attorney executed by the plaintiffs-bank in favour of Mr. V.V. Joshi. The objection was raised by the defendants for production and exhibition of the document. However, the same was allowed subject to costs and the matter was adjourned. Thereafter P.W. No.2 testified that he has brought general power of attorney executed in favour of Mr. V.V. Joshi on 28-1-1987. However, the witness admit in examination in chief itself that the persons executing the power of attorney did not put their signatures in his presence and that he was not acquainted with their signatures. In view of this statement, the power of attorney was not exhibited and returned to the witness. Therefore, evidence of this witness i.e. P.W. No.2 is also of no help to the plaintiffs in proving this Issue though this witness has admitted that he was acquainted with the signature of Mr. V.V.Joshi. Thereafter plaintiffs-bank examined Mr. V.V. Joshi himself as P.W.No.3. He stated that he has signed the plaint as constituted attorney of the plaintiff-bank, and that the power of attorney was given to him by the plaintiffs-bank after passing resolution to that effect. The objection was raised by the defendants for production and proof of the said resolution on the ground that this document was not disclosed by the plaintiffs any where in the plaint or affidavit of documents. Subject to objection the document was taken on record, and objection was to be decided at the time of judgment.
13. P.W. No.3 Mr. V.V. Joshi also produced original power of attorney alongwith its xerox copy. He stated that Mr. Shah and Mr. Choudhary have signed this power of attorney as they were the then directors of the plaintiffs bank. Counsel for the defendant also raised objection for exhibiting the document on the ground that the power of attorney was not signed in the presence of the witness by these two directors. The document was however exhibited subject to objections which were to be decided at this stage. The witness further stated that on the basis of this power of attorney he had filed the plaint.
14. The plaintiffs bank examined in all three witnesses and I have discussed the relevant evidence of these three witnesses regarding this Issue. Admittedly P.W. No.1 had no personal knowledge about the signature of Mr. V.V. Joshi. Evidence of P.W. No. 2 is also of no help because he admitted that the power of attorney was not executed in his presence and he was not acquainted with the signatures of the executants i.e. two members of the Board of Directors. Therefore, his evidence is also of no use. Lastly the evidence of Mr. V.V. Joshi who undoubtedly admitted his signature on the plaint, but in cross examination he had admitted that the power of attorney was not signed in his presence by two directors and so far as board resolution Exhibit P-27 was concerned, this witness stated that he obtained the board resolution from the head office by post and the certified copy of the resolution Exhibit P-27 was signed by S.G. Kulkarni and he could identify the signature of Mr. Kulkarni. In cross examination P.W. No.3 admitted that he was not present in the meeting in which the resolution P-27 was passed and he could say that the power of attorney was signed by Mr. Shah and Mr. Choudhary because their names appear in the said resolution.
15. Mr. Divekar advocate for the defendants also raised one more contention and that is that the Special Executive Magistrate was not competent to affirm the power of attorney and since Exhibit P-28 was affirmed by Special Executive Magistrate it was not admissible in evidence.
16. I must at this stage point out that usually bank suits are not contested. On all the counts the borrower shall ask for installments and raise plea that his signature was obtained on blank form by the bank. It is in very few cases such pleas are going to the root of the case, and therefore, they are required to be seriously considered alongwith Supreme Court's judgment relied upon by the plaintiffs' advocate referred to above.
17. Order 29 of the Code of Civil Procedure deals with suits filed by or against corporations. Rule 1 of the said Order lays down that any pleading in suits by corporation may be signed and verified on behalf of the corporation by the secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case. The plaint in the instant case is signed by Mr. V.V. Joshi on the basis of power of attorney executed in his behalf by the Board of Directors of the plaintiffs-bank, and therefore, the plaintiffs in order to succeed in proving Issue No.4 has to prove the following things :-
[A] That the Board of Directors of the plaintiffs-bank passed a particular resolution in a meeting held for that purpose;
[B] That the said resolution is duly placed on record by the bank and proved according to the provisions of law;
[C] That the signatures on the power of attorney are proved as per the provisions of law; and
[D] That the notarization of the power of attorney is also proved as required by the law.
If all the four factors are considered in the present case, the findings are against the plaintiffs-bank. None of the three witnesses examined by the plaintiffs said that they were present in the meeting in which the Board had passed the resolution authorizing Mr. V.V. Joshi or empowering Mr. Joshi to act as its constituted attorney. The bank also did not examine any one who was present in the said meeting nor did adduce any evidence regarding passing of the resolution. Apart from this, even copy of the resolution Exhibit P-27 is not properly proved. Admittedly, this resolution is not a public document and hence its certified copy is not admissible in evidence. Exhibit P-27 is an extract from the meeting of the Board held on 19th December 1986. It is a certified true copy of the extract signed by the secretary of the Managing Committee. This extract is accompanied by a list of officers and it states that Power of attorney in favour of following officers and name of Mr. V.V. Joshi appears at Sr. No.14.
18. In fact, the defendants had, in his written statement, specifically raised a plea in paragraph No. 33 that the defendants are not aware as to whether Mr. V.V. Joshi was duly authorized principal officer of the plaintiffs-bank and whether he is authorized to sign and verify the plaint on behalf of the plaintiffs and the plaintiffs, therefore, be put to strict proof thereof as the defendants did not admit genuineness of the document. This paragraph No. 33 of the written statement is in reply to paragraph No. 28 of the plaint wherein the plaintiffs has stated that the plaint is signed by Mr. V.V. Joshi, the constituted attorney of the plaintiffs and is verified by Mr. Sunil Redij who is conversant with the facts of the case and able to depose to the same.
19. When the defendants have specifically challenged the authority of Mr. Joshi to sign the plaint and of Mr. Redij to verify the plaint, it was incumbent on the plaintiffs to prove each fact in this regard separately, independently and also in legally permissible manner. However, I am at pains to point out that the plaintiffs did not adduce any evidence in this regard. The plaintiffs did not prove passing of resolution in proper and legal manner, the plaintiffs did not examine the persons who were present in the said meeting, the plaintiffs did not examine the secretary who prepared the minutes of the said meeting, the plaintiffs did not produce original minutes regarding the said resolution, the plaintiffs did not examine any of the directors who were present in the said meeting and who passed the resolution, the plaintiffs did not examine the persons issuing certified copy of the minutes and the plaintiffs remained contended only by adducing evidence in the above nature reproduced above.
20. Since the resolution passed by the Board of Directors of the plaintiffs-bank is not a public document it was necessary and obligatory on the plaintiffs to prove the fact of passing of the resolution in proper manner by adducing proper evidence and/or in the alternative to prove the copy of the resolution in proper manner. However, the plaintiffs bank has not discharged its obligation in this regard at all, and consequently, the resolution nor its copy is proved because Mr. Joshi who produced the copy of the resolution admitted that he was not present when the resolution was passed and he got the copy of the resolution by post from the head office.
21. Third objection was regarding proof of execution of the power of attorney. Exhibit P-28 is the true copy of the General power of Attorney. It is purported to be signed by one Mr. S.L. Shah and V.B. Choudhary, the directors of the plaintiffs-bank, and it is attested by Special Executive Magistrate, Sangli. Out of the three witnesses examined by the plaintiffs bank, witness No.1 does not speak anything of this power of attorney. Plaintiffs' witness No.2 produced the power of attorney but stated in his cross examination itself that the power of attorney was not signed in his presence by Mr. Shah and Mr. Choudhary and he was not acquainted with those signatures. And the third witness of the plaintiffs bank Mr. V.V. Joshi also stated that the power of attorney was not signed in his presence by the two directors but it was sent to him by the head office. This plaintiffs' witness No. 3 also no where stated that he was acquainted with the signatures of Mr. Shah and Mr. Choudhary, but to the contrary, he stated that because the names of Mr. Shah and Mr. Choudhary appeared in the note forming part of Exhibit P-27 he was saying that the power of attorney was signed by those two directors viz. Mr. Shah and Mr. Choudhary.
22. All this evidence adduced by the plaintiffs is not at all sufficient for proving the execution of the power of attorney by Mr. Shah and Mr. Choudhary nor it proved that both of them had signed the power of attorney pursuant to the resolution of the Board, nor it proved that the plaintiffs had in fact passed any resolution authorizing those two directors to sign the power of attorney in favour of Mr. V.V. Joshi.
23. The another objection that was raised by Mr. Divekar, counsel for the defendants, was that the power of attorney Exhibit P-28 was notarized by the Special Executive Magistrate, Sangli, and since this Special Executive Magistrate was not authorized to affirm the power of attorney, and neither the original nor the true copy of the power of attorney can be considered in evidence. Apart from his objection that the power of attorney and the resolution were not relied upon by the plaintiffs in the affidavit of documents, my attention was also drawn by Mr. Divekar to the provisions of the Powers of Attorney Act 1882 in this regard.
24. I find strong force and substance in the objection raised by Mr. Divekar, the counsel for the defendants. The Powers of Attorney Act 1882 lays down a procedure by which an instrument creating a power-of-attorney has to be deposited in the District Court within the local limits of its jurisdiction the instrument may be. [ Because the head office of the plaintiff-bank is at Sangli, it will be the District Court at Sangli in this regard.] The person presenting the power of attorney for deposit will have to file affidavit about its execution, will have to file declaration in that regard, and after the District Court satisfied about due execution of the power of attorney on the basis of declaration, affidavit and verification, a note of the instrument so deposited will be taken in a separate file, and this will be open to the public for inspection and certified copy shall be delivered to any person on his request. As per Section 4 of the Powers of Attorney Act, 1882 it appears that a person obtaining certified copy of the instrument has to present copy of the instrument so deposited and said copy may be stamped and marked as certified copy, which means that marking and certification can be done by the District Court only.
25. Rules in this regard are to be found in Chapter XLIX of the Original Side Rules. They are in respect of the Powers of Attorney Act, 1882 and they are in all four rules which provide that an application to deposit a power of attorney shall be made by petition, the power of attorney, the execution of which shall be verified in accordance with the provisions of Section 4 clause [a] of the Powers of Attorney Act, 1882, shall be annexed to such petition, and the Court or the Judge in Chamber may direct it to be deposited in the registry but the Court also empowers before passing order of deposit to require further evidence of execution. These rules further provide that any person can inspect these documents and get its certified copy thereof on the payment of prescribed fees.
26. It is true that these rules of the Original Side will not apply exactly they are to the District Court. However, the procedure with the District Court cannot be in any way different, nor can it be contrary to the provisions of Section 4 of the Powers of Attorney Act, 1882.
27. Therefore, if the plaintiffs-bank intends to prove the power of attorney, then if he produced the original, he has to prove its due execution in proper and legal manner and if he has relied upon the copy of the power of attorney then he can do so only by following the procedure under Section 4 of the Powers of Attorney Act. In the instant case, Exhibit P-28 no where shows that the power of attorney was lodged by the plaintiffs-bank with the District Court, Sangli, nor does it show that it is a certified copy issued by the District Court, Sangli. In this Act, i.e. the Powers of Attorney Act it is no where laid down that the Special Executive Magistrate is empowered to affirm the power of attorney. Further Exhibit P-28 also does not show that the plaintiffs-bank complied with the provisions of Section 4[a] of the Powers of Attorney Act particularly in this case. Counsel for the plaintiffs also could not show any provision of law under which the Special Executive Magistrate was empowered to affirm the power of attorney and Court was bound to accept the power of attorney so affirmed by the Special Executive magistrate as legally admissible piece of evidence.
28. For all these reasons it has to be held that the plaintiffs-bank has miserably failed to prove the due execution of the power of attorney by Mr. Shah and Mr. Choudhary and it has also failed to prove the compliance of the Section 4 of the Power of Attorney Act and has also failed to prove that the Special Executive magistrate was competent to affirm the power of attorney.
30. Counsel for the plaintiffs relied upon a judgment of the Supreme Court reported in 1998 Bank. J. 324 [ United Bank of India Vs. Naresh Kumar & Others ]. It was an appeal by Special Leave to the Supreme Court in a matter wherein the appellant bank was the plaintiff which had filed a suit for recovery of Rs. 1,40,553.91 against the defendants. One of the Issues framed by the trial Court was, whether the plaint is duly signed and verified by a competent person ? The findings of the trial Court on this Issue were against the bank and the suit was dismissed. The appellate Court also dismissed the appeal on the basis of findings on Issue No.1 and High Court also did not interfere in the second appeal. When the matter went to the Supreme Court, the Supreme Court held that in cases like the present where suits are instituted or defended on behalf of a public Corporation, public interest should not be permitted to be defeated on a mere technicality. Procedural defects which do not go to the root of the matter should not be permitted to defeat a just cause. Supreme Court, therefore, held that the plaint was not liable to be rejected and that in the absence of any express authorization, the court can presume that the ratification by Corporation was implied.
31. Mr. Divekar with reference to the said Supreme Court's judgment contended that even in this case the Supreme Court held that a person may be expressly authorized to sign the pleadings on behalf of the company, for example by the Board of Directors passing resolution to that effect, or by a power of attorney being executed in favour of the individual. And since the plaintiffs bank in the instant case has relied upon the resolution of the Board of Directors and the power of attorney, the plaintiffs cannot be absolved from the liability to prove this authorization in proper manner, and since the plaintiffs bank has failed to discharge its burden the Supreme Court's judgment cannot come to the rescue of the plaintiffs.
32. So far as resolution and power of attorney are concerned, I have already given my findings that the plaintiffs bank has failed to prove the resolution and power of attorney and due authorization in favour of the person signed the plaint by the plaintiffs-bank. However, the Supreme Court has held that ratification can be implied, and therefore, it has to be presumed that in the instant case also the bank has impliedly ratified the act of signing of the plaint by Mr. V.V. Joshi and filing of the plaint by him. Therefore, findings on Issue No. 4 would in the negative, but that would not affect the tenability of the suit in view of the Supreme Court's Judgment.
A plea of limitation was raised by the defendants in Paragraph No. 32 of the written statement. According to the defendants, the plaintiffs bank is seeking extension of limitation on the basis of acknowledgment of liability. But this acknowledgment of liability was signed by him in blank, and therefore, when the amount of liability was not mentioned, same cannot be treated as proper acknowledgment for the purpose of saving limitation. As per Section 18 of the Limitation Act, an acknowledgment cannot be used for the purpose of computing limitation and hence the suit is liable to be dismissed.
34. In this regard, P.W. No. 1 has stated in paragraph No. 5 of his deposition that on 17-2-1992 the defendants gave acknowledgment under their seal and signatures in respect of the four loans or facilities alongwith a copy of the resolution dated 9-2-1992 passed by the Board of Directors and all the acknowledgments have been signed by defendant Nos. 2 and 3. There is no cross examination of P.W. No.1 on this point at all and further Exhibit P-16 includes a resolution passed by the defendants authorized to the effect that term loans and cash credit hypothecation facilities are to be acknowledged and further authorized Mr. and Mrs. Manjrekar to sign the relevant loan documents. In the absence of any cross examination the evidence of P.W. No.1 has to be accepted and hence I hold that the defendants have failed to prove that the suit is barred by limitation. Therefore, findings on this Issue No.1 is in the negative.
35. The burden of proof regarding these Issues Nos. 2 and 9 lies on the defendants and they have to prove that they executed blank documents. In their written statement the defendants repeatedly asserted that their signatures were taken on blank documents, and the documents were filled in subsequently. In this respect the defendants cross examined P.W. No.1 who in his examination in chief deposed to about all the four facilities and execution of the documents by the defendants in that regard. In the cross examination the witness admitted that he had no personal knowledge about all the four loan transactions and the rate of interest agreed between the bank and the defendants, and that he was not concerned with the talks that took place between the Manager of the Bank and the defendants, and therefore, he had no personal knowledge and that the defendants never signed any of the documents proved by that witness in his presence. The witness also admitted that the documents were signed by the defendants before the Manager but he was not present there and he subsequently verified the signatures of the defendants on the basis of specimen signatures given by the defendants at the time of opening of the account. P.W. No.2 does not say anything about the documents from Exhibit P-2 to Exhibit P-16 or that they were signed by the defendants in his presence, and after the documents were filled in by the bank officer. P.W. No.3 was examined to prove signing of the plaint, and therefore, this witness has not stated anything about the documents from Exhibit P-2 to Exhibit P-16 or they were being filled in by the bank before the defendants signed the documents.
36. Consequently, it is the evidence of P.W.No.1 that is available in respect of these Issues and as against that it is the defendants' evidence wherein he has stated that he has signed the documents when there were blanks and those blanks were not filled in at the time of his signature. Here I must point out that the plaintiffs-bank gave evidence in most casual manner and without referring to the Issues framed by the Court and without considering the seriousness of the Issues framed and without considering the consequences. When the defendant has been repeatedly and from the beginning asserted that he has signed the blank documents and when the court has framed the Issues in that regard it was for the plaintiffs to prove that the documents were duly and properly filled in before defendant put his signature. It is true that the burden in this regard lies on the defendant but when the plaintiff enters the witness box first to prove its case without full knowledge of the defence raised by the defendant and Issues framed by the Court then it was necessary for the plaintiffs to adduce proper evidence in that regard. Initial burden of proving these Issues lies on the defendant, but burden of adducing evidence in rebuttal lies on the plaintiffs. The plaintiffs did not adduce evidence in rebuttal on these Issues either initially or after the evidence of the defendant was over. It was, therefore, to be seen whether the evidence adduced by the plaintiffs is sufficient to prove its claim and contentions.
37. I already reproduced the evidence given by the P.W.No.1 in his examination in chief and in his cross examination. At the time of proving the signatures of defendant Nos. 2 and 3 on Exhibit P-2 and P-3 by the P.W.No.1, the counsel for the defendants raised objection that the witness cannot prove the signatures because the documents were not signed in his presence. That objection was overruled by me at that stage because the defendant has not denied signing of the documents. However, the Court has to decide whether the defendant proves that he has executed blank documents and whether the plaintiffs adduced sufficient evidence in rebuttal in this regard.
38. Admittedly, the plaintiffs did not examine any officer of the bank to testify as to who filled in the blanks in all the documents from Exhibit P-2 to exhibit P-16 or in whose presence those blanks were filled in. Further plaintiffs did not examine the Manager of the bank in whose presence the defendant signed those documents. P.W. No.1 has clearly admitted in his cross examination that he did not have any personal knowledge about all the four loan transactions and the rate of interest agreed between the bank and the defendant, and he has further admitted that as an officer he was not concerned with the talks that took place between the manager and the defendant, and therefore, he had no personal knowledge and he further gave damaging admission [ though what he admitted was truth ] that the defendant never signed any documents in his presence.
39. If this was the fact then it was incumbent on the plaintiffs to examine the manager before whom the defendant had signed because this witness P.W. no.1 in the immediate next sentence has stated that he got those documents after the documents were signed by the defendant before the manager. This evidence clearly shows that it was only the manager of the plaintiffs bank who could have testified as to whether the documents were filled in before the defendant signed or whether the defendant signed the blank documents. The plaintiffs did not examine the said manager for proving this material fact and this was serious lapse on the part of the bank.
40. As against this, the defendant has come with his specific case both in his written statement and in his evidence that whenever he required to sign the documents in favour of the bank his signatures obtained on printed blank papers and documents and blank forms. He further stated that even promissory notes which were signed by him were blank. There is no cross examination of the defendant regarding these material issues and nothing is put to the witness to the effect that so and so manager and such and such officer of the plaintiffs bank had filled in all the forms and that the defendant signed those blank forms and documents after reading them in their presence and after understanding the significance thereof.
41. Apart from this my attention was further invited by Mr. Divekar to Exhibit C of the plaint which is a copy of the secured term loan agreement dated 18-1-1990. He pointed out that on page 2 clause 3 of the said agreement there are blanks not filled in by the bank so also there are blanks in clause 19  and  on internal page No. 38 of the plaint. These blanks is important part of the transactions because clause 3 referred to the amount of principal advanced and agreed rate of interest between the parties. My attention was also drawn by Mr. Divekar to Exhibit T of the plaint which is a secured term loan agreement dated 24-4-1991. Clause 3 where also the column regarding rate of interest is blank. Mr. Divekar contended that if the plaintiffs could even at the time of filing of the suit, file the documents with blanks and which according to the plaintiffs were the copies of the originals then there was strong force in the contentions and the objections of the defendant that his signatures were obtained by the plaintiffs on blank forms and documents.
42. On the other hand Mr. Shetye counsel for the plaintiffs contended that the plaintiffs bank has discharged its burden in this regard and alternatively even if the documents were blank same would not affect the merits of the plaintiffs' case because defendant had admitted that he has taken four facilities from the bank. Mr. Divekar on the other hand contended that these two aspects of the case were totally different. According to him, if the plaintiffs is relying on the documents, then the plaintiffs could succeed only on the strength of its own case and not on the basis of the admissions given by the defendant. He further contended that even if the plaintiffs is a bank, the rules of evidence and the rules regarding burden of proof were applicable equally to the bank and to the defendant and no special rules could be invented for the purpose of giving concession to the bank so far as admissibility of documents, proof of documents and burden of proof were concerned. It is difficult to reject the claim and contention of Mr. Divekar because the plaintiff must succeed on the strength of its own case and it cannot rely upon the admission of the defendant, not at least when two issues are totally different, from the evidence I have discussed above, I have no alternative but to come to the conclusion that the plaintiffs has failed to prove that when the defendant signed the documents from Exhibit P-2 to Exhibit P-16 and other documents they were duly filled in and that the defendant did not sign the blank documents. The plaintiffs has failed to rebut the case of the defendant in this regard, and therefore, it has to be held that the defendant has proved that he executed the blank documents. Hence the findings on Issues Nos. 2 and 9 are in the affirmative.
All these issues are in respect of claim of the plaintiffs-bank for the interest. According to the plaintiffs-bank they are entitled to claim and charge interest with quarterly rest and at a rate of 19.25% per annum. According to the defendants the plaintiffs-bank cannot charge more than 12.5% per annum (without quarterly rest).
44. For the purpose of proving their entitlement to the rate of interest the plaintiffs- bank relied upon guidelines issued by RBI from time to time and also guidelines issued by NABARD. However, the defendants strongly relied upon the letter issued by Board of Directors of the plaintiffs-bank at the time of sanctioning their loan. Therefore, the question is whether plaintiffs-bank are bound by the agreement which they entered into with the defendants or they can charge interest in contravention of the said agreement and at the rate fluctuating from time to time as per the guidelines of the RBI. This question of interest is of great importance in the case because the loan amount is near about 29 to 30 lacs and interest charged thereon is equal to loan amount.
45. In order to appreciate the case of the defendants the documents of the plaintiffs - bank will have to be classified. First set of documents of the plaintiffs is documents pertaining to the loan application of the defendants, the feasibility report of the project of the defendants and the decision taken by the Board of Directors of the plaintiffs-bank sanctioning the loan amount and its communication to the defendants. The second set of documents include all the loan forms, promissory notes, agreements of hypothecation etc. executed by the defendants. They also include the statement of accounts maintained by the plaintiffs - bank in respect of the different loan facilities given to the defendants and third set of documents includes the guidelines issued by RBI and NABARD.
46. Exhibit P-2 and P-3 are the letters written by the plaintiffs-bank to the defendants. Both of them are letters of sanction. Exhibit P-2 is dated 19-3-1991 showing the date of sanction of the defendants loans as 15-3-1991. Sanctioning authority shown as the Board of the plaintiffs-bank. Similarly, Exhibit P-3 is a letter of sanction dated 25-10-1989 and the date of sanction is 13-10-1989 and the sanctioning authority is the Board of the plaintiffs - bank. As per Exhibit P-2 plaintiffs-bank has sanctioned cash credit facility of Rs. 4.95 lacs, second was term loan for Rs. 4.30 lacs. Thereafter, loan for poultry feed mill unit aggregating to Rs. 4.30 lacs and fourth was working capital of 2.80 lacs. The rate of interest for three loans is 14% per annum and for the working capital it is 18% per annum. Secondly, as per Exhibit P-3 term loan of Rs. 26.32 lacs and cash credit hypothecation of 3.16 lacs were sanctioned and for the term loan the rate of interest was 12.5% per annum, for the other loan it is 15.5% per annum.
47. So far as different documents, namely promissory note, letter of lien and set off, secured term loan agreement etc. are concerned, the rate of interest quoted is "quarterly rest" whatsoever be the rate of interest. The guidelines issued by the RBI and NABARD from time to time has quoted different rate of interest at different period of time but with quarterly rests. Therefore, the crucial question is whether the bank can charge interest at quarterly rest and my findings is that the bank cannot charge interest at quarterly rests.
48. This is so because when the defendants initially applied for loan and when their applications were sanctioned by the Board of Directors of the bank, it was open to the plaintiffs-bank to put conditions on the defendants that they will have to pay interest at quarterly rests whatever be the rate of interest in respect of each individual type of loan. However, the Board of Directors while communicating their decision of sanctioning the loans applied for by the defendants did not intimate the defendants that the defendants will have to pay interest at quarterly rest. Both the letters Exhibit P-2 and P-3 are silent in this regard and inspite of specific defence raised by the defendants, the counsel for the plaintiffs-bank nor any of the witnesses of the plaintiffs-bank could point out that in the sanction letters Exhibit P-2 and P-3 the bank has intimated to the defendants that they will have to pay interest with quarterly rest. The absence of any such thing firstly shows that the Board did not sanction the loan of the defendants on the ground that the defendants will have to pay interest at quarterly rests and therefore, if the Board did not sanction loan with this pre-condition of quarterly rests interest and if the Board did not put any such conditions to the defendants that they will have to pay interest at quarterly rests then whatever may be shown by the subsequent documents, the plaintiffs-bank cannot claim, charge and recover interest at quarterly rests. The agreement between the defendants and the plaintiffs-bank stands concluded by resolution of the Board of Directors of the plaintiff - bank sanctioning the defendants loan at particular rate of interest per annum without quarterly rests and as soon as that decision of the Board of Directors is communicated by the plaintiffs and accepted by the defendants a concluded contract is brought into force which the plaintiffs-bank cannot be allowed to amend or substitute.
49. The execution of the documents by the defendants in respect of loan facilities has taken place subsequent to the sanctioning letters Exhibit P-2 and P-3 and if in Exhibits P-2 and P-3 there is no condition of defendants paying interest at quarterly rests, then even if the defendants sign scores of documents in the form of promissory notes, hypothecation agreement , loan agreement or even mortgage, the defendants cannot be made liable to pay interest with quarterly rest. Further even if the RBI guidelines or the guidelines issued by the NABARD authorise and empower the plaintiffs to claim, charge and recover interest at quarterly rests, the plaintiffs cannot do so in the instant case because the plaintiffs-bank cannot go beyond the terms of the concluded agreement. Therefore, even if Exhibit P-4 collectively, Exhibit P-7 Collectively, Exhibit P-8 collectively, Exhibit P-9 collectively, Exhibit P-11 Collectively, Exhibit P-13 collectively and all other documents got executed by the defendants in respect of the different loan facilities show that the defendants agreed to pay interest at quarterly rests, the said admission will not come to the help and rescue of the plaintiffs-bank in claiming, charging and recovering interest at quarterly rest. Taking and giving loan by a borrower from the bank is a matter of agreement between the parties and the terms of the agreement stand concluded on issuing sanction letter and acceptance of the sanction letter by the borrower and thereafter the bank cannot be permitted to charge interest relying upon the execution of subsequent documents by the borrower. What is not agreed between the parties cannot be permitted to be claimed, charged and recovered.
50. There is one more strong reason for disallowing the plaintiffs-bank claim for interest at quarterly rest and that is to be found in Exhibit P-22 collectively which includes the RBI guidelines and guidelines issued by NABARD. Advances to the agriculturists are recoverable after one year because it is only at the time of harvesting that the agriculturist can repay their loan. Therefore, interest at quarterly rests is not charged and is not permitted. However, a question was raised by the counsel for the plaintiffs-bank whether poultry can come under the category of Agriculture. However, in my opinion this dispute cannot be raised by the plaintiffs-bank because the sanctioning letters Exhibits P-2 and P-3 themselves show that the bank has treated poultry as Agriculture Allied Activity. On the first page of Exhibits P-2 and P-3 at the right hand corner the following words are written Agri. Allied Activity Poultry Finance. For these reasons, namely concluded agreement between the parties i.e. the plaintiffs-bank and the defendants not permitting the plaintiffs bank to recover interest at quarterly rest and therefore claim of the plaintiffs-bank in that regard has to be rejected.
51. In view of this finding, it is not necessary to give any separate finding on Issue No. 7. Issue No.3 is whether the defendants prove that plaintiffs are entitled to charge simple interest at the rate of 12.5% per annum only. The answer to this issue is that defendants succeed in proving that the plaintiffs-bank is entitled to charge simple interest per annum (without quarterly rest) but the Defendants fail to prove that the rate of interest for all types of loan facilities was only 12.5% per annum. The rate of interest has to be with reference to the loan sanctioned letter Exhibits P-2 and P-3.
Both these issues are connected together because they are in respect of liability of the defendants or the outstanding amount due by the defendants to the plaintiffs. The question therefore is whether the plaintiffs proves that the plaintiffs-bank are entitled to claim amount of Rs. 56 lacs and odd as per the prayers in the suit. At the same time Issue No. 8 has to be considered because according to the defendants, the plaintiffs-bank did not give credit for Rs. 26 lacs, Rs. 13,24,800/- and Rs. 5,05,000/- as pleaded by the defendants (which was an amount in deposit with the plaintiffs under different FDRs etc). I have held earlier that defendants have succeeded in proving that the signatures were obtained by the plaintiffs-bank in blank. I have also held that charging of quarterly rate of interest by the plaintiffs - bank in respect of all the loan facilities cannot be permitted as it is against the contract between the parties. However, so far as the disbursement of loan amount is concerned, it has to be held that the plaintiffs bank has disbursed the loan amount as per the sanction letter to the defendants. The defendants also inspite of their various defences and stand do not contend that nothing was paid to them by the plaintiffs from out of different loan facilities given to them. The principal amount of loan i.e. disbursed by the plaintiffs-bank to the defendants can be found in the sanction letter Exhibits P-2 and P-3. However, the crucial question is even if the plaintiffs-bank proves the payment of this amount whether the defendants can be made liable to pay this amount.
53. It is pertinent to note in this regard that the claim of the plaintiffs in this suit is for total amount of Rs. 59,30,554/- under different heads. This amount is inclusive of interest charged till the date of filing of the suit. Two questions therefore arise whether the plaintiffs succeeds in proving as to how much was the amount towards principal and how much was the amount towards interest from out of the claim of Rs. 59,30,554/-. At this juncture I have no option but to observe that the state of affairs and the picture created by the plaintiffs-bank witnesses is most shabby in this case. When P.W. 2 Sunil Dattatray Redij was examined by the plaintiffs to prove all the statements of accounts and to prove the monetary claim of the plaintiffs in respect of the facilities granted, Mr. Divekar, counsel for the defendants cross-examined him not only at length but also on very vital and important aspect of claim, charge and recovery of interest by the plaintiffs. This witness was confronted with statements of account and different entries made therein regarding interest and he was asked to make calculations and was given sufficient time by the court to make those calculations after which he had to admit that the plaintiffs-bank has charged interest to the defendants at different rates at different times and the interest so charged was ranging from 18% to 23% with quarterly rests.
54. It is clear from the evidence of P.W.No.2 Sunil Redij and from Exhibit D.5 that the bank has charged interest at different periods of time and in respect of different facilities according to its choice and without following guide lines in that regard. For example, in paragraph Nos. 17 and 18 of his cross examination he (P.W. No. 2) devoted to this particular aspect. Apart from this the witness was asked to make calculation of interest in respect of about 25 to 30 entries in the account books and he was given time to make the calculation. When he appeared on the next date he produced a statement showing calculation of interest made by him and this was taken on record by consent of the parties and marked Exhibit D.5. From this document it is clear that the plaintiffs-bank has charged interest ranging from 18.75 % to 23.24% with quarterly rests on all the facilities given to the defendants. I have already held that the bank was not entitled to charge interest at quarterly rests, and therefore, charging of interest at quarterly rests is completely illegal.
55. There is one more important aspect in this case on which claim of the plaintiffs-bank is liable to be rejected. Admittedly, the bank's claim in the suit is about 59,30,554/- and this inclusive of principal and interest and according to the plaintiffs-bank was charging interest as per the guidelines issued by RBI and NABARD. These guidelines were changing and have changed very often and consequently the interest charged by the bank to the defendants have also changed. In the background of this fact, it was necessary for the plaintiffs to prove as to what was the principal amount in respect of each loan facility and what was the interest charged by the bank in respect of that facility. Further it was necessary for the bank to prove as to what was the rate of interest prevailing at that particular time, which guidelines of the RBI or NABARD were in force at that particular time and under which guidelines the plaintiffs-bank charged interest to the defendants and at what rate. However neither in the plaint nor anywhere in the evidence the bank has tried to prove all these vital and important facts separately and independently. What has been done is production of statement of account and production of guidelines of RBI and NABARD, and rest of the work is left for the Court to decide i.e. Court will have to decide after making hundreds of calculations as to what was the principal amount, how much was the interest charged at different periods, which circular of the RBI or NABARD was in force at that particular time and for what period, and what interest was chargeable as per the circular and whether the same has been charged or whatever was charged is in excess.
56. It is not function of the Court to come to the rescue of the party in such a way. The Court has to appreciate the evidence recorded and take note of the facts which are brought on record, but this does not require the Court to come to the assistance of the plaintiffs and go through all the rhetorics on the aforesaid manner. The Court cannot even after going through the statement of account in respect of the loans granted to the defendants decide to conclude that particular sum was due to the bank towards loans and particular sum was due towards interest, nor Court can hold and decide that particular circular of the RBI or NABARD was in force at a particular time empowering the bank to charge particular rate of interest and bank has charged that much interest or interest in excess thereof. There are more than 4/5 facilities granted to the defendants and period of four years have lapsed with near about 14 quarterly rests intervening. Further there is adjustment of FDRs of the defendants and there is absolutely no connecting link in respect of any of this matters.
57. If at all the plaintiffs-bank wanted to justify its account of charging interest at such apparently exorbitant rate or a rate which is not agreed to between the parties and at a rate which was fluctuating every quarter, then it was necessary for the plaintiffs to first produce on record the relevant RBI guidelines or guidelines of the NABARD by which the plaintiffs were entitled to charge interest at a particular rate and then show from the accounts that for that particular period the said rate of interest is charged, claimed and recovered e.g. if according to the plaintiffs for the quarter from 1.1.1992 to 31-3-1992 plaintiffs-bank were entitled to charge interest at the rate of 21% per annum as per the RBI or NABARD guidelines, the plaintiffs should have produced the relevant circular of RBI on NABARD which was in force and applicable for that quarter and should have shown that in the account books for that quarter the plaintiffs had charged that much interest only and not more. However, the plaintiffs has in the instant case miserably failed to prove this important factor. This is therefore the case where plaintiffs has charged interest at different rates for different quarter without any kind of supporting authority in their favour. The court therefore cannot make calculations to help the plaintiffs to find out as to which is the guidelines of the RBI in force at that time, what was the rate of interest as per those guidelines at that time and how much interest is charged by the plaintiffs during that particular quarter. Since the plaintiffs have completely failed on this count it has to be held that charging of interest by the plaintiffs-bank is totally at the whim and caprice of the plaintiffs-bank and there is no legal sanctity to the same.
58. Since the claim of the plaintiffs in the suit is for principal as well as interest and since the plaintiffs has not been able to show as to how much was the principal amount on the date of the suit in respect of which facility and how much was the interest, the court cannot pass any decree in favour of the plaintiffs-bank and the entire claim of the plaintiffs-bank has to be rejected.
59. There is one more important aspect in this matter, which disentitles the plaintiffs to claim any relief and that is Issue No.8. Admittedly, when the plaintiffs-bank granted loan facilities to the defendants, the plaintiffs called upon the defendants to deposit with the plaintiffs bank the Defendants FDRs for different amounts Rs. 26,00,000/-, Rs. 13,24,800/- and Rs.5,05,000/- i.e. in all Rs. 44,29,800/-. It is contended by the plaintiffs-bank in this regard that as per the authority given by the defendants, the plaintiffs-bank adjusted the entire amount of Rs. 44,29,800/- of the defendants towards the loan amount and even thereafter the defendants have to pay the suit claim of Rs. 59 lacs and odd.
60. In fact in the detailed written statement filed by the defendants, the defendants have repeatedly contended that the plaintiffs have not accounted for their aforesaid amount of Rs. 44,29,800/- and no credit is given by the plaintiffs-bank to the defendants in respect of this amount.
61. When the Defendants have raised this particular plea very specifically and clearly it was necessary for the plaintiffs-bank to amend those pleadings and to clarify the position in this regard. It was necessary for the plaintiffs-bank to give particulars of the defendants deposit, the particulars of the defendants authorization letter to make adjustment and the mode and manner in which the amount of Rs. 44,29,800/- was adjusted by the plaintiffs-bank, when it was adjusted in which account it was adjusted, how much interest was paid to the Defendants etc. However, the Plaintiffs never brought all these things on record by amending the plaint. Further a court has framed issue in this regard vide Issue No. 8. Thereafter also the plaintiffs-bank did not amend the plaint and did not place this matter on record. It is only at the time of the evidence that an attempt was made by the plaintiffs-bank to explain how, when and where the amount of Rs. 44,29,800/- of the defendants was adjusted by them. In fact this is a vital and important question for the defendants but the plaintiffs-bank adduced evidence without any pleadings in that regard and without giving any opportunity to the defendants to verify any defence before entering into the witness box or before cross-examining the witness of the plaintiffs-bank in this regard. This is therefore a case where the plaintiffs have tried to prove adjustment of Rs. 44,29,800/- without any pleadings in that regard and without giving any opportunity to the defendants to meet the case of the plaintiffs well in advance.
62. In this regard it was contended by the advocate for the plaintiffs that since the burden of proving issue No. 8 is on the defendants, the plaintiffs bank was not required to amend the pleadings or to give any opportunity to the defendants. This argument cannot be accepted. The burden of proving Issue No. 8 was placed on the defendants because it was their defence which they have raised. But the Plaintiffs-bank started leading evidence first and plaintiffs-bank was in possession of all the documents regarding adjustment and it was the plaintiffs alone who could have proved this fact. The Issue No. 8 is in the negative i.e. whether the defendants prove that the plaintiffs did not give credit for the amount of Rs. 44,29,800/- and the affirmative side of the issue is whether the plaintiffs proves that it gave due credit for the amount of Rs. 44,29,800/- and if this is so it was for the plaintiffs-bank to amend the plaint for which documents in support of the amendment and then try to prove the adjustment of Rs. 44,29,800/- of the defendants. It is true that the defendants has by their letters consented for adjustment but when, where and how the adjustment was made is a matter within the special knowledge of the plaintiffs and therefore the burden equally lies on the plaintiffs-bank. Therefore, though the plaintiffs-bank has tried to lead evidence showing this adjustment or giving credit of amount of Rs. 44,29,800/- the same evidence cannot be considered firstly because there were no pleadings of the plaintiffs, secondly because the plaintiffs-bank did not give any opportunity to the defendants by placing all the necessary particulars supported by the documents before the defendants. The plaintiffs-bank has tried to prove the affirmative fact of adjustment of Rs. 44,29,800/- in the absence of any pleading and therefore, evidence of the plaintiffs-bank cannot be considered. It is a cordinal principle of civil law that a party cannot be taken by surprise. Even though the suit is filed in 1994. Written statement is filed in March 1998 and the evidence was recorded in July-August, 1998. The plaintiffs-bank did not care to furnish any particulars in respect of all the deposits of the defendants in the form of FDR or UTI and did not furnish any documents to the defendants for the purpose of showing adjustment and did not explain their case at all so as to enable the defendants to challenge the act of the plaintiffs and also to challenge the manner of giving credit, the way of giving credit to this amount towards the loan facilities.
63. In fact this case has a peculiar background and that is filing of a complaint by the defendants before the Consumers Dispute Redressal Forum wherein the defendants in 1993 i.e. before filing of the present suit filed a complaint against the plaintiffs-bank for damages and compensation on account of the failure of the plaintiffs-bank to give the loan facilities in time. In that complaint also the defendants has raised objection to the arbitrary rate of interest charged by the plaintiffs-bank. The plaintiffs-bank appeared in that matter and admitted that at different times from 1990 onwards interest rate was not correctly charged and it was charged in excess. They tried to contend that it was due to mis-interpretation of the circulars at branch level that the bank charged incorrect interest. This is an admission coming from the affidavit filed by one Sunil D. Redij (who was examined as a witness of the plaintiffs in the suit) before the Consumer Dispute Redressal Forum. If the Plaintiffs officers could mis-interpret and misread the circulars of RBI and NABARD and if inspite of acquiring expertise in the matter of calculation of interest they could commit mistakes and charge excess interest, the plaintiffs cannot expect this court to substitute the work of accounts and come to the rescue of the plaintiffs-bank for the purpose of charging interest, calculating interest with reference to the particular guideline of RBI in force in a particular quarter. So also court cannot come to the rescue of the plaintiffs in finding out as to how much was the amount of the defendants in deposit, how and where it was adjusted and whether the adjustment was proper or there also plaintiffs committed mistakes and made improper adjustment.
64. Thirdly, if the rate of interest charged by the plaintiffs is in excess by 10% 11% than the agreed rate then it clearly shows that the account books of the plaintiffs are wrong and unreliable. If this is so then adjustment of Rs. 44,29,800/- by the plaintiffs as per their own whims and caprice and calculations cannot also be justified in the instant case in the absence of any pleadings in that regard and in absence of any opportunity to the defendants to meet the case and raise their objections in respect of adjustments.
65. For all these reasons, I have no alternative but to hold that the plaintiffs-bank have failed to prove that any amount is outstanding and due by the Defendants. The suit of the plaintiffs is liable to be dismissed. However, considering the facts and circumstances of the case, plaintiffs cannot be saddled with the costs of the defendants in the suit.
Suit of the Plaintiffs dismissed. No order as to costs.