BANK OF BIHAR Vs. MAHABIR LAL

JUDGEMENT

(1.) This is an appeal by a certificate granted by the Patna High Court allowing the appeal preferred before it by the defendants 1 and 2 and dismissing the claim of the plaintiff Bank (the appellant before us) for a sum of Rs. 35,000/-.

(2.) According to the Bank, defendants 1 and 2 carried on business at Bihar Sharif under the name and style of Messrs Jogilal Prabhu Chand. On February 17, 1941, they executed a cash credit agreement in favour of the Bank under which cash credit facilities were sanctioned upto a limit of Rs. 50,000/- against cloth bales on certain terms. Under that agreement a sum of Rs. 15,000/- was advanced to the Firm on that very day. On August 28, 1947 the Firm executed a promissory note in favour of the Bihar Sharif branch of the Bank for Rs. 50,000/- and approached the Manager for immediate advance of Rs. 35,000/- as they required that amount for paying the price of certain cloth allotted to them by M/s. Manohardas Jainarain, wholesale dealers of Patna. Then according to the Bank, an arrangement was entered into between the Firm and the Manager of the Bihar Sharif of the Bank under which the Firm was allowed to draw on the security of the promissory note on its agreeing to pledge the bales of cloth as further security after they were received from the wholesalers. On the basis of this agreement, the Firm drew a cheque for Rs. 35,000/- on August 29, 1947, in favour of the second defendant, which was, according to the Bank, actually passed for payment by the Manager of the Bihar Sharif Branch of the Bank and the amount was paid to the second defendant. Further, according to the Bank, on August 30, 1947 a "false and mischievous" telegram purporting to be from defendant No. 2, Mahabir Lal, was received by the Manager of the Bihar Sharif Branch of the Bank saying that the Potdar of the Bank who was sent along with him with the money by the Manager had not deposited it and that the Potdar could not be traced. The telegram contained a further request that the amount of Rs. 35,000/- be made available to the firm immediately. On September 1, 1947 the Manager informed the Firm that the allegations in the telegram were altogether false. On September 9, 1947 the Manager received a letter signed by Mahabir Lal alleging that in collusion with the Potdar he, (the Manager) had misappropriated the sum of Rs. 35,000/-. These allegations are said by the Bank to be false and the suit out of which this appeal arises was instituted for the recovery of the amount for which the cheque was drawn by the Firm on August 29, 1947 and actually cashed by the Manager.

(3.) The defendants denied the claim of the Bank as false. According to them, the suit was a counterblast to a criminal case instituted by them against the Manager and the Potdar of the Bihar Sharif branch of the Bank charging them with misappropriation. While the defendants admitted that they had made arrangements with the Bihar Sharif branch of he Bank for a loan of Rs. 35,000/- as alleged by the Bank for taking delivery of 42 bales of cloth which had been allotted to them by M/s. Manohardass Jainarain, wholesale dealers of Patna, they contended that the second defendant was informed that under the rules the Bank could advance a loan upon the goods actually kept in the custody of the Bank. They further alleged that the Manager said that in order to oblige the Firm he was prepared to advance Rs. 35,000/- provided certain conditions were fulfilled. Those conditions were:(1) that the Firm should execute a loan bond as well as a promissory note for Rs. 50,000/- as further security; (2) that the firm should draw a cheque for Rs. 35,000/- endorsed to self; (3) that the second defendant should further agree that instead of taking the amount in cash with himself he should let the amount be sent by the manager Mr. Kapur, through Ram Bharosa Singh. Potdar of the Bank for being paid to M/s. Manohardass Jainarain and (4) that after paying the amount the said Potdar would take delivery of the bales of cloth allotted to the Firm and bring them to the premises of the Bank at Bihar Sharif where they would remain pledged until the loan was repaid.