MARGARET LALITA SAMUEL Vs. INDO COMMERCIAL BANK LIMITED

JUDGEMENT

(1.) The defendant in the action is the appellant in this appeal by special leave. The respondent-plaintiff is the Indo Commercial Bank ltd., Madras, now taken over and represented by the Punjab National Bank. We will hereafter refer to the plaintiff as the Bank. In 1943 Kawasji Karanjia and Jal Karanjia and C. B. Samual husband of the defendant, floated a company known as the Modern Hindustan Food Products Ltd. at Poona. Jal Karanjia, C. B. Samual and the defendant were Directors of the Company. The Company opened a current account with the plaintiff bank in 1943 which was later converted into an overdraft account with the maximum limit of Rs. 25,000/-. By a subsequent arrangement dated 19th June, 1944, the limit of the overdraft was raised to Rs. 10 lacs. C. B. Samuel, as Managing Director of the Company, executed a promissory note for Rs. 10 lacs and he and his wife Margaret Samuel (defendant) executed a guarantee Bond (Exhibit 57) by which they jointly and severally guaranteed to the bank the repayment of all money which shall at any time be due to the Bank from the Company on the general balance of their accounts with the bank, or any account whatever. The guarantee was to be a continuing guarantee to the extent of Rs. 10 lacs at any one time. We will have occasion to refer to the terms of the bond in detail later. The overdraft facility was utilised by the Company and amounts were drawn from the Bank at various times. The Company ceased business on 30th June 1946 and thereafter the company entered into an arrangement with the plaintiff bank by which the plaintiff bank was authorised to receive all amount due from the Director General of Food Supplies, Govt. of India, or from any other person or Department and appropriate the sums collected towards the money due to the bank from the Company. An irrevocable power of attorney authorising the bank to do so was executed by C. B. Samuel as Managing Director of the Company. All Bills and documents were accordingly handed over to the plaintiff bank for realisation of the amount due to the Company. C. B. Samuel died on 27th April, 1951. By her letter Exhibit 55 dated 2nd Feb., 1952, the defendant acknowledged her personal guarantee to repay to the plaintiff the sum of Rs. 2,71,531-8-6 which was stated to be the balance due to the plaintiff from the Company as on 31st Dec., 1951. Adding a sum of Rupees 21,886-6 Ans-0 ps. by way of interest from 1st Jan., 1952 till 30th Sept., 1953, and deducting a sum of Rs. 57,964-14-6 said to be the amount recovered between those dates, the balance due on 8th Nov., 1954 was stated to be Rupees 2,35,453-1-0. On 8th Nov., 1954 the present suit was filed by the Bank to enforce the guarantee bond against the defendant Margaret Samuel and to recover a sum of Rs. 1,00,000/- from her. It was stated in the plaint that a sum of Rs. 85,453-1-0 was being remitted and the suit was laid to recover the sum of Rs. 1,50,000/- only. Along with the plaint an extract of the account subsequent to 1946 was filed.

(2.) The defence of Margaret Samuel, to the extent that is relevant for the purpose of the present appeal, was that the suit was barred by limitation, that the letter dated 2nd Feb., 1952 was obtained from her by fraud and that she was, in any case, not liable to pay amounts disputed by her in para 15 of her written statement. She also pleaded that the plaintiff had deliberately withheld production of the accounts between 1943 to 1946 during which period most of the transactions took place and that if those accounts were produced she would be in a position to challenge other items as well.

(3.) Soon after filing the written statement the defendant filed an application in the Trial Court to direct the plaintiff to produce, among other documents, the accounts from 1943 onwards. The Trial Judge by his order dated 10th March 1955, directed the plaintiff to produce the documents within 2 weeks from that date. The plaintiff did not produce the documents within the time allowed. Subsequently, however, an extract of the accounts from 1943 to 1946 was produced on 1st Sept., 1955, the date of hearing of the suit. On 10th Oct., 1955, the defendant filed Exhibit 85, an application seeking a direction from the Court "that the plaintiff be allowed to produce any documentary evidence which they might possess in support of the items mentioned in the schedules even till the time the evidence is finished and the defendant be allowed to deny, under the circumstances mentioned all the items mentioned in Sch. 'B' with her explanation for the items". Along with the application the defendant filed two schedules, Sch. 'A' showing the items specifically denied by the defendant in her written statement and Sch. 'B' showing the items which were denied by her after the accounts from 1943 to 1946 were produced in Court by the plaintiff. The application was opposed by the plaintiff. The Trial Court dismissed the application on the ground that it was belated. The Trial Court observed that if the defendant wanted to disputre any item from the accounts she should have got the accounts produced even before she filed the written statement. No doubt she had filed an application soon afterwards to direct the plaintiff to produce the accounts and other documents within two weeks, but when the plaintiff failed to produce the accounts within two weeks, she did not take any further action in the matter. Having failed to take steps to compel the plaintiff to produce the accounts earlier, the Court said, she could not seek to dispute the items after the plaintiffs had closed the evidence on their side. Thereafter the trial of the suit was concluded.