BANK OF MYSORE LTD Vs. B DNAIDU

JUDGEMENT

(1.) Respondent sued the appellant which is the Bank of Mysore, Ltd., for return of the Shares left as security for a loan, alleging that the Bank unreasonably failed to accept the tender of monies due and caused loss to the respondent estimated at Rs. 11,000/- and this sum together with dividends payble with respect to the shares are more than sufficient to wipe off the debt. The tender and discharge of the debt were both denied by the Bank and a lien on the shares was claimed for payment of the loan referred to in the plaint as well as another for recovery of which a decree has been obtained in the Court of the Sub Judge. The question as to what was the amount due to the Bank was raised in Issue No. 4, that of tender in Issue No. 1 and of damages in Issue No. 3. Without recording any evidence the learned District Judge dismissed the suit holding that it was not maintainable. The dismissal was set aside by this Court and the ease remanded for disposal after taking evidence and allowing amendment of the plaint. Subsequently, an account of monies due to the Bank and of damages due to plaintiff was asked for and an additional issue about the Bank's right. to retain the shares till payment of the amount, due under the decree of the Sub Court was framed. Besides the correspondence and extracts of accounts relating to the transactions exhibited in the case, the only persons examined in the case are plaintiff and the Superintendent of the Loan section of the defendant Bank. The lower Court has on a consideration of these decreed the suit as prayed for awarding Rs. 11,000/- as damages. On behalf of the Bank it is contended that the decision is not warranted either by the facts of the case or the law applicable to it. Learned Counsel for the respondent did not rely on the cases referred to in the judgment for supporting it as some of these were found to be either misquoted or misapplied.

(2.) The plaintiff's right to the shares cannot be disputed as these stand in his name and the plaintiff cannot question the Bank's claim to retain the shares till the amount due in respect of what is called the share loan account is discharged as the shares were given as security for the loan. The case of the plaintiff is not that as a matter of fact the amount was paid by him but only that he offered to pay it, that the Bank unreasonably refused the offer and that, owing to this refusal to receive the amount and release the shares, the plaintiff could not have the benefit of realising about Rs. 11,000/- by disposing of the shares when the value of these had appreciated. According to the Bank there was no acceptable offer and plaintiff has suffered no loss by retention of the shares. The crux or the case is the factum and legality of tender. Except for a mere reference in the plaint which is controverted, there is no proof of tender of any amount in the year 1S41. The allegation concerning this in the letter Exhibit A is so vague and dubious that no weight can be attached to it. Apart from this it is the cheque dated 29-5-1943 for a sum of rupees twenty thousand drawn by the plaintiff in favour of defendant which is alleged to constitute an effective tender. The cheque was not sent to the Manager of the Bank but given to Sri Wajid who was then a Director of the Bank. Mr. Wajid is not examined in this case and the cheque is not encashed. The cheque directs payment in "full and final settlement of all accounts" of the plaintiff. In his evidence the plaintiff states

(3.) It is argued on behalf of the plaintiff that since the amount of the cheque was at any rate more than what was due for satisfaction of the share loan, the Bank should have appropriated what was necessary for the same out of the realisation under the cheque and credited the rest towards the other account. In the absence of any instruction from plaintiff in this behalf, the Bank could hardly have adopted this course unless the law required it. Even if this was possible or necessary, the plaintiff, it is alleged is not entitled to insist on delivery of the shares by virtue of Article 19 of the Articles of Association. The Article is pointedly set out in a letter to the plaintiff wherein a lien is claimed on the shares for the amount due not merely on the share loan account but also on the overdraft account. An attempt was made on plaintiff's behalf to show that the contract between the parties must, be construed as having limited the lien only to the share loan. Even so, the contention for the Bank is that the lien is two-fold -- one under the general law of contract as in section 171 capable of being varied by agreement, another under the Companies Act binding on plaintiff as a shareholder which cannot be avoided. The Bank's contention has, I think, to be upheld though it is enough for the purpose of the decision in this case that the cheque in any event cannot be regarded as a valid tender and the right of the Bank to proceed against the shares for recovery of the debt in respect of the overdraft account is secured by the attachment of the shares in execution of the decree. A tender to be effective must be, as required by Section 38, Contract Act, unconditional and of the full amount due. Prima facie both these are lacking in the cheque. The amount is admittedly short of what was payable for a complete discharge and yet it is intended to operate as extinction of liability. In -- 'Bowen v. Owen', (1847) 11 QB 130 (A), Lord Denman C.J. Observed