STANDARD CHARTERED BANK Vs. M S HANDA

JUDGEMENT

(1.) Messrs. Standard Chartered Bank, the plaintiff, filed a suit for recovery of Rs. 2,78,37,801.20 under Order 37 Civil Procedure Code against Mr. M.S. Handa, Mr. Ashwani Kapoor and Indian Overseas Bank. In brief the facts of the case as are apparent on record are that Mr. M.S. Handa is the drawer of Bill of Exchange No. HK/1 dated 23.6.1989. Defendant No 2, Mr. Ashwani Kapoor is the acceptor and Defendant No.3, Indian Overseas Bank is the co-acceptor of the said Bill of Exchange (Hundi). The said Bill of Exchange was duly discounted by the plaintiff bank by issue of a Reserve Bank of India cheque for Rs.4,75,62,500.00 favouring Indian Overseas Bank, defendant No.3, and by crediting a sum of Rs.5,17,295.00 into the account of defendant No.1. Before the maturity date of payment upon the said Bill of Exchange i.e. on September 20,1989 the plaintiff bank received a letter dated 3rd August, 1989 from the defendant No.3 's Zonal Office that the Branch Manager of Indian Overseas Bank .who had co-accepted the said Bill of Exchange (Hundi) had no authority to do so and therefore, they had no liability towards the plaintiff bank on the said co-accepted Hundi dated 23.6.1989. This was refuted by the plaintiff bank. Despite the said defendant No.3's pretended protest made in terms of the said <PG>539</PG> letter dated 3rd August,1989, the plaintiff bank received a sum ofRs.2,41,30,000.00 vide four cheques drawn on the Reserve Bank of India dated 4.8.1989, 10.8.1989,29.8.1989 and 12.9.1989. Upon maturity as provided in the said Hundi on demand made by the plaintiff bank, the defendant No.3 who had unconditionally promised and guaranteed payment on the Hundi on the due date i.e. 20.9.1989 failed and neglected to obtain a discharge by making payment against the said Hundi and as such, the said Hundi stands dishonoured for non-payment. On these facts this suit has been filed against all the three defendants.

(2.) All the three defendants made appearance and filed applications seeking leave to defend under Order 37, Rule 3(5) Civil Procedure Code being I.A. No. 6035 of 1990 filed by defendant No. 1 ; I.A. No. 5777 of 1990 filed by defendant No.2 and I.A. No. 5778 of 1990 filed by defendant No.3.

(3.) Defendant No.1.Mr.M.S.Handa in his application seeking leave to defend has stated that he only acted as a Finance Agent for arranging the finance. The plaintiff bank in the present case approached defendant No.1 for introducing to them the parties who may require the finance for any substantial project in hand and it was with this view that the plaintiff bank gave a letter dated 20.1.1989 to the defendant No.1 confirming that the bank was agreeable to discount the bills/hundis drawn for 90 days, provided Indian Overseas Bank accepts the same and confirms to them that they would make the payment to the plaintiff bank on the due date. He arranged loan for defendant No.2 and the defendant No.3 co-accepted the Hundi. No consideration had passed to the defendant No. I as far as this Hundi was concerned, and he was only paid the commission amount which was credited in his account. The cheque for Rs.4,75,62,500.00drawn by the plaintiff bank was in the name of the Indian Overseas Bank, who were the co-obligants of the Hundi and the amount was paid by them to the defendant No.2. The position as between the plaintiff and the defendant No. I is that of a principal and agent and no grounds have been shown in the plaint which would make the agent liable for the amount.