VOLTAS LTD Vs. FEDERAL BANK LTD

JUDGEMENT

(1.) THE present appeal is filed by the appellant (defendant No. 6 in the court below) against a judgment and decree dated 16. 11. 1996 passed in a suit for recovery of a sum of Rs. 41,219. 75 paise filed by the respondent No. 1/bank (plaintiff in the court below), against the appellant and the respondents No. 2 to 6 (defendants No. 1 to 6 in the court below ).

(2.) BEFORE proceeding to deal with the respective submissions of the parties, it is necessary to advert to the brief facts of the case. Respondent No. 1/bank, plaintiff in the suit proceedings, claimed that on 06. 07. 1981, it had engaged the services of the respondent No. 2 firm as its sub-contractor for completing certain jobs in connection with a contract awarded to it by the West bengal Electricity Board for erection, testing and commissioning of six numbers of Electrostatic Precipitators for their Kolhaghat Thermal Power Station. As per the averments in the plaint, respondent No. 3, the sole proprietor of respondent No. 2 firm had an account with the respondent No. 1/bank, who on his request, granted overdraft limit of Rs. 20,000/- on 20. 1. 1981 to respondent No. 2 and a promissory note dated 20. 01. 1981 was executed by respondent No. 3 in favour of respondent No. 1/bank. The amount was subsequently increased to rs. 50,000/- and again on 16. 9. 1981, the respondent No. 3 executed a demand promissory note and other related security documents as proprietor of respondent No. 2 firm and the respondents No. 4 to 6 as co-obligants signed the documents jointly with respondent No. 3.

(3.) THE respondent No. 1/bank further stated that the respondents No. 2 and 3 had executed a special power of attorney dated 14. 8. 1981 in its favour, authorizing it to receive payments of their bills from the appellant, raised in connection with execution of the contract, appropriate the same and give due discharge in respect thereof and vide letter dated 28. 08. 1981, the appellant had accepted the special power of attorney dated 14. 8. 1981. It was averred that despite the assignment of debt and the obligation cast on the appellant to make payments of the amounts payable to the respondents No. 2 and 3 directly, to the respondent No. 1/bank, the appellant released payments to the tune of Rs. 2,50,000/- in favour of the respondents No. 2 and 3. On 12. 03. 1982, a sum of Rs. 23,941/- was recovered by respondent No. 1/bank from respondents No. 2 and 3 and after adjusting the said amount, respondent No. 1 claimed that as on 12. 3. 1982, a balance sum of Rs. 32,090. 85 paise remained outstanding and payable by the respondents. Legal notices of demand were duly served by the respondent No. 1/bank upon the respondents, but they did not care to pay the same, thus compelling the respondent No. 1/bank to file the summary suit in March 1983, praying for a decree of Rs. 41,219. 75 paise against the appellant and respondents No. 2 to 6 jointly and severally, along with costs and future interest @ 19. 5%p. a. The respondent No. 1/bank impleaded the appellant as defendant No. 6 in the aforesaid suit.