UNION OF INDIA Vs. FEDERAL BANK

JUDGEMENT

(1.) THESE are appeals from the same decree passed in O.S.No.51 of 1967 of the Sub Court of Parur.A.S.No.733 of 1974 is an appeal by the 10th defendant,the Union of India,representing the Southern Railway Administration and A.S.No.737 of 1974 is by defendants 1 to 7,the first defendant being a firm and defendants 2 to 4 being partners thereof.The suit was for recovery of money.The first defendant firm,M/s Pareed Pillai and Brothers,of which the Managing Partner was the second defendant was carrying on business in cocoanut oil.The activity of the firm consisted mainly of exporting cocoanut oil from the State to places in India outside the State.The plaintiff in the suit is the Federal Bank Limited with its Head Office at Alwaye.The first defendant firm also had its office at Alwaye.The firm and its partners defendants 1 to 4 were availing of banking facilities with the plaintiff bank from the very commencement of their business,one an overdraft account with a limit of Rs.50,000 and the other a documentary bills accounting facility with a limit of Rs.5,00,000.It was the practice of defendants 1 to 4 to book consignments of cocoanut oil in tins at the Railway Stations Alwaye, Irinjalakuda and Chalakudy to various parties outside State to take the railway receipts in respect of such consignments to plaintiff Bank and endorse them in favour of the Bank and to draw the proceeds through their accounts on the basis of such endorsement as also by handing over bills of exchange.When amounts were realised by the bank on bills being retired at the destination station the accounts of the firm were being duly credited with such realisations.In the suit the claim is for the amount outstanding from defendants 1 to 4 on account of their dealings with the Bank.The case is that as on 30th December,1963 a sum of Rs.4,43,897 -93 was the balance due to the Bank.Out of this a sum of Rs. 3,65,390.75 was said to represent the amount due to the Bank by reason of purchase of 25 railway receipts specifically mentioned in the A Schedule to the plaint.The railway receipts were all endorsed in favour of the Bank by one or other of defendants 1 to 4 in the usual course of business.The goods represented by these railway receipts are said to have not been delivered at the destination stations and consequently the plaintiff bank is said to have lost to the extent of the amount paid on the strength of endorsement of the railway receipts. The 10th defendant had taken the goods for delivery but had failed to deliver and is therefore sought to be made liable in respect of the value of the goods represented by these 25 railway receipts.That is the sum of Rs.3,65,390.75.By some subsequent adjustments the total amount due to the plaintiff Bank from defendants was reduced and it is only the sum of Rs.4,27,143.08 that is mentioned in the B valuation statement that is claimed as due.Of this,the amount due from the 10th defendant towards purchase value of the 25 railway receipts as damages on account of the failure of the 10th defendant to deliver the goods is the amount mentioned in the A statement namely,Rs.3,65,390.75. The Bank claims to be a bona fide transferee for value of 25 railway receipts on account of endorsements on account of which the Bank is said to have become the owner of the goods and the Bank claims that it is entitled to have value of the goods represented by the railway receipts.

(2.) DEFENDANTS 5 to 7 are impleaded because they had guaranteed the payment of amounts due from defendants 1 to 4.The decree is prayed for also against the properties in Schedules B to I

(3.) IN support of the case of the parties P.W.1 the Managing Director of the plaintiff bank was examined and Exts.P -1 to P -1067 were marked.On the side of the defendants 12 witnesses were examined and Exts.B -1 to D -593 were marked.