VARKEY SOURIAR Vs. KERALEEYA BANKING CO LTD

JUDGEMENT

(1.) This second appeal is by 1st defendant and arises out of suit on a hypothecation - bond Ext. I dated 17.12.1102 executed by him for securing an overdraft account up to Rs. 420 with the 1st plaintiff, the Keraleeya Banking Co. Ltd., Thiruvella, represented by its Managing Director Varki Thomas. According to the plaint, an amount of Rs. 630 made up of the principal sum of Rs. 420 advanced under this account along with interest amounting to one half the principal had accrued due. This amount had been paid to the Bank by the 2nd plaintiff Thomas Alexander as per Ext. G in 1121 and it was prayed, therefore, that decree may be passed in favour of the 2nd plaintiff. The 1st defendant contested the suit mainly on ground of bar of limitation and also discharge by payment long previously on 7.4.1118 to the 4th defendant, who was a prior assignee of the bond from other earlier Managing Director Punnoose Oommen. Both the courts below found against limitation and we are not concerned with it any further. On the plea of discharge the courts below differed among themselves as to whether the 1st defendant had at all made actual payment as claimed of Rs. 325 in satisfaction to the 4th defendant and bona fide obtained Ext. I(a) endorsement on 7.4.1118. But they agreed that the assignment under Ext. II dated 18.10.1116 by Punnoose Oommen of Ext. I bond in favour of the 4th defendant was without proper authority and that therefore Ext. I was still enforceable against the 1st defendant. In the result, both the courts decreed the suit in favour of the 2nd plaintiff as prayed for and hence this appeal by the 1st defendant as abovesaid. It should be added that the 1st plaintiff bank was since wound up and is being represented in this court by the Court Liquidator.

(2.) The lack of authority in Punnoose Oommen to assign, relied on by the 1st plaintiff bank, was based on Ext. A resolution of the Board of Directors of the 1st plaintiff Bank on 11.10.1116 viz. a week before the assignment Ext. II recording the resignation of Punnoose Oommen from his office of managing Director of the bank and the appointment of Varki Thomas to that office instead. Varki Thomas was charged under the resolution, with the duty of getting extension till 20.10.1116, to make certain returns and himself raise necessary money and pay the filing fees before the Registrar of Joint Stock Companies within that time and thereafter take all the records etc., from Punnoose Oommen. The Bank's case was that Punnoose Oommen colluded with the 4th defendant who was another Director of the Bank and further a party to Ext. A resolution, to withhold Ext. I bond from the new managing Director, Varki Thomas, with a view to their mutual gain and at the expense of the Bank, and so Ext. II assignment was brought into existence on 18.10.1116 for the low consideration of Rs. 200 in contrast to the Rs. 630 already accrued due thereon. It was based on those circumstances, that the courts below had found against the first defendant.

(3.) Mr. Kuruvilla, learned Counsel, appearing for the 1st defendant appellant urged before me that Punnoose Oommen's resignation cannot be held to have taken effect by 18.10.1116 viz., the date of Ext. II assignment in the absence of positive evidence that Varki Thomas had by that time fulfilled his obligation under Ext. A resolution to raise money and pay the filing fees to the Registrar of Joint Stock Companies. Alternatively and assuming that the resignation took effect on 11.10.1116 the 1st defendant as a stranger acting bona fide was entitled to take it that Punnoose Oommen continued even thereafter to be the managing Director and so had proper authority when he made the assignment Ext. II on 18.10.1116. In either case the discharge granted under Ext. I(a) by the assignee 4th defendant was enough to absolve the 1st defendant from further liability under Ext. I. Taking up the main contention it appears clear from Ext. A terms that Punnoose Oommen had resigned his office as and from 11.10.1116 viz., the date of the resolution itself. No doubt, Varki Thomas had to pay the filing fees to the Registrar and thereafter get the records of the Bank from Punnoose Oommen but that did not mean that Punnoose Oommen continued in office until such payment. Indeed Varki Thomas could not, as contemplated by Ext. A resolution, make necessary application before the Registrar for extension of time unless he was already the Managing Director. Further Ext. A resolution be speaks the urgent necessity to meet certain threat of action by the Registrar of Joint Stock Companies on account of the default to submit returns and pay filing fees on the part, apparently, of the Managing Director. It is hardly likely that in such circumstances Ext. A was recording only a contingent and not an actual resignation. There can be no doubt, therefore, that Punnoose Oommen had ceased to be the managing Director as and from the very date of the resolution. The argument of learned Counsel on this aspect has to go.