SKINS TANE CO Vs. A M ABDUL KHADER

JUDGEMENT

(1.) THE unsuccessful defendants 1 and 3 have preferred this appeal against the judgment and decree dated 25. 4. 1994 made in O. S. No. 11102 of 1988 on the file of 18th assistant Judge, City Civil Court, Madras.

(2.) THE respondent herein filed the suit seeking for a judgment and decree directing the defendants to pay the plaintiff a sum of Rs. 70,459. 92/- with interest at the rate of 16. 5% per annum from the date of plaint till the date of realisation and for costs of the suit. The case of the plaintiff is that the first defendant is a partnership Firm and defendants 2 to 7 are its partners and the first defendant opened a current account with the plaintiff on 12. 9. 1987 in respect of its leather business and it was regularly issuing cheques to various parties and the plaintiff has been honouring those cheques and the first defendant issued three consecutive cheques all dated 20. 11. 1987 for Rs. 29,789/-; Rs. 334/- and rs. 75,000/- respectively and all the three cheques were drawn in favour of the Sales Tax Officer, Vepery Assessment circle, Madras, and the plaintiff as a prudent banker and keeping in mind that the first defendant is a commercial organisation and the cheques were drawn on a government agency, had in good faith passed all the three cheques for payment on 9. 12. 1987 even though there was a credit balance of only Rs. 1,312. 03 in the current account of the first defendant with the plaintiff. It is also stated by the plaintiff that the representative of the first defendant, who was present in the bank premises on 9. 12. 1987, consented to the honouring of three cheques and promised to bring sufficient funds immediately and adjust the overdrawn position. According to the plaintiff, the first defendant, on 6. 1. 1988, adjusted the current account to cover the monies due to the plaintiff in respect of the cheques for rs. 334/- and Rs. 29,789/- and it did not repay the plaintiff the sum of Rs. 75,000/- being the amount due in respect of the third cheque. It is further stated by the plaintiff that the first defendant by letter dated 24. 12. 1987 informed the plaintiff that it had filed a writ petition in WP no. 13062 of 1987 in this Court and obtained injunction order and requested the plaintiff to stop the payment of the third cheque for Rs. 75,000/- and the plaintiff sent a reply dated 29. 12. 1987 informing the first defendant that all the three cheques were paid for by the plaintiff on 9. 12. 1987 itself. According to the plaintiff, the defendants refused to pay the outstanding amount and issued legal notices dated 8. 1. 1988 and 7. 7. 1988 and the plaintiff sent reply notice dated 28. 7. 1988 requesting the first defendant to settle the dues and that was not done and hence the suit.

(3.) THE defendants in the written statement admitted that they are having a current account with the plaintiff and they issued all the three cheques for the sums stated therein. According to them, they issued letter dated 24. 12. 1987 giving instructions to the plaintiff to stop payment with regard to the cheque to the value of rs. 75,000/- since they filed writ petition and obtained an order of stay with regard to the payment of the amount and only after that, the plaintiff informed them that the cheque for Rs. 75,000/- along with two other cheques had been passed for payment on 9. 12. 1987. The defendants have denied the plaint averment that the first defendant representative was present at the bank on 9. 12. 1987 and promised to bring sufficient funds. It is further stated by the defendants that they did not have any over-draft facility arrangement with the plaintiff bank and on the negligence of passing of the cheque, the defendants had suffered damages and they are not liable to pay the amount due under the cheque. It is further stated by the defendants that the plaintiff has no right to debit the proceeds of the cheque issued by the customs department to the first defendant and credit the same to the balance outstanding in the current account and the plaintiff is bound to return that amount to the first defendant with interest at 24%. The defendants made a counter claim for that amount.