SYED HUSSAIN ASSRAF Vs. DENA BANK

JUDGEMENT

(1.) THIS Appeal arises from the decree passed by the Learned Civil Judge, senior Division at Vasco in Special Civil Suit no. 31 of 1976 on 31-10-1996. The suit was partly decreed and the defendants No. 1, 2,3 and 5 were directed to pay jointly to the plaintiff the sum of Rs. 3,66,203. 40/- with interest thereon at the rate of 6% per annum from the date of the suit till payment or realisation.

(2.) IT was the case of the Plaintiff nationalised Bank that defendant No. l (since absconding) was its employer in its Head Office at Mumbai and defendant No. 2 was his wife, whereas defendants No. 3 and 4 are the residents of Goa and were carrying on a partnership business in the name and style of Messrs. Goa ship Repairs (defendant No. 5) with defendant no. 2 as the 3rd partner. It was alleged that defendant No. 2 was merely a benami partner in place of defendant No. 1 and in fact it was at the instance of the defendant No. 1 that she was described as a partner of defendant No. 5 partnership firm which was registered under the indian Partnership Act, 1932. Defendant No. 2 did not have any independent source of income. Defendant No. 1 had joined the services of the bank in 1951 as a clerk and came to be promoted as an officer in 1964 and till 4th october, 1975 he was attached to the Clearing department at its Head Office. He was posted as an officer attached to the Clearing department right from 1964 to 4th October, 1975 and he entered into criminal conspiracies to defraud the Bank and to embezzle and misappropriate its fund in excess of rs. 15,00,000/ -. The modus operandi employed by the defendant No. 1 in defrauding the Bank was in short through various Bank Accounts he had opened in his individual names or jointly with defendants No. 2 and 3. He got issued from time to time cheques drawn on such bank accounts opened at the branches of the Plaintiff bank and the cheques were thereafter presented for encashment through the said bank accounts. When the said cheques were received from the branches or from other banks at the Clearing department of the Plaintiffs at their Head office, the defendant No. 1 either destroyed or removed such cheques and failed to show receipt of the same in the run-up to be furnished in the said office as well as in other branches. As a result of this modus operandi, the account on which such cheques were drawn could not be debited and they would remain in dark. At the same time, defendant No. 1 would ensure that other banks or branches of the Plaintiffs bank presenting such fictitious cheques were given credit for the amounts thereof without corresponding debit entries made in the accounts on which the said cheques was drawn. Thus the defendant No. 1 would cause wrongful gains to the holders of the bank accounts and corresponding losses to the Plaintiff Bank.

(3.) THE aforesaid fact came to light sometime towards the end of September, 1975 and thereafter the plaintiffs caused further enquiries and to its surprise it learned that the defendant No. 1 had roped in a subordinate by name J. S. Katkar who had encashed cheques drawn on various branches of the plaintiffs to the extent of about Rs. 1,50,000/- during the years 1972-1975. A police complaint came to be registered against the said Katkar who was arrested and during the course of investigation by the police, he had purportedly disclosed that he had merely lent his name for opening and operation of the Bank account by defendant no. 1. The investigation was subsequently handed over to the Central Bureau of investigation, Mumbai and in the meantime it learned that defendant No. 1 having come to know the arrest of Katkar, absconded and/or failed to report to duty as from 3rd October, 1975. In the course of the enquiries by the bank, it came to light that the defendant No. 1 had opened different accounts jointly with defendants No. 2 and/or defendant No. 3 i. e. S. B. A/c No. 5567 at the Dadar Branch, S. B. A/c. No. 110 at the Umerkhadi Branch, A/c. No. NSH/1759 at the Head Office, S. B. A/c. No. 18361 at the Head Office, Current A/c no. 14407 at the Head Office in the name of m/s. Johnson Structural with defendant No. 3 as another partner. The Defendants No. 1, 2 and 3 deposited in the said bank accounts false cheques and obtained false credits to the tune of Rs. 3,66,203. 40 and the said sum was utilized for the business of defendant No. 5 with the assistance of defendant No. 4. During the course of investigation it was further realised as per the plaintiffs that defendant No. 2 had invested in the business to defendant No. 5 an amount of Rs. 1,00,000/- while defendant No. 3 had lent an advance of defendant No. 5 a sum of Rs. 1,00,000/- over and above his investment in the said firm. As per the plaintiffs, the defendants No. 5 has started with capital fraudulently obtained by defendants No. 1, 2 and 3 and these funds were actually from the financial loss caused to it by the defendant no. 1 by following the above stated modus operandi. It was further contended that during the course of investigation by the C. B. I. it was revealed that a sum of Rs. 2,18,007/- was yet to be recovered by defendant No. 5 from various parties for whom the firm did the work of ship repairs and thus the Plaintiffs were put to a total loss of Rs. 3,66,203. 40.