INDIAN OVERSEAS BANK Vs. DINAR CHEMICALS

JUDGEMENT

(1.) THE appellant had filed a suit for recovery of a sum of Rs. 2,10,962. 10 and further interest at the rate of 15. 5% per annum from the date of filing of the suit. The case of the appellant (hereinafter referred to as the plaintiff) is that respondent No. 1 (hereinafter referred to as defendant No. 1)through respondent No. 2 (hereinafter referred to as defendant No. 2) approached the plaintiff with a request to allow them to enjoy diverse credit facilities including bills discounting facility which facility was granted by the plaintiff by letter of hypothecation in Form F (107) defendant No. 1 through defendant No. 2 hypothecated in favour of the plaintiff the bills of Exchange that will be drawn/issued by them in future from time to time. The plaintiff lent and advanced to defendant No. 1 through defendant No. 2 diverse amounts against Bills of Exchange drawn by defendant No. 1 through defendant No. 2 and drawn on various parties payable to the plaintiff and which were accepted by the drawees thereof. Various Bills of Exchange were sent through the plaintiff opera House Branch, New India Co-op. Bank ltd. , Girgaum, Bombay for collection. On the strength of the said usance of the bills discounting facility dated 8. 8. 1981, the plaintiff granted nine bills to defendant No. 1. The new India Co-op. Bank Ltd. , Girgaum Branch informed the plaintiff that the said bills sent for collection have been eaten by white ants. The case of the plaintiff further is that defendant no. 1 through defendant No. 2 vide their letter dated 20th February, 1984 accepted the liability under the said eaten bills and on 31. 5. 85 defendant No. 1 through defendant no. 2 and countersigned by defendant No. 3 have confirmed the correctness of the balance standing in the name of defendant No. 1 in respect of the said Bills. Inspite of reminders from the plaintiff, defendants did not brother to pay the amount due to the plaintiff on account of the said Bills, except for a sum of rs. 51,100/- in relation to three bills. Consequently the suit was filed for recovery of a sum of Rs. 1,06,200/- with interest amounting to rs. 1,04, 762. 10, thereby claiming total amount of Rs. 2,10,962. 10. The cause of action is said to have arisen on 20th February, 1984 when defendant No. 1 through defendant No. 2 accepted the liability of eaten bills and also undertook to pay all the dues to the plaintiff and the cause of action also arose on 31. 5. 85 when defendant No. 1 through defendant No. 2 confirmed the correctness of the balance outstanding in the account of defendant No. 1. The cause of action is also said to have arisen on 27. 2. 1986 when the plaintiff sent a registered A/d notice through its lawyer demanding payment of the outstanding amount.

(2.) THE stand of the defendants No. 1 to 3 in respect of the acknowledgements dated 20. 2. 84 and 31. 5. 85 is that their signatures were being taken by the plaintiff from time to time as a routine matter and the defendants signed the same without knowing the contents thereof. In respect of the Bills of Exchange, the stand taken by the defendants no. 1 to 3 is that the plaintiff Bank had neglected and failed to return the ten hundis in question to defendant No. 1 as required under law so as to bind the defendants to pay the amount thereon to the plaintiff Bank. The defendants further took the stand in the written statement that since the plaintiff Bank had sent the bills for correction to the New India co-operative Bank Ltd. , Girgaum, Bombay, the plaintiff Bank ought to have proceeded against the said Bank to recover the amount under the said Bills. Thus, the stand taken by the defendants is that their liability would arise only upon the return of the said Bills to defendant No. 1. The plea of limitation was also raised by the defendants. In addition, the defendants also made counter claim in respect of the amount adjusted by the plaintiff Bank towards the said unreturned hundis, amounting to Rs. 86,865. 00. The defendants also claimed that on account of the plaintiff Bank refusing to release machinery and other articles/jewels belonging to the defendants, the defendants suffered loss of more than Rs. 80,000/ -. Thus the defendants had filed a counter claim amounting to Rs. 1,66,865/-with interest thereon at the rate of 15. 5% per annum. The cause of action for filing the counter claim is stated to have arisen upon the filing of the suit in question by the plaintiff bank.

(3.) ON the pleadings of the parties, the trial Judge had framed the following Issues :-