APPANA PULLAM RAJU Vs. CENTRAL BANK OF INDIA

JUDGEMENT

(1.) The Central Bank of India, the 1st respondent herein/plaintiff instituted the suit O.S.No.78/81 on the file of Subordinate Judge, Ramachandrapuram, as against M/s.East Coast Oil Expellers Limited, and others for recovery of amount by passing a preliminary mortgage decree and also the other suitable reliefs inclusive of personal decree as against certain of the defendants and the learned Subordinate Judge on appreciation of the evidence available on record decreed the suit by Judgment dated 25-8-1994 as against all the defendants and the same had attained finality as against all the other defendants except the 7th defendant since the other defendants had not chosen to challenge the said Judgment and decree. However, aggrieved by the same, the 7th defendant alone had preferred the present Appeal.

(2.) Sri Ramachander Rao, the learned Counsel representing the appellant/7th defendant had taken this Court through the respective pleadings of the parties and the issues settled and the findings recorded by the trial Court and would maintain that there are several serious infirmities which had lost sight of by the trial Court and in view of those infirmities, the suit as against the 7th defendant should have been dismissed. The learned Counsel in all fairness would maintain that the 7th defendant also had not seriously controverted about the original guarantee letter dated 13-4-1970 since the execution of the same had been admitted and at the best the 7th defendant can be fastened with liability to a tune of Rs.60,000/- and not beyond thereto. The learned Counsel also pointed out that even as per para-11 of the plaint it is clear that the negligence had been on the part of the Bank inasmuch as there was failure on the part of the Bank to protect the security and in this view of the matter guarantors' liability came to an end. The learned Counsel also pointed out the memo filed by the plaintiff in this regard to the effect that there are no stocks either in the key godowns or the open loan premises. The learned Counsel also laid emphasis on the aspect that MutyalaSrihari Rao at the relevant point of time was not one of the Directors and as per Ex. A-10 it is clearthat the 3rd defendant came in the place of the said Mutyala Srihari Rao and the fact that several documents referred to the name of Mutyala Sri Hari Rao would go to show that the 2nd defendant in collusion with the Bank had manipulated these records and hence on the strength of such documents, the 7th defendant cannot be fastened with liability. The learned Counsel while further elaborating his submissions commented that Ex.A-24 would go to show that this is a document to be executed by borrowers only and not by guarantors but however surprisingly the signature of the 7th defendant also is found. The learned Counsel also had taken this Court through the evidence of D.W.5 and had commented that the trial Court had not attached much importance to the evidence of the expert who had given categorical opinion about the difference of signatures. The Counsel also pointed out the infirmities in Exs.A-25, 52, 53, 57, and A-58. The learned Counsel had pointed out that even if the amounts mentioned in the promissory notes are to be taken as they are, the total amount had not been borrowed even as per the stand taken by the Bank. The learned Counsel also would point out the difference of signatures even to the naked eye apart from the expert evidence in this regard. The learned Counsel pointed out the difference of dates in the seriatim in the documents produced by the Bank and would comment that all these aspects would go to show that these records had been manipulated by the Bank at the instance of the 2nd defendant. The Counsel would maintain that the 2nd defendant obtained the signatures of the 7th defendant in blank papers and could have manipulated all the records in collusion with the Bank to his advantage. The learned Counsel also pointed out the interpolation in the documents and the clear negligence especially on the part of the Bank by virtue of which it can be inferred that there had been collusion between the 2nd defendant and the Bank officials. The learned Counsel made elaborate submissions on the liability of the surety and the liability of the guarantor and when it would come to an end or when it should have been deemed to have been terminated vis-avis the negligence on the part of the Bank in this regard. The learned Counsel also would submit that merely because the signature had been admitted it does not mean that the execution had been admitted. Admission of signature is something different from admitting the execution of a document and the Bank miserably failed in proving the execution of the relevant documents in general and Ex.A-58 in particular by the 7th defendant and hence the plaintiff is bound to fail as far as the claim as against the appellant/ 7th defendant is concerned. The learned Counsel also pointed out that in view of Order 34 Rule 11 of the Code of Civil Procedure and inasmuch as this Court can exercise the discretion, interest to be granted at 6%. Ultimately the Counsel would conclude that in the light of the facts and circumstances at the best the 7th defendant can be fastened with the liability limited to Rs.60,000/- covered by the original guarantee letter and nothing beyond thereto and the interest granted by the trial Court also is excessive and the discretion had not been exercised properly and hence the Appeal may have to be allowed in toto or at least to the extent as indicated above. The learned Counsel also placed reliance on certain decisions to substantiate his contentions.

(3.) Per contra, Sri Rajiva Reddy, the learned Counsel representing the Central Bank of India, hereinafter in short referred to as Bank for the purpose of convenience made the following submissions. The learned Counsel had taken this Court through the evidence of P.W.1, P.W.2 and P.W.6 and had explained that P.W.6 categorically deposed about the execution of the documents inclusive of Ex.A-58 by the 7th defendant and P.W.1, P.W.2 and P.W.6 are disinterested witnesses, just officials of the Bank and their evidence cannot be doubted in any way. The learned Counsel also would maintain that the stand taken by the appellant/7th defendant that the Bank had colluded with the 2nd defendant definitely cannot be sustained. There was absolutely no negligence on the part of the Bank. The Bank only had pleaded what had happened and how in a high handed manner the 2nd defendant had acted and this will not amount to negligence on the part of the Bank so as to have the effect of discharging the guarantor's liability. The learned Counsel also had drawn the attention of this Court t:o relevant provisions of the Code of Civil Procedure and the Banking Regulation Act and would comment that this being a commercial transaction, the trial Court in fact had exercised the discretion properly and the same need not be disturbed by reducing the interest in any way. The learned Counsel also had taken this Court through the evidence available on record in general and the evidence of P.W.1, P.W.2 and P.W.6 and D.W.2 in particular and would submit that in the light of the stand taken by the 7th defendant putting forth the theory of obtaining signatures in blank papers, the variance of signatures and the other aspects which had been pointed Out by the learned Counsel for the appellant would fall into insignificance. The Bank is not at all concerned with the internal problems inter se between the defendants as such from the bickering in between those parties. The original borrowers or the guarantors as the case may be and the Bank is interested in recovering the loan which had been advanced to the 1st defendant Company and inasmuch as the 7th defendant also stood as a guarantor, he cannot escape the liability. The Counsel also commented that the evidence of D.W.5 is only that of an expert. However, P.W.1, P.W.2 and P.W.6 had well deposed relating to execution of the documents and the filling up of the printed forms by the concerned Bank officials for the execution of the documents by the guarantors and they had well established and proved and the minor discrepancies pointed out cannot be seriously considered so as to reverse the well considered findings recorded by the trial Court and hence the Appeal is liable to be dismissed.