BHAJAN SING Vs. UNION OF INDIA

JUDGEMENT

(1.) The facts leading to this writ petition inter alia are that on 30th July, 1982 the petitioner No. 1 opened a Savings Fund Account No. 684 in his name and the said Bhajan Finance Company opened a Current Account No. 264 at the Zakeria Street Branch of the bank in this regard.

(2.) By a letter dated 29 of November, 1982 the said branch of the respondent bank informed the petitioners $at the respondent Bank had sanctioned an overdraft limit of Rs. 5,00,000/- in favor of the petitioners on the securities mentioned therein. A copy of the said letter dated 29th jf November, 1982 has been annexed to the writ petition. The said overdraft facility was availed of by the petitioners by overdrawing in the said current account No. 264.

(3.) From time to time .the respondent bank made diverse advances to the petitioners by allowing the said current to be overdrawn and the petitioners also repaid diverse amount to the respondent bank in the current account. In or about January, 1983 the respondent, bank at the request of the petitioners enhanced the said overdraft limit to Rs. 20,00,000/-. In this connection the petitioners wild relied on the certificate dated 2nd of April, 1983 issued by the said branch of the respondent bank a copy whereof has been annexed to the writ petition. The respondent bank before granting the said overdraft facilities to the petitioners had in fact written a letter dated 11th January 1983 addressed to the New India Assurance Co. asking them for indemnity policy of Rs. 20 lacs. In the said letter the respondent bank expressed satisfaction about the financial stability and good market reputation of the said firm. The said recommendation was made on the basis of the documents deposited to the bank which show that the aforesaid firm at the material time was to get from various debtors money to tune of Rs. 45 lacs, which was secured by hire purchase agreements with the said parties. Accordingly the petitioners availed of the said enhanced limit of Rs. 20,00,000/- by overdrawing in the said current account from time to time. The said financial facility by way of overdraft limit was sanctioned by the respondent bank after being satisfied about the financial stability of the said company.