UMA SHANKAR PRASAD Vs. BANK OF BIHAR LTD

JUDGEMENT

(1.) This appeal arises out of a decree passed by the First Subordinate Judge of Patna in a suit instituted on the basis of a mortgage bond. The bond in question was executed on 22 December, 1929, by the late Rai Bahadur Radha Krishna and his nephew, Babu Uma Shankar Prasad. These two gentlemen were merchants in a considerable way of business at various places in the province and were then anxious to extend and enlarge the premises at Patna which were their headquarters. For this purpose they were in need of money and they, therefore, approached the Bank of Bihar with whom apparently they had dealt for several years, and asked for an overdraft. The. agent of the bank consented to their overdrawing j their current account to the extent of Rs. 30,000 on condition of their mortgaging the land on which their business premises stood together with the existing buildings and any other buildings which they might subsequently construct on it. The bond stipulated for the payment of interest at 9 per cent., per annum to be compounded at the end of every six months. It further stipulated that payments were to be made in instalments, and that the whole of the amount should be repaid on or before 31 December 1931. The suit was instituted on 16 November 1937, that is very shortly before the statutory period of six years limitation for a suit on the basis of a mortgage bond was about to expire. The plaintiff asserted that the amount then due under the mortgage bond was Rs. 65,334-11-6, and asked for a preliminary mortgage decree for that sum together with costs and interest pendente lite. Immediately before the trial commenced, a petition was put in by the defendants pointing out that the sums actually advanced to them amounted to Rs. 35,025-15-9 or Rupees 5025-15-9 in excess of the overdraft for which they had asked. The mortgage bond was not so precisely worded, as it might have been and very possibly the effect of it was not that desired or contemplated by the bank. However, that may be, it was conceded in the Court below, and has been conceded here, that Rs. 30,000 was a secured debt and that the balance of Rs. 5025-15-9 was an unsecured debt. The learned Subordinate Judge gave the plaintiffs a preliminary mortgage decree for the former amount, and a money decree for the latter amount. The question that arises in this appeal is whether or not a money decree for the smaller amount should have been passed at all.

(2.) It appears that the defendants drew cheques from time to time on the bank, and that these cheques were honoured even after the defendants had overdrawn their account by more than Rupees 30,000. When a customer of a bank draws a cheque on it knowing that the funds to his credit are not sufficient to meet it but expecting the bank nevertheless to honour it, he impliedly applies to the bank for an overdraft or a loan. If the suit had. been instituted within a period of three years from, the date on which the earliest of the various sums-amounting in all to this Rs. 5025-15-9 had been, paid out by the bank, the suit would undoubtedly have had to be decreed. The suit, however, as I have already said, was not instituted until 17 November 1937, and the last of the advances made to the defendants had been made as far back as 26 January 1931. The question, therefore, that arises is whether or not the suit, so far as this part of the claim was concerned, was or was not barred by limitation. The lower Court took the view that Art. 96, and not Art. 57, Limitation Act, was applicable. In doing so, it relied on what was said by Mr. R.C. Pandit, the manager of the bank, who gave evidence at the trial. Mr. Pandit said this: I got a copy of the petition filed by defendant 1 that the bank had advanced more money than is stipulated in the bond. The accounts were scrutinised after this, and it was found that something more than Rs. 30,000 had been advanced. This has been done by mistake. As defendant 1 was an old client of the bank and a very respectable man, so the clerks in charge were not very careful in advancing the amounts from time to time, and so this mistake.

(3.) It will be useful to quote certain observations by Parke, B. in Kelly V/s. Solari (1841) 9 M. & W. 54, the nature of an action for the recovery of money paid by mistake. The learned Judge there said: I think that where money is paid to another under the influence of a mistake, that is, upon the supposition that a specific fact is true, which would entitle the other to the money, but which fact is untrue, and the money would not have been paid if it had been known to the payer that the fact was untrue, an action will lie to recover it back, and it is against conscience to retain it, though a demand may be necessary in those cases in which the party receiving may have been ignorant of the mistake.