GADDAR MAL Vs. TATA INDUSTRIAL BANK, LTD

JUDGEMENT

(1.) This second appeal by the plaintiff arises out of a suit brought by the plaintiff against the Tata Industrial Bank, Limited, Bombay, defendant, for recovery of a balance alleged to be due under a contract arising out of overdrafts allowed by the Bank to the plaintiff from time to time, on security of a deposit with the Bank of 182 bales of cotton. The contract governing the suit was expressed in a letter of lien of the 5 December 1912, by the plaintiff in which it was agreed that the plaintiff on his part should deposit bales of cotton and obtain loans re-payable upon demand from the defendant Bank. The loans were to bear interest at Rs. 8- 8-0 per cent per annum and the Bank was to hold the cotton as security until directed by the plaintiff to sell them, in which case the Bank was entitled at the time of settlement to recover the loans made, along with the interest and certain charges for insurance and storage. Provision was made for variation of the rate of interest by agreement between the parties.

(2.) On the 18 March 1922, the Bank informed the plaintiff by letter that they intended to charge Rs. 9 instead of Rs. 8-8-0 from that date, and again on the 21 April 1922, they intimated their intention to raise the interest to Rs. 10. To these two intimations the plaintiff made no reply. It is to be noted that in all, the plaintiff obtained Rs. 24,900. Out of this sum, one advance of Rs. 3,400 made on the 8 February 1923, was subsequent to both the letters of the 18 March and 21 April 1922, raising the interest from Rs. 8-8-0 to Rs. 9 and Rs. 10. The cotton was ultimately sold by the Bank under directions by the plaintiff and the plaintiff claimed that on the 18 February 1922, when the sale was complete there was a sum of Rs. 528-5-0 due to him out of the sale price after deduction of insurance and storage costs, and after allowing interest to the Bank at Rs. 8-8-0. In his suit he ignored the fact of the Bank having raised the interest. The suit was resisted on the grounds that (a) the plaintiff had under-estimated the costs of storage and insurance and (b) that he was bound to allow the defendant the higher rate of interest from the dates of the letters of the Bank intimating their intention to charge the higher rates. With ground (a) we have no concern in this second appeal, as, the decision on this issue was one of fact.

(3.) Both the lower Courts have held that plaintiff was bound to pay the higher rates of interest and have given the same reasons for so holding. These reasons are set forth in the judgment of the trial Court in a manner approved by the lower appellate Court as follows: Issue No. 2-It is next contended by the plaintiff that the defendant is not entitled to claim the increased rate of interest at Rs. 9 per cant. and 10 per cent per annum, for there was no subsequent agreement by the plaintiff to pay interest at the enhanced rate. The stipulation contained in the agreement is that interest shall be charged at the rate of 8 per cent per annum or at such other rate as may be from time to time agreed upon. This shows that the Bank had reserved to itself the right to increase the rate of interest from time to time. No customer would willingly and expressly agree to an enhancement of the rate that has once been stipulated and we have, therefore, to look to the circumstances and see whether the plaintiff had accepted the increased rates. Letters, dated the 18 March 1922 and the 21 April 1922, demanding the increased rates of 9 and 10 per cent. per annum respectively were duly sent and delivered to the plaintiff who did not take any objection. If he was not prepared to accept the increased rates he ought to have protested and cleared his accounts with the Bank. But the silence on the part of the plaintiff shows that there was an implied acceptance of the rate which the Bank had the power to increase. It is well-established law that acceptance can be made without express communication and the issue is, therefore, decided accordingly.