BANK OF BARODA Vs. INDOCHEM AND VARNISH INDUSTRIES

JUDGEMENT

(1.) THIS appeal has been preferred by the above named appellant -Bank against the judgment and order dated 9th April, 2002 passed by the then Presiding Officer, DRT, Allahabad in case No. Original Application 240/01, whereby and whereunder the claim of recovery for Rs. 10,29,497/ -,' of the appellant Bank against the respondents has been rejected.

(2.) THE respondent No. 1 is a proprietorship firm, defendant No. 2 is its proprietor and defendant Nos. 3 and 4 are guarantors of the defendant No. 1. Defendant No. 1 is manufacturing and doing business of resin, varnish etc. at Haldwani in the district of Nainital. Defendant No. 1 through defendant No. 2 took a cash credit loan from the appellant Bank and defendant Nos. 3 and 4 stood its guarantors and all the Banking documents as per the Banking Regulation have been executed by the borrowers including mortgage of the property. During the course of business one party of Delhi approached defendant Nos. 1 and 2 for purchase of their products. Defendant Nos. 1 and 2 did not agree to part with their products unless cash payments were made. On 15th September, 1998 one Nand Singh Bist brought a letter from one Tirupati Rosen and Chemicals along with a Demand Draft dated 12th September, 1998 for Rs. 7.22 lacs. The said draft was presented by defendant No. 1 to the appellant -Bank for collection as the account of defendant No. 1 was with the applicant -Bank. The said draft was issued by the State Bank of India, Fatehpuri Branch, Delhi, in favour of defendant No, 1 payable at State Bank of India, Haldwani. The appellant -Bank had sent the draft for clearance. When the appellant Bank did not receive any adverse report from the State Bank of India, Haldwani, then on presumption of clearance of the demand draft, credit of the draft's amount Rs. 7.22 lacs was made in the cash credit account of defendant Nos. 1 to 4. The said amount was withdrawn by defendant Nos. 1 to 4, but after four months on 14th January, 1999 it was informed by the State Bank of India, Haldwani that the said demand draft was not issued by the State Bank of India, Fatehpuri Branch, Delhi and was forged one and then defendant No. 5 State Bank of India, Haldwani Branch, debited Rs. 7.22 lacs to the account of the applicant -Bank. On receiving such advice, applicant -Bank made representation to the State Bank of India, Haldwani Branch i.e. defendant No. 5, regarding unauthorized debit of Rs. 7.22 lacs from their account but when nothing happened, then the original application was filed against all the defendants as mentioned above and the array of the defendants remained as it is in the array of the respondents in the present appeal.

(3.) BEFORE this Appellate Court Mr. G.C. Mehrotra, Senior Advocate for and on behalf of the appellant Bank submitted at the very first instance that the appellant Bank had acted in their regular course of business and as per the clearing house rules, no adverse report came regarding the demand draft. They had rightly credited in the account of defendant Nos. 1 to 4 and defendant Nos. 1 to 4 had utilized the amount. In that way, if any information had come after four months, then there cannot be any alternative for the appellant -Bank but to proceed against the defendant No. 5 and also defendant Nos. 1 to 4.