MS CM AUTO STORES V. UNION BANK

RSA/193/1997

AI Insights

The case involves M/s C.M. Auto Stores and others (appellants) against the Union Bank of India (respondent) concerning a dispute over an overdraft facility. The respondent bank had filed a suit for recovery of `71,865.10, alleging that the appellants failed to repay the overdraft taken in 1978. The appellants contested the suit on various grounds including the authorization and competency of the person to sign and institute the suit, misjoinder of parties, and the maintainability of the suit. The trial court decreed in favor of the bank, which was upheld by the appellate court. However, the High Court, after considering substantial questions of law, found that the bank failed to prove its case due to lack of legal evidence supporting the execution and contents of the documents on which the suit was based.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 688801 (HC-HIMACHAL_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 23-12-2010
• Assessment Year: misc
• Other Referred Cases: Sait Tarajee Khimchand and others vs. Yelamarti Satyam and others, Ramji Dayawala & Sons (P) Ltd. vs. Invest. Import, United Commercial Bank vs. Durga Dass and another, UCO Bank vs. Durga Ram
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: N K SOOD
• Assessee Lawyers: R L SOOD; SANJEEV KUMAR
• Keywords: Interpolation; Legal evidence; Limitation; Overdraft facility; Suit for recovery; Authorization and competency; Misjoinder

Judgement Text

"IN THE HON’BLE HIGH COURT OF HIMACHAL PRADESH, SHIMLA R.S.A.No. 193 of 1997. Judgment reserved on : 7.12.2010 Date of decision : 23.12. 2010. M/s C.M.Auto Stores and others ..Appellants. Vs Union Bank of India ..Respondent. Coram The Hon’ble Mr. Justice Kuldip Singh, Judge. Whether approved for reporting ?1 No For the appellants : Mr. R. L. Sood, Senior Advocate with Mr. Sanjeev Kumar, Advocate. For the respondent : Mr. N. K. Sood, Advocate. Kuldip Singh, Judge This appeal is directed against judgment, decree dated 31.8.1996 passed by learned Additional District Judge, Shimla in Civil Appeal No. 110-S/13 of 1995/89 affirming judgment, decree dated 13.7.1989 passed by learned Senior Sub Judge, Shimla in case No. 365/1 of 1989 decreeing the suit of respondent. 2. The facts, in brief, are that the respondent –bank had filed a suit for recovery of ` 71,865.10 against appellant No.1 and its partners appellants No.2, 3. The pleaded case of the respondent is that appellants had availed the facility of over draft on 30.9.1978 to the extent of ` 50,000/- and agreed to repay the amount with interest at the 1 Whether reporters of Local Papers may be allowed to see the Judgment ? yes 2 rate of 15% per annum with quarterly rests. The appellants failed to pay the amount and, therefore, the suit was filed. 3. The appellants contested the suit by filing written statement and took preliminary objections of authorization and competency of the person to sign, commence and institute the suit. The objections of limitation, verification, mis-joinder of appellant No.3, who is not a partner of appellant No.1 have also been taken. The appellant No.1 is a sole proprietorship concern of appellant No.2, the appellant No.3 has nothing to do with the transactions in question. The documents on the basis of which the suit has been filed were not filed alongwith the plaint. 4. On merits, the competency of Anil Kapoor to commence, prosecute the suit has been denied. The rate of interest at the rate of 15% per annum has been denied. The interest was to be levied on simple interest basis. It has been pleaded that nothing is due to the bank. The appellant No.3 had written no letter to the bank nor he was authorized to do so on behalf of appellants No.1 and 2. The delivery of the notice to appellants was denied. The appellants denied the claim of the respondent. In alternative, it has been prayed that if any amount is found due against the appellants, then the same may be ordered to be paid in easy instalments. The respondent has filed the replication and denied the case set-up in the written statement while reiterating the case pleaded in the plaint. 5. On the pleadings of the parties, the following issues were framed:- 1. Whether the plaintiff is entitled to the suit amount, if so, with what rate of interest? OPP 3 2. Whether the suit is not maintainable as having not been signed and instituted by authorized person, as alleged? OPD 3. Whether the suit is within limitation? OPP 4. Whether the plaint is not properly verified as alleged? OPD 5. Whether the plaint is bad for misjoinder of defendant No.3? OPD 6. Whether the suit is not maintainable in view of the preliminary objection No.5 of the written statement? OPD 6-A. What is the effect of the absence of averments regarding limitation in the plaint? OPD 7. Relief. It has been held in issue No.1 that respondent is entitled to the agreed rate, issue No.2 has been decided that the suit is maintainable, issue No.3 was answered in affirmative, under issue No.4, it has been held that plaint has been properly verified, issue No.5 has been answered in negative, under issue No.6 it has been held that the suit is maintainable, under issue No.6-A, it has been held that the averments are there. The learned Senior Sub Judge on 13.7.1989 decreed the suit of the respondent for a sum of ` 71,865.10 with costs and future interest from the date of institution of the suit till realisation of the total decretal amount at the agreed rate of interest at the rate of 6% higher than the bank rate with a minimum of 15% per annum at quarterly rests. The learned Additional District Judge dismissed the appeal on 31.8.1996 filed by the appellants against judgment, decree dated 13.7.1989. On 11.11.1997 the learned Single Judge allowed the appeal and dismissed the suit. 6. In Civil Appeal No. 6237 of 1998, the Supreme Court on 4.8.2004 remitted the matter back to this Court to consider whether 4 any substantial question of law arises for consideration and if so, to frame the substantial question of law and then to decide the second appeal in accordance with law. On 7.4.2010 the learned counsel for the appellants has submitted that substantial questions of law have been annexed with the memorandum of appeal and this fact has not been denied by the learned counsel for the defendant. The learned counsel for appellants has submitted that appeal may be heard and decided on substantial questions of law annexed with the memorandum of appeal. 7. The following substantial questions of law have been annexed with the memorandum of appeal:- 1. Whether merely exhibiting the signatures of a person on a document can dispense with the quantum and quality of proof required to prove the document and whether such a document can at all refer to or read in evidence in order to return a finding on the basis of such document? 2. Whether the courts below have erred in law in reading in evidence un-exhibited and marked documents by basing their judgments and decrees on such un-exhibited and marked documents? 3. Whether the courts below could rely upon the statement of account produced by the respondent which is Ex.P-2, which was not certified properly under the banker’s book evidence and read the same in evidence more particularly when the PW-1, the Manager had categorically admitted that the same was not a true copy of the ledger book of the bank? 4. Whether there has been great miscarriage of justice as the courts below have failed to decide an important question of law that the documents on the basis of which the plaintiff based its claim were not filed with the plaint nor were they listed in the list of reliance and accordingly, such documents could not be permitted to be placed on record 5 or read by way of evidence in support of the plaintiff-bank case? 5. Whether the courts below have erred in law occasioning great miscarriage of justice by ignoring statement of PW-1 Shri Anil Kapoor, Manager of respondent Bank wherein he has categorically admitted that the interpolation in the documents has been made behind the back of the present appellants. Further, whether the courts below were justified in law in relying upon such interpolated documents, which had not been proved in accordance with law in deciding the case against the present appellants? 6. Whether the documents/letter signed by one alleged partner of a firm in his personal capacity can bind another alleged partner of the firm or be read against him and whether the lower appellate court has erred in law in failing to decide or take into account the above law point urged before it? 7. Whether the courts below could go beyond the pleadings of the parties and read in evidence the same, which was beyond the pleadings and admitted position of the parties more particularly in the matter of rate of interest as the admitted position relating thereto as the evidence by the statement of PW-1 Anil Kapoor, Manager of the respondent bank has been ignored. And whether the court below has occasioned injustice to the plaintiff by ignoring Ex.D-2 in the matter of deciding the rate of interest? 8. Whether in law, the court below is justified in law in holding that it was for the appellant-defendant to examine the official witnesses of the bank in order to prove that the documents which were filed at a later stage were interpolated or filled by the bank at some later date, especially in the light of the admitted position in law that the onus was always on the plaintiff-bank to prove that the documents were filled in at the time that they were executed or at the point of time before the filing of the suit in the court? 6 9. Whether the suit was bound to fail as there were no pleadings to bring the suit within the period of limitation, the same being clearly barred prima facie under Order 7 Rule 7 C.P.C.? 10. Whether the court below has erred in law in laying down the legal preposition that once the defendant admits his signature on the document, the presumption arises that he has executed the document after understanding the same and the contents thereto, especially in the light of the admitted position that the documents were interpolated and filled in lateron behind the back of the appellant? 11. What is the effect on the non-production of the sanction/authorisation by the bank in favour of the Manager of the branch to file the suit and whether the suit was bound to be dismissed in the absence of the same? 12. Whether the court below has occasioned great injustice in law to the appellants by ignoring the documentary evidence produced from the Govt. department and record such as the telecommunication department, income tax department etc.etc. which records clearly proved that the petitioner-appellant No.1 was sole proprietorship concerned? 13. Whether the court below was bound in law to follow the law laid down by this Hon’ble Court in Civil Suit No. 56 of 87 titled UCO Bank vs. Durga Ram and further whether the court below has occasioned injustice in law to the appellants by ignoring the other rulings that were cited before it and by not referring to them at all? 8. The learned counsel for the parties have been heard by treating the aforesaid questions as substantial questions of law Involved in the appeal. The record has also been perused. The learned counsel for the appellants has submitted that the suit has not been filed 7 by authorized competent person. The appellant No.3 has nothing to do with the sole proprietorship of appellant No.2 under the name and style of appellant No.1. The appellants No.2 and 3 are not partners of appellant No.1, the suit is barred by limitation. The courts below have taken into consideration inadmissible documents, which have not been proved for decreeing the suit of the respondent. The documents on the basis of which the suit has been filed were not filed at the time of filing of the plaint and, therefore, the two Courts below have erred in decreeing the suit. The learned counsel for the appellants has prayed for acceptance of the appeal and dismissal of the suit. The learned counsel for the respondent has supported the impugned judgment, decree and has submitted that the two Courts below have decreed the suit of the respondent after due appreciation of evidence on record and no fault can be found with the impugned judgment, decree. 9. The substantial questions of law No.1, 2, 3, 8, 10 and 13 for convenience sake can be decided collectively. It has been contended on behalf of the appellants that the respondent has not proved the material documents. The appellants have taken the specific stand that the documents in question were not filled in when those were signed. The signatures were obtained on printed documents of the bank with blank spaces which were not filled in. The respondent has examined only PW-1 Anil Kapoor, Branch Manager. He has nowhere stated that mark ‘A’, ‘B’, “C’ and ‘D’ were prepared, executed and signed in his presence. The foundation of the suit rests on mark ‘A’ hypothecation agreement, mark ‘B’ demand promissory note and mark ‘C’ authorization dated 30.9.1978 vide which the demand promissory note for ` 50,000/- was given to the bank as a security for 8 repayment of the outstanding amount. Mark ‘D’ is the letter dated 30.9.1978 vide which machinery / stock was hypothecated to the bank. 10. PW-1 Anil Kumar has completely demolished the case of the bank by stating that Ex.P-2 is not true copy of ledger. In fact the suit has been filed by the bank on the basis of statement of account Ex.P-2. The letters mark ‘E’, ‘F’, ‘G’, ‘H’ and ‘J’ allegedly written by the appellants to the bank do not improve the case of the respondent. The respondent has relied Ex.PX dated 20.9.1978 to show that the appellant No.1 is a partnership firm. The appellant No.2 has admitted his signatures at point ‘A’ on Ex.PX but he has not identified or admitted signatures of appellant No.3 on Ex.PX. The admission of appellant No.2 of his signatures on Ex.PY and his specimen signatures on Ex.PZ does not improve the case of the respondent that appellant No.3 is a partner of appellant No.1 firm. 11. The appellant No.2 has admitted his signatures Ex.PX/1, Ex.PX/2 on demand promissory note mark ‘B’. The appellant No.2 has admitted his signatures Ex.PX/3 to Ex.PX/5 on mark ‘A’ hypothecation agreement. He has also admitted his signatures Ex.PX/6 on mark ‘C’ as well as his signatures Ex.PX/7 on mark ‘D’. The appellant No.2 has admitted his signatures on power of attorney Ex.PX/8. But he has not identified or admitted signatures of appellant No.3 on any document. The learned counsel for the respondent has relied mark ‘E’ letter dated 19.8.1983 and has submitted that appellant No.3 is a partner of appellant No.1. It has been contended that mark ‘E’ connects appellant No. 3 with appellant No.1 and his connection with appellant No.1 is nothing but that of a partner. The appellant No.3 vide mark ‘E’ 9 has desired for final settlement of accounts with the bank. Mark ‘E’ has also been relied by respondent in order to show that appellant No.3 as partner of appellant No.1 has acknowledged the liability to pay the amount on 19.8.1983 and, therefore, the suit is within limitation. The question is with respect to admissibility of mark ‘A’, ‘B’, ‘C’, ‘D’, ‘E’, ‘F’, ‘G’, ‘H’ and ‘J’ in evidence. 12. The Supreme Court in Sait Tarajee Khimchand and others vs. Yelamarti Satyam and others, AIR 1971 S.C. 1865, has held that mere marking of a document as an exhibit does not dispense with its proof. The Supreme Court in Ramji Dayawala & Sons (P) Ltd. vs. Invest. Import AIR 1981 SC 2085, has held that undoubtedly, mere proof of the handwriting of a document would not tantamount to proof of all the contents or the facts stated in the document. If the truth of the facts stated in a document is in issue mere proof of the handwriting and execution of the document would not furnish evidence of the truth of the facts or contents of the document. The truth or otherwise of the facts or contents so stated would have to be proved by admissible evidence, i.e. by the evidence of those persons who can vouchsafe for the truth of the facts in issue. In United Commercial Bank vs. Durga Dass and another 1995 (1) Sim. L.C. 497, the learned Single Judge has held that acknowledgements dated 22.10.1982 and 23.6.1984 have not been legally proved. Accordingly, they have to be ignored and the suit was barred by limitation. 13. In the present case the basic documents of over draft facility and mark ‘E’ as well as mark ‘F’, ‘G’, ‘H’ and ‘J’ have not been proved by legal evidence. The execution of these documents has been seriously disputed by the appellants. The appellant No.2 has 10 admitted only his signatures on loan documents. PW-1 Anil Kapoor himself has stated that statement of account Ex.P-2 on the basis of which suit has been filed is not correct. PW-1 Anil Kapoor has not stated that documents in question were executed in his presence. He has not stated he was posted in Shimla Branch of the bank when the documents in question were executed. The two courts below have not rightly addressed the legal questions involved in the suit more particularly the legal proof of documents on the basis of which suit has been filed and other documents such as mark ‘E’, ‘F’, ‘G’, ‘H’ and ‘J’. The admission of signatures only by appellant No.2 on loan documents will not prove their execution unless evidence is led from the side of the respondent atleast to the extent that in fact these documents were executed by the appellants No.2 and 3 as partners of appellant No.1. In the context of stand of appellants mere admission of appellant No.2 on some over draft facility documents does not prove the execution, contents of such documents. The question of onus to disprove the contents of said documents will arise if contents of such documents have been prima facie proved by the bank by leading legal evidence. There is complete lack of legal evidence in support of the claim of respondent against the appellants. Hence, substantial questions of law No.1, 2, 3, 8, 10 and 13 are decided in favour of the appellants and against the respondent. 14. The substantial questions of law No.4 and 5 are interconnected, therefore, both of them are taken up together for decision The substantial questions of law No. 1, 2, 3, 8, 10 and 13 above have been decided against respondent in absence of legal evidence. In view of the findings on substantial questions of law No.1, 11 2, 3, 8, 10 and 13 wherein it has been held that respondent has failed to prove its claim against the appellants by leading legal evidence, no separate findings on substantial questions of law No. 4 and 5 are required. PW-1 Anil Kapoor has stated that he is not in a position to say that in mark ‘B’, ‘C’ and ‘D’ blank spaces were filled in lateron. PW-1 has nowhere stated that mark ‘B’, ‘C’ and ‘D’ were executed in his presence, therefore, his statement that he is not in a position to say that blank spaces in mark ‘B’, ‘C’ and ‘D’ were filled in lateron cannot be construed that he has admitted that in fact blank spaces in mark ‘B’, ‘C’ and ‘D’ were filled in lateron. The appellants cannot take the benefit of this part of statement of PW-1 in support of their contention that the documents were interpolated lateron. Once the basic documents of over draft were not proved by the respondent then it makes no difference that those documents were actually filed with the plaint or the documents when filed in the court were interpolated. The fact remains that the claim of the bank against appellants has not been established. The substantial questions of law No. 4 and 5 are decided accordingly. 15. The appellant No.2 has admitted his signatures on Ex.PX declaration of partnership and he has also admitted his signatures on Ex.PY ‘account opening form-partnership firm’. It is the case of the respondent that appellants No.2 and 3 approached the respondent for obtaining over draft facility by representing themselves as partners of appellant No.1 firm. The signatures of appellant No.3 on Ex.PX and Ex.PY have not been proved. The appellant No.2 has only admitted his signatures on Ex.PX and Ex.PY. He has not admitted the execution of Ex.PX and Ex.PY. Ex.DW-2/A is the income tax 12 assessment order dated 26.5.1976 for the assessment year 1974-75 of Vishwa Bhushan, M/s C.M. Auto Store. In Ex.DW-2/B income tax assessment order dated 4.3.1982 for the assessment year 1979-80 Vishwa Bhushan Banta has been shown proprietor of M/s C.M. Auto Stores, Dhalli. In Ex.DW-2/C assessment order dated 15.3.1988 for the assessment year 1985-86 Vishwa Bhushan Banta has been shown proprietor of M/s C.M. Auto Stores. In affidavit Ex.DW-3/A dated March 1978, Vishwa Bhushan Banta has shown himself as sole proprietor of M/s C.M. Auto Stores, Dhalli. There is thus overwhelming evidence on record that appellant No.1 is a sole proprietorship of appellant No.2. Ex.DW-2/A, Ex.DW-2/B, Ex.DW-2/C, Ex.DW-3/A clearly prove that appellant No.2 is sole proprietor of appellant No.1. Once appellant No.1 is a sole proprietorship concern of appellant No.2 then there is no question that appellant No.1 is a partnership firm and appellant No.3 a partner thereof. Ex.PX and Ex.PY alongwith their contents have not been proved by legal evidence. Mere proof of signatures of appellant No.2 on Ex.PX and Ex.PY does not mean that the execution and contents of Ex.PX and Ex.PY have also been proved. Ex.PX and Ex.PY are not binding on appellant No.3 to the extent that these documents refer that appellant No.3 is a partner of appellant No.1. Thus, the substantial question of law No.6, 12 are decided accordingly. 16. The respondent has failed to prove the principal amount due against the appellants, therefore, respondent is not entitled to interest at any rate on the alleged due amount from the appellants. The substantial question of law No.7 is decided in favour of the appellants and against the respondent. 13 17. The over draft facility was extended on 30.9.1978. The bank has relied mark ‘E’ dated 19.8.1983 for extension of limitation. The suit was filed on 18.8.1986. Mark ‘E’ has not been proved by legal evidence. The Ex.P-2 statement of account is not correct as per PW-1 Anil Kapoor, therefore, respondent cannot take benefit of Ex.P-2. The over draft facility was extended on 30.9.1978, mark ‘E’ is dated 19.8.1983, nothing from the record has been shown by way of legal evidence that any part payment was made by appellants within three years from 30.9.1978 or appellants had acknowledged their liability within limitation starting from 30.9.1978. Therefore, mark ‘E’ dated 19.8.1983 which is otherwise not a legal piece of evidence in no case can extend the limitation for filing of the suit which was filed on 18.8.1986. There is no legally acceptable explanation in the plaint for extending the limitation, hence the suit of the respondent against the appellants is time barred. The substantial question of law No.9 is decided in favour of the appellants and against respondent. 18. The suit has been filed by Anil Kapoor on the basis of power of attorney Ex.P-1. The appellants have never disputed the authorization given by the bank in favour of Anil Kapoor, who is not a stranger to the bank but an officer of the bank. The suit has been filed by Anil Kapoor for the benefit of the bank. Assuming that Anil Kapoor was not having requisite authority and competency to file the suit, this defect bank could remove by ratification. The defect, if any, is of procedure which has nothing to do with the merits of the case. The bank continued with the suit filed by Anil Kapoor and has thus ratified the defect, if any, in the authority, competency of Anil Kapoor in filing the suit. The bank shall be deemed to have accepted the filing of the 14 suit by Anil Kapoor by its own conduct. This has caused no prejudice on merits to the appellants. Hence, the substantial question of law No.11 is decided against the appellants and in favour of the respondent. 19. No other point was urged. 20. The result of the above discussion, the appeal is allowed. The judgment, decree dated 31.8.1996 passed by learned Additional District Judge and judgment, decree dated 13.7.1989 passed by learned Senior Sub Judge are set-aside. The suit filed by the respondent bank is dismissed. No costs. ( Kuldip Singh ) Judge. December 23, 2010. (GR) "