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2007 Supreme(AP) 686
Andhra Pradesh High Court
BANK OF BARODA, HYDERABAD - Appellant
Versus
D. RADHAKRISHNA REDDY - Respondent
Decided On : 07/18/2007
Advocates Appeared :
S.P.SARVESWARA MURTHY, Srinivas Chitturi
Headnote:
Contract Act – Section 25 (3) – Limitation Act, 36 –Section 3 –: (1) Whether consent of the debtor is required to appropriate the amounts of the debtor in the hands of the creditor towards a time barred debt? (2) Whether on the facts and in the circumstances of the case, the legal principle decided by the Supreme Court of India in Bombay Dying and manufacturing reported is applicable to the facts of the case –"interim stay subject to the condition that in case the appellant fails, the amount shall be refunded with interest per annum from the date of the decree on record made elaborate submissions and placed reliance on certain decisions to substantiate their respective stands can be seen from the submissions made by the Counsel on record, the only point to be answered in the second appeal is whether the appellant herein-defendant in on the file of VII Assistant Judge, City Civil Court Bank Main Branch has general lien and the said lien can be exercised against a time barred debt substantial questions of law, on the strength of which the second appeal was admitted, already had been specified supra. For the purpose of convenience parties hereinafter would be referred to as plaintiffs and defendant as shown first plaintiff instituted the suit for recovery of and also for the relief of perpetual injunction first plaintiff died legal representatives were brought on record. It was averred in the plaint plaintiff and some other partners have constituted a partnership firm under the name and style Telex Corporation –Held, Terms of the contract the bank is entitled to appropriate the debt due from the aforesaid decisions it is amply clear that though the remedy to recover the debt from the principal debtor is barred by limitation, the liability still subsists and the bank is entitled to appropriate the debt due from the amounts which are in its possession either belonging to the principal debtor or the surety as it is settled law that the liability of the surety is co-extensive with that of the principal debtor bank has a general lien over all forms of securities or negotiable instruments deposited by or on behalf of the customer in the ordinary course of banking business and that the general lien is a valuable right to the banker judiciously recognized and in the absence of agreement to contrary by virtue of statutory provision of the contract act the banker has a general lien over such securities and amounts in its possession has the right to use the proceeds towards adjustment of the debt due to him from the customer. Such a lien is also applicable to negotiable instruments including fdrs of the customer which are lying with the bank. Merely because the said fixed deposit was created subsequent to the loan transaction it would not make any difference bank has a right to adjust all the amounts which are in their possession and which belong to the customer on the date they adjust the said amount irrespective of the date on which the transaction which gave raise to the said claim took place – Appeal is hereby allowed.
"admit. The following substantial questions of law arise for consideration in the second appeal : (1) Whether consent of the debtor is required to appropriate the amounts of the debtor in the hands of the creditor towards a time barred debt? (2) Whether on the facts and in the circumstances of the case, the legal principle decided by the Supreme Court of India in Bombay Dying and manufacturing Co. v. State of Bombay, reported in AIR 1958 SC 328 is applicable to the facts of the case?"
( 2 ) THIS Court in CMP No. 15879 of 1998 on 25. 9. 1998 made the following Order:
"interim stay subject to the condition that in case the appellant fails, the amount shall be refunded with interest at 12 per cent per annum from the date of the decree. Notice. "
( 3 ) THE Counsel on record made elaborate submissions and placed reliance on certain decisions to substantiate their respective stands.
( 4 ) AS can be seen from the submissions made by the Counsel on record, the only point to be answered in the second appeal is whether the appellant herein-defendant in O. S. No. 685/1986 on the file of VII Assistant Judge, City Civil Court at hyderabad - M/s. Bank of Baroda, hyderabad Main Branch has general lien and the said lien can be exercised against a time barred debt. The substantial questions of law, on the strength of which the second appeal was admitted, already had been specified supra. For the purpose of convenience, the parties hereinafter would be referred to as plaintiffs and defendant as shown in O. S. No. 685/86 on the file of VII Assistant Judge, city Civil Court at Hyderabad.
( 5 ) THE first plaintiff instituted the suit for recovery of Rs. 13,000/- and also for the relief of perpetual injunction. Since, the first plaintiff died, the legal representatives were brought on record. It was averred in the plaint as hereunder: "the plaintiff and some other partners have constituted a partnership firm under the name and style of M/s. Telex Corporation. The office of the said firm continued upto 1967. The said firm had the key cash credit facility with the defendant bank. The partnership firm had delivered possession of certain radia components etc. , worth about rs. 4 1/2 lakhs under the lock and key under the defendant bank as security against the key cash credit facility of Rs. 2,00,000/ -. The defendant bank should have taken steps to sell the said goods pledged with the defendant bank and should have realize the amounts payable into the said loan account. The defendant bank by realized the amount of Rs. 51,467. 60 ps. , who had credited the same into the Key Cash Credit Loan. The plaintiff is having compulsory deposit account No. 53/74 with the defendant bank as per the provisions of Income Tax Rules and Regulations. The defendant had refused to pay the amounts payable to the plaintiff by 11. 6. 1983 under the said account. The defendant bank had given reply dated 14. 12. 1983 to the plaintiff informing that the amounts have been adjusted towards the loan account of M/s. Telex Corporation of which plaintiff was one of the partners. The defendant had no right to withhold the amount payable to him and adjust the same into the loan account of M/s. Telex corporation as the said loan was time barred. It is submitted that in the compulsory deposit account No. 53/74 amounts will be accruing payable to the plaintiff. The plaintiff apprehends that the defendant may withhold those amounts also without any injunction to the plaintiff. The plaintiff, therefore, seeks the relief of perpetual injunction against the defendant from withholding and adjusting said amount to the cash credit account of M/s. Telex Corporation. The suit is filed for recovery of the amount of rs. 13,000/- and for perpetual injunction against defendant from withholding amounts payable to the plaintiff in the compulsory deposit account No. 53/74. "
( 6 ) THE appellant herein/the defendant in the said suit - M/s. Bank of B
