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2006 Supreme(Bom) 1078
IN THE HIGH COURT OF BOMBAY
Vazifdar S.J., J.
Bank of India ... Plaintiffs.
Versus
B. C. Mody Exports P. Ltd. & anr.... Defendants.
Suit No. 1594 of 1985, decided on 137-2006.
Advocates appeared:
Sowmya Srikrishna with Ms. Vandana Tiwari i/b. FZB & Associates, for plaintiffs.
K.C. Nichani, for defendants.
Headnote:Civil Procedure Code, 1908 - Order XXVI, Rule 16-A Evidence adduced Objected to Admissibility of evidence decided by Court considering all objections first Recording grounds of objections before a Commissioner would same valuable time of Court. The Commissioner naturally, having no power to decide the admissibility of documents, merely marked the documents for identification.
Even before the Commissioner for taking evidence, it is desirable for a party objecting to evidence, oral or documentary, being taken on record to specify the grounds of objection. For it is on these grounds that the Court can finally decide the question of admissibility. Where evidence is recorded by a Court the objection is considered and ruled on whether immediately or as is now permissible in view of the judgment of the Supreme Court in the case of Bipin Shantilal Panchal v. State of Gujarat, AIR 2001 SC 1158 : 2001 All MR (Cri) 452 (SC)] at the hearing. In either case the party tendering the evidence is then put on notice and may either challenge the ruling if the evidence is rejected or seek to prove it in another manner or through another witness. In the latter case it would save time and expense for all the parties as it may obviate a possible order of remand. The recording of the grounds of objection before a Commissioner would serve the same purpose and in fact to a greater extent.
COMMERCIAL TRANSACTION - Awareness of people in acknowledging balance due and all entries therein Presumption gains importance where the acknowledgement is made in respect of commercial transaction. It is important to note that in the letters of acknowledgement, the defendants have expressly admitted their liability under the CC Account. The acknowledgement of necessity refers to only one figure, the final consolidated figure. T he acknowledgement thereof however involves a consideration of the entire ac count all the entries. It is a reasonable and justifiable presumption that people, are aware of the correct state of their accounts and that they acknowledge the balance due thereunder after considering their account and examining the entries therein. But in the absence of anything to the contrary it must operate. To hold otherwise would denude such acknowledgements of their commercial efficiency. The presumption is stronger when the acknowledgement is by men of business and when made in respect of commercial transactions.
Contract Act, 1872 - Sections 10 and 19 Evidence Act, 1872, Sections 3, 27 and 61 Suit for recovery of amount by Bank Based on documents of guarantee hypothecation etc. Contention that Bank got signatures of defendant our blank forms Documents shown to defendant could not point out what were blanks that later on filled Defendant’s contention cannot be accepted. The intrinsic evidence in fact indicates that not only was the document not signed in blank but that the defendants affirmed and ratified the contents thereof throughout. There is no dispute that the loan was in fact in the sum of Rs. 2,50,000/when the promissory note was executed. Nor is there any dispute that the correct date of execution of the promissory note was 28.11.1974. The intrinsic evidence therefore establishes the promissory note.
The handwritten portions have been counted signed in the margin. That clause 3 which was deleted did not contain the initials in the margin, is of no consequence. It referred to the rate of interest which was, in fact, not filled-in. The clause, whether it was cancelled or not, was therefore of no consequence. The rate of interest was specified in clause 4 which contains initials on the side. Ms. Nichani however submitted that clause 2 purports to hypothecate in favour of the plaintiff even goods the defendants did not deal in. However, admittedly, it refers to goods the defendants dealt in at that time, such as diesel engine parts, chemicals fish hooks and polyamide resin. The mere fact that certain other goods were also mentioned would not establish that the document was executed in blank. That the blanks were filled in, in the same handwriting is not conclusive or even indicative of the documents having been signed in blank.
Contract Act, 1872 - Sections 10, 19 and 25 Suit for recovery of amount by Bank Amounts paid by Bank while discharging bills of exchange of defendants Bills of exchange dishonoured Amount of bills debited to cash credit account of defendants Contract as to "cash credit facility" and "Foreign Bills Purchase" proved Contention that dishonoured bills cannot be debited Not tenable. The plaint in Suit No. 1866 of 1980 filed by the defendants in this Court together with the annexures thereto was Exhibited as Exhibit ’D’ in evidence in the present matter. In paragraph 15 of the plaint in Suit No. 1866 of 1980, the defendants have stated as under :
"However, the 1st defendants wrongfully debited the plaintiffs Cash Credit Account with the amounts of the said 7 Bills of Exchange and interest and sent on 22nd June, 1978, 25th July, 1978 advice notes of having debited to the plaintiff’s said account sums of Rs. 1,23,864.43, Rs. 1, 65,939.33 and Rs. 1,43,588.63. Copies of the said Debit Advices are here to annexed and marked Exhibit ’G’.
(b) Thus admittedly the debit advice notes were forwarded by the plaintiffs to the defendants. The contents thereof, are important while deciding the question about the agreement alleged by the plaintiff and the refund alleged by the defendants. The debit advices include the debits in respect of all five of the aforesaid bills of exchange. The rupee equivalent of the amount of the said bills of exchange were specified and, in respect thereof, the following was expressly stated by the plaintiffs.
Bank of India present their complements and beg to inform you that your cash credit account has been debited as under.
(c) Surely, if such an arrangement had not been agreed upon the plaintiffs would have objected immediately upon receipt of the debit advices. They never questioned the right or authority of the plaintiffs to so debit their cash credit account.
(d) Thus, the doubt, if any, as to the arrangement pleaded by the plaintiff and the fact of the debit of the amounts of the dishonoured bills of exchange in the cash credit account, is now established beyond any doubt .’’
Ms. Nichani relied upon Exhibit ’P-43B’ a copy of noting and protesting certificate, pertaining to one of the said bills of exchange dated 23.3.1977. The certificate does not state that the bill of exchange had been accepted. On this basis, she submitted that the bills of exchange were not accepted. She further submitted that the bills of exchange were not even produced in evidence and therefore, acceptance was not even proved.
Contract Act, 1872 - Sections 10, 19 and 25 Deed of guarantee Cash credit facility extended by Bank Contention that deed of guarantee was without consideration Depended on proof Whether defendant signed deed in blank at suggestion of plaintiff Not proved Contention not tenable. Whether the defendant No. 2 proves that the deed of guarantee executed by him was without consideration. The deed of guarantee which is dated 28.7.1977 is Exhibit P-8, Ms. Nichani agreed that the answer to this issue will depend upon the answer to Issue No. 6 for, as she clarified, this contention was based solely on the ground that the guarantee had been signed in blank.
Contract Act, 1872 - Sections 10, 19, 25 and 73 Negotiable Instruments Act, 1881, Section 98(4) Bills of Exchange Dishonoured Intimated in time to defendants Clearance to be done through a Bank in Africa as agent for Bank of India (Plaintiff) through which bills sent for discounting Contractual stipulation to this effect Defendant cannot object to doubled amount. Ms. Nichani submitted that even assuming that the bills of exchange were accepted, they were not presented in time and the notice of dishonour was not given to the defendants in time.
Even assuming that the defendants have established these contentions, it would not carry their case any further and they will not be entitled to resist the plaintiff’s claim on these grounds. Exhibit P-43A is the original Bill Form No. 1005, dated 20.11.1974 the relevant portion whereof reads as under :
"1. You may at your option but at my/our risk and responsibility in all respects, appoint on agent, who shall be my/our agent to collect.
2. You or the agent, at you or his option, may send for collection or payment on my/our account at my/our entire risk and responsibility by post or by other manner to another agent or to the drawee thereof any cheques, bills, hundis or other instruments with or without share certificate or other documents attached, I/We agree that such other agent or the drawee shall be my/our agent for collection at my/ our entire risk and responsibility in all respects.’’
In view of this contractual stipulation, it would not be open to the defendants to foist any liability upon the plaintiffs even assuming that there was any negligence on the part of the Commercial Bank of Africa as alleged.
The plaintiffs case:
2. In or about November 1974 the plaintiff granted defendant No. 1 Demand Cash Credit facility upto a limit of Rs. 2,50,000/-. In respect thereof defendant No.1 executed various documents including a Demand Promissory Note, a Deed of Hypothecation and a letter of Lien and Set off all dated 2811-1974. The same had been tendered and marked in evidence as Exhibits P1, P2 and P3 respectively. The documents were completed in all respects when they were signed by the defendants. In March 1975 the Cash Credit facility was enhanced to Rs. 5 lacs in respect whereof a supplemental deed of hypothecation dated 29-3-1975 was executed by defendant No. 1 extending the hypothecation created under the earlier deed of hypothecation to operate in respect of the increased limit. In September 1975 the Cash Credit facility was enhanced to Rs. 5,50,000/ - and in respect thereof another supplemental deed of hypothecation dated 4.9.1975 (Exhibit P 5) was executed by defendant No. 1 extending the earlier hypothecation to cover the enhanced limit. In July 1977 certain further documents were executed including a demand promissory note (Exhibit P 6) dated 28-7-1977 in the sum of Rs. 5,50,000/- and a Continuing Security Bond dated 28.7.1977 (Exhibit P 7). The Demand Promissory Note stipulated interest at 7% p.a. over the bank rate with a minimum of 13% p.a. with quarterly rests. The continuing security bond stipulated that the promissory note was to operate as a continuing security for repayment of all monies due and payable by defendant No. 1 to the plaintiffs. In consideration of the aforesaid facilities defendant No.
2 executed a deed of guarantee also dated 28.7.1977 (Exhibit P 8) in his personal and individual capacity guaranteeing the repayment by defendant No. 1 of the plaintiffs dues upto a limit of Rs. 5,50,000/- with interest thereon.
3. Prior to the cash credit facilities initially granted in 1974 the plaintiffs had granted to defendant No. 1 a "Foreign Bills Purchase" Facility (FBP facility) in 1969. Under this facility the plaintiffs were to purchase/negotiate bills of exchange drawn by defendant No.1 on various parties to whom defendant No. 1 had sold goods. The plaintiffs would thereupon credit the FBP facility account with the amount of the bills after deducting their charges.
4. The plaintiffs case, which is one of the main disputes between the parties, is that there was an agreement and/ or arrangement between defendant No. 1 and itself that in the event of dishonour of any of the bills of exchange purchased by it from defendant No.1 and negotiated under the FBP facility and or in the event of the plaintiffs not receiving for any reason whatsoever the amounts of any such bills of exchange from the respective drawee and/or acceptor thereof the plaintiffs would debit the first defendants account under the aforesaid Cash Credit facility by the amount which the plaintiffs had credited the first defendants account in respect of the FBP facility at the time of negotiation. This agreement and/or arrangement is seriously disputed by the defendants. The arrangement is deposed to by Ved Prakash Sood on behalf of the plaintiffs in his affidavit in lieu of examination-in-chief as under:
"Apart from the Demand Cash Credit Facility, the plaintiffs had also granted another, facility to defendant No. 1 viz. a Foreign Bills Purchase Facility in or about 1969. Under the said facility the plaintiffs would purchase/ negotiate bills of exchange drawn by defendant No.1 on various parties to whom defendant No. 1 had sold goods. The agr
