Karnataka High Court
B. SHAMBUMAL GANGARAM - Appellant
Versus
STATE BANK OF MYSORE -Respondent
Decided On : 08-10-70

Headnote:

STATE BANK OF MYSORE V. B. SHAMBHOOMAL GANGARAM - BANKING - MORTGAGE - SUIT FOR RECOVERY OF MORTGAGE DEBT - DEFENCE - DISCHARGE OF SURETY - FAILURE TO TAKE ACTION ON HUNDIES - LIMITATION - OR. 2, R. 2 CPC - ACKNOWLEDGMENT - INTEREST - MONEY LENDERS' ACT.

Fact of the Case:

The plaintiff, State Bank of Mysore, filed a suit against the defendants, B. Shambhumal Gangaram and B. S. G. Chagganmull, to recover Rs. 1,61,272.45 with current and future interest and costs as money due to the Bank on accounts in respect of which the second defendant on behalf of himself and the firm had executed two memoranda of deposit of title deeds, each for Rs. 1,00,000 dated 14-8-1950 and 21-8-1950, thereby mortgaging the properties shown in plaint 'a' and 'b' schedules and by sale of the schedule properties other than those released from time to time by the Bank. The defendants resisted the claim of the plaintiff on various grounds. They contended that the plaintiff was not entitled to collect and realise any securities executed in favour of the Bank without a registered conveyance or transfer or assignment as per provisions of the Stamp Act, the Registration Act and the Transfer of Property Act. The amalgamation of the Bank with the Bank of Mysore is a transgression of the powers conferred on the local legislature and cannot override the provisions of the central Legislation. Therefore the plaintiff cannot seek to have a right to recover the claim in this case. The Bank advanced certain monies to the second defendant on the strength of deposit of title deeds and discounting hundies. Several hundies formed security furnished by the defendants and the plaintiff has suppressed that fect. The plaintiff ought to have filed a suit to recover the monies due under the hundies and should not have brought the present suit against the properties mortgaged. The defendants stated that the suit was barred by time inasmuch as there is no truth in the allegation of the plaintiff that they acknowledged the liability. In the course of the transaction of advances made by the plaintiff to the 2nd defendant, the defendant was taking securities and some times discounting hundies. The plaintiff filed a suit (O. S. No. 19/56 on the file of the First Additional Civil Judge, Bangalore for recovery of Rs. 58,879-5-0 as the amount found due under the over-draft facility. That suit ended in a decree. The discounting of hundies was a part of the said account and it was not a distinct and separate account. Therefore in that suit the plaintiff ought to have claimed the amount claimed in this suit as well and having omitted to do so, it was not open to the plaintiff now to enforce its right regarding the suit amount and the same is barred under Or. 2, R. 2 CPC. The plaintiff had retained hundies presented to it by the defendants for discounting and had allowed those hundies to become time barred with the result the defendants were discharged to the extent of the amount due under the hundies. The plaintiffs ought to have realised the amounts on those hundies as the plaintiff stood in the position of an agent of the defendants in regard to the hundies and if the plaintiff had allowed those hundies to become time barred, the defendants were entitled to ask the plaintiff to adjust that amount. They stated in the written statement that each of the hundies gave rise to different cause of action and therefore the items of LBD. account on account of different hundies became time barred and the drawers of the hundies not being made parties to the suit, the suit was not maintainable. Incidentally they pleaded that the interest claimed was excessive.

Finding of the Court:

The court found that the plaintiff was entitled to collect and realise any securities executed in favour of the Bank without a registered conveyance or transfer or assignment as per provisions of the Stamp Act, the Registration Act and the Transfer of Property Act. The amalgamation of the Bank with the Bank of Mysore is not a transgression of the powers conferred on the local legislature and can override the provisions of the central Legislation. The plaintiff was entitled to seek to have a right to recover the claim in this case. The Bank advanced certain monies to the second defendant on the strength of deposit of title deeds and discounting hundies. Several hundies formed security furnished by the defendants and the plaintiff has not suppressed that fact. The plaintiff was not required to file a suit to recover the monies due under the hundies and was entitled to bring the present suit against the properties mortgaged. The suit was not barred by time as the defendants had acknowledged the liability. The discounting of hundies was not a part of the over-draft account and was a distinct and separate account. Therefore, in the previous suit, the plaintiff was not required to claim the amount claimed in this suit and was entitled to enforce its right regarding the suit amount. The plaintiff had not retained hundies presented to it by the defendants for discounting and had not allowed those hundies to become time barred. The defendants were not discharged to the extent of the amount due under the hundies. The plaintiffs were not required to realise the amounts on those hundies as the plaintiff did not stand in the position of an agent of the defendants in regard to the hundies. The defendants were not entitled to ask the plaintiff to adjust that amount. Each of the hundies did not give rise to different cause of action and the items of LBD. account on account of different hundies did not become time barred. The drawers of the hundies were not required to be made parties to the suit and the suit was maintainable. The interest claimed was not excessive.

Issues: 1. Whether the plaintiff was entitled to collect and realise any securities executed in favour of the Bank without a registered conveyance or transfer or assignment as per provisions of the Stamp Act, the Registration Act and the Transfer of Property Act? 2. Whether the amalgamation of the Bank with the Bank of Mysore is a transgression of the powers conferred on the local legislature and cannot override the provisions of the central Legislation? 3. Whether the plaintiff was entitled to seek to have a right to recover the claim in this case? 4. Whether the Bank advanced certain monies to the second defendant on the strength of deposit of title deeds and discounting hundies? 5. Whether several hundies formed security furnished by the defendants and the plaintiff has suppressed that fact? 6. Whether the plaintiff was required to file a suit to recover the monies due under the hundies and should not have brought the present suit against the properties mortgaged? 7. Whether the suit was barred by time inasmuch as there is no truth in the allegation of the plaintiff that they acknowledged the liability? 8. Whether the discounting of hundies was a part of the said account and it was not a distinct and separate account? 9. Whether in the previous suit, the plaintiff was required to claim the amount claimed in this suit and was entitled to enforce its right regarding the suit amount? 10. Whether the plaintiff had retained hundies presented to it by the defendants for discounting and had allowed those hundies to become time barred? 11. Whether the defendants were discharged to the extent of the amount due under the hundies? 12. Whether the plaintiffs were required to realise the amounts on those hundies as the plaintiff stood in the position of an agent of the defendants in regard to the hundies? 13. Whether the defendants were entitled to ask the plaintiff to adjust that amount? 14. Whether each of the hundies gave rise to different cause of action and the items of LBD. account on account of different hundies became time barred? 15. Whether the drawers of the hundies were required to be made parties to the suit and the suit was maintainable? 16. Whether the interest claimed was excessive?

Ratio Decidendi: The court held that the plaintiff was entitled to recover the mortgage debt from the defendants. The defendants were not discharged from their liability to the extent of the amount covered under the hundies Exts. P-68 to P-125, because the plaintiff allowed them to become time barred. The suit was not barred by virtue of the provisions of Or. 2, R. 2 CPC. The suit was not barred by limitation. The rate of interest claimed was not excessive.

Final Decision: The appeal was dismissed with costs.