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High Court Of Delhi
SATISH KUMAR MITTAL - Appellant
Versus
STATE BANK OF INDIA - Respondent
Interim Application 2286 of 1992
Decided On : 10/01/1995
CONTRACT - BANKING - AMENDMENT OF WRITTEN STATEMENT - PLEA OF SET OFF - LIMITATION - SECTION 3 OF THE LIMITATION ACT - SECTION 171 OF THE CONTRACT ACT - ORDER 6 RULE 17 CIVIL PROCEDURE CODE - ORDER 8 RULE 6 CIVIL PROCEDURE CODE - COURT'S DISCRETION TO ALLOW AMENDMENT - INTERESTS OF JUSTICE.
Fact of the Case:
Plaintiff made a term deposit of Rs. 6,00,000 with the defendant bank. The bank issued three term deposit receipts each for Rs. 2,00,000. The receipts matured on 8/12/1984. On maturity, the plaintiff was informed that payment could not be made due to instructions from the head office. The plaintiff filed a suit under Order 37 of the Code of Civil Procedure for a decree of Rs. 6,27,270. Leave to defend was granted to the defendants. The defendants filed a written statement stating that the plaintiff had executed a counter guarantee whereby he undertook to pay on demand to the bank any amount which the bank may be called upon to pay under a bank guarantee executed by the bank. The bank had paid Rs. 16,59,000 to IATA under the bank guarantee and had adjusted the amount of the fixed deposit receipts against the amount due from the plaintiff. The plaintiff filed an application under Order 6 Rule 17 Civil Procedure Code for amendment of the written statement to add a plea of set off.
Finding of the Court:
The court held that the amendment sought by the defendant was material and necessary for deciding the matter in controversy between the parties. The bank had a lien under Section 171 upon the proceeds of the fixed deposit receipts which were lying in deposit with the bank. The defendant could show to the Court that the amount which was due to the plaintiff under the aforesaid fixed deposit receipt was liable to be adjusted and /or set off against the amount which the plaintiff owed to the bank. The court also held that the plea of set off was not barred by limitation under Section 3 of the Limitation Act. The right of set off is a right in defense whereas the plea of counter claim is a weapon of offense. The court further held that the amendment sought by the defendant was not malafide. The defendant was entitled to the adjustment of the proceeds of the fixed deposit receipts against the amount which had been paid by the bank under the bank guarantee issued by it to IATA. In the alternative, in case, it is held that the defendant was not entitled to adjustment, the defendant is still entitled to set off the amount of the proceeds of the fixed deposit receipts on which the bank has a lien under Section 171 of the Contract Act.
Issues: 1. Whether the defendant can amend the written statement to add a plea of set off? 2. Whether the plea of set off is barred by limitation?
Ratio Decidendi: 1. The court held that the amendment sought by the defendant was material and necessary for deciding the matter in controversy between the parties. The bank had a lien under Section 171 upon the proceeds of the fixed deposit receipts which were lying in deposit with the bank. The defendant could show to the Court that the amount which was due to the plaintiff under the aforesaid fixed deposit receipt was liable to be adjusted and /or set off against the amount which the plaintiff owed to the bank. 2. The court held that the plea of set off was not barred by limitation under Section 3 of the Limitation Act. The right of set off is a right in defense whereas the plea of counter claim is a weapon of offense.
Final Decision: The court allowed the defendant to amend the written statement, as proposed in the application for amendment, subject to payment of Rs. 2,000. 00 as cost.
( 1 ) THIS order will dispose of the application underorder6 Rule 17 Civil Procedure Code for amendment of the written statement filed by the defendant. Thefacts of the case in short are that the plaintiff had made a term deposit in the totalsum of-Rs. 6,00,000. 00 with defendant No. l and three term deposit receipts each forthe value of Rs. 2,00,000. 00 were issued by the defendant-Bank. The said receipts became due for payment on 8/12/1984. When theplaintiff on maturity of the said receipts went to the office of the defendant on 10thdecember, 1984, he was informed that payment cannot be made to the plaintiff onaccount of certain instructions received from the head office/regional office. Theplaintiff, therefore, filed the present suit under Order 37 of the Code of Civilprocedure for the grant of a decree for Rs. 6,27,270. 00. Leave to defend the suit wasgranted to the defendants by order dated 15/01/1987 and the defendantsfiled the written statement. The case as set up in the written statement by thedefendants was that the plaintiff alongwith Mr. Rajender Bhanot, Managing Director of M/s. Indo Travels Services Private Limited approached the defendant-Bankwith a request to furnish a bank guarantee to members of lata for payment to thesaid members of monies that might become due to them from the said M/s. Indotravels Services Private Limited. It is the case of the defendant that it gave aguarantee for Rs. 16,59,000. 00 dated 3/02/1984 unconditionally guaranteeing the payment to all and each member of IATA of all amount that may becomedue and payable by M/s. Indo Travels Services Private Limited from time to time. In consideration of the bank giving the said guarantee dated 3/02/1984, theplaintiff alongwith the said M/s. Indo Travels Services Private Limited and onelamba Foreign Travels Private Limited executed a counter guarantee dated 3/02/1984 whereby the plaintiff undertook and agreed to pay on demand tothe State Bank of India any amount which the bank may be called upon to pay underthe said guarantee dated 3rd February, 1984. It is further stated that the plaintiffdeposited its three term deposit receipts with defendant No. 1 on 8/06/1984 and 9/06/1984 each in the sum of Rs. 2,00,000. 00 and the said deposits were to matureon 8/12/1984 and 9/12/1984. IATA by a letter dated 4/09/1984 invoked the bank guarantee executed by the defendant-Bank anddemanded payment of Rs. 16,59,000. 00. On such demand having been made, thedefendant duly made payment of the aforesaid amount of Rs. 16,59,000. 00to IATAon 30/11/1984 and called upon the plaintiff as well as M/s. Indo Travelservices Private Limited to pay the said amount. On the failure of the plaintiff and/or either guarantors to pay the said amount or any part thereof, the bank filed Suitno. 441/84 in this Court for recovery of the aforesaid amount and it was statedtherein that the bank had already adjusted the amount of the fixed deposit receiptsas well as five other term deposit receipts of the plaintiff as well as one term depositreceipt of M/s. Indo Travel Services Private Limited against the amount which wasdue to the bank from these persons. In the alternative it was prayed in the said suitthat a joint and several decree be passed against the present plaintiff and M/s. Indotravel Services Private Limited and the other guarantor for the sum of Rs. 15,25,359. 70 paise.
( 2 ) THE present application was filed by the defendant on 3/03/1992 foramendment of paragraph 4 of the written statement. Originally in paragraph 4 ofthe written statement, the defendant had stated that the defendant as banker of theplaintiff had general lien on the term deposit receipts and it was entitled to retainthe proceeds of the said term deposit receipts or securities as goods bailed to it assecurity for payment due from the plaintiff to the State Bank of India and/or as asecurity for a general balance of account. It is also stated that the bank had alreadyfiled a suit against the plain
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