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1993 Supreme(Del) 542
High Court Of Delhi
JAMMU AND KASHMIR BANK LIMITED - Appellant
Versus
EAGLE BUILDERS AND CONTRACTORS LIMITED. - Respondent
Suit 2140 of 1988
Decided On : 09/17/1993
V.K.Dhar
A bank is entitled to recover the amount advanced to a customer as overdraft, along with interest, if the customer fails to repay the amount despite repeated demands.
Headnote:
BANKING - RECOVERY OF MONEY - OVERDRAFT - INTEREST - BANKING COMPANY SUED FOR RECOVERY OF MONEY ADVANCED TO THE DEFENDANTS - DEFENDANTS FAILED TO REPAY THE AMOUNT - COURT HELD THAT THE PLAINTIFF BANK IS ENTITLED TO RECOVER THE AMOUNT WITH INTEREST.
Fact of the Case:
The plaintiff bank filed a suit for recovery of Rs. 1,63,542.33 from the defendants, who had taken an overdraft from the bank and failed to repay it. The defendants were proceeded against ex parte as they did not appear in court.
Finding of the Court:
The court found that the plaintiff bank had proved its case by filing an affidavit of its manager and principal officer, who had testified about the overdraft, the defendants' acknowledgment of their liability to pay, and the bank's demand for payment. The court also found that the defendants had not filed any written statement or examined any witnesses to rebut the plaintiff bank's claims.
Issues: Whether the plaintiff bank is entitled to recover the amount advanced to the defendants as overdraft.
Ratio Decidendi: The court held that the plaintiff bank was entitled to recover the amount advanced to the defendants as overdraft, as the defendants had failed to repay the amount despite repeated demands. The court also held that the plaintiff bank was entitled to interest on the amount at the rate of 16-1/2 percent per annum compounded quarterly.
Final Decision: The court decreed the suit in favor of the plaintiff bank and against the defendants for the recovery of Rs. 1,63,542.33 with costs and interest at the rate of 16-1/2 percent per annum compounded quarterly.
( 1 ) THIS is a suit for recovery of Rs. 1,63,542. 33 together with costs and interest from the date of suit till realisation at the rate of 16-1/2 percent per annum compounded quarterly.
( 2 ) THE facts of the case briefly stated, are that the plaintiff is a banking company registered under the Jammu and Kashmir Companies Act having its registered/head office at Srinagar, Kashmir and various branches including a branch of Rajindra Palace, New Delhi. Dr. B. L. Wanchu is the Deputy Manager and Principal Officer of the palintiff bank and he is duly authorised to sign and verify the plaint and to institute the present suit. In this regard he holds general attorney of the plaintiff bank.
( 3 ) AS per averments made in the plaint defendant No. 2 introduced himself as a director of M/s. Maurya Finance and Chit Fund (P) Ltd. , and opened a current account No. 48 with the plaintiff bank in the name of the said company. Thereafter he opened another account No. 94 in the name of defendant No. l with the plaintiff bank. It is further stated in the plaint that on the basis of the assurances given by defendant No. 2, the plaintiff bank permitted overdraft in the said account No. 94. On 03/09/1984 defendant No. 2 presented a cheque for Rs,l lakh and requested for overdraft in the aforesaid account as the said account showed credit of only Rs. 54,694. 39. It is further alleged that on his personal assurance regarding repayment of the said amount overdrawn, the plaintiff bank permitted overdrawal by passing the abovementioned cheque for payments It is further stated in the plaint that thereafter at the request of the defendants, the plaintiff bank permitted overdrawals in the aforesaid account as shown in the statement of account. Defendant No. l and 2 operated the said account for quite some time and deposited a sum of Rs. 5000. 00 in the aforesaid account on 05/08/1985.
( 4 ) IT is further alleged in the plaint that vide letter dated 17/10/1985 the defendants acknowledged their liability to pay and assured that the debit balance in the account would be duly adjusted before March 1986 but the defendants failed to keep up their assurances. It is also alleged that defendants 1 and 2 confirmed the debit balance in the aforesaid account vice confirmation dated 18/02/1987 confirming the balance of Rs. 1,26,106. 55. Thereafter plaintiff bank issued number of communications and reminders calling upon the defendants to pay the amount due and regularise the account but they failed to do so. It is further alleged that the plaintiff bank has charged interest at the rate of 17-1/2 per cent per annum compounded quateriy Upto 31/03/1987 and thereafter at the rate of 16 per cent per annum compounded quaterl as per directions of the Reserve Bank of India and also as per the practice and procedure of the bank as agreed to by the defendants. Since the defendants have failed to pay the amount due to the plaintiff bank the present suit has been filed by the plaintiff bank.
( 5 ) NOTICE of the suit was issued to the defendants. Despite service defendant No. 1 did not appear and accordingly he was proceeded against ex pane vide order dated 04/04/1989. At the initial stage defendants 2 and 3 appeared through their counsel on 23/02/1989 but thereafter none appeared on their behalf. Accordingly, defendant No. 2 and 3 were also proceeded against ex parte vide order dated 25/07/1989. By the same order the plaintiff bank was permitted to lead evidence by way of affidavit The plaintiff bank has filed the affidavit of Shri S. S. Nathyal, manager and principal officer of the plaintiff bank in suport of their case. All the averments and allegations made in the plaint have been proved by the aforesaid witnesses.
( 6 ) EX. AL is the photocopy of the power of attorney in favour of Dr. B. L. Wannchu, who had signed and verified the plaint. Ex. A2 is the cheque for Rs. 1 lakh dated 22/08/1984 which was encashed by the defendants on 13/09/1984. Ex. A3 is the statement of a
