Back
2018 Supreme(Del) 650
IN THE HIGH COURT OF DELHI AT NEW DELHI
VALMIKI J.MEHTA, J.
Jain Exports Pvt. Ltd. – Appellant
Versus
State Bank of Saurashtra & Anr. – Respondents
RFA No. 272 of 2018
Decided On : 22-03-2018
For the Appellant :Mr. Kuljeet Rawal, Advocate.
The main legal point established in the judgment is that the bank's liability as a guarantor is determined by the nature of the letters issued by its Manager and the timing of the presentation of the cheques.
Headnote:
CPC - Recovery Suit - Section 96 of CPC - [Issue no. 3] - [Section 126 of the Indian Contract Act, Section 2(h) of the Indian Contract Act] - The court discussed the liability of the bank in relation to two dishonored cheques and the letters issued by the bank's Manager. The court held that the letters did not constitute a guarantee for repayment of the loan and that the bank was not liable as a guarantor. The court also emphasized that the bank's liability would only arise if the cheques were presented around the dates of the letters, which was not the case.
Fact of the Case:
The plaintiff filed a suit for recovery of a loan amount against the State Bank of Saurashtra, based on two dishonored cheques and letters issued by the bank's Manager.
Finding of the Court:
The court found that the bank was not liable as a guarantor for the repayment of the loan and dismissed the appeal.
Issues: The main issue was whether the bank was liable for the dishonored cheques based on the letters issued by the bank's Manager.
Ratio Decidendi: The court held that the letters did not constitute a guarantee for repayment of the loan and that the bank was not liable as a guarantor. The bank's liability would only arise if the cheques were presented around the dates of the letters.
Final Decision: The appeal was dismissed.
VALMIKI J. MEHTA, J.
CM No. 10619/2018 (Exemption)
1. Exemption allowed subject to just exceptions.
CM stands disposed of.
RFA No. 272/2018
2. This Regular First Appeal is filed under Section 96 of the Code of Civil Procedure, 1908 (CPC) by the plaintiff in the suit impugning the judgment of the trial court dated 21.11.2017 by which the trial court has dismissed the suit for recovery of Rs. 33,80,316/-against respondent no. 1/defendant no. 1/State Bank of Saurashtra. It is noted that the suit was originally filed as an order XXXVII CPC suit and there were two defendants in the suit, with the defendant no. 2 being Sh. R.P. Mathur, the sole proprietor of M/s. Radhika Leather Fashion who had issued the subject two cheques in favour of the appellant/plaintiff. Since the defendant no. 2 did not file an application seeking leave to defend, the suit as against him was decreed in terms of the order dated 1.4.1997 of the trial court for the suit amount along with interest. The issue to be decided in the present appeal therefore is only the entitlement/claim of the appellant/plaintiff for the amount as against the respondent no. 1/defendant no. 1/State Bank of Saurashtra.
3. The facts of the case are that the respondent no. 2/defendant no. 2 was having his account with the respondent no. 1/defendant no. 1/State Bank of Saurashtra. As per the plaint it is pleaded that respondent no. 2/defendant no.2 approached the appellant/plaintiff for a loan of Rs. 50 lacs and this loan was advanced by the appellant/plaintiff to the respondent no. 2/defendant no. 2 for six months. In discharge of his liability the respondent no. 2/defendant no. 2 had given two cheques dated 1.9.1994 and 1.9.1995. In the plaint it is pleaded that the Manager of the respondent no. 1/defendant no. 1/State Bank of Saurashtra in terms of his two letters dated 3.3.1994 issued confirmation for honouring the cheques. Since respondent no. 2/defendant no. 2 committed default in payment of the loan amount because only part of amount of Rs. 26 lacs was paid, therefore the subject suit was filed.
4.(i) The only issue to be decided, and as argued on behalf of the appellant/plaintiff before this Court is that whether the respondent no. 1/defendant no. 1/State Bank of Saurashtra is liable on account of the fact that the two subject cheques which were dishonoured were assured for payment in terms of two letters dated 3.3.1994 issued by the Manager of the respondent no. 1/defendant no. 1/State Bank of Saurashtra. This issue is issue no. 3 which was framed by the trial court and trial court has decided this issue in favour of the respondent no. 1/defendant no. 1/State Bank of Saurashtra by firstly holding that the two letters were not authorized to be issued by the respondent no. 1/defendant no. 1/State Bank of Saurashtra through its Chief Manager and that these letters were issued without any authority becomes clear as it is seen that the letters do not bear any reference number. Trial court has further held that such letters issued by the Manager of the Bank can only make the respondent no. 1/defendant no. 1/State Bank of Saurashtra liable if the respondent no. 1/defendant no. 1/State Bank of Saurashtra had become a guarantor for payment of the amount of the cheques, but these two letters dated 3.3.1994 cannot be construed as letters of guarantee issued by the respondent no. 1/defendant no. 1/State Bank of Saurashtra.
(ii) To the aforesaid conclusions of the trial court I would like to add that even assuming the two letters both dated 3.3.1994 were authorized to be issued by the Manager of the respondent no. 1/defendant no. 1/State Bank of Saurashtra, yet these letters would only require the respondent no. 1/defendant no. 1/State Bank of Saurashtra to pay the cheques as if presented in and around the dates of the cheques. These letters dated 3.3.1994 cannot be construed as fastening the liability upon the bank for all times to come even if the cheques are not presented in and around
