1981 (2) TMI 248 - HC - Indian Laws

Summary

Issues Involved:
1. Competence of Branch Managers to file suits or other legal proceedings.
2. Authority of Branch Managers to sign and verify pleadings.
3. Limitation period for filing suits.
4. Requirement of notice under Section 98 of the Negotiable Instruments Act.

Issue-wise Detailed Analysis:

1. Competence of Branch Managers to File Suits or Other Legal Proceedings:
The primary issue was whether Branch Managers of the State Bank of India (SBI) could file suits or other legal proceedings without a resolution from the Directors of the SBI. The court examined the relevant provisions of the State Bank of India Act, 1955, and the State Bank of India General Regulations, 1955. Regulation 77 allowed Branch Managers to sign and verify documents related to legal proceedings. The court found that Branch Managers had the authority to sign Wakalatnamas and authorize advocates to file suits. The court concluded that the suits were properly filed and instituted by the Branch Managers.

2. Authority of Branch Managers to Sign and Verify Pleadings:
The court analyzed Regulations 76 and 77, which empowered certain officers, including Branch Managers, to sign and verify pleadings and other legal documents. The court noted that a notification dated 17th September 1959, authorized 'Agents' (later re-designated as Branch Managers) to sign documents. Therefore, Branch Managers were authorized to sign and verify pleadings, and the suits filed by them were valid.

3. Limitation Period for Filing Suits:
In R.S.A. No. 2997 of 1979, the court addressed the issue of whether the suit was time-barred against the surety. The court referred to Article 1 of the Limitation Act, 1963, which provides a three-year limitation period from the close of the year in which the last entry is made in a running account. The court found that the suit was filed within a week of the last entry, making it within the limitation period. The court reversed the lower courts' findings and held that the suit against the surety was also within limitation.

4. Requirement of Notice Under Section 98 of the Negotiable Instruments Act:
The court examined whether the suit against the surety was incompetent due to the lack of notice under Section 98 of the Negotiable Instruments Act. The court found that the suit was based on the balance shown in the running account and not solely on the promissory note. Therefore, Section 98 was not applicable. Additionally, the court noted that even if Section 98 were applicable, the surety failed to show any loss due to the lack of notice. The court reversed the lower courts' findings on this issue as well.

Conclusion:
The court allowed Civil Revisions Nos. 2357 and 2358 of 1980, setting aside the judgments and decrees of the Additional District Judge and restoring those of the Judge, Small Cause Court. R.S.A. No. 2997 of 1979 was also allowed, and the plaintiff's suit was decreed for Rs. 5765.79 against all defendants jointly and severally, with interest at the contractual rate from the date of institution till realization. Similarly, R.S.A. No. 401 of 1980 was allowed, and the plaintiff's suit was decreed for Rs. 10618.24 against all defendants jointly and severally, with interest at the contractual rate from the date of institution till realization. The parties were ordered to bear their own costs throughout.