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TMI Blog1978 (4) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... from time to time and the defendent-company used to make payments towards the amount advanced to it. Shri Binay Krishna Rohatgi, who was the father of appellants Nos. 1 to 6 and husband of appellant No. 7 in F.A. No. 386 of 1967, guaranteed the repayment of the aforesaid loan by executing guarantees in favour of the bank. On April 24, 1953, again a promissory note for Rs. 2,50,000 was executed by the company and the aforesaid Shri Binay Krishna Rohatgi executed a guarantee for that amount. On June 23,1956, the company again renewed the pronote for Rs. 1,50,000 (Ex. 1 c ), which was the amount due against it, and Shri Binay Krishna Rohatgi executed a guarantee for the repayment of the said loan (Ex. 3 b ). Finally, on June 23, 1959, the last pronote. was renewed by the company for an amount of Rs. 1,62,000 (Ex. 1 d ), agreeing to pay interest thereon at the rate of 7 % per cent. per annum. Shri Binay Krishna Rohatgi again executed a guarantee for that amount in favour of the bank (Ex. 3 c ). This amount was, however, not paid by the company and ultimately the bank filed the money suit in question on May 12, 1962. Till that date the total dues including interest was at Rs. 1,82,72 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thousand only for value received with interest at 3 per cent. over the Reserve Bank of India rate with a minimum of 7 per cent. per annum with monthly rests." This was signed by the chairman of the company. It also bears the signature of one Shri Anandi Lall Poddar as the director of the company. I propose to first deal with the question as to whether in the facts and circumstances of the present case the company is liable to repay the amount in question. Learned Advocate-General appearing on behalf of the company submitted that as the pronote (Ex. 1 d ) was executed by the chairman of the company without there being a resolution of the board of directors authorising him to execute the said pronote, the company is not liable to pay the amount in question. In that connection, learned Advocate-General drew our attention to the earlier pronotes which were executed on February 7, 1950 (Ex. 1), on February 3, 1953 (Ex. 1 a ), on April 24, 1953 (Ex. 1 b ) and on June 23, 1956 (Ex. 1 c ), as well as to the two resolutions of the board of directors dated February 23, 1953 (Ex. 9 c ), and April 4, 1956 (Ex. 9 b ), in support of his contention that the board of directors had passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en proved and marked as an exhibit in the case. Perhaps, it was only filed and later withdrawn from the record of the case. In my opinion, in such a situation, on the statement of D.W. 1 only, it will not be proper to infer that there was no resolution by the board of directors authorising the managing director to execute the pronote in question. Even if it is assumed that there is no resolution, in my view, the right of the bank to realise the amount which it has advanced to the company cannot be defeated on this ground. It is not the case of the company that Shri Poddar, its managing director, had executed the pronote in question in his personal capacity, rather, it is almost admitted that he had executed the pronote in question in favour of the bank on behalf of the company. After the execution of the pronote in question, a receipt had been granted on behalf of the company saying that it had received from the bank a sum of Rs. 1,62,000, on account of consideration money of pronote executed by them in favour of the bank dated June 23, 1959. This has been marked Ex. 2 a . In such a situation, it is not open to the company to say that the managing director of the company was not du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th. It was then submitted that Shri Anandi Lall Poddar, who executed the pronote in question, had not executed the said pronote as the managing director of the company, but only as chairman and the chairman of the company had no such power. In my opinion, this submission is against the pleading of the company itself. In para. 7 of its written statement it has been stated that the managing director of the company had no authority to execute the pronote in the absence of a resolution duly adopted by the board of directors authorising the managing director to borrow Rs. 1,62,000. Thus, it is admitted that on the relevant date Shri Anandi Lall Poddar was also the managing director of the company and he executed it in that capacity. Witness No. 3 examined on behalf of the company (D.W. 3) has stated that Binay Babu, who was the managing director of the company, was ill in the year 1959, and, as such, Anandi Lall Poddar, the chairman of the company, began to look after the business of the company. In view of the statement made in the written statement, it is not open to the company to urge that the pronote in question was not executed by the managing director of the company. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there being any consideration for the same, and, as such, it cannot be enforced in law. Section 2( d ) of the Contract Act provides that when at the desire of the promisor, a promisee or any other person does or abstains from doing or promises to do or abstain from doing something, such act or abstinence or promise is called a consideration for the promise. It was submitted that although a pronote was executed on June 23, 1959, actually no amount was paid on that day by the bank. In my opinion, this argument is misconceived. From the copy of the ledger of the bank it appears that about Rs. 1,62,000 was shown to have been deposited on the basis of the pronote and then shown to have been withdrawn the same day. In the eye of law this will amount to payment of Rs. 1,62,000 by the bank to the company on the basis of the pronote in question. This will be deemed to be a consideration within the meaning of section 2( d ) of the Contract Act. In the case of Ibrahim Mallick v. Lalit Mohan Roy, AIR 1924 Cal. 388 Rankin J. (as he then was) held in a more or less similar situation that the fresh promise in respect of the old debt would be valid and enforceable and it is not hit by section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not have derived if he had not made the agreement." In the case of Fullerton v. Provincial Bank of Ireland [1903] AC 309 (HL), after making reference to the Alliance Bank's case [1864] 2 Drew. Sm. 289 ; 62 ER (II) 631, at page 313, it was observed that there need not be an arrangement for forbearance for any definite or particular time ; it can be inferred from the surrounding: circumstances that there was an implied request for forbearance for a time, and that forbearance for a reasonable time was in fact extended to the person who asked for it. In such a situation any document executed will be deemed to be for consideration, the consideration being abstinence on the part of the creditor. In the case of Glegg v. Bromley [1912] 3 KB 474 (CA), at page 491, it was observed : "I think that where a creditor asks for and obtains a security for an existing debt the inference is that, but for obtaining the security, he would have taken action which he forbears to take on the strength of the security, and I cannot think that this inference is rebutted by the fact that the reason why he asks for further security is his desire to obtain a benefit for himself at the expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bank. Apart from that it is not correct to urge that Shri Binay Krishna Rohatgi had only guaranteed to discharge the liability of the company in respect of the amount which had been withdrawn by it from the account of the bank. He had guaranteed to discharge the liability of the company in respect of the amount which had been advanced to it through the account or on the basis of a pronote. The relevant portion of the letter of guarantee is as follows : "1. That on default of the constituent to discharge or pay you on demand all his/their liabilities or moneys already advanced or to be advanced paid or incurred by you on such account, or at any time or from time to time advanced paid or incurred to or for the use or accommodation of or on the credit of the constituent (whether on current, cash credit, pronote and/or overdraft or letters of credit accounts, or for bills discount or in the form of liabilities against bills, bills of exchange, promissory notes and/or other negotiable securities drawn, accepted or endorsed by him or otherwise howsoever) I/we shall pay you on demand and discharge all such moneys and liabilities together with all interest, discount, commissions and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenge the mode of proof of these documents before this court. Learned counsel then urged that the bank has simply annexed a copy of the accounts for the period from 1947 up to the year 1962, along with the plaint and none has proved the entries in the ledger of the bank in accordance with the requirement of section 34 of the Evidence Act which requires that every entry in the books of account regularly kept in the course of business to be proved before a claim can be based on the basis of those entries. It is settled law that if the claim against a defendant is based on the entries in the books of account maintained by the plaintiff, it has to be proved that such books of account were kept in the regular course of business and then the relevant entries have to be proved on behalf of the plaintiff. But that procedure is not to be followed in the case of banking companies for whom there is a special law of evidence known as the Bankers' Books Evidence Act, 1891. Section 4 of that Act is as follows : "Subject to the provisions of this Act, a certified copy of any entry in a banker's book shall in all legal proceedings be received as prima facie evidence of the existence of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that Shri Binay Krishna Rohatgi had incurred the liability in the nature of a debt either for family purposes or for his own personal benefit, so as to pass on the liability to his heirs even after his death. In my opinion, whatever may be said about following the property which were joint family properties at the time of the death of Shri Binay Krishna Rohatgi, there cannot be any doubt that the properties which have passed on his death to his heirs can certainly be followed while enforcing the liability under the guarantee. Apart from that, so far as the present case is concerned, Shri Binay Krishna Rohatgi in para. 2 of the letter of guarantee (Ex. 3c) had stated: "in the event of my dying or becoming under disability the liability of my executors, administrators or legal personal representatives and of my estate shall continue until the expiration of three calendar months' notice in writing given to you by such legal personal representatives to determine this guarantee". In that view of the matter the bank can enforce the guarantee given by Shri Binay Krishna Rohatgi against the properties which have devolved after his death on his heirs. It cannot be enforced either against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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