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TMI Blog1995 (10) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... nk and considering the testimonial and documentary collections emerging from the record of the present case, we are of the opinion that the appeal is required to be dismissed at the threshold being meritless as the impugned judgment and decree are quite weighty, legal and sustainable. 3. Since this Court is addressed at a marathon length at the threshold, we would like to highlight the serious contentions advanced on behalf of the appellants in the backdrop of the aforesaid facts. 4. Present respondent No. 1 Vijaya Bank instituted the aforesaid suit against the defendants in respect of the outstanding dues of the Bank in the current account No. 1446 of the appellant No. 1 original defendant No. 1 firm. The appellant No. 1 is the original defendant No. 1; appellant No. 2 is the original defendant No. 2; appellant No. 7 is the original defendant No. 7, and appellant No. 4 is the original defendant No. 8; whereas, respondent Nos. 2 to 5 are the original defendants Nos. 3, 4 5. The Parties are, hereinafter, addressed as shown in the cause title of the original suit for the sake of convenience. 5. Defendant No. 1 firm had a current account No. 1446 with the plaintiff B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ini Dinesh Shah, Exh. 144 and (3) Mr. Deepak Shah, Chartered Accountant at Exh. 145. The parties also placed reliance on the documentary evidence to which a recourse and reference will be made by us at the appropriate stage hereinafter. 10. Upon appreciation and assessment on the evidence on record, the trial Court decreed the suit for an amount of ₹ 5,66,368/- with running interest at the rate of 18% per annum on an amount of ₹ 3,76,000/- from the date of the suit till realisation, with costs by the judgment recorded on 29th April, 1994. 11. The learned Advocate appearing for the appellants raised multi-prolonged attack on the validity and legality of the judgment and decree under challenge. It was seriously criticised that the trial Court has committed serious illegality in passing the impugned decree in a suit which was incompetent and time barred. The contention is also raised that the plaintiff Bank is not entitled to interest as considered and awarded by the trial Court. The contentions raised on behalf of the appellants are countenanced with equal vehemence on behalf of the respondent No. 1 original plaintiff Bank. 12. Since the points raised on be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fendant No. 1 firm by crediting an amount of ₹ 3,56,000/- in the account of Shreeji Corporation, a partnership firm having account with the same Bank and an amount of ₹ 20,000/- in the account of D. Sushil Co. The aforesaid two debit entries came to be by the plaintiff Bank in the current account No. 1446 on 29th December, 1979. (8) The question whether the action of the Bank was legal and valid or the plaintiff Bank was authorised will be a question to be examined and adjudicated later on by us. (9) The defendant No. 2, D.K. Patel, is the karta of D.K. Patel, H.U.F. who is one of the two partners of Shreeji Corporation in whose account the amount of ₹ 3,56,000/- came to be transferred, and he is not examined as a witness. (10) The second partner of Shreeji Corporation is one Mr. R.C. Joshi, who is the father of defendants Nos. 5 6. None of them is examined. (11) The transfer of amounts of ₹ 3,56,000/- and ₹ 20,000/- in the account of Shreeji Corporation and D. Sushil Co. respectively on 29-12-1979 is made by the plaintiff Bank on oral authority. (12) The defendants have never objected the transfer of the aforesaid amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Three Years. The close of the year on which the last item admitted or proved is entered in the account; such year to be computed as in the account. 16. It could very well be seen from the aforesaid provision that for running account the period of limitation is prescribed. According to Article 1 the Limitation Act, the period of limitation is three years which starts from the close of the year in which the last item admitted or proved in entered in the account. Such year is to be computed as in the account meaning thereby that in the year in which last entry is made would be excluded in computing the period of limitation and thereafter like that from the following month the limitation of three years would start. It is true that one sided payment is not sufficient. Mutual account involves a reciprocal demand, and payment or promise. 17. The fixed deposit receipt came to be liquidated and the proceeds along with the interest came to be appropriated towards the dues of the Bank in the current account on 21st October, 1980, and according to the provisions of Article 1, the close of the year in which the last item admitted or pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was no signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (I of 1872), oral evidence of its contents shall not be received. 20. The jural relationship of debtor and creditor must be admitted; administration may be implied, but surrounding circumstances may be considered to construe the documents. Even a mere look at the three documentary evidence Exhs. 74, 75 and 103 unequivocally goes to show that for and on behalf of the defendant No. 1 firm, acknowledgment of the dues of the plaintiff Bank is made by the partner Mr. D.K. Patel. An acknowledgment under Section 18 of the Limitation Act must be of a liability. Thus, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorised or illegal action of the partner rendering the firm and other partners immune from the said liability. On the contrary, a partner is an agent of the firm for the purpose of business of the firm. There is an implied authority of the partner to act as an agent of the firm, 24. Section 18 of the Indian Partnership Act, 1932, in Chapter IV makes it clear that subject to the provisions of the Partnership Act a partner is an agent of the firm for the purpose of business of the firm. In Chapter IV, various provisions are enumerated and prescribed with regard to the relations of partners to the third parties. A conspectus of Sections 18 19 and 26 of the Partnership Act would go to show that unless contrary provision is made in the partnership deed a partner of the firm is an agent of the firm for the purpose of business of the firm and he has an implied authority. 25. Section 19 of the Partnership Act provides an implied authority of the partner as an agent of the firm. It is very clear from the aforesaid provision of Section 19 that the act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm. The authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the current account. Therefore, after giving notices as aforesaid, and requisting the defendants to pay up or square up the dues the plaintiff-Bank was constrained to liquidate the Fixed Deposit Receipts (F.D.Rs.) as there were over drawings in the current account more than the sanctioned ceiling under the temporary over-draft facility. There is no dispute about the fact that the Bank has appropriated the proceeds of fixed deposit receipts along with interest towards dues of the Bank. The outstanding amount in the current account came to be ₹ 13,07,293.92 P. The defendants failed to accede to the request of the plaintiff Bank to pay up the said dues by transferring the fixed deposit receipts, with interest. Therefore, the plaintiff Bank had liquidated the fixed deposit receipts along with interest on 21st October, 1980, the total amount of which came to ₹ 9,42,092.80 P. Therefore, giving the credit for the said amount the balance amount of ₹ 3,65,201.10 P. remained to be paid by the defendants to the plaintiff Bank in the said over-draft current account. It is this action of the plaintiff-Bank which is questioned in the course of the marathan submission before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urplus amount left with it and could retain it for payment of other debts due from the same party in the absence of any contract to the contrary. Section 171 of the Contract Act provides for a general banker's lien. According to the law merchant, the banker can look to his general lien as a protection against loss on account, or loss on loan or verdraft. And money has been held to be a species of goods over which lien may be exercised. Where a banker has advance money to another, he has, obviously a lien on all securities which come into his hands for the amount of his general balance, unless there is an express contract or circumstances to the contrary, which is not the factual scenario in the present case. 29. There is a very interesting judgment of the Calcutta High Court in the case of Krishna Kishore Kar v. United Commercial Bank wherein, it is held that in the absence of contract to the contrary, banker's lien under Section 171 could be exercised. In case of separate accounts in the Bank, adjustment can be made by the Bank under Banker's lien. The plaintiff having cash credit account and other account all proceeds of fixed deposits duly credited in cash credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general banker's lien, the plaintiff bank was empowered and entitled to transfer and appropriate even by liquidation the FDs towards their over-draft account of the defendants. On all counts it cannot be said even for a moment that the action of the plaintiff-bank in liquidating the FDRs for purpose of appropriation towards bank's dues was, in, any way, unjust, improper or illegal. 36. Next it was contended that the plaintiff-Bank has failed to prove its suit dues. It is also contended that the Bank is not entitled to interest as claimed by the plaintiff-Bank. After having examined the facts and circumstances and the evidence on record, we have no hesitation in finding that the plaintiff-Bank has, successfully, established the suit dues. The bank has placed reliance on the certified true copy of the current account of defendant No. 1 firm under Section 4 of the Bankers' Books Evidence Act 1891. The certified true copy from the current account is produced and relied on. It is contended from the certified true copy that under Section 4 Bankers Books Evidence Act 1891, does not prove the dues of the Bank. It is true that under the provisions of Section 4 of the Banker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of Shriji Corporation and an amount of ₹ 20,000/- in D. Sushil Co. on 29-12-1979 has been kept away. Adverse inference has to be drawn for such non-examination of material witnesses as well as material documentary evidence of books of accounts. Non-production of books of accounts some stray letters and documents would undoubtedly cause serious doubt about the credibility and the veracity of the defendants. Not only that, according to the settled proposition of law, an inference can be drawn for non-production of important documents in the form of books of accounts. It is settled proposition of law that that a party who is in possession of these documents which can throw light upon the issues in controversy withholds the same from the scrutiny of the Court, could be visited with an adverse inference. This proposition is very well expounded by the Apex Court in the case of Gopal Krishnaji Ketkar v. Mohamed Haji Latif, reported in AIR 1968 SC 1413. Again non-production of material documentary evidence like books of accounts of the defendants also would be sufficient to raise an adverse inference. 39. Again, a serious criticism was levelled with full vehemence by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay at the rate to be prescribed or prevalent as per the circulars, and instructions of the Reserve Bank of India. The trial Court has also, rightly, not placed reliance on Exh. 146 which is a statement prepared by one witness of the defendants, Mr. D.D. Shah. The trial Court has placed reliance on the evidence of certified copies of the Bankers' Books coupled with the evidence of the witness Mr. D.P. Shah, at Exh. 30, and the evidence of the Manager Mr. Shetty, at Exh. 106. 41. Having regard to the documentary evidence discussed hereinabove, and particularly the rate of interest mentioned in the promissory note at Exh. 71, and the letter dated 22-1-71 at Exh. 72, in relation to the rate of interest, while viewed in the light of the provisions of Sections 22 and 35-A of the Banking Regulation Act, 1949, and the evidence on record, the rate of interest awarded by the trial Court, before and after the suit, is contractual rate and it is quite just and reasonable and justified. 42. Having regard to the aforesaid facts and circumstances narrated hereinbefore, and the entire relevant proposition of law set out above, this Court has no hesitation in finding that the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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