RSA No. 3181 of 2009 (1) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH RSA No. 3181 of 2009 Date of Decision: 2.9.2009 M/s Ganesh Dal, Oil and General Industires and others ......Appellants Versus State of Bank of India .......Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA. 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? Present: Shri Mohit Garg, Advocate, for the appellants. HEMANT GUPTA, J. (Oral). Defendants No. 1 to 5 are in second appeal aggrieved against the judgment and decree passed by the learned first Appellate Court, whereby suit for recovery of Rs.5,42,099.30p along with interest @ 9% per annum from the date of filing of the suit till payment has been decreed with costs. Defendant-appellants entered into number of agreements for availing financial assistance such as cash credit facility, demand draft purchase facility etc. As per the plaintiff, in order to avail demand draft purchase facility, the defendants submitted eight bills for the value of Rs.2,53,598/- from 2.7.1982 to 14.7.1982 along with Railways Receipts/Motor Transport Receipts. The same were accepted, but were dishonoured on presentation and returned unpaid. After adjusting the credit and debit entries, a sum of Rs.5,05,545.72, stood recoverable from RSA No. 3181 of 2009 (2) the defendants on account of advances availed of by the defendants under the cash credit limit. A sum of Rs.36,553.58 is the interest recoverable and thus, the plaintiff claimed the aforesaid amount. The findings recorded by the learned first Appellate Court are that the defendants executed the documents towards demand draft purchase facility and the cash credit limit and that the suit is within time. Such findings are not disputed in the present appeal. Learned counsel for the appellants has firstly argued that the Motor Transport Receipt and/or Railways Receipts having been accepted by the Bank and payment made to the defendants in terms of the demand draft purchase facility, therefore, the plaintiff Bank is not entitled to recover the amount from the defendants as their right is to recover the amount from the consignee alone or the transporters and not the defendant- appellants. In support of such contention, reliance is placed upon Corporation Bank and another v. Navin Shah, (2000)2 Supreme Court Cases 628 and Dena Bank v. The M.P. National Textiles Corporation Ltd., AIR 1982 Madhya Pradesh 85. It is further argued that the findings recorded are not based upon pleadings. It is not the case of the plaintiff that the goods receipts were fake, but finding has been so recorded. Lastly, it is argued that the cheques signed by Bhushan Kumar on behalf of the defendant-firm are the unauthorized payments made by the Bank and, therefore, the appellants are entitled to set off the amount of the said cheques. Reliance is placed upon Meenakshi Achi and another v. P.S.M. Subramanian Chettiar and others, AIR 1957 Madras page 8. I do not find any merit in any of the arguments raised by the learned counsel for the appellants. RSA No. 3181 of 2009 (3) The fact that the defendants have withdrawn the amount on the strength of goods allegedly consigned by it through the Motor Transporters or Railways is not disputed by the appellants. In fact, such is finding of fact on the basis of statement of PW2 -S.M. Kataria, the Manager of the Bank. The bills and the receipts are Exhibits P.18 to P.32 produced on record. Exhibits P.51 to P.68 are the cheques by which the defendant-appellants have withdrawn the amount of Rs.2,53,598/-. The Bills were received back unpaid by the Collecting Branches of the Bank. Learned counsel for the appellants has vehemently argued that the first Appellate Court has returned a finding that such receipts were fake. There was no pleading of the plaintiff that the Motor Transport Receipts or the Railways Receipts are fake. Therefore, the finding recorded by the learned first Appellate Court is not based upon the pleadings of the plaintiff. The learned first Appellate Court has relied upon notices Exhibit P.70 to P.73 served upon the transporters to return the bills. Such notices were served upon the defendants vide Exhibit P.74. Exhibit P.81 is the reply given by respondent No.2 undertaking to pay the balance amount. It was found that the goods were never dispatched against the Motor Transport Receipts produced by the defendants. The amount of the Bills against which the defendants released payment on proof of the dispatch, was never paid by the consignees, therefore, the appellants have been rightly made liable for payment. It is the defendants, who have been paid for the amount of the bills of the goods allegedly sent by the defendants. Since the appellants are the beneficiaries of the payment, they alone are responsible for making the payment to the Bank. RSA No. 3181 of 2009 (4) The judgment in Corporation Bank's case (supra), is not applicable to the facts of the present case. It has been held therein that once the Bank has purchased or discounted an instrument from a customer and credited the customer with the amount of the instrument and allowed the customer to draw against the amount as credited before the bill or instrument is cleared, then the Bank would be collecting the money not for the customer but chiefly for itself. There is no dispute about the proposition of law laid down in the aforesaid judgment, but the controversy in the present appeal arises on account of dishonour of the instruments. When the bills were presented for payment, they have not been honoured. It is the defendant-appellants who have taken the benefit in advance with the goods allegedly sent by the defendants. Therefore, the ratio laid down in the aforesaid judgment is of no assistance to the argument raised by the learned counsel for the appellants. Similarly, in Dena Bank's case (supra), the Court has held that if the relevant documents are discounted by the bankers without waiting for its collection by the drawee by giving full credit for the entire amount of the document, the banker itself becomes a purchaser and the holder thereof for full value. The aforesaid judgment is again not helpful to the argument raised by the learned counsel for the appellant for the reason as given in Corporation Bank's case (supra). The argument that the plaintiff has not set up a case of fraud in presentation of the bills, whereas the first Appellate Court has returned a finding that the goods receipts were fake is again inconsequential The primary reason to claim the amount of bills is their dishonour. The bills can be dishonoured for variety of reasons including the same being actuated by RSA No. 3181 of 2009 (5) fraud. It is not the case of the appellants that such bills have been honoured by the consignees. Once the bills are not honoured, the liability to pay and the benefits thereon, would be on the person, who has drawn such benefits. Therefore, I do not find any substance in the argument raised by the learned counsel for the appellants. About 700 cheques were issued by the defendants. Out of such cheques, 275 cheques in the sum of Rs.2 lacs were issued under the signatures of Bhushan Kumar. Bhushan Kumar is admittedly not a partner of the defendant-firm. It has been found by the learned first Appellate Court that Bhushan Kumar is not a stranger but son of defendant No.3 and defendant No.4, brother of defendant No.2 and husband of defendant No.5. The issuance of a large number of cheques by Bhushan Kumar shows that he has implied authority to act on behalf of defendant No.1-firm and its partners never raised any objection about the encashment of cheques by Bhushan Kumar. The said finding cannot be said to be erroneous when Bhushan Kumar is not a stranger . In fact, the defendants permitted him to be a representative of the firm. Such representation was never disputed by the defendants for a long period of time. Consequently, I do not find any patent illegality or material irregularity in the finding recorded or that the finding recorded gives rise to any substantial question of law in the present second appeal. Hence, the present appeal is dismissed. (HEMANT GUPTA) JUDGE 02-09-2009 ds