- 1 - IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION SUIT SUIT SUIT NO.179 OF 1989 NO.179 OF 1989 NO.179 OF 1989 State Bank of India ...Plaintiffs vs. D.M.Kapadia ...Defendant None for the plaintiffs Mr.Mehul Shah i/b Mr.Bharat Shah for the defendant CORAM CORAM CORAM: A.S.OKA,J. A.S.OKA,J. A.S.OKA,J. DATE DATE DATE : NOVEMBER 10,2008 : NOVEMBER 10,2008 : NOVEMBER 10,2008 ORAL JUDGMENT: ORAL JUDGMENT: ORAL JUDGMENT: 1. On 8th October 2008, when this suit appeared on board for recording of evidence, none was present for the plaintiffs. On 18th October 2008, the suit was kept for hearing of the arguments. On that day, none appeared for the plaintiffs. The learned counsel for the defendant was present. However, the Advocate for the plaintiffs has already filed written submissions. The Advocate for the defendants has also filed written submissions. 2. The suit is filed by the plaintiffs-bank against the defendant for recovery of a sum of Rs.4,08,650/- together with interest thereon at the rate of 16.5% per annum on the principal amount of Rs.2,71,928.73 from the date of filing of the suit till realisation of the amount. The defendant is an acceptor of various bills of exchange, the details of which have been set out in the paragraph 2 of the plaint. Shree Sajjan Mills Limited (hereinafter referred to as the said - 2 - company) is the drawer of the said bills of exchange. According to the case of the plaintiffs, certain credit and discounting facilities were granted by the plaintiffs to the said company. According to the case of the plaintiffs, from time to time, the defendant purchased from the said company cloth manufactured by the said company in respect of which the said company drew on the defendants bills of exchange payable to the plaintiffs. According to the case of the plaintiffs, the bills when presented were duly accepted by the defendant. The said bills of exchange were duly discounted by the plaintiffs under the bill discounting facility extended to the said company by crediting full value of the said bills to the credit of the said company. The details of the bills of exchange (total 16) have been set out in paragraph 2 of the plaint. 3. By letter dated 29th January 1986 sent by the plaintiffs to the defendant, it was recorded that the plaintiff has released documents of title against the acceptance of the Bills by the defendant. In the said letter, it was recorded that the defendant has not paid amounts payable under the bills on the respective due date of bills. By the said letter, the plaintiffs demanded payment of the amount payable under the said bills with interest. Thereafter, the plaintiff received certain amount by a demand draft from the said company. It is stated in the plaint that the said demand - 3 - draft was subsequently cancelled. 4. By letter dated 6th March 1986, the plaintiffs called upon the defendant to make payment of the amounts due under the said bills of exchange together with interest thereon. By another letter dated 28th March 1986, the plaintiffs called upon the defendants to make payment of the amount due. Ultimately, by Advocate’s notice dated 11th July 1986 was sent by the plaintiffs to the defendants calling upon him to make payment of an amount of Rs.2,71,928.73. By reply dated 4th August 2008, the defendant requested the Advocate for the plaintiffs to give inspection of the certain documents. The case of the plaintiffs is that inspection of the documents was given to the defendants. As the defendant failed and neglected to pay the said amount, present suit has been filed. 5. It must be stated here that summons for judgment taken out by the plaintiff was disposed of by consent order dated 16th January 1990. A decree on admission was passed in the sum of Rs.2,09,728.73 with interest at the rate of one half of the rate of interest claimed in the suit from the respective dates of the bills till payment. Under the same order, unconditional leave to defend the suit to the extent of the claim for Rs.62,200/- and interest thereon was granted by this court. - 4 - 6. The defendant contested the suit by filing his written statement. It was contended that the suit is not maintainable on account of non-joinder of the said company as a party defendant in as much as the said company was a necessary party to the suit. It was contended that the plaintiff has filed a suit in this court against the said company for recovery of amount inclusive of the amount of claim in the present suit. It was pointed out in the written statement that as per the decree on admission passed by this court on 16th January 1990, the decretal amount has been deposited by the defendant on 2nd April 1990. 7. The defendant contended that after the receipt of delivery of the goods supplied by the said company, the defendant found that certain goods were damaged and therefore it was mutually agreed between the defendant and the said company that a lumpsum amount of Rs.62,100/- shall be deducted from the amount payable to the said company and accordingly a credit note for Rs.62,100/- bearing no.156 dated 18th January 1996 was forwarded by the said company to the defendant and the said amount was debited to the account of the said company. Therefore, a contention is raised that the defendant was entitled to adjust the amount of the said credit note in the sum of Rs.62,100/- against the total amount payable in respect of the goods purchased from the said company. It was therefore contended that out of the claim of the plaintiffs of - 5 - Rs.2,71,928.73, the defendant was liable to pay only a sum of Rs.2,09,728.73. It is pointed out that the defendant has paid the amount as per the decree on admission earlier passed in favour of the plaintiffs. 8. The issues were framed on 17th August 2007. The issues read as under : (i) Whether Plaintiff proves that suit is maintainable in light of High Court Suit No.1142/1987 filed against Shree Sajjan Mills Ltd. for same bills of exchange as drawer of the bills ? (ii) Whether Plaintiff proves that Defendant is liable to pay sum of Rs.62,100/- balance due under bills of exchange ? (iii) Whether Defendant proves that suit suffer from non joinder of proper and necessary parties ? (iv) Whether Defendant proves that he is not liable to pay sum of Rs.62,100/- to plaintiffs Bank, as credit No.156 dated 18.1.86 issued by the drawer of the bills of exchange i.e. Shree Sajjan Mills Ltd. the acceptance of bills of exchange to the extent are without consideration ? v) What order : 9. Apart from producing documents on record, the plaintiff - 6 - examined Shri Naresh Watwani, Chief Manager of the plaintiffs by filing an affidavit in lieu of examination in chief. The said witness was cross examined by the Advocate for the defendant. The defendant examined Mr.Mansukhlal Kapadia on her behalf. The said witness is the husband of the defendant. The witness was cross examined by the Advocate for the plaintiff. 10. Various contentions have been raised by the learned Advocate for the defendant. He pointed out that a credit note dated 18th January 2006 for Rs.62,100/- issued by the said company has been duly proved. He pointed out that the suit filed by the plaintiffs against the drawer of the bills (said company) was transferred to the Debt Recovery Tribunal, Bombay. He pointed out that a decree has been passed by the said Tribunal against the said company for the amount payable to the plaintiffs which includes the suit claim. He submitted that the credit note at Exh.D-2 proves the failure of the part consideration to the extent of the amount mentioned therein and the said case made out by the defendant has not been shaken in the cross examination. He submitted that it is true that the plaintiff had a choice to file a suit for recovery either against the drawer or the acceptor of the bills of exchange or against any of them. He further submitted that two separate suits filed by the plaintiffs on the same bills of exchange were not maintainable. He submitted that under - 7 - the Rule 6 of Order I of the Code of Civil Procedure,1908 there is an option to the plaintiffs to file a suit either against the acceptor or the drawer of the Bill of exchange but that does not entitle the plaintiff to file two separate suits against the drawer as well as acceptor of the bills of exchange and proceed with both the suits. He submitted that if the plaintiff is allowed to prosecute the suit on merits and a decree is passed, the result will be that for the same claim, there will be two separate decrees passed in favour of the plaintiffs and the net result will be unjust enrichment of the plaintiffs. He placed reliance on the provisions of section 44 and 45 of the Negotiable Instruments Act,1881 and submitted that in view of the credit note for the sum of Rs.62,100/- (Exh.D-2), the liability of the defendant has been reduced by a sum of Rs.62,100/-. 11. In the written arguments filed by the Advocate for the plaintiff, it is submitted that bills in respect of which the suit has been filed have been admittedly accepted by the defendant and the defendant agreed to make payment of the amount payable under the said bills. It is submitted that the defendant being acceptor is in a position of principal borrower and therefore, the plaintiff is entitled to maintain this suit against the defendant. Reliance is also placed on the decision of the Apex Court and this Court reported in 1993 2 SCC page 199 and A.I.R. 1993 Bombay page 297 and 2005 (1) - 8 - Mh.L.J. 19. 12. I have carefully considered the submissions. It will be necessary to refer to the evidence adduced by the parties. The affidavit of the only witness examined by the plaintiff Mr.Naresh Watwani is at exh.P. In the said affidavit, the witness has set out the facts leading to the filing the suit. In the cross examination he admitted that for recovery of the very same amount which is claimed in the present suit, the bank had filed a suit against the said company. The witness admitted that the said suit was transferred to the Debt Recovery Tribunal and a decree has been passed in the said suit in favour of the plaintiffs by the said tribunal. He also admitted that the Government of Madhya Pradesh has paid a sum of Rs.7,38,24,269/- to the plaintiff bank as per the guarantee issued by the said Government. In the cross examination, the witness came out with a case that the claim before the Debt Recovery Tribunal was separate and the suit claim was separate. In the cross examination, he was confronted with the recovery certificate issued in the sum of Rs.88,97,576.01 by the Debt Recovery Tribunal as against the said company. 13. The defendant examined her husband and constituted attorney. His affidavit is at Exh.D. Reliance was placed in the said affidavit on the credit note issued by the said - 9 - company in favour of M/s.Amit Enterprises, a proprietary concern of the defendant. The said witness was cross examined by the Advocate for the plaintiffs. The only suggestion given in the cross examination is that the defendant was liable to pay to the plaintiff a sum of Rs.62,100/-. The correctness of the said suggestion was denied by the witness. 14. At this stage, it must be noted that the defendant produced 5 documents along with the list of documents dated 15th December 2007. On the said list, the Advocate on record for the plaintiffs has made an endorsement on 9th January 2008 stating therein that the documents produced by the defendant were admitted by the plaintiffs. On the basis of the said admission, the documents have been exhibited. There is a credit note dated 18th January 1986 at Exh.D-2 issued by the said company in favour of the plaintiffs. The credit note records that a sum of Rs.62,100/- for which the credit was given by the said company represents 352 rebate on bales of screen printed cloth delivered on 7th November 1985 and 15th November 1985 in various consignments as contents thereof were found having printing defects, finish variation and weaving defects. Thus, the said credit note at Exh.D-2 has been admitted in evidence by consent of the plaintiffs. My attention has been invited to the letter dated Exh.D-5 sent by M/s.Bachubhai Munim & Co. the advocates earlier representing the plaintiffs to the Advocates earlier representing the - 10 - defendant. Along with the said letter, a xerox copy of the letter dated 28th February 1990 sent by the Manager of the plaintiff to the Advocate for the plaintiff. The relevant part of the said letter reads thus : . "With further reference to our letter No.C & I/MISC/90/1 dated 18.01.90 and your letter no.P 398 dated 12.02.90 we have to advise that our Head Office are not inclined to accept the compromise proposal with the reduced principal amount of Rs.2,09,828.73. The compromise proposal would be acceptable to us only in case M/s.Divyani Mansukhlal Kapadia (Amit Enterprises) agree to pay the principal amount of Rs.2,71,928.73 plus 50% of the interest upto the date of payment. The Bank agrees to refund the amount of Rs.62,100/- to the defendants, M/s.Amit Enterprises, if the bank is able to recover the same from M/s.Shree Sajjan Mills: in the main suit..." 15. The document at Exh.D-6 is a recovery certificate issued by the Debt Recovery Tribunal, Bombay in the sum of Rs.88,97,576.01 The said recovery certificate in the suit filed by the plaintiffs against the said company (the drawer of the bill of exchange). As pointed out earlier, there is a categorical admission by Mr.Naresh Watwani, the only witness examined by the plaintiffs that for recovery of the suit claim, the plaintiffs-bank has filed a suit against the said - 11 - company and the said suit has been transferred to the Debt Recovery Tribunal. The witness admitted that a decree was passed by the said Tribunal against the said company and the plaintiff has received a sum of Rs.7,38,24,269/- from the Government of Madhya Pradesh as the payment of the said amount was guaranteed by the said Government. 16. Thus, it is an admitted position that out of the said amount payable by the said company to the plaintiffs, the aforesaid amount has been received from the plaintiffs from the Government of Madhya Pradesh and for balance amount of Rs.88,97,576.01, there is already a recovery certificate issued by the Debt Recovery Tribunal. 17. Apart from this, as pointed out earlier, the credit note dated 18th January 1986 issued by the said company has been admitted in evidence by consent of the plaintiffs. The husband of the defendant who stepped into the witness box stated on oath in paragraph 4 of his affidavit in lieu of examination-in-chief that the credit note in the sum of Rs.62,100/- issued by the said company relates to the amounts payable under the bills of exchange in respect of which the suit has been filed by the plaintiffs. He has stated that the bills of exchange relied upon by the plaintiffs are without consideration to the extent of Rs.62,100/-. He contended that the liability of the defendant to pay the amount to the said - 12 - company under the bills of exchange has been reduced to the extent of Rs.62,100/-. As stated earlier, now the suit claim is confined to the said amount with interest payable thereon. The credit note was admitted in evidence with the consent of the plaintiffs. Moreover, it is an admitted position that the plaintiffs have received a substantial amount from the State of Madhya Pradesh on account of liability of the borrower i.e the said company and for balance amount, there already a decree passed in favour of the plaintiff by the Debt Recovery Tribunal. Therefore, the plaintiff is not entitled to recover the amount of Rs.62,100/- from the defendant. 18. In the circumstances, the issues No.1 and 2 will have to be answered in favour of the defendant and against the plaintiff. Therefore, it is not necessary to answer the issue no.3. Issue no.4 will have to be answered in favour of the defendant. 19. Hence, I pass the following order : i) Decree on admission is already passed against the defendant on 16th January 1990. The balance claim of the plaintiff to the extent of Rs.62,100/- with interest thereon stands dismissed. ii) There will be no order as to costs. - 13 - JUDGE JUDGE JUDGE