FA/1118/1988 1/12 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 1118 of 1988 For Approval and Signature: HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? No 2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of the judgment ? No 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? No 5 Whether it is to be circulated to the civil judge? No ========================================================= PARIKH HARIVALLABHDAS MULCHAND & 2 - Appellant(s) Versus VIJAYA BANK & 2 - Defendant(s) ========================================================= Appearance : MR RAJESH K SHAH for Appellant(s) : 1 - 3.None for Appellant(s) : None for Petitioner No(s).: for Appellant(s) : 3, MS ARCHANA AMIN FOR MR KG VAKHARIA for Defendant(s) : 1, MR VC DESAI for Defendant(s) : 2, MR AC GANDHI for Defendant(s) : 3, ========================================================= CORAM : HONOURABLE MR.JUSTICE M.R. SHAH Date : 19/06/2008 ORAL JUDGMENT 1. Present appeal is filed by the appellant – original defendant under Section 96 of the Code of FA/1118/1988 2/12 JUDGMENT Civil Procedure challenging the judgment and decree dated 29.04.1985 passed by the learned City Civil Court No.5, Ahmedabad in Civil Suit No. 9 of 1977 in decreeing the suit filed by the respondent – original plaintiff and ordering and directing the appellants – original defendants to pay Rs.1,42,442.49 paise to the original plaintiff with interest at the rate of 16% per annum from the date of the suit till realisation. 2. The original plaintiff – Bank filed Civil Suit No.9 of 1977 against the respondents – original defendants to recover and for decree in the sum of Rs.1,42,442.49 paise in respect of the key loan cash credit facility granted by the plaintiff to the defendant. As per the averment in the plaint, the defendant which is a proprietary concern opened current account by depositing Rs.300/- on 01.10.1973 with the plaintiff – Bank. That thereafter, the defendant requested to the Bank for key loan cash credit facility with a limit of Rs.1 lac. Pending sanction of the cash credit facility, the defendant was permitted to over draw the account. Thereafter, the defendant delivered hosiery goods on or about FA/1118/1988 3/12 JUDGMENT 11.10.1973 and requested the Bank to grant ad-hoc facility by opening key loan cash credit account till the limit was sanctioned by the Head Office. The Bank opened a key loan cash credit account and allowed withdrawal of various amounts against security of goods delivered. It is further contended that Head Office sanctioned the key loan cash credit account of Rs.1 lac to the defendant and other family concerns of the defendant. Promissory note, repayment of installment letter and pledge agreement etc. were executed by the defendant. In pursuance of the pledge agreement, hosiery goods which were already delivered to the Bank were included as security and the defendant was also required to deliver hosiery goods to keep the margin approved by the Bank. The defendant delivered to the Bank hosiery goods valued by them and supported by the bills produced by the defendant amounting to Rs.1,41,956.88 paise. It was further contended under the said agreement, the defendant agreed to repay the loan within one year and on default of the stipulated repayment, an additional interest at the rate of 3% per annum was to be charged till the date of the actual payment. FA/1118/1988 4/12 JUDGMENT The defendant made representation to the Bank that the goods which were pledged were genuine and valuable goods worth the amount shown in the original bills given to the Bank by the defendant. The defendant undertook to keep the goods insured for full value against loss or damage by fire, theft etc. It was further contended that four concerns i.e. M/s. Laxmi Vijay Hosiery Mills, M/s.Pareikh Harivallabhdas Mulchand, M/s.Mathurdas Govindas Parikh and M/s. K.Traders were either partnership firms or sole proprietary concerns of Shri Mathuradas Govinddas Parikh and his family members Smt.Gulablaxmi Govinddas Parikh, Shri Mukundbhai Mathurdas Parikh, and Smt.Illaben Mathurdas Parikh. It was contended that the plaintiff – Bank gave notice to the defendant to make payment of the outstanding amount including interest due thereon without any response. The Bank thereafter, gave notice to the defendant informing it that if payment of outstanding dues was not made within the time given in the notice, the Bank would take inventory of the defendant's hosiery goods and sell them by public auction. The defendant made various promises and delayed the postponed FA/1118/1988 5/12 JUDGMENT auction several times, but ultimately the Bank decided to sell the pledged goods in a public auction unless an additional security was given. The defendant created an equitable mortgage of their undivided interest in the land in favour of the plaintiff Bank. Mr.Mathurdas Govinddas, karta of the H.U.F. gave power of attorney to the plaintiff to recover the amount of compensation that may be awarded by the Land Acquisition Officer in respect of the land equitably mortgaged with the Bank which was under acquisition for the purpose of G.I.D.C. As the defendant could not make payment as promised, the Bank informed the defendant that the pledged goods will be sold by a public auction thereof. Suits were filed by the defendant and its sister concerns being Civil Suit Nos.3617,3618 and 3619 of 1975 in the City Civil Court and ex-parte interim injunction was obtained against the Bank restraining it from selling the pledged goods. That thereafter, all the aforesaid suits were withdrawn after the injunction orders were vacated. It was contended by the plaintiff that they were entitled to recovery an amount of Rs.1,42,422.49 paise under the said account. It was contended that FA/1118/1988 6/12 JUDGMENT the pledged goods were packed in wooden boxes and kept in the godown of M/s.Gokaldas & Company at the risk and cost of the defendant as per the agreement. It was contended that the inventory of the goods and auction have been postponed from time to time because of the representation by Shri Mathurdas Govinddas who ultimately agreed that suits may be filed against the defendant and its sister concerns so that consent decree could be obtained by the Bank and his bunglow be charged. This suit was filed without relinquishing the rights of the Bank by selling the pledged goods or by sale of the land mortgaged with the Bank. 3. The defendant contested the suit by filing written statement at Exh.20. It was contended on behalf of the defendant that the suit was barred by limitation and for non-joinder of necessary parties. It was contended that Shri Shirish Mehta who was the person in-charge of the Bank and through whom finance was taken was a necessary party. It was contended on behalf of the defendant that the Bank as no authority to file suit and the security must be realised first or in the alternative the plaintiff must deliver the FA/1118/1988 7/12 JUDGMENT goods to the defendant. It was further contended that it was agreed by and between the parties that on payment of Rs.45,000/- by the defendant to the plaintiff, the plaintiff must deliver the pledged goods to the defendant. The plaintiff further failed to do so and did not credit the amount of Rs.45,000/- to the defendant's account. The learned trial Court framed the issues at Exh.44. The learned trial Court held that the suit is not barred by limitation. The learned trial Court has also held that the suit is not bad for non-joinder of necessary party – Shri Shirish Mehta. So far as other issues are concerned, the plaintiff examined its Officer Shri Mahadev Govind Upadhyaya. The defendant did not led any oral or documentary evidence. The plaintiff proved the promissory note, letter stipulating payment of additional interest at the rate of 3 percent per annum on the defaulted, pledge agreement. After appreciating the evidence on record and considering the rival submissions the learned trial Court decreed suit directing the defendant to pay Rs.1,42,422.49 paise to the plaint with interest at the rate of 16% from the date of suit till realization. Being FA/1118/1988 8/12 JUDGMENT aggrieved and dissatisfied with the impugned judgment and decree passed by the learned trial Court, the appellant – original defendant has preferred the First Appeal. 4. Today the appeal is called out twice. Learned Advocate appearing on behalf of the appellant Mr.R.K.Shah, has chosen to remain absent. This appeal being appeal of 1988, this Court cannot wait further and therefore, it was decided to hear and proceed ex-parte further so far as present appeal is concerned. Ms.Archana Amin, learned Advocate has appeared on behalf of the respondent. It is submitted by Ms.Amin, learned Advocate that in a detailed well reasoned judgment, the learned trial Court has decreed suit appreciating the evidence on record and considering the fact that the plaintiff was entitled to recover the amount decreed in support of the key loan cash credit facility and therefore, the learned trial Court has not committed any error in decreeing the suit by holding that the suit is within prescribed time of limitation and is not bad for non- joinder of necessary party. Therefore, it is FA/1118/1988 9/12 JUDGMENT requested to dismiss the present appeal. 5. I have gone through the judgment and decree passed by the learned trial Court decreeing the suit. I have gone through the Record and Proceedings of the case and entire documentary evidence produced on behalf of the plaintiff. The defendant has not led any oral and/or documentary evidence. It is not in dispute that the defendant has opened key loan cash credit facility and had taken key loan cash credit amount of Rs.1 lac. It is not in dispute that defendant executed promissory note. It is not in dispute that hosiery goods were pledged by way of security. The learned trial Court has held that suit is not bad for non-joinder of necessary party i.e.Shri Shirish Mehta considering the fact that the facility was granted in the name of the defendant and withdrawal were made from the current account by the defendant after the amount was transferred from the key loan to the current account and considering the fact that nothing is on record to warrant any interference that the amounts were taken away by Shri Shirish Mehta. The learned trial Court has also rightly held that the suit is not barred by FA/1118/1988 10/12 JUDGMENT limitation. The learned trial Court has rightly answered the said issue considering Section 21(1) of the Limitation Act. The said finding is not required to be interfered with. 6. Considering the deposition Officer – Shri Mahadev Govind Upadhaya examined by the plaintiff, the plaintiff has proved sanction of loan in favour of the defendant, execution of promissory note and the amount due and payable by the defendant to the plaintiff. It is also not disputed that the defendant has acknowledged the dues under the suit account as on 30.06.1975 and said balance confirmation and acknowledgment is at Exh.54, which clearly shows that the defendant acknowledged the balance amount of Rs.1,08,226.75 paise due under the suit account as on 30.06.1975. By producing certified statement of key loan cash credit account of the defendant at Exh.55 due of Rs.1,42,422.49 paise has been proved by the Bank. There is no evidence produced and/or coming forth on record that the said amount was taken away by Shri Shirish Mehta, Branch Manager as alleged by the defendant. The learned trial Court has rightly FA/1118/1988 11/12 JUDGMENT negatived the contention on behalf of the defendant that first goods which were pledged by way of security were required to be sold and only thereafter, suit can be filed. 7. It was contended on behalf of the defendant that the suit is not maintainable because an amount of Rs.45,000/- was given by the four sister concerns to the Bank and that has not been credited in the suit account. Said aspect has been dealt with by the learned trial Court and it is held and observed by the learned trial Court that the defendant has not shown any evidence that any direction was given to the Bank to credit that amount in any particular account. Therefore, the learned trial Court has rightly held that the defendant or its sister concerns may have their own remedy in respect of that amount against the Bank. It appears that the said amount has been given to the Bank during the pendency of the suit, still the defendant has not pleaded any set off in the suit. Considering above, it cannot be said that the learned trial Court has committed any error in decreeing the suit. On considering entire FA/1118/1988 12/12 JUDGMENT record and the fact that cash credit facility was granted in the name of the defendant and withdrawal were made from the current account by the defendant after the amount was transferred from the key loan account to the current account, the learned trial Court has rightly decreed the suit, which is not required to be interfered with. 8. For the reasons stated above, the appeal deserves to be dismissed and accordingly it is dismissed. In the facts and circumstances of the case, there shall be no order as to costs. [M.R.Shah,J.] satish