THE HON'BLE SRI JUSTICE B.PRAKASH RAO And THE HON'BLE SRI JUSTICE G.BHAVANI PRASAD A.S.Nos.2473, 2547 AND 3607 OF 2000 COMMON JUDGMENT: (Per the Hon’ble Sri Justice G.Bhavani Prasad) A.S.No.2473 of 2000 is directed against the judgment and decree in O.S.No.35 of 1997 on the file of the District Judge, Anantapur, dated 24.03.2000. A.S.Nos.2547 and 3607 of 2000 are directed against the judgment and decree in O.S.No.32 of 1997 on the file of the District Judge, Anantapur, dated 24.03.2000. As the parties to all the three {3} appeals are common and the subject matter of both the suits under the appeals is closely interconnected and interdependent, all the three appeals are being heard and decided together, at the request and with the consent of the learned counsel for both the parties. O.S.No.35 of 1997 (O.S.No.153 of 1989) was filed by the State Bank of India, Anantapur, against M/s. Ranga Slab Polishing Company, Anantapur and its Managing Partner and Partners, for recovery of Rs.8,14,302.95 ps with future interest and costs, alleging that the Bank sanctioned a loan of Rs.40,000/- for the first time on deposit of title deeds and execution of other documents by the Firm and its partners, with the loan limits being increased from time to time and the defendants availing the enhanced credit facilities from time to time and the loan limits were ultimately enhanced to Rs.6,00,000/- by 1987, with the defendants executing the necessary documents from time to time. As per the extract of the account relied on by the bank, the said amount was stated to be due and to have remained unpaid in spite of the demands from time to time. The defendants questioned the suit claim contending that the transactions began in 1978 and the extract of the account was filed in the suit only from 1985 and if the accounts from 1978 are furnished, the defendants would not be due the suit amount. The rate of interest charged from time to time was not specified in the suit and due to the conduct of the Bank in locking the office room and store room of the premises of the Firm, the defendants failed in their contract with the Tamil Nadu Civil Supplies Corporation Limited, Madras {“TNCSCL” for brevity}, resulting in a loss of Rs.11,44,000/- and the defendants were forced to file O.S.No.233 of 1989 (O.S.No.32 of 1997) against the Bank for recovery of damages of Rs.21,44,000/- for that reason. The defendants also contended that the plaint was not clear about the respective amounts due under the pledges and the promissory notes or the details of advancement of various amounts from time to time and the terms of the contract and rules of banking were violated by the Bank by filing the premature suit. The defendants, therefore, desired that the suit should fail. O.S.No.32 of 1997 was filed by the defendants in O.S.No.35 of 1997 for recovery of damages of Rs.21,44,000/- with interest at 18% per annum and costs, on the same allegations against the Bank about the illegal locking of their premises on 02.06.1987 and the resultant collapse of the transactions with TNCSCL. The defendants claimed that apart from the loss due to failure of the transaction, the Firm and the Partners also suffered loss of expected profits, mental agony and other disadvantages estimated at Rs.10,00,000/- due to which, the suit amount was arrived at Rs.21,44,000/-. To a notice issued prior to the suit, the Bank gave an untrue reply and hence, they claimed the damages. The Bank resisted the suit claiming that the Firm and the Partners defaulted in payment of the loan amounts and excess amounts drawn, in spite of demands from time to time and the Bank was justified in issuing notice of demand, during the pendency of the transaction with TNCSCL. The Firm and the Partners failed to pay even after completion of the contract with the said Corporation. The Firm undertook to close the accounts by 30.06.1987 and failed to do so and the Bank acted to recover its legitimate dues legally and therefore, the Bank desired the suit for damages to fail. The trial Court framed issues in OS.No.35 of 1997 and recast them on 3.03.2009 as follows. (1) Whether the plaintiff bank has obtained signatures of the defendants on the printed blank forms without filling the forms and concocted the documents as alleged in the written statement? (2) Whether the plaintiff bank is entitled to claim interest at the rate of 16.25% p.a., with quarterly rests on the amount advanced? (3) Whether the rate of interest agreed is only 12.5% p.a. without quarterly rests under the loan limits from 1 to 5 as claimed by the defendants? (4) Whether the locking of the factory premises of D-1 by the plaintiff bank is illegal and resulted the same in damage to the defendants 1 to 3 as alleged by them? (5) Whether the defendants are not liable to pay interest over the amounts due during the locking period of the factory premises? (6) Whether the suit claim (amounts due under different loan facilities) is barred by limitation? (7) Whether the plaintiff bank is entitled to recover the suit amount as claimed? (8) To what relief? The trial Court examined P.Ws.1 and 2 and D.W.1 during the trial in O.S.No.35 of 1997 and also marked Exs.A1 to A53 and Exs.B1 to B19. Similarly, the trial Court framed the following issues in O.S.No.32 of 1997. (1) Whether the plaintiff is entitled to claim damages, if so, in what amount? (2) Whether the defendants 2 and 3 are necessary parties to the suit? (3) Whether the plaintiff is entitled to any further interest, if so, at what rate? (4) To what relief? During the trial, the trial Court examined P.W.1 and D.W.1 and marked Exs.A1 to A26 and Exs.B1 to B52. The trial Court rendered the impugned judgment in O.S.No.35 of 1997, firstly observing that the extract of account filed by the Bank does not give any particulars of rate of interest charged at quarterly rests while the plaint did not furnish any particulars as to how the suit amount was arrived at. The trial Court also observed that the loan application and appraisal reports or sanction orders and the agreements between the parties were not filed by the Bank on which a direction was given by the Court to produce them. The trial Court further observed that the default by the Bank in spite of such directions has led to drawal of an adverse inference. The trial Court also concluded that no value can be attached to the claims of the Bank without placing the terms and conditions of the contract before the Court and the plaintiff Bank was consequently directed to file the rescheduled account extract showing the principal amount and addition of interest at the rate of 12.5% p.a. simple up to the limit of Rs.4,00,000/-. The trial Court also concluded that the interest concluded at 16.25% without quarterly rests has to be charged only on the additional loan of Rs.1,00,000/-, which was availed by the Firm after and not earlier to 20.03.1987. On an analysis of the oral and documentary evidence, the trial Court, hence, concluded that the said revised extract of the account with revised interest is, therefore, necessary for granting any relief against the Firm and the Partners. The trial Court also concluded in favour of the defendants in respect of their signatures being allegedly obtained in printed forms and also the absence of any justification for locking the premises of the Firm making the business of the Firm come to a stand still. The trial Court noted that no amounts were received by the Firm from the TNCSCL, Madras, and the trial court, therefore, considered the Bank to be disentitled to the interest for the period between 02.06.1987 to 06.09.1988 i.e., for a period of fifteen {15} months four {4} days and accordingly, the Bank was directed to delete interest in the revised extract account to be filed. The trial Court also came to a conclusion that the suit is well within the period of limitation and ultimately, granted a decree only for the outstanding amount, which may be found due as per the revised extract of account to be filed as per its directions with proportionate costs. The trial Court, therefore, asked the Bank to file revised extract of account within a period of one month for scrutiny and confirmation by the Court, in accordance with which the preliminary decree shall be prepared and the trial Court also gave an option to the parties to adjust the decretal amount in O.S.No.32 of 1997 towards the decretal amount in O.S.No.35 of 1997. In the judgment in O.S.No.32 of 1997, the trial Court, on similar considerations on the evidence placed before it in that suit, concluded that while it was open to the Bank to take charge of the machinery pledged to it and take further steps for sale thereof, if there was default and closure of the unit for a long time, the circumstances in the suit show that the Bank has not been given any power or right to put a lock to the industry and close its business altogether without any justification or reasonable cause for effecting the sale of goods and machinery and put locks to the premises. The trial Court observed that the viable industry was running smoothly and came to a stand still by illegal activities of the Bank officials and the trial Court found the deaf ear paid by the Bank authorities to the requests of the Firm to be unreasonable. It found that the Bank itself sanctioned two instalments of loan of Rs.75,000/- on 20.03.1987 and Rs.25,000/- on 01.04.1987 positively on being satisfied about the viability of the industry, the capacity to organize the marketing, the creditworthiness of the industry etc., and within a period of two {2} months, it opted to close the industry by locking it on 02.06.1987. The Firm or its partners were not unable to run to the industry nor did the industry become a sick industry for the Bank to take such vindictive action and therefore, the trial Court, on an analysis of all the circumstances, concluded that assessing the loss of profit at Rs.15,000/- due to the cancellation of the contract with TNCSCL, Madras, and reasonable profit during the period of locking at Rs.75,000/- will be reasonable. The trial Court also fixed Rs.20,000/- towards damages for the damaged semi-finished slabs, Rs.2,000/- towards service charges paid to the engineers, Rs.5,000/- towards electrical labour charges including watchman salary, Rs.1,000/- towards miscellaneous damages and Rs.1,78,000/- in total under all the earlier mentioned heads. The trial Court also considered it appropriate to award a sum of Rs.1,00,000/- towards mental agony and also future profits and other heads of damages and considered the defendants 2 and 3, who are the loan sanctioning authorities, also to be necessary parties to the suit and accordingly, granted a decree for Rs.2,78,000/- with proportionate costs and interest on the sums of Rs.1,78,000 and Rs.1,00,000/-. The defendants in O.S.No.35 of 1997 filed A.S.No.2473 of 2000 contending that that statement of account filed by the Bank is at variance with the balance sheet and the preliminary decree prepared by the successor Judge to the one who pronounced the judgment was not in accordance with the contents of the judgment. The defendants also challenged the other conclusions of the trial Court on factual considerations and again reiterated the unjustifiable conduct of the Bank in locking their premises. A.S.No.2547 of 2000 was filed by the Bank against the judgment and decree in O.S.No.32 of 1997 contending that the Firm and the Partners failed to liquidate the dues towards the excess amounts drawn in spite of repeated demands compelling the Bank to take action for seizure of the pledged articles in order to sell them and such seizure of the goods and the machinery as per the contract would not have resulted in the grant of the damages awarded by the impugned judgment and decree. The Firm and the Partners preferred A.S.No.3607 of 2000 against the conclusions in O.S.No.32 of 2007 again reiterating their claims about the quantum of damages contending that at least the trial Court should have granted damages of Rs.10,00,000/- in addition to the amount of Rs.2,78,000/- granted by the impugned judgment and decree. The appeal was, therefore, restricted to that claim of Rs.10,00,000/- as damages in addition to the amount already awarded. Sri M.Subba Reddy, learned counsel for the Firm and its Partners and Sri K.V.Subrahmanya Narasu, learned counsel for the Bank, were heard. The point for consideration is whether the impugned preliminary decree in O.S.No.35 of 1997 is in accordance with the judgment in question and if not, the preliminary decree in O.S.No.35 of 1997 and consequently, the judgment and decree in O.S.No.32 of 1997 require reconsideration. Though number of grounds were raised by the Firm and its Partners against the other conclusions in the judgment in O.S.No.35 of 1997, no serious emphasis has been laid on them during the hearing of the appeals and the primary grievance of the borrowers that the revised extract of the account, filed by the Bank after much delay after the period fixed by the Court has expired, neither was true nor covered the entire period nor was acceptable without giving an opportunity of hearing to them. It is admitted that while the impugned judgment was pronounced on 24.03.2000, the revised extract of account was filed by the Bank into the trial Court only on 26.06.2000 without even any formal application, either written or oral, for extension of time of one month fixed by the impugned judgment for filing such a revised extract of account. That apart, the Firm and its Partners have admittedly filed their objections into the trial Court against the revised extract of account and admittedly, the parties were not given an opportunity of being heard to satisfy the trial Court about their respective claims before the impugned preliminary decree was drafted and passed. The Firm and the Partners again expressed serious reservations about the correctness of the revised extract of account and their basic objection right from the inception was about the suppression of the transactions of the parties between the period from 1978 to 1985 and the trial Court, after elaborate consideration, found positive substance in the contentions of the borrowers on almost all the issues, which have been decided in their favour by the impugned judgment and which conclusions have not been challenged by the Bank even till now by way of any cross appeal or cross objections. The findings of the trial Court in the impugned judgment have become final on these aspects. It requires a comprehensive adjudication as to whether the revised extract of the account filed by the Bank is in tune with the conclusions arrived at by the trial Court against the Bank in respect of the account of the Firm and its Partners. The preliminary decree granted is vitiated as the same was not decided on merits and the same generosity in receiving the revised extract of account, even after the lapse of time fixed by the Court itself, should have also been shown to the borrowers in considering the objections raised by them against such revised statement of account. The matter therefore requires to be considered afresh by the trial Court to that extent only. If the matter has to be remitted back in respect of the suit claim by the Bank in O.S.No.35 of 1997, the conclusions, which the trial Court may arrive at on such reconsideration, will have a positive impact in considering the justification or otherwise for the Bank to lock the premises of the Firm, which provided the cause of action for claiming the damages claimed in O.S.No.32 of 1997. The conclusions of the trial Court in the impugned judgment in O.S.No.32 of 1997 about the un-justifiability of the action of locking the premises by the Bank will have to be viewed and considered afresh in the light of the conclusions that the trial Court may arrive at on merits on the revised extract of account and the objections of the Firm against the same as existence or non-existence of substantial dues from the Firm to the Bank in violation of terms and conditions of the agreement between the parties provides the justification or the absence of it for the locking of the premises of the Firm. Any claim for damages or assessment of the quantum of the same should have to be necessarily dependent on such justification or absence of it. As such both the suits have to be remitted back for reconsideration of the interdependent questions of fact. Under the circumstances, it cannot be the subject of any summary determination at the appellate stage. Therefore, the judgments and decrees in O.S.No.35 of 1997 and O.S.No.32 of 1997 dated 24.03.2000 on the file of the District Judge, Anantapur, are set aside and both the suits are remitted back to the Court of the District Judge, Anantapur, for fresh consideration on merits in accordance with law after giving every reasonable opportunity of hearing to both the parties. Remitting back of O.S.No.35 of 1997 is without interfering with the findings arrived at by the trial Court in the impugned judgment and only to the extent and for the purpose of deciding after scrutiny the amounts due to the plaintiff Bank from the defendant’s Firm and its Partners on the date of that suit duly considering the revised extract of account filed by the Bank and the objections by the defendants with a further opportunity to submit any further particulars from the Bank and to raise any other objections by the defendants within a reasonable time. The remitting back of O.S.No.32 of 1997 is for the purpose of re-examination of the entitlement of the Firm and its Partners for any damages and if they are so entitled the reasonable quantum thereof depending upon the result of O.S.No.35 of 1997. The appeals are ordered, accordingly, without costs. The appellants in all the three appeals may be entitled to seek refund of the Court Fee paid in these appeals, in accordance with law. The trial Court shall dispose of both the suits as expeditiously as possible at any rate not later than three {3} months from the date of communication of a copy of this judgment. No costs. _________________ (B.PRAKASH RAO, J) ____________________ (G.BHAVANI PRASAD, J) 30th August 2010 RRB