1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO. 1911 OF 1980 Syndicate Bank ...Plaintiffs Vs. New Synthetic Chemical Industries & Ors. ...Defendants Mr. S.N. Acharya for Plaintiffs Mr.Deepak Jadhav for Defendants 2A to 2C CORAM: SMT.ROSHAN DALVI, J. DATED: 1ST APRIL , 2009 P.C. 1. This suit is filed by the Plaintiffs for recovery of Rs.1,53,719.10 upon two Bills of Exchange dated 31st January 1978 and two Bills of Exchange dated 17th April 1978 with interest at the rates mentioned in the particulars of Plaintiffs claim at Exhibit-K to the plaint. The Bills of Exchange have been drawn by the original Defendant No.1 as the proprietor of Defendant No.1 and accepted by the original Defendant No.4 as the proprietor of Defendant No.3. The bills being negotiable instruments carry presumptions of the passing of consideration thereunder. The bills were dishonoured when presented. Notice of dishonour has been given by the Plaintiff. The bills have been noted and 2 protested. The Plaintiff' s Advocate's legal notice has remained unanswered. Hence the Plaintiffs have sued on the Bills. The Plaintiffs claim interest at the rate allowed by Reserve Bank of India. The Plaintiff claim that the Defendants have expressed and implicitly agreed and promised to pay the rate of interest as allowed by the Reserve Bank of India and as varied from time to time. 2. Defendant Nos.2 and 4 have expired. Their heirs have been bought on record. The heirs of original Defendant No.2 have sought to defend the suit. Written statement has been filed by all the Defendants. Defendant Nos.1,3 and 4 have not defended the suit. 3. The following issues were framed by Justice R.G. Vaidyanatha on 13th December 1996. ISSUES FINDINGS 1.Whether the Plaintiff-bank proves that the Defendants are due in a sum of Rs.1,53,719.20 on the basis of suit Bill of Exchange, promissory notes and foot of account as claimed in the plaint as on the date of the suit. Yes 2.Whether the suit promissory note is not supported by consideration as alleged in 3 the written statement Need not be answered 3.Whether the amount of Rs.1,02,000/- was not credited to the account of Defendant Nos.1 and 2. Yes, but that does not matter. 4.Whether the Plaintiff is entitled to ] claim interest and if so, at what rate.] ] Yes – at the rate 5.Whether the Plaintiff is entitled to ] of 12% p.a simple interest at 7% as alleged in ] para 3 of the written statement. ] 4. Thereafter, further additional issues were framed upon the written statement filed by Defendants 3 and 4 on 18th October 2000. Defendants 3 and 4 have not defended the suit thereafter. They have neither cross examined the Plaintiff's Advocate nor led their own evidence. The further issues arising from their written statement are, therefore, not considered. 5. The heirs of defendant No.2 have only contested the suit. They have essentially claimed that they have not received any assets and properties of the original Defendant No.2. They have contended that they are not concerned with the affairs of Defendants 1 and 2. They have simplicitor denied and disputed the Plaintiff' s claim. They have relied upon 4 and adopted the written statement of Defendant Nos.1 and 2. 6. The Plaintiff has led evidence of its officer. He has been cross examined by the Advocate on behalf of defendants 1A and 2C. No other evidence is led in the suit. The issues shall have to be decided based upon the evidence of the said officer alone. 7. Issue No.1.:- The Plaintiff' s officer has produced 4 suit Bills of Exchange, 2 dated 31st January 1978 and other 2 of which are dated 17th April 1978. They are shown to have been signed by Defendant No.2 as the proprietor of Defendant No.1 as the drawer of Bill of Exchange and by Defendant No.4 as the proprietor of Defendant No.3 is the acceptor of Bill of Exchange. The bills have been marked Exhibits – A, B, C, D and E. The execution by the drawer as well as acceptor is not denied. Defendants 2A to 2C who are the heirs of Defendant No.2, who has signed the Bill of Exchange has not denied his signature. There is, therefore, nothing to dispute the execution of the Bills. 8. The Defendants have waived notice of dishonour of the payment on 10th February, 1978, 9th February, 1978, 24th 5 April, 1978 and 29th April, 1978. These notices of dishonour are similarly signed as per the signatures on the Bills of exchange. These signatures have also not disputed. These notices of waiver of dishonour are marked Exhibits – F, G, H and I. 9. The bills show specific liquidated amounts of Rs.14,400/-, Rs.60,000/-, Rs.13,200/- and Rs.12,600/-. These are stated to be under specified invoices and delivery challans of the dates of the bills. There is nothing shown to dispute their contents. 10. The execution of the bills is followed by the legal notice requiring payment of the amounts precisely as mentioned in the bills being the precise amounts for which the bills were drawn and discounted. It also shows the due date of the bills as mentioned therein. It calls upon the Defendants to make payments of the total amount under the 4 bills with interest at the rate of 17% p.a thereon. The copy of the notice admittedly received by the Defendants is marked Exhibit – J. A further notice making similar claim on 11th July 1979 by the Plaintiffs' then Attorneys is marked Exhibit-K. 6 (It appears that the Defendants were sanctioned a loan as per their application dated 10th January 1977. The sanction letter has been executed on 27th June 1977. Original Defendant No.2 as a proprietor of Defendant No.1 has signed the letter of proprietorship on 9th July, 1977). 11. On 1st July, 1978 original Defendant No.2 on behalf of Defendant No.1 addressed his letter to the Manager of the Plaintiffs' Bank admitting the liability under the Bills of exchange. He has mentioned that he has contacted the acceptors who would be making payment on the Bills of Exchange before 15th September 1978. He requested the Plaintiffs to excuse his Firm for the enormous delay and guaranteed that that would not be repeated in future. The signature of original Defendant No.2 on this letter is also not denied. Thereafter there have been further notices by the Plaintiffs dated 18th September, 1978 and the Plaintiffs' earlier Advocate dated 18th November, 1978 to Defendant Nos.1 and 3. Again on 14th December 1978 and 7th February, 1979 the original defendant No.2 has accepted his liability as well as the delay in making payment and applied for time to make payment by 15th January, 1979 and later till 15th March, 1979. 7 12. Thereafter by his letter dated 10th December, 1979 the original Defendant No.2 specifically admitted the liability of his Firm outstanding under the suit Bills of Exchange in the following terms:- “ Out of total outstanding liability of Rs.1,30,200/- including interest of Rs.30,000/- approx. we will pay Rs.20,000/- approx. by the end of this month and the balance of Rs.1,10,000/- will be paid by monthly installment of Rs.20,000/- starting from January, 1980 and will be completed not later than June, 1980.” 13. The signature of the original Defendant No.2 on the said letter is also not denied. Under a further letter dated 3rd April, 1980 the original Defendant No.2 as the Proprietor of Defendant No.1 further offered to pay Rs.40,000/- plus interest before 15th April, 1980 and the balance before 15th May, 1980. 14. Despite express admission of liability and offer of precise amounts repayable towards principal as well as interest the original Defendant No.2 failed to honour any of his commitments. 15. The Plaintiffs got the bills noted and protested and the noting in respect of each of the 4 bills has also been 8 produced as Exhibits – N1 to N4. The evidence of the Plaintiff's officer Mr. K.Ramaswami Ganesh has set out each of these documents and has proved the documents by direct oral evidence. His evidence further shows the admissions of the Defendants. 16. Despite lengthy cross examination of this officer on various counts the evidence with regard to the execution of the Bills of Exchange, notice of waiver, legal notice of the Plaintiffs, several letters admitting the liability by the original Defendant No.2 on behalf of Defendant No.1 Firm as well as the noting and protest of bills, the Plaintiffs' case upon the suit bills has not been shattered. 17. The Plaintiffs' suit is required to be considered only upon such evidence. The Advocate for Defendants 2A to 2C has rightly argued that the Plaintiffs have relied upon other documents which do not find a place of the plaint. These documents cannot be relied upon by the Plaintiffs to prove the claim. Such documents have not been considered above. 18. The Plaintiffs' Advocate has explained that the Defendants had not only executed and issued the suit 4 Bills of Exchange, but had also taken a Goods Loan from the 9 Plaintiffs' Bank. For that purpose they had made an application on 10th January, 1977, which came to be sanctioned under the Plaintiff's sanction letter dated 27th June, 1977 and after which the original Defendant No.2 issued a letter of Proprietorship in respect of Defendant No.1 Company and wrote several letters admitting his liability under the Goods Loan Account. Consequently a consolidated Promissory Note for Rs.1,50,000/- representing that the amounts under the Goods Loan as well as under the Bills of Exchange came to be executed. This suit is not filed for recovery of any amounts under the Goods Loan. Hence, such documents cannot be relied upon by the Plaintiffs and need not be considered by the Court. 19. The Plaintiffs action is in respect of the amounts mentioned under the 4 Bills of Exchange alone. Only the Bills of Exchange, the notice of waiver, the correspondence consequent upon the legal notice and showing the admission of liability and the noting and protest of the bills are required to be considered. The Plaintiffs' claim in suit is precisely under the amounts on the bills and interest thereon. The Plaintiffs have fully proved that claim. Issue No.1 is, therefore, answered in the affirmative in respect of the suit Bills of Exchange. 10 20. Issue No.2.:- The Defendants' claim that there was no consideration which was based under the Promissory Note relied upon by the Plaintiffs. As aforesaid the Promissory Note is in respect of the consolidated amount promised to be paid under the Goods Loan Account as well as under the bills. That need not be considered in the suit. Hence, this issue need not be answered. 21. Issue No.3.:- It has been the contention of the Advocate on behalf of Defendants 2A to 2C that the Plaintiffs have not maintained the Defendants' account and have not shown the precise amount payable under such account. It is also claimed that the total principal amount of the suit Bills of Exchange of Rs.1,02,000/- has not been credited to the account of the Defendants. 22. The suit is filed on separate and distinct Bills of Exchange. The suit is for the principal amount on each of the 4 such Bills of Exchange and interest thereon. The Bills of Exchange themselves show that it is in respect of 4 distinct transactions of goods sold and delivered represented by specific invoices and delivery challans shown by their distinctive numbers and dates. The Plaintiffs have 11 discounted those Bills of Exchange. The preliminary liability for payment on the Bills of Exchange was of Defendants 3 and 4 as acceptors. The further liability on the Bills of Exchange was on Defendants 1 and original Defendant No.2 as the drawers. The Plaintiffs need not credit the Defendants' account for the amount representing the bills. The Plaintiffs will be entitled to sue on the bills themselves as they have done. Hence, though the amount payable by the Defendants under the suit Bills of Exchange was not credited to any account of the Defendants by the Plaintiffs, that does not matter. Issue No.2 is answered accordingly. 23. Issue Nos.4 & 5.:- The suit Bills of Exchange did not mention any rate of interest. Hence, the Plaintiffs are not entitled to any interest at the contractual rate. The legal notice dated 10th March, 2008 claims interest at 17% p.a. The Plaintiff Bank would be entitled to such rate of interest under Section 3(1)(b) of the Interest Act, 1978. That would be the interest upon the suit debt claimed by the Plaintiff from the date of written notice given by the Plaintiffs as the persons making the claim to the Defendants as persons liable to such interest until the filing of the suit. The date mentioned in the legal notice being the date from which the interest would be payable is the date of the notice itself, 12 since the amount is demanded with interest within 24 hours of the receipt of the notice. The receipt of the notice is not denied. Hence the interest claimed under the legal notice is payable from the date of the notice until the date of the suit under the aforesaid provisions. 24. The Plaintiffs have claimed interest at the higher rate of 18½ %, 20% and 21.55% during different periods from the dates of the Bills of Exchange until the date of the suit under certain circulations and notices issued by the Reserve Bank of India. Those notices, circulars and letters are not produced or proved. The Plaintiff, therefore, would not be entitled to interest at the rate claimed in the particulars of their claim Exhibit – K to the plaint. 25. The Defendants have alleged that the Plaintiff would be entitled to simple interest at the rate of 7% p.a in the written statement. That is not the contractual rate of interest. That is not even shown to be bank rate of interest allowed by the Reserve Bank of India. The Plaintiff, therefore, would be entitled to interest on the unpaid amount of the suit Bills of Exchange from the date of the legal notice issued by the Plaintiffs. However, that rate of interest under the aforesaid Section for at least some part of the period during which it is 13 required to be paid would exceed “the current rate of interest” i.e., the rate of interest than allowed by the Reserve Bank of India. This is a matter of judicial notice. 26. Consequently the Plaintiffs would be entitled to interest from the date of the notice until the date of the suit, but at a lower rate of interest than that mentioned in the legal notice, which would be allowed by the Reserve Bank of India at all times during the period of default. The most equitable rate of interest to be allowed to the Plaintiff would be interest at the rate of 12% p.a on the total principal amount on the suit Bills of Exchange from the date of the first legal notice being 18th November 1978 till the filing of the suit. 27. The Plaintiffs would be further entitled to interest from the date of the filing of the suit and till the date of the judgment under Section 34 of the C.P.C. This would be at the rate deemed reasonable to be paid by the Court on the principal amount. Interest at the rate of 12% p.a on the principal amount of Rs.1,02,000/- on the 4 such Bills of Exchange from the date of the filing of the suit until the date of the judgment/decree would be such a reasonable interest. 28. The Plaintiffs would be further entitled to interest under 14 the proviso to Section 34 of the C.P.C. The suit transaction is a commercial transaction since moneys were payable under Bills of Exchange executed by business firms. Interest at the reasonable rate above the rate of 6% p.a would, therefore, be payable. Interest at the rate of 12% p.a would be such reasonable rate payable on the principal amount of Rs.1,02,000/- under the 4 such Bills of exchange from the date of the judgment until payment/realisation. Hence, the Plaintiffs would be entitled to interest at the rate of 12% p.a on the principal amount of Rs.1,02,000/- from date of the legal notice given by the Plaintiff until realisation. The issue Nos.4 and 5 are answered accordingly. 29. Hence, the order: 1.The suit is decreed for a sum of Rs.1,02,000/- with interest on their principal amount of Rs.1,02,000/- from 18th November, 1978 until payment/realisation. 2.Since Defendants 2A to 2C are the heirs and legal representatives of the deceased Defendant No.2 who is the drawer of the Bills of Exchange their liability under the such Bills of Exchange towards the decree shall be to the extent of the assets of the original 15 Defendant No.2 which comes to their hands during the period of execution. 3.There shall be no order as to costs. (SMT. ROSHAN DALVI, J.)