IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA RFA No. 145 of 1995 Reserved on : 1st July, 2008 Date of Decision: 22nd July, 2008 UCO Bank Appellant Versus Durga Ram and another Respondents Coram The Hon’ble Mr. Justice Jagdish Bhalla,C.J. The Hon’ble Mr. Justice Sanjay Karol,J. Whether approved for reporting1? Yes. For the appellant: Mr.Arjun Lal Sood, Advocate. For the respondents: Mr.Aman Sood, Advocate, vice counsel for respondent No.1. Mr.Sanjeev Kuthiala, Advocate, for respondent No.2. Per Sanjay Karol, J. The present appeal arises out of judgment and decree dated 28th November, 1994, passed by learned Single Judge of this Court in Civil Suit No. 56 of 1997, dismissing the plaintiff’s suit for recovery of Rs.2,56,486.35 paisa. For the purpose of convenience, the appellant herein is referred to as the plaintiff and the respondent No.1 herein is referred to as the defendant No.1 and respondent No.2 is referred to as defendant No.2. The plaintiff, a Banking Financial Institution, on the request of defendant No.1 agreed to sanction loan, on the strength of deed of Whether the reporters of Local Papers are allowed to see the Judgment? 2 guarantee executed by defendant No.2. The truck loan facility of Rs.1,40,000/- was sanctioned and defendant No.1 agreed to repay the loan amount in thirty equal monthly installments alongwith interest @ 12 ½ % per annum with quarterly rests. Defendant No.2 executed deed of guarantee dated 5.1.1981. Defendant No.1 in breach of his contractual obligations failed to pay monthly installments within time, but however, acknowledged the outstanding debt due and payable to the plaintiff-Bank vide acknowledgment letters dated 23.6.1984 (Ext.PW-2/B) and 23.10.1982 (Ext.PW-2/C). Subsequently, the plaintiff-Bank sent a legal notice dated 18.9.1984 asking the defendants to pay the amount of Rs.1, 88,806, inclusive of interest upto 31.12.1984. The defendants, however, did not repay the amount and consequently the plaintiff was left with no option but to file the suit for recovery of Rs.2, 56,486.35 paisa alongwith future interest at the rate of 12 ½ % per annum, with quarterly rests till realization thereof. Defendant No.1 chose not to contest the suit and as such was proceeded ex parte and defendant No.2 – guarantor filed the written statement and contested the suit. On the pleadings of the parties, the following issues were framed:- “1. Whether the plaintiff advanced loan to defendant No.1 against the execution of the memorandum of agreement, as alleged? OPP 2. Whether the suit is barred by limitation? OPD2 3. Whether the liability of defendant No.2 stood discharged by novation of contract? OPD2 4. Whether memorandum of agreement is hit by the provisions of Indian Contract Act? OPD2 3 5. Whether signatures of defendant No.2 were obtained on blank printed forms without explaining their terms to him? If so, to what effect? OPD2 6. Whether the plaintiff is estopped from filing the instant suit by its acts and conduct? OPD2 7. To what rate and amount of interest and from whom is the plaintiff-bank entitled to recover? OPP 8. Whether the plaintiff is entitled to recover the suit amount or any other amount? OPP 9. Relief. Issues No.1,3,4,5 and 6 were decided in favour of the plaintiff and since issue No.2, the suit being barred by limitation was decided against the plaintiff and, therefore, issues No.7, 8 and 9 were also decided against the plaintiff. Appreciating the material on record, learned Judge came to the conclusion that the confirmation and acknowledgement letters Ext.PW- 2/C and Ext.PW-2/B, being private documents could not be stated to have been proved in accordance with the statutory requirements stipulated under Section 67 of the Indian Evidence Act, 1872 (hereinafter referred to as the “Act”). Relying upon the ratio of law laid down by the Apex Court in Sait Tarajeet Khimchand and others v. Yelamarti Satyam and others (AIR 1971 SC 1865), P.C.Purushothama Reddiar v. S.Perumal, (AIR 1972 SC 608) and Bombay High Court in Sir Mohammed Yusuf and another v. D.and another, AIR 1968 Bombay 112, the learned Judge came to the conclusion that since plaintiff’s witness Shri P.C.Mittal (PW-2) had neither scribed nor signed the said documents and also Shri H.R.Mahajan, an employee of the Bank, who had filled in the blanks of the said documents, was in service and not examined, therefore, the documents could not have been stated to have 4 been proved in accordance with law. The Court held that the original agreement (Ext.PW-2/A) was executed in January, 1981 and the default committed in repayment of the loan amount had occurred in February, 1981 itself, therefore, in the absence of any proof of acknowledgement of debt the suit filed on 20.6.1987 was barred by limitation. The defendants have not challenged the findings returned by the learned Single Judge and the present appeal has been filed only by the plaintiff. Mr. Kuthiala, learned counsel appearing for defendant No.2 and Mr. Aman Sood, learned counsel appearing for defendant No.1 have vehemently argued that Shri H.R.Mahajan, being in service of the Bank was the best person to have proved the acknowledgement letters in question. According to them, the best evidence was concealed by the plaintiff and, therefore, an adverse inference needs to be drawn against the plaintiff. According to them, the documents in question could have been proved only in accordance with the provisions of Sections 34, 67, 61 and 101 of the Act and the same not having been proved in accordance with law, the suit was barred by limitation. We have heard learned counsel for the parties and also perused the record. The memorandum of agreement, deed of guarantee dated 5.1.1981 (Ext.PW-2/A) was duly executed by defendant No.2 and defendant No.1. From the statement of accounts Ext.PW-1/A, it is clear that the last deposit made in the account, being the last credit entry, is on 30.12.1983. The suit was filed on 20.6.1987. The balance confirmation and debt acknowledgement letters bearing the signatures of defendant No.1 are Ext.PW-2/C dated 23.10.1982 and Ext.PW-2/B dated 23.6.1984. As per the 5 last letter a sum of Rs.1,65,120.34 paisa is acknowledged to be due and payable to the plaintiff-Bank. It is pertinent to notice that defendant No.1 did not contest the suit and remained ex parte. Though defendant No.2 alone contested the same, but, however, did not step into the witness box to examine himself nor led any evidence, documentary or oral, in support of his case. In para 5 of the plaint, the plaintiff has categorically stated that defendant No.1 called on the plaintiff-Bank on 23.10.1982 and 23.6.1984 and after having fully understood the position of his truck loan account, he executed the balance confirmation letters dated 23.10.1982 (Ext.PW-2/C) and 23.6.1984 (Ext.PW-2/B). In response to the same, defendant No.2, in his written statement, has only stated that he has no knowledge about the said fact and in any event any admission/acknowledgement of the balance debt due and payable to the Bank is not binding on the answering defendant as defendant No.2 is not a party to the same. To prove its case, the plaintiff examined Shri Moti Chand Chajjar as PW-1, who has proved the statement of account (Ext.PW-1/A) which was issued by him under the provisions of Bankers’ Books Evidence Act, 1891. Further Shri P.C.Mittal (PW-2) has stepped into the witness box and inter alia stated as under:- “Ext.PW-2/A is the agreement-cum-guarantee deed executed by the defendants in respect thereof. This document was duly signed, by them in token on its correctness, in my presence. Stamp papers were brought by the defendants for this purpose. Blanks of the agreement were filled in by Shri D.D.Bhatia, the then Manager before the said defendants put in their signatures upon it.” 6 This witness, in cross-examination, has clarified that he was the second officer of the Branch and used to sign the vouchers pertaining to disbursement of loan and also the papers with respect to the intimation given to the higher authorities regarding the disbursement of cash and other daily transactions. He has stated that defendant No.1 signed the balance confirmation letters Ext.PW-2/B and Ext.PW-2/C. He has stated that the then Manager Shri H.R.Mahajan had filled in the blanks in Ext.PW-2/B when he was not present. According to him, Mr. Mahajan is still in the employment of the Bank. From his statement, it is evident that the documents were signed in his presence even though the blanks of Ext.PW-2/B and Ext.PW- 2/C were not filled in his presence. It is not in dispute that the documents in question were executed in the presence of PW-2. All that PW-2 has stated is that the blanks in the said documents were filled in by Shri H.R.Mahajan in his absence. He has been working in the very same branch of the Bank and has been personally handling all paper work and is familiar with the affairs. In our view this witness has clearly proved the execution of the documents in question. His statement is clear, cogent and reliable. There is nothing which renders his version to be doubtful. It is not the case of defendant No.2 that the documents were filled in subsequently after obtaining the signatures of defendant No.1. In fact, in his written statement, the defence taken is that he is not even aware of execution of any balance confirmation letters. Further we have ourselves seen the signatures of defendant No.1 on the documents. The signatures on Ext.PW-2/A tally with the signatures on Ext.PW-2/B and Ext.PW-2/C. The signatures having been proved, in our view, Shri H.R.Mahajan was not required at all to have stepped into the witness box to prove the documents in question. 7 Mr. Kuthiala, has also vehemently argued that defendant No.1 ought to have been examined by the plaintiff to prove execution of the acknowledgement letters. The submission needs to be rejected for the following reasons:- 1. The defendant No.1 has chosen not to contest the suit and defendant No.2 has not disputed the execution of the said letters. 2. The document can be proved in accordance with the provisions of Section 47 of the Act Chapter V of the “Act” lays down the manner in which the document is required to be proved. All that Section 67 of the Act provides is that if a document is alleged to have been signed or to have been written wholly or in part by any person, the signature or the handwriting of so much of the document as is alleged to be in that person’s handwriting must be proved to be in his handwriting. It is a settled position of law that the proof of the genuineness of a document is the proof of the authorship of the document and is proof of a fact like that of any other fact. The evidence relating thereto may be direct or circumstantial. It may consist of direct evidence of a person who saw the document being written or the signature being affixed. It may be proof of the handwriting of the contents, or of the signature, by one of the modes provided in Sections 45 and 47 of the Evidence Act. It may also be proved by internal evidence afforded by the contents of the document. This last mode of proof by the contents may be of considerable value where the disputed document purports to be a link in a chain of correspondence, some links in which are proved to the satisfaction of the Court. In such a situation the person who is the recipient of the document, be it either a letter or a telegram, would be in a reasonably good 8 position both with reference to his prior knowledge of the writing or the signature of the alleged sender limited though it may be, as also his knowledge of the subject matter of the chain of correspondence, to speak to its authorship. [Mobarik Ali Ahmed vs. The State of Bombay, AIR 1957 SC 857]. The issue in Sait Tarajee Khimchand (supra) was as to whether mere marking of document as exhibit would dispense with its proof or not; in P.C.Purushothama Reddiar (supra) the issue was as to whether it was open for the party to object to the admissibility of a document which had been marked without any objection; and in Sir Mohammed Yusuf (supra) the issue was that the evidence of the contents contained in the document is hearsay evidence unless the writer is examined in the Court. These issues are not germane to the controversy involved. The reliance by the Court thereupon in our considered view is misconceived. The matter needs to be examined from yet another angle. The relevant terms of Deed of guarantee Ext.PW-2/A are being reproduced as under:- “18. In consideration of the Bank having at the request of the Guarantor agreed to lend and advance to the Borrower the said sum of Rs.140000/- upon and subject to the terms and conditions hereinbefore mentioned and on the security hereby created the Guarantor doth hereby agree to guarantee due repayment of the said sum of Rs.140000/- together with interest thereon at the rate aforesaid and all other moneys costs charges and expenses payable to the Bank under these presents or by operation of law or otherwise by the Borrower and due performance and observance of other terms covenants and conditions herein contained and on the part of 9 the Borrower to be observed and performed and also all loss and damages that may be suffered by the Bank on account of the breach of the terms covenants and conditions by the Borrower PROVIDED ALWAYS AND IT IS HEREBY EXPRESSLY AGREED AND DECLARED that any neglect or forbearance of the Bank in endeavouring to obtain payment of the moneys hereby secured or any indulgence given by the Bank to the Borrower. In the observance and performance of the terms covenants and conditions herein contained, and on the part of the Borrower to be observed and performed or any time given by the Bank to the Borrower for payment of the moneys hereby secured shall not in any way affect or prejudice the guarantee or the continuing liability of the Guarantor hereby created.” 20. The Guarantor doth hereby agree to pay on demand all moneys which may become payable under these presents from the Borrower and not paid by the Borrower.” From the same, it is evident that the guarantee is continuing in nature and defendant No.1 has agreed to pay “on demand” all moneys which may become payable under these presents and not paid by the Borrower. In Syndicate Bank vs. Channaveerappa Beleri and others, (2006) 11 SCC 506, the Apex Court, while examining various forms of Deed of guarantee, has held that in a case where the guarantee is payable on demand, the limitation begins to run when the demand is made and the Guarantor commits breach by not complying with the demand. [Also: Gulzar Ali etc. vs. State of H.P., JT 1997 (8) SC 564]. In the present case the demand made is with the filing of the suit. 10 No doubt the burden to prove that the suit is within limitation is heavy on the plaintiff. Since while framing of the issues burden to prove issue No.2 was put on the contesting defendant, Mr. Kuthiala has submitted that it was for the plaintiff to have proved the fact that the suit was within limitation, keeping in view the provisions of Section 101 of the Act Notwithstanding this fact, the plaintiff itself has examined its witnesses and proved the execution of the balance confirmation letters in accordance with law. Further, we may also take notice of the order dated 26.7.1990 passed by the Court, wherein it has been recorded as under:- “At the time of framing issues, Mr. Yoginder Paul has admitted the signatures on the loan documents but denied their contents vis-à-vis his client. His explanation for denying the factum of execution of loan documents at the time of admission/denial thereof is on the basis of averments of paras 2 to 4 and being not conversant with the handwriting of defendant No.1 who has been proceeded ex parte…..” The fact that the plaintiff had advanced the loan and that the liability of defendant No.2 stood discharged by novation of contract or that the agreement in question was hit by the provisions of Indian Contract Act for the reason that the signatures of defendant No.2 were obtained in blank printed forms or that the plaintiff is estopped from filing the suit for its various acts of omissions and commission, is not required to be adjudicated by us. The findings have not been challenged by the defendants. In our view, the statement of account (Ext.PW-1/A) also duly stands proved as it was certified to be true and correct under the Bankers’ 11 Books Evidence Act. The debt due and payable and also the suit amount stands duly proved by the plaintiff’s witnesses. We may also record that the plaintiff has been taking steps for getting the vehicle attached during the pendency of the suit. The plaintiff has taken all steps within its competence to protect and preserve the property and ensure recovery of its debt. Considering the matter from all angles, we are of the considered view that while deciding Issue No.2, the Court has seriously erred in not appreciating the material on record in its correct perspective. The documents duly stand proved and the suit of the plaintiff is within limitation. For the aforesaid reasons, the judgment, decree passed by the learned Single Judge is set aside and the suit filed by the plaintiff is decreed with costs. The plaintiff shall be entitled to the decretal amount alongwith contractual rate of interest, pendente lite and future, at the rate of 12 ½ % per annum, with quarterly rests till the realization of the amount. (Jagdish Bhalla), Chief Justice July 22, 2008 (Sanjay Karol), (C) Judge.