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Banking Law Newswire: Suits filed by Public Sector Banks not to be dismissed on technical grounds: Delhi High Court

In a recent appeal disposed off by the Delhi High Court, it has been laid down that suits filed by Banks should not be dismissed on technical grounds even though the dismissal may be technically right.

In the instant case, the Appellant/ Plaintiff Bank instituted the suit from which the appeal arose, pleading:

  1. That the respondent/defendant is a proprietary concern of the  defendant;
  2. That the respondent/defendant on 19th September, 2002 opened a current account with the Arya Samaj Road, Karol Bagh Branch of the appellant/plaintiff Bank with a Temporary Over Draft (TOD) facility;
  3. That in the routine process the appellant/plaintiff Bank debited two cheques for Rs. 1,04,000/- and Rs. 2,17,471/- to the account of the respondent/defendant byallowing TOD on 4th February, 2010;
  4. That on account of these debits the current account of the respondent/defendant waspermitted to be over drawn for a sum of Rs. 3,21,471/- as on 31st July, 2010, with interest was showing TOD of Rs. 3,55,728/-; and,
  5. That the respondent/defendant did not make re-payment of the TOD inspite of repeated requests and reminders.

Accordingly,on 10th August, 2010 the suit for recovery of Rs. 3,55,728/- with pendente lite and future interest @ 24 + 2% at monthly rest from 1st August, 2010 till realization was filed.

The respondent/defendant no. 1 failed to appear before the Trial Court inspite of service by publication and was proceeded against ex parte. The appellant/plaintiff Bank led ex parte evidence by filing the affidavit by way of examination-in-chief of its Assistant Manager.

The learned Addl. District Judge vide the impugned judgment dismissed the suit, finding/observing/holding:

  1. That though the appellant/plaintiff Bank in the plaint had pleaded the respondent/defendant to have opened the account on 19th September, 2002 but the account opening forms proved in evidence were dated 28th March, 1986 and 29th March, 1986;
  2. That the appellant/plaintiff Bank in the plaint had not disclosed the date of grant of TOD facility;
  3. That in the legal notice issued preceding the suit it was stated that the respondent/defendant no. 1 had on 4th February, 2010 approached the appellant/plaintiff Bank for grant of credit facility, without disclosing the nature of the credit facility;
  4. That the appellant/plaintiff Bank had failed to prove grant of TOD facility to the respondent/defendant;
  5. That mere entries in the statement of account proved to show withdrawal of Rs. 1,04,000/- and Rs. 2,17,471/- are not sufficient to automatically hold that the appellant/plaintiff Bank granted any such facility to the respondent/defendant; and,
  6. That the appellant/plaintiff Bank had also failed to prove its claim for interest @ 24% and 2% per annum with monthly rest.

The appellant/plaintiff Bank sought to correct the date of the opening of the current account by the respondent/defendant from 19th September, 2002 to 28th March, 1986 and 29th March, 1986. The counsel for the appellant/plaintiff Bank further stated that consequent to the amendment evidence would be required to be led and for which purpose the appeal be allowed and the suit be remanded to the Trial Court.

Judgment of the High Court:

The Hon’ble High Court perused the affidavit by way of examination-in-chief of the witness of the appellant/plaintiff Bank. It held that the plaintiff’s witness has though deposed, as in the plaint, of the respondent/defendant having openedaccount on 19th September, 2002 but proved the account opening forms dated 28th March, 1986 and 29th March, 1986. The Court further observed that he has further deposed of the respondent/defendant having requested for a TOD facility and of grant of TOD as pleaded in the plaint and proved the statement of account in proof thereof. It was observed that the respondent/defendant being ex parte, the said deposition remained unchallenged.

In view of the abovementioned facts, the High Court felt that there was no reason to doubt the version of the appellant/plaintiff Bank. From the account opening form bearing the signatures of the proprietor of the respondent/defendant, the factum of the respondent/defendant being a account holder with the appellant/plaintiff Bank is proved. Similarly from the statement of account of the said account, the transactions on the basis whereof the claim is made also stand proved.

The High Court held that The learned Addl. District Judge, had taken a hypertechnical view.Though strictly speaking he may be right in law but it cannot be lost sight of that the monies of scheduled banks as the appellant/plaintiff Bank is, are public money and the loss if any to the appellant/plaintiff Bank is the loss of public monies. It is for this reason only that the Supreme Court in United Bank ofIndia Vs. Naresh Kumar (1996) 6 SCC 660 had held that the suit for recovery of money filed by such banks cannot be dismissed on the technical plea of the authority of the signatory of the plaint having not been proved.

The High Court eventually concluded that there was no need to first allow the application for amendment and thereafter take fresh evidence and all of which would be a burden on the time of this Court or of the Trial Court and which can be well spent on other deserving contentious cases and deem it appropriate to allow the appeal and decree the suit. The impugned judgment and decree was accordingly set aside. The suit of the appellant/plaintiff Bank against the respondent/defendant was decreed as prayed.