Final Order 1

Order Details: Copy of Judgment
Pdf Text: 1 Judgment in Comm. SU 2742019
MHCC010116992019 Presented on : 15/11/2019
Registered on : 19/12/2019
Decided on : 05/03/2024
Duration : 04Y/02M/15D
Exh.53
IN THE CITY CIVIL COURT AT MAZGAON, MUMBAI.
(COURT ROOM No.32)
COMMERCIAL SUIT No.274 OF 2019
Gujarat Cables & Enamelled Products Pvt. Ltd.
A Private Limited Company having its Head
Office at 508, Bharat Chambers, Baroda
Street, Mumbai400 009. …PLAINTIFF
VERSUS
Bank of Baroda
having its head office at Baroda Corporate
Centre, Plot No.C26, Block G, Bandra Kurla
Complex, Bandra(East), Mumbai400 051
(Earlier known as Dena Bank) having its
Corporate & Head office at Dena Corporate
Centre, C10, G Block, BandraKurla Complex,
Bandra(East), Mumbai400 051 and its branch
at Ambika Shopping Centre, G. I. D. C.
Industrial Estate Branch, Ankleshwar,
393 002, Gujarat. …DEFENDANT
Shri.Nainesh Amin, learned advocate for plff.
Shri.Anant Shinde, learned advocate for defendant.
CORAM : H. H. JUDGE, SHRI VISHAL SADASHIVRAO GAIKE,
COURT ROOM NO.32.
J U D G M E N T
(Delivered on 05/03/2024)
1. This is a suit for recovery of sum of Rs.73,85,031.11 with
further interest @ 14% p.a. from 14/11/2019 till realization of entire
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amount.
2. The case of the plaintiff in nutshell is that, it is a Private
Limited Company and is in the business of manufacturing of copper and
aluminum enamelled wire products from its factory at 44/4/2, Demani,
Dadra 396193, Dadra & Nagar Haveli(U.T.). Plaintiff was a customer of
defendant bank (erstwhile Dena Bank), G.I.D.C. Industrial Estate
Ankleshwar branch since 1978 till 2018. Dena Bank has merged into
Bank of Baroda. Since 1970 the plaintiff had been granted various
working capital facilities by the defendants from their Ankleshwar
Branch(Gujarat) and Gulalwadi Branch(Mumbai). The working credit
facilities included cash credit hypothecation, letter of credits and bank
guaranties.
3. That, since 1977 the plaintiff is a constituent of the
defendant and was granted and have availed the working capital limits
as were sanctioned from time to time by the defendant to the plaintiff.
On sanction of those credit facilities, over the years, the plaintiff have
executed the necessary security documents as and when required by the
defendant for availment and utlisation for the credit facility sanctioned
by the defendant. It had adhered to the terms of the sanction and
followed the repayment schedule without making defaults.
4. That, the credit facility was renewed over the years at the
defendant's end. On 17.08.2005 the limits were increased from 470.00
Lakhs to Rs.575.00 Lakhs vide Sanction Letter
DB/GIDC/Ankl/272/2005 on the terms and conditions mentioned
therein. Thereafter, on 04.01.2006 the defendant had issued revised
sanction letter with revised rate of interests, margins, commissions and
charges. That, on 31.07.2009 the defendant bank has unauthorizedly
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debited from the bank account number 086813000016 of the plaintiff a
sum of Rs.6,73,161/ without any written consent of the plaintiff or by
giving any prior intimation or explanation as to the reason by the said
amount was debited from the account of the plaintiff.
5. Thereafter, on 23.10.2009, the defendant had also
unauthorizedly debited an additional amount of Rs.2,75,000/ that to
without any written consent of the plaintiff or by giving any prior
intimation or explanation as to the reason by the said amount was
debited from the account of the plaintiff. That, from July 2009 till
December 2010 the defendant continued to debit the plaintiff's account
every month with higher rate of interests and charges which was not
agreed upon between the plaintiff and the defendant and which was not
as per the revised sanction letter.
6. That, after coming to know about the said unauthorized
debits, the plaintiff immediately raised its objection and sought an
explanation from the defendant. On 29.05.2010, the plaintiff received
a letter inter alia informing it that the earlier rate of interest, bank
commission and bank charges, charged and applicable to the plaintiff's
account from the year 2006 have been withdrawn vide sanction letter
dated 26.09.2009 and the defendant was recovering the past difference
of interest, bank commissions and bank charges for the period with
retrospective effect from 01.09.2008 onwards. The said sanction letter
dated 26.09.2009 was received by the plaintiff on 29.05.2010 through
fax. The plaintiff have not accepted the terms of sanction letter dated
26.09.2009. The defendant bank has backdated its sanction letter dated
26.09.2009 therefore, plaintiff is not liable to pay any interest, fees,
commissions and/or charges contrary to the sanctioned terms
mentioned in the revised sanction letter dated 04.01.2006 with
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retrospective period from 01.09.2008 onwards.
7. That, in the past the plaintiff has written numerous letters,
sent emails and text messages. Telephone calls and personal meetings
were also held with the defendants officers at their Vadodara Regional
Office and had sought explanation for the acts of the defendant by
charging a 3% p.a. higher rate of interests and double LC commissions
and bank charges that too with retrospective effect from 01.09.2008
without any written intimation and without any acceptance or
confirmation by the plaintiff to the said revised sanction terms and
conditions set out in the sanction letter dated 26.09.2009.
8. The Senior Manager of the defendant bank through his
email dated 04.03.2014 has inter alia admitted that any revised terms
and conditions can be implemented only after receiving unconditional
acceptance of terms of sanction from their end and till then the previous
terms of sanction shall continue. It was thus, admitted by the defendant
that any revised terms and conditions of sanction would be
implemented or become effective only if the same is accepted by the
plaintiff.
9. That, the conduct on the part of the defendant is contrary
to the terms of the revised sanction letter dated 04.01.2006 and also
contrary to the Rules and Banking Codes and Standard Board of India
wherein it is specifically set out as to how the bank can charge or revise
the rate of interest. As per the said rules if banks increase any of these
charges or introduce a new charge, it will be notified one month prior
to the revised charges being levied. Normally, changes will be made
with prospective effect giving notice of one month. If the bank has made
any change without notice then it will notify the change within 30 days.
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10. That, pursuant to regular follow up by the plaintiff, the
defendant bank restored the interest rates, commissions and charges as
per the earlier revised sanction letter dated 04.01.2006 which can be
seen from sanction letter dated 16.12.2010. In view of the assurance
and promise given by the officers if the defendant bank, the plaintiff
continued to operate its account with the defendant bank and did not
shift to another bank. That, when the defendant finally refused to
adhere to the plaintiff's request, it was constrained to close its account
with the defendant bank at the end of November 2017 and shifted its
banking activity to another bank.
11. That, plaintiff lodged complaint with defendant's Internal
Ombudsman on dated 17.11.2016 and 30.01.2017. The Internal
Ombudsman informed the plaintiff that its complaints which were
rejected nor partially accepted by the bank were examined hence, it
redirected the complaint to the Chief Manager, Customer Service Cell,
Head Office, Dena Bank for examination/action. Thereafter, for the first
time, the defendant through their email dated 17.12.2016 refused to
adhere to the plaintiff's request for refund of the said amounts debited
from its account. Thereafter, plaintiff filed another complaint to the
Internal Ombudsman on dated 23.01.2017 but, its complaint was
rejected without hearing through order dated 03.02.2017.
12. That, a sum of Rs.39.56 Lakhs was unauthorizedly charged
and recovered by the defendant bank by debiting the account of
plaintiff. Hence, the plaintiff has filed the present suit for recovery of
total amount of Rs.79,85,031.11 which includes simple interest @ 14%
p.a. from the respective dates of wrongful debit till 13.11.2019.
13. The plaintiff has its head office in Mumbai within the
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jurisdiction of this Court. The Credit Facility was availed by the plaintiff
from the defendant bank in its Ankleshwar Branch, Gujarat and
Gulalwadi Branch, Mumbai. The repayment of the Credit Facility was
done by the plaintiff from its Mumbai office and the correspondence
also was exchanged by the plaintiff from its Mumbai office. The
defendant has their corporate office within the jurisdiction of this Court
hence, this Court has jurisdiction to try and decide the suit.
14. That, the credit facilities were sanctioned by the defendant
vide letter dated 26.09.2009 received by the plaintiff on 29.05.2010.
Thereafter plaintiff had made several written and oral representations
to the defendant for the unauthorized debits from its account. The
defendant had reversed part of the unauthorized debits and partly
restored the previous terms and conditions vide sanction letter dated
16.12.2010. Thereafter, for the first time through email dated
17.12.2016 the defendant refused to refund the amounts
wrongfully/unauthorizedly debited from the plaintiff's account. The
complaint filed by the plaintiff before the Internal Ombudsman was
rejected on 13.02.2017. Plaintiff filed application for preinstitution
Mediation before this Court on 30.03.2019 but the defendant refused to
participate in the mediation process hence, non starter report dated
17.07.2019 was issued. Thus, the suit is filed within the period of
limitation which may be decreed with costs.
15. The defendant appeared and filed its Written Statement
at Exh.4. The contention of the defendant bank, in brief, is that, the suit
is framed and filed against the defendant is false, frivolous and not
maintainable under the provisions of law. The plaintiff has filed the
present suit with malafide intention to extract money from the
defendant. There is no cause of action arisen against the defendant for
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filing the present suit and therefore, the said suit is deserves to be
dismissed with costs. The plaintiff had from time to time availed the
credit facilities from the defendant bank's (erstwhile Dena Bank) branch
situated in GIDC Industrial estate, Ankleshwar, Gujarat. The defendant
states that no cause of action has arisen in Mumbai. All the
loan/security documents in respect of the credit facilities earlier availed
by the plaintiff have been executed by the plaintiff in favour of the
defendant at Dena Bank, GIDC Industrial Estate, Ankleshwar Branch,
Gujarat of the defendant. The plaintiff is claiming alleged recovery of
money on the ground of alleged wrongful debits from the plaintiff's
account No.086813000016 which was maintained by the plaintiff with
the defendant at GIDC Industrial Estate, Ankleshwar Branch, Gujarat.
The defendant respectfully submits that this Court does not have the
jurisdiction on the ground that the repayment of the credit facility was
done by the plaintiff from their office at Mumbai. In view of the
averments made in the plaint, it is required to be rejected as per the
provisions of Order 7 Rule 11(d) of CPC, 1908.
16. The present suit is filed for recovery of alleged wrongful
debit entries made by the defendant for the period 2008 to 2010. The
defendant never admitted its liability and never assured the plaintiff
that the unauthorized debits would be reversed. The refusal of the
defendant to refund the debited amount and the rejection of the
complaint by the internal ombudsman of the defendant bank, cannot
extend the period of limitation for filing the suit. Therefore, the present
suit is hopelessly barred by the law of limitation.
17. The defendant (erstwhile Dena Bank) had sanctioned and
granted various working credit facilities to the plaintiff during the
period 1978 to 2017. The plaintiff had from time to time executed all
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the loan/security documents in respect of the credit facilities availed by
it in favour of its GIDC Industrial Estate, Ankleshwar Branch, Gujarat as
per the terms and conditions of the sanction. The credit facilities
granted to the plaintiff were reviewed from time to time. Through its
letter dated 17.08.2005 the defendant had sanctioned and granted
Credit Facilities aggregating to Rs.575.00 Lakhs to the plaintiff.
Through its modified letter of sanction dated 04.01.2006, certain terms
and conditions mentioned in the letter of sanction dated 17.08.2005
with regards to the revised rate of interests, margins, commissions,
charges etc. were revised. Every sanction of bank is valid for a period of
one year from the date of sanction and on expiry of period of one year
from the date of sanction, the bank has to review/renew the account of
the borrower on submission of the relevant renewal papers and other
data on the basis of which the account can be reviewed/renewed. If the
borrower fails to submit the relevant renewal papers then the bank has
to do short review of the account which may be for the period for 3 to 6
months, otherwise, the account of the borrower may be declared as non
performing assets (NPA). Therefore, the terms and conditions of letter
of sanction dated 17.08.2005 and modified letter of sanction dated
04.01.2006 by which the defendant was given concessions in the rate of
interests and margin money were valid for only one year from the date
of such sanction.
18. That, from the defendant's cash credit account number
086813000016 an amount of Rs.6,73,161/ was not unauthorizedly
debited without any written consent of the plaintiff. As per the sanction
letter dated 27.06.2007, the plaintiff was enjoying concessional rate of
interests of BPLR – 0.50% against applicable rate of interests of BPLR +
1.50% as per the credit rating “C” and 50% concession on BG/LC
Commission. The proposal of the plaintiff was reviewed for six months
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on 19/09/2008 by GMO, Gujarat due to non submission of renewal
papers in time by the plaintiff with specific stipulation to charge
interests as per credit rating i.e. BPLR + 1.50 % as per credit rating “C”.
However, the defendant had continued charging concessional rate of
interests in the cash credit account of the plaintiff in systems. The same
was pointed out by Risk Based Internal Audit (RBIA) of the defendant
therefore, the difference of the interest from September 2008 to June
2009 being sum of Rs.4,46,341/ + regular interest at the rate of BPLR
+ 1.50 % I.e. Rs.2,26,820/ aggregating to total amount of
Rs.6,73,161/ was debited in cash credit account of the plaintiff on
31.07.2009.
19. That, further the amount of Rs.2,75,000/ was not
unauthorizedly debited from the plaintiff's cash credit account on
23.10.2009. That, regular renewal of proposal was sanctioned by GMO,
Ahemadabad on 26.09.2009. At that time also, the plaintiff requested
for restoring the concessional rate of interests as well as continuation of
50% concession in BG/LC commission which was turned down by the
defendant on the following grounds.
i) There had been instances of devolvement of Lcs in 200708 (17
Lcs of Rs.149.59 Lacs and in 200809 (8 Lcs of rs.120.25 Lacs)
ii) Current assets of the Plaintiff were not sufficient to justify
Drawing Power DP of both the defendant and CITI Bank. As per Audited
Balance Sheet of the plaintiff as on 31.03.2009, the holding level of
stocks and book debts were not sufficient to cover the sanctioned limit.
iii) Abnormal delay in submission of regular renewal papers in time.
iv) Decline in sales and profitability of the Plaintiff during 200708
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and 200809.
20. As per the letter of sanction and bank's extant guidelines
the process fees and supervision charges are required to be paid by the
borrower and therefore the process fees for 2008 and 2009 of
Rs.2,75,000/ was also recovered from the account. The defendant
states that the defendant charged the plaintiff with the interest rate and
charges/commission on LC/BG for the period from July 2009 till
31/10/2010 without any concession in the rate of interest and
charges/commission on LC/BG as the earlier concessions allowed by the
defendant were only for the period of one year and the said concessions
were withdrawn due to non submission of renewal papers and other
reasons as stated in Sub Clause (i) to (iv) stated hereinabove, due to
which the account of plaintiff could not be renewed and because of
which the concession given by the defendant could not be continued.
21. That, various letters, emails and correspondences have
been exchanged between the plaintiff and the defendant and various
meetings have been held between the plaintiff and officers/higher
authorities of the defendant to resolve the issue. The defendant through
various correspondences have conveyed to the plaintiff and explained
the reason of charging rate of interest and charges/commissions which
were not charged excessively but charged as per the RBI guideline and
banks existing guidelines.
22. That, regular review was done by the defendant on the
submission of relevant renewal documents and other data by the
plaintiff which was necessary for review of or renewal of the loan
account and on the basis of which the defendant had sanctioned and
granted the credit facilities by its letter of sanction on certain terms and
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conditions mentioned therein which is required to be accepted by the
plaintiff. This was communicated to the plaintiff vide email dated
04.03.2014. At the time of short review it was noticed that the rating of
plaintiff was declined in addition to non submission of renewal
documents and therefore, the concessions given to the plaintiff were
withdrawn.
23. That, subsequently at the request of the plaintiff and
looking after the past relation of the plaintiff who was banking with the
defendant from the last 40 years, the defendant vide letter of sanction
dated 16.12.2010 again granted concessions in the rate of interests,
charges/commissions to the plaintiff as the plaintiff's account was
reviewed due to the submission of renewal papers and other documents
required for the review of the account. The concessions in the rate of
interests, charges/commissions were sanctioned to the plaintiff because
of improvement in the rating of plaintiff for the last financial year on
account of improved performance.
24. The defendant has denied that any assurance and promises
were made to the plaintiff that it would reverse/compensate the loss
caused to the plaintiff and therefore, the plaintiff continued to operate
its account with the defendant bank and did not shift to another bank.
The plaintiff continued to bank with the defendant till 2017 even after
having the said disputes. This shows that the present suit is filed with
malafide intention to extract money from the defendant. The defendant
refused to participate in the preinstitution mediation process as the
defendant is not liable to pay any amount to the plaintiff. The plaintiff
is not entitled to recover the claim amount with any further interest.
Hence, the suit be dismissed with costs.
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25. The learned advocate of plaintiff filed Written Notes of
arguments at Exh.51 and compilation of case laws at Exh.52. The
learned advocate of defendant filed Written Notes of arguments at
Exh.49. The oral arguments of both the sides were heard.
26. The learned advocate of plaintiff relied on the following
case laws :
(a) Madholal Sindhu Vs. Asian Assurance Co. Ltd. and Others, 1945
SCC OnLine Bom 44 : AIR 1954 Bom 305 : (1954) 56 Bom LR 147.
(b) Sriram Industrial Enterprises Ltd. Vs. Mahak Singh and Others,
(2007) 4 Supreme Court Cases 94.
(c) Gopal Krishnaji Ketkar Vs. Mohamed Haji Latif & Others, (1968)
3 SCR 862 : AIR 1968 SC 1413.
(d) Gaiv Dinshaw Irani And Othets Vs. Tehmtan Irani And Ors,
(2014) 8 Supreme Court Cases 294.
(e) Khan Bahadur Shapoor Fredoom Mazda Vs. Durga Prasad
Chamaria And Others, (1962) 1 SCR 140 : AIR 1961 SC 1236.
(f) Union of India Vs. Probhat Marketing Co. Ltd. (1969) 1 SCWR
40.
(g) Asset Reconstruction Company (India) Limited Vs. Bishal
Jaiswal And Another, (2021) 6 Supreme Court Cases 366.
(h) Rashtriya Ispat Nigam Limited Vs. Prathyusha Resources And
Infra Private Limited And Another, (2016) 12 Supreme Court Cases
405.
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27. The learned advocate of Defendant relied on the following
case laws :
(a) Patel Roadways Limited, Bombay Vs. Prasad Trading Company,
(1991) 4 Supreme Court Cases 270.
(b) Prem Singh And Others Vs. Birbal And Others, (2006) 5
Supreme Court Cases 353.
(c) Ramchandra Ganuji Waikar in insolvency, 1922 SCC OnLine
Bom 157 : (1927) 29 Bom LR 1167.
(d) State Bank of India Vs. Yasangi Venkateswara Rao, (1999) 2
Supreme Court Cases 375.
(e) Babulal and Another V/s. State, (1965) SCC OnLine ALL 368 :
AIR 1966 ALL 204 : 1966 Cri. LJ 390.
(f) Central Bureau of Investigation Vs. V.C. Shukla And Others,
(1998) 3 Supreme Court Cases 410.
(g) Bachhaj Nahar Vs. Nilima Mandal And Another, (2008) 17
Supreme Court Cases 491.
28. On the above facts, the following issues were framed at
Exh.13 by my learned Predecessor for determination and I have
recorded my findings thereon for the reasons stated thereunder.
ISSUES FINDINGS
1. Whether the plaintiff proves that, the
defendant had unauthorizedly debited
amounts from the account of the plaintiff
…In the Negative.
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in contravention to the sanction letters ?
2. Whether this Court has jurisdiction to
entertain the suit ?
...In the Negative.
3. Whether the suit is within the period of
limitation ?
...In the Negative.
4. Whether the plaintiff is entitled for decree
for Rs.83,66,242.50 with further interest
@ 14% p.a. from the date of suit till its
realization ?
...In the Negative.
5. What order and decree? ...As per final
order.
REASONS
AS TO ISSUE No.1 :
29. This issue is regarding alleged unauthorized debit of
amounts by the defendant bank from the account of plaintiff in
contravention to Sanction Letter Exh.20 and revised Sanction Letter
Exh.21. The affidavit at Exh. 17 and additional affidavit at Exh.34 of
evidence in lieu of examinationinchief as (PW1 Mr. Chetan A. Jain) is
filed at Exh.17 alongwith list of documents Exh.18. The PW1 has
repeated and reiterated in his evidence affidavits, the contents of the
plaint. He has relied upon the following documents : Exh.20 Copy of
Sanction letter DB/GIDC/Ankl/272/2005 dated 17.08.2005 together
with original letter dated 26.09.2005 from the defendant bearing
reference No.DB/GIDC/Ankl/3902/2005, Exh.21 original sanction
letter (revised dated 04.01.2006), Exh.22(colly.) Original letter bearing
No.GID/ADV/864/2010 dated 27.05.2010 together with copy of terms
and conditions of Sanction Letter dated 26.09.2009 and copy of fax
received by the plaintiff on 29.05.2010, Exh.23(Colly.) Copies of emails
exchanged between Mr. Chetan Jain on behalf of plaintiff with the
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defendant, its various officers/departments and banking ombudsman
from 01.08.2009 to 03.02.2017, Exh.24 Certified Copy of extract of
Board Resolution passed by the plaintiff company on 10.10.2019,
Exh.25(colly.) Printouts of bank statements of account of plaintiff i.e.
account no.086813000016 for the period 15.07.2009 to 01.03.2011,
01.05.2011 to 13.05.2011, Exh.26 Certificate under Section 65B of the
Indian Evidence Act, Exh.27 office copies of letters dated 04.08.2009,
10.08.2009, 28.10.2009, 12.12.2009 and 31.12.2009, Exh.28 Office
copy of plaintiffs complaint to the internal Ombudsman of the
defendant dated 30.01.2017, Exh.29 copy of Banking Codes and
Standard Board of India and Exh.30 The MSME Code, Exh.36 copy of
self attested table of disputed entries from statement of account from
the statement of accounts of the plaintiff's account number 0868130016
and Exh.37 certified copies of balance sheet and profit and loss
accounts of the plaintiff's company as of 31.03.2005 and 31.03.2008
duly certified by Chartered Accountant. The evidence closure pursis on
behalf of plaintiff is filed at Exh.38.
30. The defendant bank examined DW1 Bondada Venkata
Ramana. He reiterated the defence of the defendant as stated in the
Written Statement. He proved the following documents : Exh.43 Letter
of authority dated 28.02.2011, Exh.44 letter dated 23.02.2011, Exh.45
Letter dated 09.04.2011, Exh.46 letter dated 23.04.2011.
31. It is an admitted position that, through first Sanction Letter
dated 17.08.2005 Exh.20 the defendant bank had sanctioned various
credit facilities to the plaintiff. The said sanction letter Exh.20 is
alongwith the terms and conditions of the said sanction. Thereafter,
through revised sanction letter dated 04.01.2006 the defendant bank
had modified the terms and conditions of its sanction of various
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facilities to the plaintiff. The earlier sanction limit was Rs.575 Lacks for
various credit facilities and the revised sanction limit was for Rs.550
Lacks. It is pertinent to note here that, the plaintiff has admitted the
terms and conditions incorporated in the first and second sanction
letter, i.e. Exh.20 and 21 respectively.
32. That, thereafter, letter Exh.22(colly.) was issued to the
plaintiff in response to the pending issues between them. The said
clarification letter dated 27.05.2010 was also issued in response to
plaintiff's letter No.GCEP/ADMN/102/20102011 dated 20/05/2010
originally addressed by the plaintiff to the Regional Manager of the
plaintiff bank. It is informed by the defendant that, the present interest
rate were being charged as per GMO sanction dated 26.09.2009. The
commission on LC and other charges relating to LC's were recovered as
per HO guidelines since September 2009. It was also informed to the
plaintiff that certain adverse features in its account were observed by
banks higher authorities and GMO had stipulated for
compliance/rectification. It was pointed out that, there was frequent
devolvement of letter of credits by the plaintiff. Out of 17 LC's during
20082009, eight LC's were devolved. The DP was not justified and
there was reported under stock audit and credit audit reports.
33. That, to decide the issue of alleged unauthorized debits by
the defendant bank from the plaintiff's account, the agreed terms and
conditions accompanying the first sanction letter dated 17.08.2005 and
the second sanction letter dated 04.01.2006 i.e. Exh.20 and 21
respectively has to be seen. The agreed condition No.6 on Exh.20
regarding rate of interest clearly stipulates that, BPLR plus 1.75 % i.e.
12.75% p.a. at present but it is subject to change from time to time as
per HO guidelines/GM office and credit rating based on audited
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balancesheet. Further, the agreed condition No.13 states that interest
rates are subject to revision as per RBI and HO guidelines. The
condition No.14 states that process fees/supervision charges and other
charges are to be recovered as per HO guidelines and the most
important condition No.15 to decide the present issue, states that bank
will charge penal interest over and above the rate applicable at 2%
under the following circumstances.
a. Delay in submission of stock and book statement.
b. Delay in submission of renewal papers and
c. Delay in servicing installment and interest.
34. That, the letter dated 26.09.2005 Exh.20(colly.) was issued
by the defendant to the Chairman and Managing Director of the
plaintiff company. The said letter was issued on plaintiff's application
for renewal and enhancement of credit facilities. The defendant had
requested the plaintiff to comply the terms and conditions and to
execute fresh set of documents and avail enhanced limits immediately.
It was reminded to the plaintiff that it was required to submit audited
balance sheet for the month of March 2005 so that the bank can carry
out fresh credit rating and change interest rate as per the eligibility
based on fresh credit rating. Thereafter, through second sanction letter
dated 04.01.2006 Exh.21 the terms and conditions of the facilities given
to the plaintiff were modified.
35. The letter dated 27.05.2010 Exh.22 (colly.) is accompanied
by fresh terms and conditions purportedly sanctioned in the month of
September 2009. It is pertinent to note here that the said document is
filed on record through the plaintiff. That, if the crossexamination of
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PW1 is seen then he has given certain admissions which are crucial for
deciding the present issue.
36. The PW1 has stated and admitted in his crossexamination
that, since about year 1975 to about year 2016, the plaintiff were
banking with Dena Bank which is now Bank of Baroda. In the year 2005
the plaintiff company was enjoying aggregate credit facility of Rs.575
Lakhs and for availing this facility, the plaintiff has executed documents
with the defendant bank. Before execution of documents or availing the
credit facility, the bank has issued sanction letter dated 17.08.2005 with
original letter dated 26.09.2005 at Exh.20 and the conditions
mentioned in the letter were accepted by the plaintiff. As per sanction
letter the plaintiff was required to submit monthly stock statement to
the defendant bank and on the basis of these stock statements, the
defendant bank was taking periodical inspection of stock. The stock
statement and periodical inspection of the stock by the defendant bank
are the requirement for drawing power of the plaintiff. The defendant
bank was issuing letter of credit for the plaintiff and on the basis of such
letter of credit the suppliers were delivering goods to the plaintiff. The
bank used to debit said amount from the plaintiff's account and bank
was giving credit to the plaintiff before receiving goods. There was few
instances of devolvement of letter of credit. The letter of sanction
was for the period of one year. Further he states that, the sanction letter
dated 17.08.2005 with original letter dated 26.09.2005 Exh.20 and the
contents on page No.6, item No.28 and 29 are correct.
37. The PW1 has further categorically admitted that, there
was delay of three months for submission of documents and despite of
that the bank continued concessional rate of interests of non submission
of required documents for renewal. That, there were devolvements of
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eight letters of credit. The PW1 admitted condition No.9 in
Exh.22(Colly.) which mentions that, process fee, supervision/inspection
charges to be recovered as per HO Guidelines of the defendant bank.
That, the plaintiff had discussion about the HO guidelines with the
defendant but, the documents were signed by the plaintiff blindly
and unconditional acceptance had to be given. That, it is mentioned
in the terms of conditions that for non compliance of any terms and
conditions, penal interest @ 2% p.a. will be charged.
38. Thus, it has come on record from the admissions of PW1
that, there were certain lapses on the part of the plaintiff which
contravened the agreed terms and conditions of the sanction letter. The
reply of PW1 that the documents, were signed on behalf of plaintiff
blindly and unconditional acceptance had to be given is not acceptable
due to the admitted fact that the plaintiff by accepting the said terms
and conditions had enjoyed the various credit facilities offered by the
defendant bank and had continued banking with it till the year 2017.
That, there was no agreed condition between the parties that if, the
defendant charges penal interest, etc. in the event of breach of any term
or condition of the sanction letter, then the consent of plaintiff should
be first obtained and then only the excess debits or penal charges
should be levied. The agreed terms and conditions of the sanction
letters give authority to the defendant to charge penal interest and
excess charges in case of breach of certain terms and conditions by the
plaintiff.
39. The plaintiff has relied upon Exh.29 copy of Banking Codes
and Standard Board of India at Exh.30 the MSME Code i.e. the Code
regarding Micro and Small Enterprise customers of bank. As there is no
pleading of plaintiff that it is a Micro and Small Enterprise customer of
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20 Judgment in Comm. SU 2742019
the defendant bank therefore, this evidence Exh.30 cannot be looked
into and appreciated. Similarly, though plaintiff has filed on record
Exh.29 and has relied upon point No.3.5 i.e. terms and conditions and
point No.3.5.1 (b) and (c) which states that normally, changes (in
terms and conditions) will be made with prospective effect giving notice
of one month and if any changes are made without notice, then bank
will be notified the change within 30 days. If, such change is to the
disadvantage of customer then the customer may within 60 days and
without notice, close his account or switch it without having to pay any
extra charges or interest.
40. That, the word “Normally” is used in the said point
No.3.5.1 (b) of the Code Exh.29. It is therefore, clear that any change in
terms and conditions between the bank and its customer, normally
cannot be implemented retrospectively. But, in the present case, the
plaintiff had admittedly contravened certain terms and conditions of the
sanction letter Exh.20 hence, in its case, the defendant bank had
retrospectively imposed the penal interest and changes in the various
interest rates of facilities being provided to the plaintiff. Even then, the
plaintiff continued its account for a further period of more than 8 to 9
years therefore, Exh.29 is of no avail to the plaintiff for proving the
present issue No.1.
41. The learned advocate of plaintiff argued that, in terms of
S. 102 of the Evidence Act, 1872, the initial onus of proving the case is
always on the plaintiff and if, the plaintiff discharges that onus and
makes out a case which entitles him to the relief, the onus shifts on to
the defendant to prove the circumstances. He relied on the Judgment of
Bharat Aluminum Co. V. Maharashtra Aluminum, 2009(80) AIC
304(310) : 2009(159) DLT 489) Prasanta Goswami V. Ramala Das,
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2009 (4) Gauh LR 775(Gauh).
42. The learned advocate of plaintiff further argued that, the
party on whom the burden of proof lies in the first instance, may shift it
to the other by proving facts giving rise to a presumption in his favour
and relied on the Judment of Manmohan v. Mathura, 7 C225; Punjab
N Bank V. Dinanath, A 1944 L 276. That, if the prima facie case is not
rebutted by cogent evidence and remains unanswered or the answer
given does not create serious doubt in the mind of the court, then the
burden of proof on the pleadings should be deemed to have been
discharged and relied on the Judgment of Mg.Hmoot V. Offl. Receiver,
14R 704 : A 1937 R 276. see also Bhola v. Bhagwat, 13 CPLR 159,
Gangadin V. Bahoram A 1937 N 230.
43. That, undoubtedly, in terms of Section 102 of the Indian
Evidence Act, the initial onus is always on the plaintiff and if he
discharges that onus and makes out a case which entitles him to a relief,
the onus shifts to the defendant to prove those circumstances, if any,
which disentitles the plaintiff to the same. In the present case the
plaintiff has not discharged its initial onus of proving that the defendant
bank had unauthorizedly debited its account therefore, in my humble
opinion, the ratios of the case laws relied upon by the learned advocate
of plaintiff to buttress his point of the provision of section 102 of the
Indian Evidence Act, are not applicable to the facts of the present case.
44. That, the learned advocate of plaintiff further canvassed
the provision of Section 114 (g) of the Indian Evidence Act against the
defendant for non production of alleged sanctioned letters alleged to be
issued to the plaintiff. The DW1 had voluntarily stated in his cross
examination that, the said more interest (for the period July 2009 to
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22 Judgment in Comm. SU 2742019
31.12.2010 then the rate of interest mentioned in sanction letter
04.01.2006 ) was charged due to withdrawal of concessions and as per
bank guidelines. Therefore, he was asked the date of the sanction letter
by which the concessions were withdrawn and he replied that he does
not remember the date of said letter but, the letter withdrawing
concessions was produced. The learned advocate of plaintiff suggested
that, no such letter of withdrawal of concessions was issued
immediately to the plaintiff and the DW1 replied in negative.
Therefore, he was asked whether he can produced the letter by which
the concessions were withdrawn and he answered that after verifying
the record he will be able to answer this question. On the next date of
crossexamination he deposed that, he is not able to produce the
sanction letter pertaining to the year 2007.
45. That, it is pertinent to note here that, there is no pleading
of the defendant that there was a third sanction letter issued in the year
2007 therefore, it cannot be held that, the defendant had suppressed
the said sanction letter. Besides that, the letter dated 27.05.2010 Exh.22
as mentioned hereinabove, was issued by the defendant in response to
plaintiff's letter dated 20.05.2010 regarding withdrawal of concessions
and charging of excess interest etc. Besides that, alongwith the said
letter dated 27.05.2010 the plaintiff has himself produced the copy of
terms and conditions of sanction dated 26.09.2009. The plaintiffs said
letter dated 20.05.2010 is not produced on record by the plaintiff
though it has relied upon Exh.22 which mentions plaintiff's said letter.
Therefore, no adverse inference can be drawn against the defendant or
withholding any document. Hence, in my humble opinion, the ratio in
the Judgments of Shriram Industrial Enterprises (Supra) and Bhopal
Ketkar (Supra) is not helpful to the plaintiff in the facts of present case.
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46. Thus, in veiw of the above discussion on evidence, I hold
that, the plaintiff has not proved that the defendant had unauthorizedly
debited the amounts from the account of plaintiff in contravention to
the sanction letters. Hence, I answer issue No.1 in the Negative.
As to Issue No.2 :
47. This issue pertains to territorial jurisdiction of this Court to
try and decide the present suit. It is the contention of plaintiff that, the
plaintiff had their head office in Mumbai which is within the jurisdiction
of this Court. The credit facility was availed by the plaintiff from the
defendant bank's Ankleshwar Branch, Gujarat and Gulalwadi Branch
Mumbai. The repayment of the credit facility was done by the plaintiff
from their office at Mumabi and the correspondence was also done by
the plaintiff from their Mumbai office. Besides that, the defendant has
its corporate office within the jurisdiction of this Court, therefore, this
Court has jurisdiction try and decide the suit.
48. The defendant has vehemently opposed this contention of
plaintiff and has argued that all the loan/security documents in respect
of credit facility had been executed by the plaintiff in favour of the
defendant bank at GIDC Industrial Branch at Ankleshwar, Gujarat State.
Therefore, as per Section 20 of the Code of Civil Procedure, 1908 this
Court is having no jurisdiction to try and decide the suit as no cause of
action, wholly or in part, has arisen within the jurisdiction of this Court.
49. That, it is necessary to mention here that, the PW1
admitted in his crossexamination that, the loan documents and
mortgage documents were submitted in the Ankleshwar branch of the
defendant Bank. He denied the suggestion that, at Gulalwadi branch,
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24 Judgment in Comm. SU 2742019
Mumbai, the plaintiff had account for operational convenience but,
categorically admitted that, the plaintiff have not submitted any
document at Gulalwadi branch and the Account No.086813000016 is
the cash credit account at Ankleshwar branch. He also admitted that,
the Ankleshwar branch has maintained cash credit account time to time
for the plaintiff.
50. That, the plaintiff has relied upon Exh.25(colly.) which are
the account statements of plaintiff's account No.086813000016
maintained and operated by it at the defendant's Ankleshwar Branch,
Gujarat. The plaintiff has relied upon the said statements to proved the
alleged unauthorized retrospective and prospective debits done by the
defendant bank from its said account. The alleged unauthorized debits
are the main cause of action of the present suit and admittedly the
plaintiff had submitted that, all the documents for loan and mortgage
were submitted by it in the Ankleshwar Branch. Therefore, the cause of
action, wholly or in part has not arisen within the jurisdiction of this
Court.
51. That, in the matter of Patel Roadways (Supra), the Hon'ble
Apex Court had interpreted Section 20 (a) of the CPC, 1908 and had
held that, where the defendant company/corporation has its principal
office at one place and subordinate office at another place and cause of
action arises at the place where the subordinate office is located then,
the suit has to be filed only in the Court within whose jurisdiction the
company/corporation has its subordinate office and not in the Court
within whose jurisdiction it has its principal office. In the present suit,
as discussed hereinabove, the cause of action has arisen wholly within
the jurisdiction of the Court in which the defendant bank's Ankleshwar
Branch is situated. Therefore, in view of the explanation given by
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25 Judgment in Comm. SU 2742019
Hon'ble Apex Court in the matter of Patel Roadways (Supra), though
the corporate office of the defendant bank is situated within the
jurisdiction of this Court but, in absence of any cause of action arising
within the jurisdiction of this Court, it is not having jurisdiction to try
and decide the suit hence, I answer issue No.2 in the negative.
AS TO ISSUE NO.3 :
52. It is the contention of the plaintiff that, the suit is filed
within the period of limitation because the first unauthorized debit
entry was made in the month of July 2009 with retrospective effect
from 01.09.2008 and was continued till March 2014 based on Sanction
letter dated 26.09.2009 allegedly received by the plaintiff on
29.05.2010. It is the contention of the plaintiff that, it had made several
oral and written representation to the plaintiff regarding the
unauthorized debit entries and the defendant had admitted its liability
and assured the plaintiff that the unauthorized debit would be reversed.
Thereafter, for the first time vide email dated 17.12.2016 and
23.12.2016 the defendant refused to refund the amount of alleged
unauthorized debits. The complaint filed by the plaintiff before the
Banking Ombudsman was rejected on 13.02.2017 therefore, plaintiff
filed PreInstitution Mediation application on 30.03.2019 and due to
non participation of the defendant in the mediation process, a Non
Starter Report was issued on 17.07.2019 hence, the plaint lodged on
15.11.2019 is lodged within the period of limitation. To buttress, its
point of suit being filed within limitation, the learned advocate of
plaintiff relied on Section 18 of the Limitation Act, 1963 by arguing
that, the various emails Exh.23(colly.) sent by the defendant bank to
the authorised representative of the plaintiff, acknowledged the
defendants liability regarding unauthorized debits.
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26 Judgment in Comm. SU 2742019
53. That, if the emails at Exh.23(colly.) are seen then there is
no admission by defendant in clear and unequivocal terms that they
have unauthorizedly debited the account of plaintiff. The language of
said emails admittedly sent by the defendant reflects that the defendant
had maintained its stand that the debits made in the account of plaintiff
were as per HO guidelines. The defendant assured the plaintiff that, its
complaint was being looked into by the higher officials. The said
assurances does not amount to any acknowledgment in writing as
contemplated by Section 18 of the Limitation Act, 1963. The period of
limitation would have extended only if there is a clear
acknowledgement in writing by the defendant bank.
54. That, another argument on behalf of the plaintiff regarding
cause of action is that, the Bank Ombudsman rejected the complaint of
plaintiff against the defendant on 13.02.2017. But, in my opinion the
cause of action had already accrued to the plaintiff when the defendant
had withdrawn the concessions given to the plaintiff. The said letter
intimating withdrawal of concessions, according to the plaintiff was
received on 29.05.2010 therefore, the statutory period of limitation had
begun to run from that day and ended in the year 2013 i.e. after three
years. Therefore, the suit filed by the plaintiff in the year 2019 is filed
beyond the period of limitation hence, barred by the Law of limitation.
Consequently, I answer issue no. 3 in the negative.
AS TO ISSUE NO. 4 :
55. That, as the plaintiff has failed to prove that the amounts debited
by the defendant from its account were done so unauthorizedly and as
it is held herein above that, the suit is filed beyond the period of
limitation and this Court has no jurisdiction to entertain the suit hence,
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27 Judgment in Comm. SU 2742019
the plaintiff is not entitled for the Decree claimed for. Therefore, I
answer issue no. 4 in the negative, as well and proceed to pass the
following order.
ORDER
1. Commercial Suit No.274 of 2019 is hereby dismissed.
2. No order as to costs.
Date : 05/03/2024.
(VISHAL SADASHIVRAO GAIKE )
JUDGE, CR NO.32
CITY CIVIL COURT, MAZGAON
MUMBAI.
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