CANARA INDUSTRIAL AND BANKING SYNDICATE LTD Vs. V RAMACHANDRA GANAPATHY PRABHU
LAWS(KAR)-1966-9-2
HIGH COURT OF KARNATAKA
Decided on September 09,1966

CANARA INDUSTRIAL AND BANKING SYNDICATE LTD. Appellant
VERSUS
V.RAMACHANDRA GANAPATHY PRABHU Respondents


Cited Judgements :-

GAINDA MAL HEM RAJ VS. AIR INDIA [LAWS(DLH)-2007-1-26] [REFERRED TO]
BANK OF BARODA VS. OFFICIAL RECEIVER [LAWS(KAR)-1977-2-9] [REFERRED TO]
EXPRESS ROAD TRANSPORT PVT LTD VS. MALLAR TRADING COMPANY [LAWS(KAR)-1983-11-15] [FOLLOWED ON]


JUDGEMENT

Gopivallabha Iyengar, J. - (1.)The Appellant; in this appeal was the plaintiff in Original Suit No. 69 of 1958 on the file of the Subordinate Judge of South Kanara.
(2.)The plaintiff is a Banking Company. The first defendant is a merchant and commission agent carrying on business in Mangalore Town. The second defendant carries on business as a Public Carrier. The first defendant in the course of his business despatches goods through the second defendant to his customers at different places. On entrusting the goods to the second defendant, the first defendant obtains from him documents called 'Way Bills' to evidence the entrustment of the goods for carriage. The first defendant despatches the parcel way bills through the plaintiff Bank endorsing the same in blank in favour of the plaintiff. Along with the way Bill, the first defendant delivers a demand draft duly drawn on his customer. The plaintiff despatches the demand drafts and the way bills to its branch at the destination for purposes of collection of the amount covered by the demand draft and delivery of the way bill to the drawee duly endorsed in his favour. The bank sends the demand draft for acceptances to the customer. If the customer accepts the demand draft and honours it any payment, the bank endorses the way bill in favour of the customer and delivers the same to him whereupon he takes delivery of the goods from the carrier on tendering the way bill duly endorsed in his favour. It was the practice of the plaintiff also to discount these demand drafts or bills as they are referred to in the plain and credit the amounts of the bills to the first defendant's account before the demand drafts are honoured by the drawee. This was because of an agreement of the first defendant with the plaintiff under which an overdraft to the extend of Rs. 20,000 is allowed by the plaintiff bank to him. The case of the plaintiff is that by the procedure above mentioned, the goods covered by the way bills were legally pledged to the Bank and formed part of the security on the basis of which the bills were discounted.
(3.)The plaint allegations are that in accordance with this custom, the first defendant executed four demand drafts; two were drawn against M/s. Prabhu Coffee Works, Bangalore bearing No. DD 630 and DD o. 648 dated 30-9-1957 and 30-10-1957 for Rupees 6,100/- and Rs. 190 respectively; the other two bearing Nos. 649 and 650 dated 30-10-1957 for Rs. 5,460 and Rs. 8,190 respectively, were drawn against M/s. Ali Sons, Coffee and Tea Traders, Bangalore. Along with the demand drafts the corresponding way bills in original duly endorsed in favour of the bank were also submitted to the bank. It is the case of the plaintiff that the way bills are documents of title and by their being endorsed in favour of the Bank and delivered to them, the goods covered by the way bills were legally and validly pledged in favour of the bank. The demand drafts were discounted by the plaintiff-bank and the first defendant was credited with the amounts as shown in schedule 'A' attached to the plaint. The aggregate amount so credited was Rs. 27,995-0-9. These bills when presented by the bank were not honoured by the respective drawees. When the plaintiff sought to obtain delivery of the goods from the second defendant, it was found that the goods had been delivered to the first defendant himself. it is the case of the plaintiff that under the terms of the way bill, the send defendant was under an obligation to deliver the goods only on production of the original way bill. As the demand drafts were not honoured, the original way bills remained with the plaintiff bank and it is only the bank or its nominees that could take delivery of the goods from the second defendant on surrendering the original way bills. The second defendant having parted with the goods without the original of the way bills being surrendered, it is alleged that he is also liable for the amounts advanced by the plaintiff to the first defendant on the security of the way bills. Therefore it is claimed by the plaintiff that the defendants are liable to pay the amount advanced to the first defendant by the plaintiff bank. The plaintiff states that he notified the second defendant of the breach of the obligation on his part and the second defendant admitted his liability to make good the entire loss sustained by the bank in this connection and gave the letter dated 18-11-1957. On a notice being issued by the plaintiff through their counsel demanding the amount due to the bank, the second defendant replied denying his liability. The plaintiff therefore filed the suit for recovery of the sum of Rs. 27,995-0-9 together with interest on the same from 18-5-1958 upto the date of the suit. The first defendant while challenging the correctness of the allegations in paragraph 3 of the plaint confessed judgment claiming deduction is respect of a sum of Rs. 500 paid by him on 12-8-1958 after the institution of the suit. The suit was accordingly decreed against the first defendant.


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