CHATTANATHA KARAYALAR Vs. CENTRAL BANK OF INDIA LTD
LAWS(KER)-1955-3-7
HIGH COURT OF KERALA
Decided on March 10,1955

CHATTANATHA KARAYALAR Appellant
VERSUS
CENTRAL BANK OF INDIA LTD. Respondents

JUDGEMENT

- (1.) THE third defendant is the revision petitioner. THE revision petition is from an order refusing to accept the additional written statement of the third defendant. THE plaintiff is a bank. THE suit is for recovery of Rs. 2,86,292-11-11 from the defendants. THE first defendant is the cashew Products Corporation Ltd. , Quilon, which is a limited company. THE second defendant is one of the directors of the company. He is also the managing director of the General Agencies Ltd. which is the managing agent of the first defendant company. THE third defendant is another director of the company. THE suit is for balance amount due to the plaintiff under an over-draft account granted to the first defendant on the security of defendants 2 and 3 who executed in favour of the plaintiff anon demand' promissory note for Rs. 4,00,000/ -. As further security for the amount the goods of the first defendant company were pledged with the bank under an open-loan arrangement. Some shares belonging to defendants 2 and 3 were also given as security. THE transaction began in the year 1947 and was renewed in 1949. THE suit was filed on 8. 9. 1950.
(2.) ALL the three defendants filed written statements in the case. The first defendant contended that when fresh documents were executed by the defendants in 1949 the plaintiff agreed to continue for a further period of three years the then existing credit facilities so that the company might be able to reduce its liability to the bank out of its business profits, that it was on the basis of this agreement that the defendants agreed to execute a fresh promissory note and to lodge with the plaintiff certain shares, that as a result of the breach of this agreement by the plaintiff the first defendant company was put to heavy loss, that the plaintiff was bound to make good the loss, that it should be set off against the amount claimed in the plaint, that the suit was premature and that, in any case, the defendants should be allowed to pay the debt in twelve quarterly instalments. The written statement of the second defendant also is to the same effect. Besides raising the above contentions the third defendant contended that he executed the promissory note only as a surety for the first defendant, that the plaintiff permitted the goods pledged by the first defendant to be sold at below cost price and thus allowed the security to be frittered away without his concurrence and that he was not liable under the promissory note. He, therefore, prayed that the suit might be dismissed with costs as against him. Defendants 2 and 3 filed their written statements on 12. 1. 1951 and the first defendant filed written statement on 31. 1. 1951. Issues were raised in the case on 21. 2. 1951. The trial of the case was delayed to a great extent by reason of the pre-occupation of the court with sessions work. The second defendant was the first witness examined in the case. His examination began on 25. 9. 1951 and was completed only on 26. 10. 1953. The examination of the third defendant began on 3. 11. 1953 and is not yet over. No other evidence has been taken in the case.
(3.) ON 1. 12. 1953 the third defendant presented a petition for permission to file additional written statement in the case. The proposed additional written statement was also filed along with the petition. It was alleged in the affidavit filed along with the petition that the business of the first defendant company was being conducted by the second defendant and that the third defendant was not in a position to state his contentions fully and clearly when the original written statement was filed, that it was only after he went through the transactions of the company fully that he was in a position to deal specifically with the allegations in the plaint. The proposed additional written statement is to the following effect: 1. The plaintiff has granted loans to the 1st defendant in other forms, such as out-agency loans, against goods which were security for the open loan. This was done in violation of the contract between the plaintiff and this defendant. 2. The plaintiff has freely made adjustments in the open loan account and in the clean draft account with 1st defendant by debiting and correspondingly crediting in other accounts without this, defendant's consent. The plaintiff has varied the contract thereby. 3. The plaintiff made mis-representation to this defendant regarding accommodation to the 1st defendant and this defendant acted on this mis-representation. 4. The plaintiff has committed fraud on an extensive scale by granting loans to the 1st defendant against goods covered by the open loan agreement. The contract between this defendant and plaintiff has been vitiated by fraud and violation of the terms of contract by the plaintiff. 5. Plaintiff has allowed the 1st defendant to overdraw freely in the clean overdraft and open loan accounts far beyond the limits agreed to by this defendant. 6. The plaintiff has converted secured loans into simple loans by releasing goods covered by bills of lading against Trust receipts and has thereby deliberately frittered away securities and committed breaches of contract against this defendant. 7. This defendant is fully discharged from liability for the plaint claim for the reasons stated in the above foregoing paragraphs". The plaintiff opposed the petition. The court below rejected the petition for two reasons. One is that the contentions raised in the proposed additional written statement would change the nature of the defence put forward in the original written statement from one of admission of the plaintiff's claim to one of questioning the same; and the other is that the petition is belated.;


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