SARJOO PROSAD,C.J. - (1.) THIS appeal is directed against an order dated 2 -5 -1955, passed by a Judge of this Court under the Banking Companies Act, adjudging the appellant as a debtor to the Shillong Banking Corporation Limited in liquidation. The claim of the bank is that the defendant No. 3, the appellant here, M/s. Kesarichand Jaisukhlal of Paltanbazar, Shillong, is liable for the payment of a sum of Rs. 5,965/5/9, the amount due to the bank, with interest at nine per cent. per annum calculated from 1 -/ -1947 onwards. The total claim has been laid for both principal and interest at Rs. 10,150/5/9. The claim is based upon the statement of account filed in the case (Ext. 1). The claim has been resisted by the appellant substantially on three grounds. It is contended that the debt due if any was paid off; that it was barred by limitation; and that in any case the bank was not entitled to the recovery of any interest, except pendente lite. The learned Judge who dealt with the matter, has found all these points against the defendant -appellant and accordingly this appeal has been preferred by him.
(2.) THE most substantial question is the plea of payment set up by the defendant. The material facts have not been controverted. It appears that the defendant made over two cheques to the plaintiff bank for a total sum of Rs. 8,800/ -. Cheque No. C. D. 0887 was for a sum of Rs. 600/ - and Cheque No. C. D. 0888 for a sum of Rs. 8,200/ -. These cheques were drawn on the Bharati Central Bank Ltd., Shillong Branch on 9 -12 -1946 and they were made over to the plaintiff bank for collection and crediting the amount towards the defendant's account which showed an overdraft. The cheques were duly presented for collection by the Plaintiff to the Bharati Central Bank the same day; but the latter bank instead of making cash payment of the amount, issued a crossed cheque for the entire sum of Rs. 8,800/ - on the Shillong Branch of another bank called the Nath Bank Limited. When this cheque of the Bharati Central Bank was presented to the Nath Bank on 10 -12 -46 for collection, the same was returned with a slip indicating that full cover for the amount in question had not been received. The cheque was again presented to the Nath Bank the following day, that is, on 11 -12 -1946 for collection; but it had no better result. The plaintiff bank then asked for cash payment and immediately returned the cheque issued by the Bharati Central Bank. From the plaintiffs accounts it appears that on the 9th December when the defendant handed over his two cheques to the plaintiff bank, it credited the amount in favour of the defendant, but later, on the 11th December when these payments were not obtained in satisfaction of the cheque issued by the Bharati Central Bank and drawn on the Nath Bank, the plaintiff Bank debited the defendant's account to that extent When the plaintiff bank asked the Bharati Central Bank for cash payment of the amount and returned the cheque issued, the latter sent a letter on 13 -12 -1946 wherein the Manager requested the plaintiff bank to accept a demand draft in lieu of cash payment. Demand Draft No. 47830 was accordingly issued by the Bharati Central Bank for a sum of Rs. 8,800/ - to cover the cheques issued by M/s. Kesarichand Jaisukhlal, the defendant -appellant. This demand draft was drawn on the head office of the Bharati Central Bank of Calcutta. The plaintiff bank immediately sent the draft for collection through its local branch in Calcutta but the demand draft was not honoured, in spite of repeated presentation; and in the meantime it appears that the Bharati Central Bank obtained an order of moratorium under Section 153 of the Indian Companies Act. Finally on 2 -1 -1947 they returned the demand draft with the note 'payment stopped under reconstruction scheme admitted by the High Court this day'. The Calcutta Branch of the Shillong Banking Corporation then returned the demand draft to the head office of the bank at Shillong and the matter stood where it was. The net result is that the plaintiff bank did not obtain payment of the amount of Rs. 8,800/ - from the Bharati Central Bank on which the cheques had been drawn by the defendant appellant. The case of the plaintiff is that it made every effort to collect the money under those cheques, issued by the defendant, and whatever step was taken was taken by the bank in consultation with the defendant orally and by phone, the defendant being a local party in whom it had confidence; and there was no lack of care or due diligence in the matter so far as the bank was concerned. This case of the plaintiff bank is however denied by the defendant. The defendant alleged that the bank had of its own accord accepted the demand draft from the Bharati Central Bank and that being so, the bank has to suffer if it failed to obtain payment in respect of the demand draft; so far as the defendant is concerned the liability if any, was extinguished by the fact that the Bharati Central Bank had honoured the cheques issued by the defendant -appellant and issued the demand draft in lien of payment to the plaintiff bank which the latter had duly accepted at its own risk. Before the learned judge who dealt with the matter at the trial, the argument proceeded on the basis that the plaintiff bank was careless and negligent in collecting the amount payable on account of these cheques and consequently the defendant had no liability in the matter when the demand draft could not be cashed on account of the negligence of the plaintiff bank. In the alternative it was argued that the bank must suffer for the failure to get payment of the demand draft because it accepted the demand draft on its own responsibility and without the consent of the defendant On both these points the learned Judge found against the defendant.
(3.) THE plaintiff examined on its behalf an assistant or the Shillong Banking Corporation who proved the statement of account (Ext. 1). He says that the accounts were kept in regular course of business and represent the true state of the transactions between the parties. His evidence further proves that the last transaction with the defendant No. 3 was on 29 -12 - 1950 when the latter paid a sum of Rs. 2,997/8/ -, as the entry in the accounts shows, in part satisfaction of his liability. This last payment was by means of a cheque which the bank collected. The entries of course do not show that any interest was added after the date in question or even prior to that date since 30 -6 -1947; but we will come to the claim for interest later. The witness further says that after the last payment to which he referred, there was no other payment by the defendant and therefore the amount remained due in the defendant's mutual and current account with the bank, until the bank went into liquidation on 26 -5 -1953. In regard to the two cheques issued by the defendant on 9 -12 -1946 the witness deposes as to the efforts made by the plaintiff Banking Corporation for collection of the amount from the Bharati Central Bank. He refers to the fact that the Bharati Central Bank gave at first a cheque on the Nath Bank in lieu of payment; and although this cheque was repeatedly presented to the Nath Bank on whom it was drawn by the Bharati Central Bank, the Nath Bank did not make any payment and the cheque of the Bharati Central Bank stood dishonoured. He narrates that on the first day when the Nath Bank returned the cheque of the Bharati Central Bank because full cover was not received as per Ext. 2, the plaintiff bank informed the defendant appellant about this and under the defendant's instructions the cheque was again presented the next day to the Nath Bank when it was again returned with a memorandum as per Ext. 3. It was then that the plaintiff bank debited the amount on 11 -12 - 1946 in the account of the defendant The witness also states that when the Nath Bank Limited ultimately refused payment, the plaintiff bank contacted the defendant and under his instructions it accepted a demand draft on 13 -12 -1946 from the Bharati Central Bank, Shillong for the identical amount issued on its Calcutta Branch for collection. The Bharati Central Bank also sent a covering letter (Ext. 4) asking the plaintiff bank to present the demand draft to its Calcutta Branch. The covering letter bears the same date. According to the witness the demand draft was presented to the Calcutta Branch of the Bharati Central Bank, but the latter requested by a letter dated 16 -12 -46 (Ext. 5) to present the same to their Shillong Branch and returned the demand draft. The defendant was again informed on the telephone and subsequently also by a letter (Ext. 6) dated 11 -1 -1947 to which the defendant replied on 28 -1 -1947. These letters of course were exchanged after the payment of the demand draft had been finally refused on account of the moratorium order on 2 -1 -1947. If this evidence is accepted, there can be no doubt that the demand draft was obtained with the consent of the defendant and it was not merely at the initiative of the plaintiff bank as alleged. The defendant has not examined Himself or anybody else to controvert the statement of this witness who has proved not only the entries in the statement of accounts but also the various events which happened and how the defendant was from stage to stage informed of the matter. The witness has also proved the entry in regard to the last payment made by the defendant. He admits that no formal note in writing was sent to M/s. Kesarichand Jaisukhlal, the appellant; but this he explains on the ground that the defendant was a local party and he appears to have been on the best of terms with the bank. The dealings between the parties both before and after the issuance of the cheques in question support the evidence of this witness. ;