ARVIND STEEL COMPANY Vs. UNION BANK OF INDIA
LAWS(DR)-2003-6-2
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on June 30,2003

Appellant
VERSUS
Respondents

JUDGEMENT

Pratibha Upasani, - (1.)THESE two appeals can be conveniently disposed of by this common Judgment and Order because though the bills and amount of recovery in these appeals are different, the respondent Bank is the same and pleadings and findings in both the matters arc also identical except the amounts and dates of Hundis. The learned Presiding Officer disposed of both the applications namely O.A. No. 3056/2000 (High Court Summary Suit No. 3324/1993) and O.A. No. 3057/2000 (High Court Summary Suit No. 3326/1993) by his common Judgment and Order dated 26.3.2002, which is impugned in these appeals. The appeal No. 17/2002 is arising out pf O.A. No. 3056/2000 and appeal No. 18/02 is arising out of O.A. No. 3057/2000.
(2.)Case of the applicant Bank i.e. Union Bank of India in both the original applications? is that one M/s. Basant Alloy Steel Ltd. was its constituents. It has drawn certain bills of; exchange (Hundis) on the defendants for valuable consideration. The Hundis' were payable. after specified period. They were accepted by the defendants whereupon the applicant Bank discounted the Hundis ;and made payments thereof to the drawer. The details of the Hundis in both the matters were given in part No. 4 of the impugned Judgment and Order.
Contention of the applicant Bank is that these Hundis were presented on their due dates. The defendants, however failed and neglected to pay the same despite several oral demands, letters and finally Advocate's notice dated 31.7.1992. Since, there was no response to the Advocate's notice also, original applications for recovery of amount of the Hundis and interest @ 18% p.a. from their respective due dates upto the date of filing the applications, came to be filed.

The defendants in both the Original applications made exactly same averments which can be summarized as follows :

That the drawer M/s. Basant Alloy Steel Ltd. had drawn the Hundis in question in the name of respective defendants and that the applicant Bank had discounted the same. The defendants, however, have denied to have accepted the Hundis. The defendants have in this connection relied on specimen signatures of their partners duly verified by their bankers Mandavi Co-operative Bank Ltd. It was stated that difference in the signatures was ex facie obvious.

The defendants have also contended that the applicant did not present Hundis even for payment apart from presentment for acceptance.

The defendants have also contended that M/s. Basant Alloy Steel Ltd. had confirmed vide its letter dated 21.12.1991 that their books pf account showed nil balance against the account of the defendants. It was also contended that the drawer by its letter dated 10.8.1992,. enclosing pay Order of Rs. 66 lacs drawn on Canara Bank had requested the applicant Bank . to retire the Hundis in question. It is averred that all these facts are said to have been told ; to the defendants by Mr. Nagarajan of the drawer.

It is also contended that (he original applications were said to be bad for non joinder of . the drawer. It is contended that the drawer of the Hundis had created certain securities in favour of the applicant Bank who, however had not disclosed the same and the applicant Bank had also not made statement renouncing and relinquishing said securities. It is also contended that the Hundis were not properly stamped and as such were not admissible in evidence.

It is also contended that the Hundis were not properly drawn since they were not signed by authorized signatory. It is further contended that under the resolution of the drawer company Hundis ought to be signed by two authorized officials while the Hundis herein are signed only by one. It is also contended that the applicant was not holder in due course. On these grounds ii is prayed that the original applications be dismissed.

4. The learned Presiding Officer after hearing both the sides, and considering and assessing the entire material placed before him came to the conclusion that the Hundis were properly stamped, original applications were not bad for non-joinder of drawer of the Hundis, Hundis were properly drawn and consequently the applicant was holder in due course. The learned Presiding Officer also came to the conclusion that the defendants in both the matters had accepted the respective Hundis. Furthermore, it was held by the learned Presiding Officer that the defendant's liability did not get extinguished by non-presentment for payment of the Hundis, that the Hundis were duly retired by the drawer and finally, the learned Presiding Officer allowed both the original applications in favour of the Bank and ordered the defendants in O. A. No. 3556 of 2000 to pay to the applicant Bank Rs. 18,30,548/- with interest on Rs. 13,19,962/- at the rate of 18% per annum from the date of filing of the original application in the High Court till full realization.

In the second Original Application namely O.A. No. 3057/2000 the learned Presiding Officer ordered the defendants to pay to the applicant Bank Rs. 15,79,719/- with interest on Rs. 11,26,540/- at the rate of 18% p.a. from the date of filing of the original application in the High Court till full realization. Being aggrieved, the present appeals arc filed.

5. I have heard Mr. Talankar for the appellants and Mr. Fadia for the respondent Bank. I have carefully gone through the written submissions tendered by Mr. Talankar and Mr. Fadia, so also the record and proceedings and in my view, no interference is called for in the impugned judgment and order.

6. Mr. Talankar has led much stress on the point of non-stamping of Hundis. It is true that none of the Hundis in both the matters are stamped. Contention of the defendants therefore is that they cannot be read in evidence. However, It appears that notification issued by the Government of India bearing No. SO 1892 dated 1.8.1989. appears to have been overlooked. Under the provisions of Section 9(1)(a) of the Indian Stamp Act, 1899, the Government of India has remitted proper stamp duty chargeable under Article 13 of Schedule I in respect of usance bills drawn on commercial Banks in respect of commercial transaction if such bills are payable within three months. The bills have been drawn in respect of commercial transaction. This is obvious from the defence taken by the defendants that the amount of bill was paid for the goods supplied by the drawer. Thus, in view of notification referred to above read with Section 9(1)(a) of the Indian Stamp Act, 1899, the contention of the appellants has to be rejected.

7. As far as non-joinder of-the drawer to the suit/original application is concerned, it is a well settled legal position that the suit merely against the acceptor is maintainable because his liability is as principal debtor. Useful reference can be made to decision of the Bombay High Court in the case of Union Bank of India v. Ankur Corporation, II (1993) BC 98=1993 Mah. L.J. 615. It has been held by the Bombay High Court in the case of Bank of Baroda v. Scientific Steels, 1996 I LJ. 851, that cause of action against the acceptor of Hundis is independent. Therefore, this defence of the appellants also fails.

8. The defendants have come out with a case that as per the resolution of the drawer company M/s. Basant Alloy Steel Limited, the Hundis were required to be drawn jointly by two authorized signatories, but here the Hundis have been signed only by one official and as such the Hundis cannot be said to have been properly drawn. I do not find any merit in this contention also, In view of Section 117 of the Indian Evidence Act, it is not open to the acceptor to take up this contention and has no locus to say that what the drawer company could say. It is clear that Hundis have apparently been drawn by the company. Neither the payee Bank nor the defendants have any concern or source to know that the same. The Hundis apparently are drawn properly. In fact, it is implicit in one of the defences of the defendants that the Hundis were not properly drawn but also were retired. In view of this, this defence of the defendants also has no substance.

9. In both these matters, the defendants have emphatically denied the acceptance of the Hundis. They have denied signatures on the Hundis purported to have been made as and by way of acceptance. The defendants have also produced on record their specimen signatures attested by their banker Madvi Co-operative Bank Limited.

There is no direct evidence about acceptance in the sense that the applicant affiant does not say that the defendants had signed the Hundis in his presence. This is because of practice of the drawer getting Hundis accepted and then to submit the same to the bankers. This has happened in this case also and the Bank relying on acceptance, discounted the Hundis and made payment thereof to the drawer. As observed earlier the defendants accepted the Hundis can be clearly proved from the attending circumstances. The first and foremost defence of the defendant is to the effect that payment of the Hundis has to be made to the drawer and therefore, they were not liable. In this defence itself, the fact of acceptance is implicit because there is no question of making payment of the Hundis unless they were drawn and also accepted. Moreover, the defendants could have stated in the reply that they had not accepted the Hundis. This reply was given to the applicant Bank's earlier dated 18.7.1992 calling upon the defendants to pay the amount due under the Hundis. However, in that reply what the defendants stated is very significant. The defendants stated that the Hundis were not presented for payment and therefore, there was no question of retirement. It was stated by the defendants that in the absence of presentment for payment, within reasonable time, they presumed that the bills were retired by the drawer. In the reply to the letter, the defendants had also stated that they had made payment of the Hundis to the drawer. Thus, the defendants have not stated even remotely that the Hundis were not accepted by them. The fact of acceptance is also clear from the drawer's letter to the acceptor dated 11.8.1992 (Exh. 34) in which the drawer reiterated to have received money from the acceptor and slated that it was its responsibility to retire the Hundis.

10. The defendant's contention that they had made payment to the drawer and therefore they were discharged, does not have any legal basis and such payment does not in law constitute valid and legal payment for getting discharge. Useful reference can be made to the judgment in the case of Canara Bank v. Laxmi Chem Corporation reported in Summons for Judgment No. 153/1999 in Summary Suit No. 5063/1998. In this case, legal position has been reiterated to the effect that it is no defence for the acceptor to claim discharge by virtue of direct payment to the drawer. It therefore does not lie in the mouth of a person who is alleged to have made payment of the bills to say that he did not accept the bills. Thus, it is evident that the defendants had accepted the Hundis.

11. Another contention of the defendants is that the Bank had not presented the Hundis on due dates and immediately thereafter. It is to be noted that the Bank has not tendered any evidence to show that the Hundis were duly and actually presented for payment. It is settled legal position that the liability of the acceptor is not affected due to non-presentment for payment of the Hindis on the due dates or immediately thereafter, Devi Datta v. Pratap Singh, AIR 1933 Lahore 176 (Division Bench), holds so and is a direct authority on this point. This contention is also without any merit and has to be rejected.

In short, it has to be staled that the defendants did accept the Hundis in question. They were liable as a principal debtor and their liability existed so long as payment was not received by the payee. Defence of the defendants that payment was made to the drawer and the drawer had also paid the amount for retirement of the Hundis to the Bank, cannot be found to be believable.

In view of the above discussion, in my view, all the findings are correctly recorded by the learned Presiding Officer and therefore no interference is warranted. The appeals arc without any substance and will have to be dismissed. Hence, following Order is passed:

ORDER

Appeal No. 17/2002 and Appeal No. 18/2002 are dismissed.



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