Decided on April 10,2003



D.C.Thakur, - (1.)THE applicant Bank did institute Suit No. 1157 of 1987 before the Hon'ble High Court at Calcutta at its Ordinary Original Civil Jurisdiction by way of presenting one plaint in connection therewith which was in fact accompanied by the eighteen exhibits. THE date of presentation of the plaint in connection with the above suit was November 27, 1987. THE applicant Bank did institute the said suit against the four defendants for the purpose of recovery of an amount not less than Rs. 39,32,248.62 p. inclusive of interest and also for interest from October 1, 1987 till filing of the suit, interim interest and interest on judgment at 16.5% per annum. Out of such four impleaded defendants, the defendant No. 1 is a Company incorporated under the Companies Act, 1956 and is also engaged in carrying on business as the manufacturer and processor or a dealer in oil and oil seeds. THE said defendant No. 1 was enjoying several credit facilities from the Burra Bazaar Branch of the applicant Bank which were a cash credit (hypothecation account) being Purchase Account, Cash Credit (book debts) and a frozen term loan account.
(2.)From point of time, the day like December 4, 1973 is the starting point of enjoyment and availing by the first defendant of the credit facilities with the applicant Bank which are of the maximum limit or Rs. 10 lakhs (Rupees Ten lakhs) on terms and conditions contained in a set of Banking documents dated December 4, 1973 executed "by and/or on behalf of the first defendant". The enjoyment of the above credit facilities would be evidenced, if one considers minutely the Exhibits '1' and '2' of the evidence-on-affidavit filed on May 26, 2000 by Mr. D. Balakrishnan, the Deputy Chief Officer (Inspection & Vigilance Department), Zonal Office, Mumbai. The Exhibit '1' being the balance confirmation confirmed on April 20, 1974 has been meant for an amount of Rs. 6,28,110.29 p. The said balance confirmation was meant by and on behalf of the said defendant company in the form of Rs. 1 lakh (Rupees one lakh) dated the above day and date after being addressed to the Manager, Burra Bazaar Branch of the United Commercial Bank.
Apart from the above, the 'Exhibit 2' is also a letter written on March 25, 1977 confirming as well as accepting the correctness of the amount which is no less than Rs. 7,44,283.95 p. The said letter in the form of balance confirmation was written to the said Manager of the Burra Bazaar Branch. The said defendant company wanted to continue the availment of the accepted, admitted credit facilities which were constantly being provided by the applicant Bank; and for such purpose the said defendant forwarded a set of Banking documents duly executed by itself on March 25, 1977 along with a letter written on 11th May, 1977.

(a) Demand Promissory Note for Rs. 10 lakhs;

(b) Letter of Waiver; (c) Letter of continuity;

(d) Agreement of hypothecation of goods;

(e) Agreement for bill purchase;

(f) Extract of the resolution of the meeting of the Board of Directors held at the Registrar Office being situated at No. 4 Synagogue Street, Kolkata-700001, of itself and in which the defendant Nos. 2, 3 and 4 attended; and

(g) One letter of joint guarantee executed on March 25, 1977 were the documents falling under the category of the Banking documents sent to the applicant Bank by the said defendant company.

(3.)THE third phase of continuation of the availment by the defendant No. 1 of the credit facilities can be witnessed, if one takes into consideration the further execution of the following four documents, namely--
(i) One Demand Promissory Note for Rs. 10 lakhs;

(ii) Letter of Waiver;

(iii) Letter of Continuity; and

(iv) agreement for hypothecation of goods which was in fact caused to be done by the said Company on April 17, 1979.

Truly speaking, the defendant company has been found to have availed itself of the facilities arising out of the commercial contract as above, but it has also been found miserably failing to operate the said accounts in respect of which those facilities were granted. Both from sub-paragraphs (c) and (d), paragraph 7 or the plaint presented on November 27, 1987 as well as paragraph 9 of the evidence-on-affidavit affirmed by Mr. D. Balakrishnan, Deputy Chief Officer (Inspection and Vigilance Department), it shall appear that on the request or the defendant, the regular operation to the extent of Rs. 7.50 lakhs in the cash credit (hypothecation account) was transferred to the cash term loan account and the overall limit of cash credit was enhanced from Rs. 10 lakhs (Rupees ten lakhs) to Rs. 20.10 lakhs sanctioned to be availed of by the said defendant No. 1 being proportionately to the extent of Rs. 7.30 lakhs in the cash credit (hypothecation account) Rs. 12.80 lakhs in the bill purchase/cash credit (book debts account).

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