BANK OF BARODA Vs. INDOCHEM AND VARNISH INDUSTRIES
LAWS(DR)-2005-5-22
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on May 31,2005

BANK OF BARODA Appellant
VERSUS
Indochem and Varnish Industries Respondents

JUDGEMENT

P.K. Deb, J. - (1.) THIS appeal has been preferred by the above named appellant -Bank against the judgment and order dated 9th April, 2002 passed by the then Presiding Officer, DRT, Allahabad in case No. Original Application 240/01, whereby and whereunder the claim of recovery for Rs. 10,29,497/ -,' of the appellant Bank against the respondents has been rejected. The facts in this case are undisputed which run as follows :
(2.) THE respondent No. 1 is a proprietorship firm, defendant No. 2 is its proprietor and defendant Nos. 3 and 4 are guarantors of the defendant No. 1. Defendant No. 1 is manufacturing and doing business of resin, varnish etc. at Haldwani in the district of Nainital. Defendant No. 1 through defendant No. 2 took a cash credit loan from the appellant Bank and defendant Nos. 3 and 4 stood its guarantors and all the Banking documents as per the Banking Regulation have been executed by the borrowers including mortgage of the property. During the course of business one party of Delhi approached defendant Nos. 1 and 2 for purchase of their products. Defendant Nos. 1 and 2 did not agree to part with their products unless cash payments were made. On 15th September, 1998 one Nand Singh Bist brought a letter from one Tirupati Rosen and Chemicals along with a Demand Draft dated 12th September, 1998 for Rs. 7.22 lacs. The said draft was presented by defendant No. 1 to the appellant -Bank for collection as the account of defendant No. 1 was with the applicant -Bank. The said draft was issued by the State Bank of India, Fatehpuri Branch, Delhi, in favour of defendant No, 1 payable at State Bank of India, Haldwani. The appellant -Bank had sent the draft for clearance. When the appellant Bank did not receive any adverse report from the State Bank of India, Haldwani, then on presumption of clearance of the demand draft, credit of the draft's amount Rs. 7.22 lacs was made in the cash credit account of defendant Nos. 1 to 4. The said amount was withdrawn by defendant Nos. 1 to 4, but after four months on 14th January, 1999 it was informed by the State Bank of India, Haldwani that the said demand draft was not issued by the State Bank of India, Fatehpuri Branch, Delhi and was forged one and then defendant No. 5 State Bank of India, Haldwani Branch, debited Rs. 7.22 lacs to the account of the applicant -Bank. On receiving such advice, applicant -Bank made representation to the State Bank of India, Haldwani Branch i.e. defendant No. 5, regarding unauthorized debit of Rs. 7.22 lacs from their account but when nothing happened, then the original application was filed against all the defendants as mentioned above and the array of the defendants remained as it is in the array of the respondents in the present appeal. The subject of dispute is the encashment of demand draft amount of Rs. 7.22 lacs and debiting of the same from the account of the appellant Bank by the defendant No. 5 State Bank of India, Haldwani. It should further be mentioned here that admittedly on receipt of such information regarding forgery of the demand draft, the defendant No. 1 had moved the Criminal Court against Nand Singh Bist, who was again being convicted. The main thrust in the relief portion of the original application was regarding illegal debiting of the demand draft amount by the defendant No, 5 from the account of the appellant Bank, but they have also mentioned in the original application that as the amount had been withdrawn by the respondent Nos. 1 to 4, they were also responsible for repaying the amount to the Bank as the same is liability as per definition of debt under Section 2(g) of the RDDBFI Act. Both the defendant No. 5 Bank and defendant Nos. 1 to 4 had contested the original application by filing separate written statements. The DRT, Allahabad considered the cases of both the parties and held that appellant Bank can not get recovery of the claim until and unless permission is being taken from the High Power Committee as was constituted by the judgment of the Apex Court in Oil and Natural Gas Commission v. Collector of Central Excise JT 1991 (4) SC 158 and as such dismissed the claim against defendant No. 5 State Bank of India of Haldwani Branch. Regarding claim against defendant Nos. 1 to 4 the Tribunal held that the claim comes within the ambit of the definition of debt as per Section 2(g) of the RDDBFI Act, but on application under the provision of Section 72 of the Contract Act, it was held that there was no enrichment by the defendant Nos. 1 to 4 by their transaction as made in the circumstances of the case, rather bonafide is there on defendant Nos. 1 to 4 and as such the claim of the appellant Bank cannot be recovered from the defendant Nos. 1 to 4.
(3.) BEFORE this Appellate Court Mr. G.C. Mehrotra, Senior Advocate for and on behalf of the appellant Bank submitted at the very first instance that the appellant Bank had acted in their regular course of business and as per the clearing house rules, no adverse report came regarding the demand draft. They had rightly credited in the account of defendant Nos. 1 to 4 and defendant Nos. 1 to 4 had utilized the amount. In that way, if any information had come after four months, then there cannot be any alternative for the appellant -Bank but to proceed against the defendant No. 5 and also defendant Nos. 1 to 4.;


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