C.H. JAVA AND COMPANY Vs. STATE BANK OF INDIA
LAWS(DR)-2006-6-8
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on June 27,2006

C.H. Java And Company Appellant
VERSUS
STATE BANK OF INDIA Respondents

JUDGEMENT

S.S.Parkar, J. (Chairperson) - (1.) THIS appeal has been filed against the judgment and order dated 29th April, 2003 passed by the D.R.T. -III, Mumbai allowing the respondent Bank's claim against the appellants on a bill of exchange dated 14th September, 1992. Few facts which give rise to the appeal are as follows: Trade Aid and Paper Allied Products (India) Private Limited (hereinafter referred to as 'drawer') had agreed to supply goods viz. white printing papers to the appellants. The said party had also obtained a bill discounting facility from the respondent -Bank. The bill of exchange was drawn by the drawer, who were supplier of the goods to the appellants, in favour of the respondent -Bank. The bill for Rs. 9,99,999/ - was payable on or before 13th December, 1992. The said bill was accepted by the appellants for the purchase of the goods. On due date, the said bill of exchange was dishonoured by the appellants by non -payment and, therefore, the respondent -Bank filed a suit against the appellants for recovery of the amount of the bill with interest at the rate of 6% per annum from the date of the suit till payments and costs of the suit. The suit was contested by the appellants on various grounds, but the main ground on which the suit was contested was the failure of consideration as the goods supplied by the drawer were not as per the specifications mentioned by the appellants and, therefore, they were returned to the drawer. After considering the various points raised by both the sides, the D.R.T. allowed the claim of the respondent -Bank and the decree has been passed in a sum of Rs. 16.29.685.80 with simple interest at the rate of 6% per annum on the principal amount till realization. That order is under challenge in this appeal.
(2.) ON behalf of the appellants reliance is placed on the correspondence between the drawer and the appellants, which took place on 21st September, 1992 and 28th September, 1992, whereby the appellants had returned the goods sent to them under 3 bills mentioned in the bill of exchange which were accepted by the drawer. Relying on the said correspondence it was argued on behalf of the appellants that the appellants were not liable to pay the amount of bill of exchange to the respondent -Bank for failure of consideration. Reliance was heavily placed on the provisions of Section 118 of the Negotiable Instruments Act. Section 118 of the Negotiable Instruments Act provides for some presumptions about consideration in respect of Negotiable Instruments. The very first presumption is that even negotiable instrument was made or drawn for consideration and even such instrument when accepted or endorsed, was accepted or endorsed for consideration. According to the appellants' Advocate, whenever there is a presumption under the law, the same is rebuttable by the facts. According to him, when the drawer of the bill who was also the supplier of the goods had accepted back the goods, the presumption of consideration against the appellants is rebutted and, therefore, the appellants are not liable to pay the amount of the bill of exchange to the respondent -Bank. Reliance is placed on behalf of the appellants on the judgment of the Supreme Court in the case of Kundan Lal Rallaram v. Custodian Evacuee Property AIR 1961 SC 1316, which is not relevant at all to the facts of the instant case.
(3.) SO far as the correspondence between the drawer and the appellants is concerned, the D.R.T. has raised its doubt about the genuineness thereof and has held that the said correspondence between the drawer and the acceptor of the bill of exchange is collusive. It is pertinent to note that by the letter of 21st September, 1992 the appellants informed the drawer that the material was not as per their specifications and, therefore, they should either replace the material or take back the same. On 28th September, 1992 the drawer wrote to the appellants to return the goods along with the bearer of that letter. The appellants have produced a letter of the same date i.e. 28th September, 1992, addressed to the drawer stating therein that they had returned the goods and, therefore, the drawer should return their original documents like hundi, challans, etc. given to the drawer. Apart from the fact that correspondence has stopped there only, a perusal of the original letter dated 28th September, 1992 Exhibit 'B', which is addressed to the drawer by the appellants, shows that the said letter was acknowledged by the director of the drawer Company. The correspondence between two parties situated at two different places i.e. Byculla and Ghatkopar, though both places are in Mumbai only, are not so close as to make it possible to exchange two letters between the parties on the same day. After the letter dated 21st September, 1992 was addressed to the drawer by the appellants, the drawer sent the letter of 28th September, 1992 with the bearer to collect back the material. When the appellants wrote the letter of 28th September, 1992 stating that the material has been returned and, therefore, the drawer should return the original documents, the same would have been acknowledged by the bearer sent by the drawer to collect the documents and not by the Director of the drawer Company as is done in this case. This raises some doubt about the genuineness of the said correspondence because if the Director personally had been there to collect the goods back, the letter addressed to the appellants by the drawer Company would not have mentioned to return the goods along with the bearer. From the tenor of the correspondence it is obvious that the bearer of the letter was other than the Director of the drawer Company and it the bearer was other than the Director of the drawer Company, the letter of the appellants addressed to the drawer Company on that very date could not have been acknowledged by the Director of the drawer Company who must not be in the office of the acceptor on that day. In view of this fact, I cannot go to the extent of disagreeing with the doubt raised by the D.R.T. in respect of the genuineness of the correspondence between the Parties about the return of goods for not being as per the specifications of the buyers, though one cannot visualize why the drawer would choose to acknowledge the return of goods and consequently exempt the appellants, the acceptors of bill of exchange, from payment unless the goods had been returned. But that is a matter between the drawer and the acceptor of bill of exchange i.e. the vendor and the purchaser of the goods/material supplied under 3 bills or invoices referred to in the bill of exchange.;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.