BASANTA KUMAR MITRA Vs. CHOTA NAGPUR BANKING ASSOCIATION, LTD

JUDGEMENT

(1.) This appeal by the defendant arises out of a suit brought by the respondent bank to enforce two mortgage deeds executed in its favour by the appellant. One of these deeds was executed on 5-11-1928, to secure a sum of Rs. 15,000 to be repaid by the end of December, 1931, and hypothecating a two storied building, and land measuring three bighas standing in Dhanbad Municipality and described in Schedule A on the plaint. The second bond was executed on 28-4-1933, to secure a sum of Rs 20,000 and hypothecating in addition to the house and land already mentioned another plot of land in Hirpur Mouza measuring about one bigha, also situated in Dhanbad Municipality. The loan secured by this bond was repayable by the end of December, 1934. The Bank sued to recover under the earlier lord the sum of Rs. 33,485-13-1 and, under the later bond, the sum of RS. 20,600-14-2 and asked for a preliminary mortgage decree with liberty to apply for a personal decree in the event of the plaintiff?s dues not being fully realized by the execution of the mortgage decree. The defendant-appellant denied liability is under both the bonds. As regards the first bond, he pleaded that, under its terms, the liability could not, in any event, exceed Rs. 15,000, with interest, and that the bond had been satisfied by payments made by him from time to time to the Bank. With regard to the second bond, he denied the passing of the consideration alleged. There were also defences relating to the rate of interest payable and raising the plea of limitation. The learned Subordinate Judge held that, under the first bond, the plaintiff was entitled to recover only Rs. 15,000 inclusive of interest, and that all items of overdrawal of the defendant's account with the Bank exceeding this amount were barred by limitation. With regard to the second bond, the Subordinate Judge allowed the claim of the Bank in full. On these findings, he gave the Bank a preliminary mortgage decree with interest at six per cent per annum till the date of realisation. Hence the present appeal. A cross-objection has been filed by the Bank.

(2.) The suit arises out of transactions which the appellant had with the branch of the Bank at Dhanbad where, from at least the year 1922, he has had a current account. I may note that the defendant, who is a practising lawyer, was a local director of the Bank at Dhanbad from its inception in the year 1919 till the beginning of the year 1941. He was also one of the legal advisers of the Bank. From the beginning, he seems to have been allowed to overdraw according to his needs, and the account was a fluctuating one the outstanding balance being sometimes in his favour and sometimes against him. This state of things continued till the end of July, 1927, after which the account remained steadily overdrawn till the execution of the first bond, the amount of the overdraft varying between Rs. 9000 to Rs. 15,000.

(3.) On the date, when the first bond was executed, the overdraft stood at Rs. 15025-2-9. The bond was executed to secure the overdraft, and the defendant covenanted therein to repay by the end of December, 1931. Transactions between the defendant and the Bank continued as before, and the account remained overdrawn with a fluctuating over-draft very seldom below Rs. 15,000 and for a considerable period, very much exceeding this limit. By January, 1931, it had swelled to nearly 30,000. On 21-8-1931, the overdraft, which stood at Rs. 28,068, -2-9 was wiped out by a cash deposit of Rs. 35,005-11-3 and for the first time since July 1927, there was a balance of the account in favour of the defendant. The defendant made a further deposit of Rs. 270 on 22 August, but, by the 25th, the account was again overdrawn to the extent of Rs. 12,742-7-6. The overdraft rose rapidly and by the end of year, it stood at Rs. 27,149-9-3. Throughout the year 1932; and the early portion of 1933, the account was in deficit against the defendant, the balance due varying from about Rs. 25,000 to Rs. 32,000.