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Bansidhar Mohanty Vs. the United Bank of India and ors. - Court Judgment

LegalCrystal Citation
SubjectBanking;Commercial
CourtOrissa High Court
Decided On
Case NumberCivil Revn. No. 612 of 1979
Judge
Reported inAIR1980Ori193; 50(1980)CLT578
ActsCode of Civil Procedure (CPC) , 1908 - Order 8, Rule 6
AppellantBansidhar Mohanty
RespondentThe United Bank of India and ors.
Appellant AdvocateM. Patra, Adv.
Respondent AdvocateB.B. Mohanty, ;G.N. Sengupta, ;G. Rath, ;A. Patnaik and ;S.C. Sinha, Advs.
DispositionPetition allowed
Cases ReferredMangilal Lodha v. Misrilal
Excerpt:
.....(2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - the latter in good faith used to accept the same and accordingly enter the quantity and value of such goods in the bank's godown ledger as per the declaration given by the defendants, without physical verification or weighment of the said goods......disclosed in the original plaint that it was holding a stock of 532.575 m. ts. of iron and steel goods pledged with it by the defendants. in answer to a direction for sale of the same, plaintiff took a new stand that the actual pledged stock was not of that quantity but of only 49.504 m. ts. giving rise to a difference of 483.071 m. ts. the real basis of the defendant's claim is that the reduction of the quantity is not correct and the defendants were entitled to adjustment of the price of the original pledged stock admitted in schedule 'dd'. in fact, in the counter to the application of the plaintiff under order 8, rule 6 (c) of the civil p.c. the second defendant who had raised a similar claim in his additional written statement had pleaded to that effect. therein he had stated:--.....
Judgment:
ORDER

R.N. Misra, J.

1. The third defendant in T. M.S. 265 of 1969 in the Court of the Subordinate Judge of Cuttack is the petitioner. Plaintiff-opposite party No. 1 has filed the suit asking for recovery of a sum of Rs. 10,86,331.01 paise from defendants 1, 2 and 4 on the basis of a cash credit and/or overdraft facility under which the defendant No. 1-Company had been allowed to draw money from the bank. Initially the limit was for Rs. 3 lakhs which from time to time was extended and in June, 1969, the limit was fixed at Rs. 10 lakhs. While the defendant No. 1-Company, defendants 2 and 4 are two of its directors who according to the plaintiff had made themselves liable for the entire loan. Plaintiff also prayed for a decree up to Rs. 9 lakhs within the aforesaid amount against defendants 3 and 5--being two other directors of the defendant No.1-Company on the basis of guarantees.

2. Three separate written statements were filed one by defendant No. 2, another by defendants 3 and 5 together and the third one by defendant No. 4. The plaint was amended and paras 59-A and 59-B were new allegations made. Defendants 2 and 3 filed two separate additional written statements with reference to the amended plaint.

In these two paragraphs, plaintiff pleaded thus:--

'59-A. That the defendant company from time to time pledged Iron & Steel goods to the plaintiff-Bank which were kept in the Godown of the defendant-Company within its premises under the lock and key of the plaintiff-Bank. When the defendants pledged such goods they used to send signed challans with a declaration about the quantity and the face value of such goods to the Bank. The latter in good faith used to accept the same and accordingly enter the quantity and value of such goods in the Bank's godown ledger as per the declaration given by the defendants, without physical verification or weighment of the said goods. As requisite machinery and equipments for weighment of these heavy iron and steel materials were not provided by the defendant-Company or otherwise available at the godown, it was not possible to physically weigh the pledged stock and figures regarding the weight of the pledged goods verified by the defendant-Company in their challans and declarations used to be accepted by the plaintiff as a matter of practice and necessary entries regarding weight and face value used to be made in the Bank's ledger on the basis of the defendant's challan and declaration.

59-B. That at no point of time the weight or quantity of pledged goods were ascertained by the Bank until they were weighed for purpose of sale under the orders of this Court when for the first time it came to the knowledge of the plaintiff that the actual stock in the godown was 49.504 M. Ts. and not 532.575 tons as stated in the Schedule 'DD' of the plaint.'

In prayer (d), the plaintiff had asked for the following relief:--

'A declaration that all Book debts, goods and movable assets mentioned in Schedule DD and X-1 and X-2 hereof are charged and/or pledged and/or hypothecated in favour of the plaintiff for the repayment of the said sum of Rs. 10,86,331.01 by sale thereof, and the sale proceeds of the pledged goods in deposit in Bank in the name of Subordinate Judge, Cuttack, to be paid to the plaintiff in part satisfaction of the decretal dues.'

Defendant No. 3 in his additional written statement denied the alleged practice in para 59-A of the plaint and disputed the assertion that the stock was about one-tenth of what had been disclosed in the books. In para 3 of such additional written statement, he pleaded:--

'That the prayer made for relief on the above amendment at para (d) of the prayer should summarily be rejected. Instead, it is necessary to consider that the present market value of these steel materials are more than Rs. 2,200 per M.T. and the difference contemplated in the pledged stock would have easily fetched more than Rs. 15,00,000. Even this difference in pledged stock would have fetched more than Rs. 6,00,000 if the same would have been put into sale in the year 1971 by the plaintiff Bank, even at the same rate shown by the plaintiff. That amount would have fetched by now at least a sum of Rs. 4,00,000 in the form of fixed deposit interest. Even otherwise, the plaintiff is liable to compensate these defendants for illegally defaulting different terms and conditions of different agreements for evading the responsibility as a Pawnee and lastly throwing unnecessarily mud at these defendants in their attempt to cover their own misdeeds for which these defendants were put into serious loss and damage. The exact amount of damage can be ascertained at the time of bearing. At the moment it is tentatively fixed at Rs. 100 and an ad valorem court-fee of Rs. 10.50 p. has been paid herewith. The defendant Company hereby undertakes to pay such further court-fee as will be determined at the time of final hearing on actual ascertainment of the sum that is payable by the plaintiff to the defendant.'

The plaintiff filed a counter/written statement to the claim preferred by the third defendant and made an application in terms of Order 8, Rule 6 (c) of the Civil P. C. for a direction that the claim preferred by the defendant against the plaintiff may be excluded from the purview of the suit. By order dated 15-9-1979, the learned Subordinate Judge disposed of that application accepting the stand of the plaintiff-Bank and directing the claim raised in para 3 of the additional written statement to be ignored for the purpose of the suit. The third defendant assails the correctness of this order in this revision application.

3. Before the learned Subordinate Judge it had been made clear on behalf of the defendants that it was not a case of set-off or counter claim, but a clear case of adjustment of the value of the difference in the stock indicated in the original plaint and the amended one. It was maintained that the necessity to raise such a claim arose on account of the changed stand of the plaintiff. In Schedule DD of the original plaint at page 37 of the suit record the total weight was disclosed to be 532.575 tons. During the pendency of the suit, there was a direction for sale of the same. In the amended plaint, the plaintiff made an addition to the following effect:

'But which as per weighment made in March 1971 in connection with the sale of pledged goods were found to weigh M. T. 49-504 only.'

It is this endorsement in amended Schedule DD of the plaint that actually has given rise to the claim raised in the additional written statement. The question, therefore, for consideration is whether the claim raised in the additional written statement is actually one of set-off or a counter-claim on one hand or is an adjustment on the other. The learned Subordinate Judge has proceeded on the footing that defendant No. 3's claim in the additional written statement was for an unascertained sum of damage and the plaintiff's claim against the defendants does not arise out of the same transaction and the same contract. Therefore, the claim is not an equitable set-off or adjustment at all. This seems to be a complete misappreciation of the position. As already indicated, the plaintiff had disclosed in the original plaint that it was holding a stock of 532.575 M. Ts. of iron and steel goods pledged with it by the defendants. In answer to a direction for sale of the same, plaintiff took a new stand that the actual pledged stock was not of that quantity but of only 49.504 M. Ts. giving rise to a difference of 483.071 M. Ts. The real basis of the defendant's claim is that the reduction of the quantity is not correct and the defendants were entitled to adjustment of the price of the original pledged stock admitted in Schedule 'DD'. In fact, in the counter to the application of the plaintiff under Order 8, Rule 6 (c) of the Civil P.C. the second defendant who had raised a similar claim in his additional written statement had pleaded to that effect. Therein he had stated:--

'......... In other words it is now clear to these defendants, that the plaintiff is not prepared to bring out the balance stock of M.S. material given to them in security as stated above and it is now thus certain that the above balance stock of M.S. material given in security to the plaintiff-Bank are lost while still in their exclusive possession, control and custody. They are, therefore, bound to render a full account of the stock given to them in security and the above loss or deliberate misappropriation by themselves must be deducted from their claim, as explained above......'

There can be no dispute that the pledged stock was a part of the plaintiff's pleadings for the foundation of its claim. Plaintiff itself had alleged that the sale proceeds of such pledged stock were available for adjustment against the suit claim. The additional claim in the written statement is also to the same effect, namely, the stock being what had originally been disclosed, its price is available for adjustment and not of the smaller quantity of stock enclosed in the note to Schedule 'DD' of the amended plaint. If this be the true position there is force in the submission of the defendants that the plea raised in the additional written statement is not one of set-off or counter claim.

4. The background in which between the parties the question arose in the case reported in (1978) 1 Cut WR 433, (United Bank of India v. National Foundry & Rolling Mills Limited) appears to be some what different. There, there was no admission in the original plaint of the extent of pledged stock and later there was no contention of availability of a smaller stock. The facts in the instant case being peculiar, there does not seem to be any necessity of examining the question whether the claim laid by the defendants is one of set-off, legal and/or equitable. The claim seems really to be one of an adjustment. While really raising a plea of adjustment, the defendant has unnecessarily referred to the question of damage. If the claim is viewed as one of adjustment, it is pertinent to the suit and cannot be excluded from consideration. Judged from that angle, the direction to exclude the claim is misconceived and the matter must be taken into account here. Adjustment cannot be subject-matter of a different claim. A Bench of this Court in the case of Tata Iron and Steel Co. Ltd. v. R. N. Gupta, AIR 1963 Orissa 174, dealt with a claim for wrongful deductions from plaintiff's bill for supply of goods by defendant and the Court found that both the supplies arose out of one contract for supply of goods. The Court came to hold that the claim was one of adjustment and not in the nature of an equitable set-off. Chief Justice Narasimham, in para 22 of the judgment stated:--

'The distinction between set-off on the one hand and payment or adjustment on the other has been pointed out in Halsbury's Laws of England, 3rd Edition, Vol. 54, page 395 (paras 669 and 672). In a setoff the plea of cross-claim is made as a defence to an action by the plaintiff for enforcement of his claim. But, to quote Halsbury.

'Where there has been payment, the party against whom the claim is brought pleads payment or accord and satisfaction which, in effect, alleges that the claim no longer exists. The plea of set-off on the other hand, in effect, admits payment of the claim and set up a cross-claim as being the ground on which the person against whom the claim is brought is excused from payment and entitled to judgment on the plaintiffs claim, (page 396 ibid)'.

Here the simple question in controversy was whether the adjustments and deductions already made at the time of payment of the final bills of the plaitniff were wrongful or unauthorised. No cross-claim is being made by the defendants to an action brought by the plaintiff. This distinction has been brought out in AIR 1937 Lah 62 and reiterated in Mangilal Lodha v. Misrilal, AIR 1951 Ajmer 78.........'

What was done in the reported decision is asked to be done in the instant case by giving credit of the value of the stock admitted to have been held by the plaintiff. Whether it was a completed transaction or the transaction was asked to be completed by accounts being taken would necessarily be of the same type, namely, a claim of adjustment and not a question of set-off. To reiterate at the cost of repetition, defendants were claiming that the value of the difference in the stock of about 483 metric tons of iron goods was to be adjusted against plaintiff's claim, because plaintiff had admitted at one stage to have been holding the same and the subsequent plea in paras 59-A and 59-B of the plaint was asked to be rejected. Such a stand when raised necessarily forms part of the present suit and cannot be excluded from consideration. On the basis of the story advanced by the plaintiff, the extent of the pledged stock the sale proceeds whereof are to be adjusted against the plaintiff's dues would be very much in issue. Another suit by the defendants on the basis of their new defence which has been directed to be kept out would not be maintainable as the same would be barred by res judicata. This in my opinion is also a pertinent aspect for consideration. I have no doubts in my mind in the circumstances that the learned Subordinate Judge fell into an error in directing exclusion of the claim from the suit. The Division Bench in the reported decision (AIR 1963 Orissa 174) took the view that of it was a case of adjustment, no court-fee was payable. The question of court-fee has not arisen at the present stage and I do not think, it would be proper for me to say anything more. As and when the question arises, the learned Subordinate Judge would deal with it. Merely because, the defendant has paid some court-fee on a tentative valuation would not bring him the liability to pay court-fee if the same is not payable.

5. The Civil Revision is allowed and the learned Subordinate Judge is directed to entertain the claim raised for adjustment by raising a suitable issue in the suit. I think it appropriate to direct parties to bear their own costs of this revision application.


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