1. One of the important points involved in these four cases (R. S. A. No. 2997 of 1979. R. S. A. No. 401 of 1980. Civil Revision No. 2357 of 1980 and Civil Revision Mo. 2358 of 1980) is whether the Branch Manager, State bank of India (concerning disputes arising in his Branch) in the absence of a resolution in his favour passed by the Directors of the State Bank of India, is competent to file a suit or other legal proceedings.
2. The Branch Managers of the respective Branches involved in these cases, filed civil suits against the respondents before the Sub-Judges in whose jurisdiction their Branches were situated and the plaints were signed and verified by them. On the basis of the power of attorneys given by the Branch Managers, the suits were instituted by the Advocates so authorised. The defendants in the two suits, out of which Civil Revisions arise, took up the plea that the Branch Manager had no authority to sign and verify the plaints and to institute the suits and, therefore, the same cannot proceed. The trial Judge (Judge, Small Cause Court) overruled the objection on the basis of Regulations 76 and 77 of the State Bank of India, General Regulations, 1955(hereinafter called the Regulations) and decreed the suits after giving a finding that the amounts claimed in the suits were due. The judgment debtors filed Civil Revision which came up for consideration before the Additional District Judge, who allowed the same and set aside the judgments and decrees of the Court below, solely on the ground that the Branch Manager, although had the authority to sign and verify the pleadings by virtue of Regulations 76 and 77. But had no authority to institute the suits on behalf of the State Bank of India. The State Bank of India has come up in further revisions to this Court under Art. 227 of the Constitution of India.
3. In the other two suits, out of which R. S. A. No. 2997 of 1979 and R. S. A. No. 401 of 1980 arise, the objections of the defendants were that the Branch Manager had no locus standi to file the present suits as he had no authority to sign and verify the pleadings, and that the suits were time barred. The suit, out of which R.S. A. No. 2997 of 1979 arises, was held to be within time against the principal debtors and was held to be time barred against the surety, whereas the suit, out of which R. S. A. No, 401 of 1980 arises, was held to be within time against all the defendants. On merits, it suit, out of which R. S. A. No. 2997 of 1979 arises, it was found that the State Bank is entitled to recover Rupees 5765.79 as Principal and interest and in the other suit, out of which R. S. A. No. 401 of 1980 arises, it was found that the State Bank was entitled to recover a sum of Rs. 10618.24 from the defendants. However, the suits were dismissed in view of the findings recorded on the point of locus standi to bring the suit. The State Bank of India filed appeals which were dismissed by the Additional District Judge and second appeals have been filed in this Court. Since the point of locus standi was common in all the four cases, they were ordered to be heard together.
4. In order to appreciate the point whether the Branch Manager of a local Branch of State Bank of India has the power to sign and verify the pleadings and to institute and defend the legal proceedings in a court, it will be useful to refer to the various provisions of the State Bank of India Act, 1955, (hereinafter called the 'Act') so that the scheme of the Act can be noticed. Under Section 3(1) of the Act. the State Bank of India was to be constituted to carry on the business of banking and other business in accordance with the provisions of the Act and for taking over the undertaking of the Imperial Bank. It is admitted that the State Bank of India was constituted and the State Bank of India so constituted was to be a body corporate with perpetual succession and was to sue and could be sued in that name as provided by Section 3(2) of the Act. According to Section 16(1) of the Act, the Central Office of the State Bank was to be at Bombay, and according to sub-section(2) local head offices in Bombay, Calcutta and Madras and at such other places in India as the Central Government may provide in consultation with the Central Board. It deserves to be mentioned here that a local head office was constituted at Chandigarh in accordance with Section 16(2) vide notification dated 20th August, 1979, published on 1st September, 1979, in part II of the Gazette of Government of India, page 99. The management of the affairs of the State Bank has been entrusted to the Central Board was to be guided by the directions of the Central Government as required by Section 17. The Central Board was to be guided by the directions of the Central Government as required by section 18. According to section 21 of the Act. Local Boards are to be constituted at places where the State Bank has a local head office, which are to consist of the members mentioned in the section. The 'Local Board' has been defined in Section 2(dd) to mean a Local Board constituted under Section 21.
Section 21B defines the powers of the Local Board in respect of the area served for which local head office is constituted and according to this section. Local Board is to exercise all powers and perform all functions and duties of the State Bank in relation to business of banking and shall also exercise such other powers and perform such other functions and duties as may be conferred on or assigned to it by the Central Board as otherwise prescribed and subject to any other general or special instructions which the Central Board may give from time to time. The net result of the reading of the provision is that for the area under the local head office, the Local Board has full powers to do what the Central Board has. Under Section 30 of the Act, the Central Board has been authorised to constitute an Executive Committee or other Committees and delegate to the Executive Committee or other Committees such powers as the Central Board may consider necessary. This Section deals with the delegation of powers of the Central Board to the Executive Committee or other Committees. Under Section 43(2). The Central Board has been authorised to delegate such powers and duties as it deems proper, to the officers, advisers and employees of the State Bank. Regulations are to be framed under Section 50(2) (m) and (n) provides for the framing of regulations regarding the conduct and defense of legal proceedings and the manner of signing proceeding, besides providing the duties and conduct of the officers, other employees, advisers and agents of the State Bank. Sub-section (3) provides that the first regulations are to be made by the Reserve Bank with the previous sanction of the Central Government which shall be the regulations of the Central Board under this provision and shall have force accordingly until they are amended or repealed.
5. In exercise of the powers conferred by Sub-section (3) of Section 50 of the Act, the Reserve Bank of India, with the previous sanction of the Central Government, made certain regulations. Regulation 77, which is relevant, deserves to be noticed for the decision of the point involved in these cases and is as follows:--
'77. Plaints, written statements, petitions, and applications may be signed and verified, affidavits may be sworn or affirmed, bonds may be signed, sealed and delivered, and generally all other documents connected with legal proceedings whether contentious or non-contentious may be made and completed on behalf of the State Bank by the Chairman or by any officer or employee empowered by or under Regulations 76 to sign documents for and on behalf of the State Bank'.
A reading of the aforesaid regulations shows that the plaints, written statements, petitions and applications can be signed and verified and similar other documents including documents connected with legal proceeding could be made and completed on behalf of the State Bank by the Chairman or by an officer or an employee empowered by and under Regulation 76.
A reading of Regulation 76 shows that the power of signing the documents has been given to the Vice Chairman, the Managing Directors, the Deputy Managing Directors, the Chief General Managers and such other officers or employees of the State Bank as the Central Bank Board or the Executive Committee may authorise in this behalf by notification in the Gazette of India. In pursuance of the powers conferred under Regulation 76, notification dated 17th September, 1959, was published in the Government of India Gazette, part III section 4, dated 26th September, 1959, by virtue of which it authorised 'Agents' besides other persons, to sign the documents contained in Regulation 76 and therefore by virtue of Regulation 77 an agent would be entitled to sign the pleadings, verify the documents etc. and also to sign generally all other documents connected with the legal proceedings on behalf of the State Bank. Later on, the designation of Agents was re-designated as Branch Managers by virtue of notification dated 231st June, 1972, published in the Government of India Gazette part III Section 4 dated 26th August, 1972, which came into force with effect from 1st September, 1972. The resultant effect was that on and after 1st September, 1972, a Branch Manager was entitled to sign and verify pleadings and was authorised generally to complete all other documents connected with legal proceedings besides other matters. It is not disputed that the present suits were instituted at the instance of the respective Branch Managers in respect of the matters arising in their Branches, and the plaints and Wakalatnamas were signed by them.
6. After hearing the parties at a considerable length, I am of the view that a Branch Manager had the authority not only to sign the pleadings and verify them, but had the authority to sign a Wakalatnama to authorise an Advocate to file suit or to file the same himself. This is amply borne out by the looking t the entire scheme of the Act and particularly Section 50(2) (m) and (n) coupled with Regulations 76 and 77. According to the counsel for the respondents-defendants, regulations could be framed on three matters as enumerated in clause (m), that is, to make a provision for conduct of legal proceedings, for defense of legal proceedings and the manner of signing pleadings. But in the present case regulation has been made only for the third purpose i.e. for signing the pleadings and not for other two purposes. On the other hand, the stand of the counsel for the State Bank of India is that the first authority to act on behalf of the State Bank of India vests in the Central Board and in the case of local head offices, in the Local Boards. In order to carry out the purposes of the Act, Section 50(1) provides for making of regulations under the Act and under clauses (m) and (n) specific powers have been given for making regulations in regard to the conduct of the legal proceedings and about other details and conduct of the officers of the State Bank. In furtherance of the aforesaid power, Regulations 76 and 77 were framed and according to the learned counsel, these regulations have to be liberally construed so as to convey that whatever was provided in clauses (m) and (n) was to be regulated by Regulations 76 and 77, and Regulation 77, could not be construed in a limited manner as was sought by the counsel for the defendants-respondents.
I find merit in the contention of the learned counsel for the State Bank of India. Regulation 77 is quite comprehensive. If the words 'generally all other documents connected with legal proceedings whether contentious or non-contentious may be made and completed on behalf of the State Bank ' had not been mentioned in Regulation 77. Something might have been said for the defendants. But the use of the aforesaid words clearly goes to show that the authorised officer has been given power to sign all documents connected with the legal proceedings and one of the documents would be a Wakalatnama which the concerned officer could sign in favour of an Advocate. It cannot be disputed that a Wakalatnama is a document connected with the legal proceedings and when, admittedly, in the present cases, the concerned Branch Managers had executed Wakalatnamas in favour of the counsel who presented the plaints it cannot be said that the presentation of plaints in Courts by the Advocates was not a proper presentations.
7. The aforesaid view of mine finds full support from a Privy Council decision in Delhi and London Bank Limited v. A. Oldham, (1894) ILR 21 Cal 60(PC) ; Chandra Sekhar Zamindari Co. Ltd. B. Ram Kumar Haldar, AIR 1914 Cal 782(1):M. C. S. Rajan and Co., Madras v. National Nail Industries Trichy, ILR (1975) 2 Mad 486; United Bank of India v. Prabhas Ch. Deb. AIR 1977 Cal 55; and a decision of the Delhi High Court in Suit No.653 of 1974. State Bank of India v. Swahney Finance Company decided on 25th Oct. 1978.
8. The counsel for the defendants in support of their contention wanted to place reliance on decisions of the Court in Municipal Committee, Ludhiana v. Surinder Kumar, 1970 Cur LJ 631; and Garib Chand v. Municipal Committee, Budhlada, 1979 Rev LR 341. These judgments are clearly distinguishable as the same are based on earlier judgments of the Lahore High Court wherein it was held that in the case of Municipal Committees if authority to sign pleadings is only granted to an officer of the Municipal committees if authority to sign pleadings is only granted to an officer of the Municipal Committee, that would not include an authority for him to decide whether to file an appeal or not and to institute an appeal. This distinction has been noticed in Seth Kirpal Chand v. Traders Bank Ltd., Jammu, AIR 1954 J&K; 45, and I am in agreement with the distinction pointed out therein. There also reliance was placed on the same Lahore authorities.
9. Even apart from the aforesaid reasoning, I am of the view that the larger authority granted to the Branch Manager to sign the plaints, written statements, petitions and applications and all other documents connected with the legal proceedings, should include the power to file suit, written statements and other documents in Court. I cannot lose sight of the fact that the State Bank of India has Branches all over the country and a special statute, namely, the Act, was framed for its working. The Banking transaction are taken up in every Branch Office and if one were to accept the argument of the defendants, even if suits can be filed within limitation after getting the sanction from the Central Board or the Local Board at least the first appeals, which will lie before the District Judge, would always be time barred because I do not think it would be possible to get instructions from the Central Board or the Local Board to institute an appeal within the period of thirty days.
10. For the reasons recorded above, I hold that the suits were not only properly filed and instituted by the Branch Managers but they had the authority to engage a counsel and sign the Wakalatnamas and the presentations of the plaints by the Advocates is proper institution of the suit. Accordingly the findings to the contrary recorded by the Courts below in all the four cases are set aside.
11. In R. S. A. No.2997 of 1979, one more point arises with regard to limitation. The Courts below in the case out of which this appeal arises, have taken the view that the suit was within limitation against the principal debtors but was time barred against the surety. After hearing the counsel for the parties on this matter at length, I am of the view that the finding recorded by the Courts below on the point of limitation is also incorrect. The facts of the case are that the Branch Manager allowed the defendants the benefit of Cash Credit Account with a limit of Rs.5000. A copy of the running Account has been produced on the record as Exhibit P. 5, which shows that the persons who were allowed the benefit of Cash Credit Account had been withdrawing and repaying amounts up to the limit of Rs.5000/- from time to time and on the debit balance, interest was accruing. For such a running account, the limitation is provided under Article 1 of the 1963 Limitation Act. which is analogous to Article 85 of the earlier Limitation Act. According to Article 1, the limitation is three years which starts from close of the year in which the lst item admitted or proved is entered in the account, such year to be computed as in the account; meaning thereby that the year in which the last entry is made would be excluded in computing the period of limitation and thereafter i.e. from the following January, the limitation of three years would start. The facts of the present case show from Exhibit P.5 that the last entry is of 11th November, 1975, whereas the suit was filed on 18th November 1975, i.e. within a week of the last entry. Hence the entire suit even against the surety, was within limitation.
The Courts below fell in error in following Federal Bank of India (Punjab) Ltd. V. Som Dev Grover, AIR 1956 Punj 21, on the facts of the present case, which is clearly distinguishable. That was a case of ordinary debtor and his surety and it was held that the suit can be within limitation from the date of acknowledgements against the principal debtor, but the acknowledgements cannot be used against the surety and if without acknowledgements, the suit is barred against the surety, it would be so and the acknowledgements cannot be used against him. It is true that in the Courts below, the counsel for the State Bank of India did not argue the case on the basis on which it has been argued before me. There, it appears that the payments made by the principal debtor were relied upon by way of acknowledgements and that is how the courts below proceeded to decide the case on that basis. Accordingly, I reverse the findings of the Courts below on the point of limitation and hold that the suit against the surety was also within limitation.
12. One more point arises in R. S. A. No. 2997 of 1979 under issue No.8. The Courts below have held that since no notice was given to the surety under section 98 of the Negotiable Instruments Act, therefore, the suit was not competent against him. The finding is erroneous for two reasons. Firstly the suit is not on the basis of promissory note but is on the basis of balance shown against the principal debtors in the running account on the basis of agreements Exhibits P. 1. and P. 2. It is true that a promissory note, Exhibits P. 3 was also executed and the plaint did make a mention thereof also. As already found above, the claim was made on the basis of balance shown in the running account also and to such an account the aforesaid section has no applicability. Assuming that the aforesaid Section 98 was applicable to the facts of the present case, O. Chinnappa Reddy. J. in Balwant Singh v. State Bank of India (1977) 79 Punj LR 256, had analysed the purpose of giving the notice. On the basis of that, it was for the surety to show that by not giving the notice what loss has occasioned to him, which he has failed to plead and prove in this case. Accordingly, the finding of the courts below on issue No. 8 is also reversed.
13. For the reasons recorded above, Civil Revisions Nos. 2357 and 2358 of 1980 are allowed, the judgments and decrees of the Additional District Judge are set aside and those of the Judge. Small Cause Court, restored R. S. A. No. 2997 of 1979 is also allowed and after setting aside the judgments and decrees of the Courts below, the plaintiff's suit is decreed for a sum of Rs. 5765.79 against all the defendants jointly and severely. The plaintiff shall also be entitled to interest on the decretal amount at the contractual rate from the date of institution of the suit till realization R. S. A. No. 401 of 1980 is also allowed, the judgments and decrees of the Courts below are set aside and the plaintiff's suit is decreed for a sum of Rs. 10618.24 against all the defendants jointly and severally. The plaintiff would also be entitled to interest on the aforesaid amount at the contractual rate from the date of institution of the suit till realization. The parties shall bear their own costs throughout.
14. Order accordingly.