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Radha Kanta Pal Vs. United Bank of India Ltd. - Court Judgment

LegalCrystal Citation
SubjectBanking;Commercial
CourtKolkata High Court
Decided On
Case NumberSuit No. 1312 of 1948
Judge
Reported inAIR1955Cal217
ActsContract Act, 1872 - Sections 126 and 139
AppellantRadha Kanta Pal
RespondentUnited Bank of India Ltd.
Appellant AdvocateT.P. Das and ;P.C. Sen, Advs.
Respondent AdvocateB. Das and ;Dilip Sen, Advs.
Cases ReferredBees v. Berrington
Excerpt:
- p.b. mukharji, j.1. this suit is concerned with the effect of what may be called a contract in the nature of a fidelity bond or a guarantee. one rajani kanta pal, since deceased, signed a bond with the comilla banking corporation limited now amalgamated with and represented by the united bank of india ltd. by this bond dated 8-8-1944 rajani, in consideration of the appointment of his relation, the second defendant nishikanta pal, to the post of a cashier and in consideration of the security for the due discharge of nishikanta's duties, executed as guarantor the security bond for rs. 10,000/- for himself, his heirs, executors and assigns.2. this suit is brought by radha kanta pal, son of rajani who died on 18-4-1945. in this suit the plaintiff claims against the bank the 31/2 per cent. g......
Judgment:

P.B. Mukharji, J.

1. This suit is concerned with the effect of what may be called a contract in the nature of a fidelity bond or a guarantee. One Rajani Kanta Pal, since deceased, signed a bond with the Comilla Banking Corporation Limited now amalgamated with and represented by the United Bank of India Ltd. By this bond dated 8-8-1944 Rajani, in consideration of the appointment of his relation, the second defendant Nishikanta Pal, to the post of a cashier and in consideration of the security for the due discharge of Nishikanta's duties, executed as guarantor the security bond for Rs. 10,000/- for himself, his heirs, executors and assigns.

2. This suit is brought by Radha Kanta Pal, son of Rajani who died on 18-4-1945. In this suit the plaintiff claims against the Bank the 31/2 per cent. G. P. Note of 1900 No. 390435 for Rs. 5000/- and also another 31/2 per cent. G. P. Note of 1865 No. CA-010581 for Rs. 5000/-. These Government Promissory Notes were deposited with the Bank by Rajani as security under the said security bond. The plaintiff also claims interest on the first Government Promissory Note from 24-4-1939 and on the Second promissory note from 21-2-1944. There is an alternative claim for the sum of Rs. 10,000/- being the value of these two Government Promissory Notes and for the sum of Rs. 2289-1-6 being the interest at the rate of 31/2 per cent. per annum from the dates that I have just mentioned.

3. The basis of the plaintiff's claim is that the services of Nishikanta Pal were terminated on 4-12-1946, but the deposit money in the shape of the Government Promissory Notes has not been returned to the plaintiff.

4. The defence of the Bank is that Nishikanta is responsible for shortage of the Bank's cash amounting to Rs. 8,800/- and the 'Bank is therefore entitled to deduct that money out of the security deposit. The plaintiff's allegation is that neither Rajani nor he had any knowledge of the defalcation or breach of duty committed by Nishikanta and that the Bank gave no notice to either of them about any such defalcation or breach of duty. In the plaint the plaintiff expressly says that he does not admit that Nishikanta had made any shortage in cash. He also contends that in any event he is not liable for such defalcation or shortage, if any, caused by Nishikanta Pal.

5. The defendant Bank in its written statement after setting out the terms of the security bond pleads that Nishikanta by serving as a cashier was found to be responsible for shortage of two sums of money, one of Rs. 600/- on 15-8-46, and the other of Rs. 8,200/- on 28-11-1946. The Bank also pleads that the defendant Nishikanta wrongfully on the breach of the terms of his appointment left his post as cashier on 4-12-1946 without any notice, and failed to pay or make good the said sum of Rs. 8,800/- in spite of demands. The Bank's case is that it has adjusted the sum of Rs. 5286-15-10 against the said sum of Rs. 8,800/-, This sum of Rs. 5286-15-10 is the proceeds of the conversion of the Government Promissory Note No. CA-006473 and the balance still payable by the defendant Nishikanta is Rs. 3513-2-0 for which the Bank claims to be reimbursed out of the other G. P. Note as security deposit and the sum of Rs. 306/- being the surrender value of the insurance policy of Nishikanta and a further sum of Rs. 294-14-3 being the outstanding balance of the provident fund of the defendant Nishikanta which are kept in the suspense account.

6. The defendants to this suit are first the Bank and secondly Nishikanta Pal. The defendant Nishikanta Pal has not entered appearance and is not defending this suit. Defendant Nishikanta Pal is the nephew of the plaintiff being the son of the plaintiff's paternal uncle's daughter. (7) The following issues were settled by this Court and accepted by learned counsel on either side:

(1) Was the defendant Nishi Kanta Pal responsible for the shortage of the sum of Rs. 8,800/- belonging to the Comilla Banking Corporation Ltd. while working as its cashier as alleged in paragraph 6 of the Bank's written statement

(2) Is the defendant bank entitled to claim the sum of Rs. 8,800/- from the second defendant Nishi Kanta Pal? If so, is it entitled to adjust the same from the proceeds of the securities deposited with the Comilla Banking Corporation Ltd. as well as from the outstanding balance from the, provident fund of the second defendant Nishi Kanta Pal?

(3) Did the plaintiff have any knowledge in July 1947 of the aforesaid shortage?

(4) Did the second defendant Nishi Kanta Pal fail to pay the said sum of Rs. 8,800/- or any portion thereof to the Comilla Banking Corporation?

(5) To what reliefs, if any, is the plaintiff entitled?'

8. The evidence in this case has been both oral and documentary. There is an admitted brief of documents marked Ex. B. There is also an admitted brief of correspondence marked Ex. A. The plaintiff himself gave evidence and was the only witness on his side. On behalf of the defendant bank three witnesses were examined. One is Saroj Biliari Nandy, at present an agent of the Bogra branch of the United Bank of India in East Pakistan, and at the, relevant time a Deputy Agent at the Narsinganj Branch of the Comilla Banking Corporation. The other is Birendra Mohan Mitra, now an officer of the Advance Department at the Head Office of the bank and at the relevant time he was in the Calcutta office of the Comilla Banking Corporation. The third witness on behalf of the bank is Manindra Bhusan Dutt, at present Superintendent of Accounts at the Head office of the United Bank of India and at the relevant time the Chief Accountant of the Comilla Banking Corporation.

9. Besides this evidence there are certain admitted facts which the parties and counsel appearing on either side have admitted and are recorded as hereunder:

1. Shortage of Rs. 600/- on 15-8-1946 due to the default of defendant Nishi Kanta Pal.

2. Shortage of Rs. 400/- on 25-11-1946 due to the default of defendant Nishi Kanta Pal.

3. Shortage of Rs. 8,200/- on 28-11-1946 due to the default of defendant Nishi Kanta Pal.

4. Formal discharge of defendant Nishi Kanta Pal not made until 4-12-1946.

5. The fact that there was a departmental enquiry by the bank.

6. Formal discharge by the bank of defendant Nishi Kanta Pal.

7. That the plaintiff had knowledge in July 1947 of the aforesaid shortages from the defendant bank's letter dated 16-7-1947.

8. The two Government Promissory Notes mentioned in the plaint were assigned to the defendant bank by Rajani Kanta Pal. .

9. The sale of Government Promissory Note No. CA-077157 (formerly numbered 390435) by the defendant bank on 19-11-1947 producing the total proceeds of Rs. 5,037-4-0.

10. The proceeds of the surrender value of the insurance policy of defendant Nishi Kanta Pal amounting to Rs. 306/- in 1948.

11. The outstanding balance of the provident fund of defendant Nishi Kanta Pal is Rs. 294-14-3.

These facts are admitted in writing sighed by counsel on either side.

10. So far as the non-appearing defendant Nishi Kanta Pal is concerned the case against him has been proved by the bank's witnesses I have mentioned. That was necessary because the admission could not cover the non-appearing defendant.

ISSUE NO. 1:

11. On the first issue, therefore, I hold upon admission of the plaintiff, that the defendant Nishi Kanta Pal was responsible for the shortage of the sum of Rs. 8,800/- belonging to the Comilla Banking Corporation while working as its cashier as alleged in paragraph 6 of the written statement of the defendant bank. As against defendant Nishi Kanta Pal himself I hold and find on the evidence of the bank's witnesses Saroj Behari Nandy, Birendra Mohan Mitra and Manindra Bhusan Dutt, which has not been disputed by defendant Nishi Kanta Pal by his appearing before me and cross-examining such evidence, that defendant Nishi Kanta Pal is responsible for the shortage of the sum of Rs. 8,800/-. I therefore answer issue No. 1 in the affirmative.

ISSUE NO. 2:

12. The first part of this issue raises the question whether the defendant bank is entitled toclaim the sum of Rs. 8,800/- from the seconddefendant Nishi Kanta Pal. As I have alreadyfound and held that the bank has proved its casein the written statement by the evidence of itsthree witnesses, which has not been contradictedby the defendant Nishi Kanta Pal, this part ofthe issue must, therefore, be answered in theaffirmative. Nothing appears from the cross-examination of the bank's witnesses by the plaintiff'scounsel to controvert that finding. I thereforehold that the defendant bank is entitled to claimthe sum of Rs. 8,800/- from defendant Nishi KantaPal and answer this part of issue No. 2 in theaffirmative.

13. The second part of this issue is the controversial part and I will discuss it later in this judgment. It is this part of the second issue which raises the question whether the defendant bank is entitled to adjust the sum of Rs. 8,800/- against the securities now claimed by the plaintiff.

ISSUE NO. 3:

14. On the plaintiff's evidence and having regard to the admissions of fact already recorded I hold and find that the plaintiff did have knowledge of the aforesaid shortage in July 1947 and therefore answer issue No. 3 in the affirmative.

ISSUE NO. 4:

15. This issue also can be disposed of briefly The evidence of the bank's witness Manindra Bhusan Dutt establishes the fact that the surrender value of the insurance policy of defendant Nishi Kanta Pal was Rs. 306/- and the further fact that the outstanding balance on the provident fund account, of defendant Nishi Kanta Pal is Rs. 294-14-3. This evidence is uncontradicted so far as the non-appearing defendant Nishi Kanta Pal is concerned and must therefore be accepted as against him. As against the plaintiff these two amounts being the proceeds of the surrender value of the insurance policy and of the provident fund account are admitted by him. Therefore, although defendant Nishi Kanta Pal did not himself pay any part of the shortage of Rs. 8,800/- to the Comilla Banking Corporation, credit on his account must be given for the sum of Rs. 600-14-3, being the total of the two sums of Rs. 306/- and Rs. 294-14-3 and the Bank is entitled to appropriate the same. Deducting this sum of Rs. 600-14-3 from Rs. 8,800/- I find a sum of Rs. 8,199-1-9. which the defendant Nishi Kanta Pal has failed to pay towards the shortage of Rs. 8,800/-. On issue No. 4, therefore, I hold accordingly.

SECOND PART OF ISSUE NO. 2:

16. I will state this part of the issue once again before I proceed to discuss it. It raises the question : Is the defendant bank entitled to adjust the sum of Rs. 8,800/- from the proceeds of the securities deposited with the Comilla Banking Corporation Ltd. as well as from the outstanding balance from the provident fund of the defendant Nishi Kanta Pal? On the part of this issue which relates to the provident fund of the defendant Nishi Kanta Pal. I have already recorded my finding on issue No. 4 which covers it.

17. The real controversy in this suit is raised over this part of issue No. 2 because it concerns the basic claim of the plaintiff. The plaintiff claims return of the securities and the bank resists such claim because it wants such securities to recoup the shortage of Rs. 8,199-1-9.

18. The main argument on this major controversy rests on certain facts which it will be convenient to recapitulate here. This recapitulation is necessary because Mr. Das has raised certain points of law which require appreciation of these facts. . Now the guarantor Rajanr died on 18-4-1945. Defendant Nishi Kanta's first default was in respect of Rs. 600/- on 15-8-1946. His second default in respect of Rs. 400/- was on 25-8-1946. His third default was in respect of Rs. 8,200/- on 28-11-1946. He was relieved of his charge on 29-11-1946 as will appear from Nandi's, evidence contained in answers to questions 52 to 53. The Bank carried out an investigation and departmental enquiry immediately thereafter and formally discharged him from 4-12-1946.

The ground of discharge was that Nishi Kanta failed to make good the shortage of the two sums of Rs. 8,200/- and Rs. 600/- amounting altogether to Rs. 8,800/-. It is necessary to mention here that Nishi Kanta made good the second shortage of Rs. 400/- of 25-11-1946 either on the same day or the day after. The investigation report shows that, he made good the sum of Rs. 400/- on the same day and the evidence of Nandi shows that it was either on the same day or the day after.

19. On these facts Mr. Das for the plaintiff raises his points of law. His argument is that after the first default in respect of Rs. 600/- on 15-8-1946 there was no notice to the plaintiff and the continued employment without notice to the plaintiff, of Nishi Kanta by the Bank in spite of this, default discharged the plaintiff from his obligations under the Security Bond. This argument is repeated in respect of the default of Rs. 400/- by contending that the continued employment of Nishi Kanta by the Bank even after this default without notice to the plaintiff discharged him from his obligations under the Security Bond. Therefore it is contended that the plaintiff is no longer liable to answer the Bank's loss due to the default of Nishi Kanta for the sum of Rs. 8,800/- and that the Bank is not justified in reimbursing its loss from the Government Promissory Notes, deposited as security with the Bank under the Security Bond.

In aid of this argument Mr. Das has relied on a decision of the Lahore High Court reported in -- 'Co-operative Commission Shop Ltd. Chak Jhumra v. Udham Singh', AIR 1944 Lah 424 (A) and on Section 139, Contract Act. The Lahore decision of Harries C. J. and Mahajan J. lays down the well known principle that continued employment of a dishonest servant whose 'dishonesty has been proved or is clear, without notice to the guarantor will discharge the guarantor. Section 139, Contract Act, says that if the creditor does any act which is inconsistent with the rights of the surety or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged.

According to Mr. Das the continued employment of a dishonest servant without notice to the guarantor is inconsistent with the rights of the surety because the surety is thereby required to take a hazard which it may not have been his intention to take under the original guarantee had he known or if it was brought to his notice that the man whose faithful service he was guaranteeing has since been proved to be dishonest.

20. On a careful consideration of this argument I find that neither the facts nor the law justifies it in the present case.

21. A surety's liability for the faithful discharge by another of his duties depends in each case on the exact terms of that guarantee. The exact terms of a particular guarantee are the primary determinants of the scope and liability of the guarantor in each individual case. That is the central fact which must dominate the decision in a particular case whether the surety is liable or not. The surety is not discharged from the liability for the principal debtor's default because the default would not have happened if the creditor had used, all the powers of superintending the performance of the debtor's duty which he could have exercised because the employer of a servant whose due performance of work is guaranteed does not contract with the surety that he will use the utmost diligence in checking the servant's work.

This proposition is supported by- the well known authority of the Mayor of -- 'Kingston-upon-Hull Corporation v. Harding', (1892) 2 QB 494 (B). The reason why I state this proposition is because of the contention made on behalf of the plaintiff that the Bank could have protected itself by more diligence, although I must confess that on the facts nothing has been shown to me which goes to show that the Bank was in any way negligent in exercising its powers of superintendence over the duties performed by Nishi Kanta. I find that far from being negligent the Bank was very diligent and quick indeed to check Nishi Kanta's negligence of duties.

22. I accept without hesitation the proposition of Mr. Das for the plaintiff that if the employer of a servant whose fidelity has been guaranteed continues to employ him even after a proved act of dishonesty without notice to the guarantor the surety is discharged. That is a basic principle implicit in the very nature of a fidelity guarantee. The reason why it is so can be stated briefly. The guarantor in such a case guarantees the fidelity and not the infidelity of the servant. He guarantees the fidelity and ensures the loss against the risk of infidelity and not the fact of infidelity. To begin with, the guarantee for fidelity means that the guarantor says in fact that he knows the fidelity of this man and he will insure the risk of any loss if such a servant commits an ad of infidelity. If the employer -wants to continue a dishonest servant after his dishonesty has been proved then he must give the guarantor notice of the act of infidelity so that the guarantor may get an opportunity to say whether he would continue his guarantee or not for a man whose infidelity has been proved. If he does then the employer can certainly hold the guarantor liable for the subsequent act of infidelity.

But if the guarantor is hot given this opportunity by the employer then the guarantor cannotbe held to his original guarantee because to do sowill be to permit the employer to encourage dishonesty at the cost of the guarantor which willnot only be against all known notions of fairnessbut also be most repugnant to the elementaryconsideration of public policy. It is unnecessaryfor me to discuss in detail the numerous authorities which have settled the law that a surety willbe discharged if the employer of a servant whosefidelity has been guaranteed continues to employhim after a proved act of dishonesty without notice to the guarantor. I will only mention thevery well known decision of -- 'Phillips v. Foxall',(1872) 7 QB 666 (C) in support of that proposition. .

23. The plaintiff's stand on Section 139, Con-tract Act, cannot be maintained. In order to attract that section there must not only be either. an act inconsistent with the rights of the surety or an omission to do an act which it is the creditor's or employer's duty to do but also the impairment of the eventual remedy of the surety against the principal debtors. This impairment of the surety's eventual remedy against the principal debtor is the very crucial factor in this section of the Statute. The concluding words the Section uses are significant 'And the eventual remedy of the surety himself against the principal debtor, is thereby impaired.' These are the qualifying words which qualify the act or omission mentioned in this section. The true construction of the Section 139, Contract Act, in my opinion is that the act or omission must be such as to impair the surety's eventual remedy against the principal debtor before the surety can be held to be discharged. If it does not then the surety is not discharged under Section 139, Contract Act.

24. On this point it is necessary to emphasise that the law in India is not the same as the English Law and therefore appeal to the English cases and authorities is likely to be misleading. The Court of Appeal in -- M. Pogose v. Bank of Bengal', ..3 Cal 174 (D) is a useful authority on this point. The observations of Chief Justice Gerth at pp. 187/8 of that Report being material, I quote

'The execution of the trust deeds by the Banks, having regard to its effect upon the plaintiff's remedies - against Mr. N. P. Pogose was an act inconsistent with the rights of the surety which by the law of England would have discharged him; see -- 'Calvert v. London Dock Co.', (1838) 2 Keen 638 (E); -- 'General Steam Navigation Co., v. Rolf, (1858) 6 CB (NS) 550 (F) and other cases to the same effect in the notes to -- 'Bees v. Berrington', 2 Wh and Tudor's LC 5th Ed. 992 (G). But under this section (Section 139, Contract Act) before the act of the creditor can operate as a discharge, it is necessary to look further and see whether by that act the eventual remedy of the surety against the principal is impaired.'

The observations of Lord Porter in -- 'MahantSingh v. U Ba Yi give the same emphasis where his Lordship says

'Section 139 only applies where the eventual remedy of the surety against the principal debtoris impaired, and, for reasons they have given,their Lordships find nothing in the present casewhich impairs the respondent's remedy againstthe original trustees.'

25. It is here that the plaintiff's whole case fails. There is nothing in evidence before me to show that the plaintiff's eventual remedy against the principal debtor Nishi Kanta has in any way been impaired. But apart from that total absence of evidence on this point which is always a question of fact, the plaintiff, in his this very action sues and is suing the defendant Nishi Kanta Pal. Therefore the plaintiff's own act of suing the principal debtor in this suit itself goes against the plaintiff's contention that his eventual remedy against the principal debtor is impaired. . Indeed the plaintiff is getting his decree against the principal debtor who has not even appeared in this suit to defend himself. I am satisfied that in an action where the surety himself sues the principal debtor thereby proving that his eventual remedy against him is not impaired, he cannot be heard to say that he has been discharged on the ground that his eventual remedy against the principal debtor is impaired.

26. That is the end of the plaintiff's case so far as the defendant Bank is concerned. It is therefore not necessary for me to discuss in detail the facts on which Mr. Das relies and which I recapitulated at the beginning of my discussion of the point. Nevertheless I will briefly notice these facts out of deference to the arguments of Mr. Das for the plaintiff.

27. The default In respect of Rs. 600/- was committed by Nishi Kanta on 15-8-1946. The letter of the Bank Accountant dated 3-9-1946 from Narayangunge to the Manager at the Head Office at Comilla shows that Nishi Kanta was given opportunity to make good this shortage of Rs. 600/-but he being unwilling to do so the suggestion was made that the security deposit on his account should be adjusted, not only in accordance with the Head Office Instructions but also under Rules 1 and 9 of the Bank's Rules which are exhibited in this suit. In fact within 4 or 5 days after the incident the Chief Accountant of the Bank, writes to the Agent at Narayangunge on 20-8-1946 drawing the attention to the shortage of Rs. 600/-saying that the Cashier should be asked to replenish the shortage immediately and failing which the shortage is to be adjusted at once by debiting his service security account with the Head Office.

The second default in respect of Rs. 400/- was-committed on 25-11-1946. Immediately on 26-11-1946-the Deputy Agent's letter to the Manager of the Head Office at Comilla draws attention to this fact. It is true that he says there that it is wise to put another cashier in charge of the Cash instead of Nishi Kanta and suggesting that Nishi Kanta should be transferred to the Bill and Securities Department. The letter ends by saying

'If the amount in question is not realised from him by tomorrow, the sum will be adjusted by debiting his security deposit account to the Head Office.'

Although the Bank thought at that time that it was wise to transfer Nishi Kanta and not to continue him in charge of the Cash because of this default of Rs. 400/-, the prompt act of Nishi Kanta by making good this shortage by paying the sum of Rs. 400/- at least goes to indicate that his dishonesty in respect of this sum is not clearly proved. Within a day after such payment Nishi Kanta committed the default in respect of Rs. 8,200/- on 20-11-1946.

Now these facts clearly distinguish the Lahore decision on which Mr. Das relied. There it was a case of continuous and repeated defaults over three consecutive years 1930, 1931 and 1932 with the Auditors reporting these 'gross breaches of duty' year after year. In the present case before me the whole thing happened in a period of about three months between 15-8-1946 and 28-11-1946, with an incident in between in respect of Rs. 400/- on 25-11-1946 which was in fact made good by Nishi Kanta. In this context I am not prepared to accept that the acts of dishonesty of the servant were so clearly established that his employment for these three months comes within the principle of the employer continuing to employ the servant after proved acts of dishonesty without notice to the surety so as to discharge the surety.

28. The terms of the guarantee at this point may be usefully referred to. The main term of the guarantee stipulates for the liability of the guarantor for

'any dereliction of duty of the said Nishi Kanta Pal or if the Bank suffers any loss or damage-on account of the negligence or carelessness or embezzlement or if he is found guilty by the Directors'.

The guarantor's liability therefore does not arise unless (a) there is dereliction of duty (b) or carelessness or negligence or embezzlement or (c) finding of guilt of Nishikanta by the Directors. These are questions of facts on which the Bank has to be satisfied and sometime must be allowed to the employer Bank to be satisfied about these serious questions of fact of carelessness or negligence or embezzlement or dereliction of duty or finding of guilt.

One other material term is

'I Rajani Kanta Pal further covenant that this Bond shall commence to have effect from 24-4-1939 and snail continue in force until, the said, Nishi Kanta Pal will have received a formal discharge of ail liability from the Comilla Banking Corporation Ltd. and its successors and assigns and shall have received this Bond from the Bank.'

Now the formal discharge came on 4-12-1946 and by the express terms of this clause, until this formal discharge the Bond continues to have effect. Alter all a Bank cannot dismiss its employee merely on suspicion or merely because some shortage in the cash of which he was in charge is reported without investigation. It has to wait for investigation and it has to find out for itself what the actual fact is. It cannot act on mere suspicion or unverified reports or without giving an opportunity to its servant to be heard in his favour. The continued employment of a servant without notice to surety in order to discharge the surety must be after the creditor or employer has proof of the servant's acts of dishonesty and not merely suspicions or reports about them. The theory is a theory not of suspicion but of satisfaction. A contract of guarantee unlike a contract of insurance is not one of uberrimae fidei but a contract strictissima juris, (16 Halsbury, Hailsham Edition, page 59, Article 52).

By its letter of 4-12-1946 the Bank intimated to Nishi Kanta Pal.

'As a result of the investigation of the shortage of Rs. 8,200/- only in the closing cash balance of 28-11-1946 you had been held responsible for the said shortage. You are therefore requested to make good the above shortage along with the shortage of Rs. 600/- made by you previously on 15-11-1946. ........ If you fail to do so within Friday next, the amount will be adjusted from your security deposit account without further reference to you.'

Upon his failure to do so the Bank intimated to him again on 9-12-1946 that

'the whole of this amount will be realised from the sale proceeds of your security lodged with the Bank (Government Promissory Notes for' Rs. 10,000/-) and from your Provident Fund, outstanding pay, if any, and the amount due on your Life Policy.'

29. It is unnecessary for me to pursue these facts any further for the simple reason that under the law under Section 139, Contract Act, the plaintiff's action must fail on the ground that his eventual remedy against defendant Nishi Kanta has not in any way been impaired. I will only record one more fact here that defendant Nishi Kanta Pal is helping the plaintiff with documents for which the plaintiff's contradictory evidence in answers to Question 62 and Q. 99 can be compared and according to plaintiff's answer to questions 9/-103 he is in close touch with Nishi Kanta or his mother.

30. For these reasons I therefore answer this part of the second issue in the affirmative and I hold that the defendant Bank is entitled to adjust the sum of Rs. 8,800/- from the proceeds of the securities deposited with the Comilla Banking Corporation Ltd. as well as from the outstanding balance of the Provident Fund of the second defendant Nishi Kanta Pal.

ISSUE NO. 5:

31. This issue -concerns the reliefs to which the plaintiff is entitled in this suit.

32. As against the defendant Nishi Kanta Pal. on the evidence and facts as proved before me the plaintiff must have judgment for the sum of Rs. 8,199-1-9 (alter giving create for the proceeds of the Provident Fund account and Insurance Policy of the defendant Nishi Kanta Pal) with, interest and costs. The plaintiff is entitled to both interim interest and interest on judgment on this sum as against the defendant Nishi Kama Pal which I allow at six per cent per annum.

33. As against the defendant Bank the plaintiff's action must fail on the grounds I have already stated and on the basis of my findings on the above issues which I have recorded. Now the fact is that the Government Promissory Note, a part of the total security under the Security Bond, being No. CA-077157 (formerly numbered. 390435) has already been sold by the defendant Bank on 19-11-1947 producing an yield of Rs. 5,037-4-0. I hold that the defendant Bank was justified in selling this Promissory Note and it should be allowed to appropriate the proceeds thereof towards its claim for Rs. 8,199-1-9. The balance of Rs. 3,161-13-9 being the difference between Rs. 8,199-1-9 and Rs. 5,037-4-0, the Bank is entitled to recoup from the other remaining Government Promissory Note. The Bank has not succeeded in converting this other Government Promissory Note because of the defect of the endorsement thereon. This Government Promissory Note was endorsed in favour of the Comilla Banking Corporation Ltd. but in the renewal cage in the place of the holder's name Rajani signed his own name though the Comilla Banking Corporation Ltd. was the holder. Attempt to convert it through the Reserve Bank has not yet succeeded.

In fact this Promissory Note was sent to Rajani for rectification of the endorsement but unfortunately there again instead of making the correct endorsement Rajani committed a fresh mistake by signing over again, after cancelling his first signature, inside that cage instead of in the margin where there is an indication to put the signature. After Rajani's death the rectification was no longer possible. The Bank also tried thereafter to cash it through the Public Debt Office but the Bank has been required to produce a Succession Certificate by the heirs of the deceased and a confirmation by them of the endorsement made by Rajani. In this connection reference to the letters of the 12th August, the 20th August and 21st August 1946 was made to show that neither defendant Nishi Kanta nor the plaintiff supplied the Succession Certificate to the Bank. All this evidence is to be found in the deposition of Manindra Bhusan Dutt, the Chief Accountant of the Comilla Banking Corporation Ltd. in answers to questions 18 to 36. The result therefore is the Bank is holding this Promissory Note but has not been able to cash it yet.

According to my findings the Bank is entitled to hold the same for the purpose of ultimately realising the balance of its dues from the proceeds thereof. No evidence has been given before me to prove that the plaintiff is entitled to any interest on these Government Promissory Notes and there is no evidence before me as to what interest the Bank had drawn on these Notes. In any event there is no evidence before me to show that the Bank did not pay any interest on these Government Promissory Notes to Rajani which he reserved under the Security Bond and which was payable to Rajani. In fact the Bank's suggestion to the plaintiff was clear; the books of account it disclosed showed payment of all interest to Rajani up to July 1945 in respect of the first Government Promissory Note. The plaintiff has not produced his books of account and he has admitted he cannot be definite or certain about his father Rajani's drawings of interest. This evidence will be found in plaintiff's answers to questions 90-92. Plaintiff's claim therefore for the recovery of these Government Promissory Notes and for interest thereon as against the defendant Bank must fail. I therefore dismiss the plaintiff's suit as against the defendant Bank with costs.

34. I therefore answer Issue No. 5 accordingly by decreeing the plaintiff's claim against defendant Nishi Kanta Pal for Rs. 8,199-1-9 with costs and by dismissing the plaintiff's suit as against the defendant Bank with costs.

35. If the sale proceeds of the second Government Promissory Note yield (more?) than Rs.3,151-13-9 and the costs awarded hereby to thedefendant Bank, then the Bank will hand oversuch surplus to the plaintiff. Certified for twoCounsel.


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