In addressing the above rival submission at the cost of
repeatation for better appreciation, it may be stated that the so called
cash credit facility holder, Madhusudan being dead, his liability towards
the so called cash credit facility as is said to have been availed by him
from the plaintiff-Bank is now sought to be fastened upon the defendant
assigning him in the position as that of a guarantor.
Undeniably, the plaintiff-Bank neither proved any loan
document i.e. promissory note, nor any such agreement for said cash
credit facility said to have been availed of by Madhusudan from the
plaintiff-Bank nor the agreement of the hypothecation being executed by
Madhusudan Pansari. The document which the bank has proved is the
statement of account certified under Banker’s Book of Evidence Act.
Thus the factum that Madhusudan had availed of any such cash credit
facility from the plaintiff-Bank has not been established. So when the
plaintiff-Bank has not proved the factum of lending of money by way of
cash credit facility to said Madhusudan, there arises no question of any
person coming to be saddled with the liability on that score merely
basing upon the statement of the account that too on being said as a
guarantor. There being no relationship of creditor and debtor between
the plaintiff-Bank and Madhusudan, the creation of relationship putting
a person in the position of a guarantor / surety does not arise. This
assignment of position of a guarantor to the defendant is based upon the
relationship between the person who has taken the cash credit facility
standing as the debtor which stands as the basic precondition so as to be
satisfied. Then only the question of the defendant standing as guarantor
as the surety in securing the payment of dues of the plaintiff- Bank
remaining unpaid by Madhusudan for its recovery on account of default
of Madhusudan would arise.
The law is quite well settled that mere statement of
account is not sufficient to charge the person of the liability unless of
course with the relationship first, the liability if on that score is accepted
by giving a nod to the correctness of the entry of account. This is not the
case here. In every such monetary transaction, the relationship between
the parties must be established first with the availment of the facility and
thereafter the accounts relating to the said transaction as between the
parties as maintained in due course of business when is proved would go
to determine the rights and liability of the parties to the transaction. The
statement of the account has been filed with the plaint. The correctness
of the same has been challenged with the denial of relationship between
the plaintiff-bank and Madhusudan and thereafter the position of this
defendant as assigned by the Bank as a guarantor. When it is stated in
the plaint that Madhusudan has executed a promissory note, no such
pro note has been proved in the case. P.W.1 on behalf of the Bank has
merely gone to depose that the bank record reveals about the advance of
cash credit facility to the extent of Rs.50,000/- to Madhusudan on
21.3.1971 according to his request. Evidence of P.W.1 being read with
the relevant pleading in the plaint, it is seen that the agreement of
hypothecation also is said to have been executed in the year 1976
whereas facility is said to have been so advanced on 21.3.78 which is one
year and four months after the execution of the so called agreement of
hypothecation. Those documents are not going to establish the
advancement of the cash credit facility to Madhusudan and about such
other documents, it has neither been spoken by P.W.1 nor those have
even been produced and proved in accordance with law. Said documents
have not seen the light of the day. The statement of account filed by the
bank containing the certificate as required under section 3 of the
Banker’s Book of Evidence Act undoubtedly raises a presumption with
regard to correctness of the statement of account until so rebutted by the
adversary. But the same itself is not taken as the document from which
the court can got to hold that the plaintiff-Bank’s case as regards the
advancement of cash credit facility to Madhusudan and the factum as
stated that the defendant stood as guarantor / surety for the same by
tendering the title deeds with the plaintiff-Bank in creating with
equitable mortgage for the purpose of repayment of loan in case of
default by mortgaged has been so established. Mere entry in the books of
account even though maintained therein the Bank in course of official
transaction and by those in due discharge of official duty cannot be
taken as enough and sufficient or the basis so as to fasten the liability
upon the (so called debtor) or a person sought to be proceeded with in
connection with said transactions and dues recoverable by the creditor
being arraigned as a guarantor as to have been given his property as
equitable mortgage through deposit of title deeds for recovery of said
outstanding dues due to default by the so called debtor and in the
absence of proof of any documents laying the foundations in creating the
relationship between parties.
HIGH COURT OF ORISSA: CUTTACK.
S.A. NO.240 of 1998
U.Co.Bank, Bolangir V Bipin Bihari Pansari
PRESENT:
SHRI JUSTICE D.DASH
Citation: AIR 2017 (NOC)776 Orissa
Date of hearing-13.04.2017 : Date of judgment- 19.04.2017
1. The appellant in this second appeal questions the
judgment and decree passed by learned Subordinate Judge, Balangir (as
then) in T.S. No. 5 of 1983 confirmed by learned Addl. District Judge,
Balangir in the first appeal under section 96 of the Code of Civil
Procedure which stood numbered as Title Appeal No. 71/57 of 1991-92.2
The appellant is the unsuccessful plaintiff as also the
appellant in the first appeal. The suit has been filed by the appellantBank
as the plaintiff for recovery of a sum of Rs. 85,435.32 by selling of
the land described in the schedule of the plaint as mortgaged before it by
the respondent-defendant, the guarantor for the cash credit facility
granted in favour of Madhusudan Pansari, running the business in the
name and style of M/s. Sarita Clothes Store.
2. For the sake of convenience, in order to bring in clarity and avoid
confusion, the parties hereinafter have been referred to as they have
been arraigned in the trial court.
3. The plaintiff-Bank’s case is that cash credit facility has been
granted to the extent and limit of Rs.50,000/- to one Madhusudan
Pansari with minimum interest of 16.5% per annum for the purpose of
cloth business run in the name and style of M/s. Sarita Clothes Store.
Said Madhusudan Pansari is thus said to be the debtor. This defendant
for the purpose of said cash credit facility is said to have stood as
guarantor. It is stated that the defendant had mortgaged the property
described in the schedule of the plaint as collateral security for smooth
recovery of the outstanding dues on account of said cash credit facility to
Madhu Sudan, in case of default in due payment by the debtor which in
the case has been done.
It is further stated that the mortgage was an
equitable one by deposit of the title deeds by the defendant with the
plaintiff. The stocks of the cloth store also stood hypothecated. The
allegation is also levelled that in violation of agreement of hypothecation,
cash credit facility holder namely Madhu Sudan sold away the entire
stock hypothecated without the knowledge of the plaintiff. Madhu Sudan
died on 7.6.82 and the business came to total close.
4. The defendant in the written statement denied the grant of
any cash credit facility by the plaintiff-Bank in favour of Madhusudan
Pansari and that the same to have been so availed of by said
Madhusudan. It is stated that the defendant had never made a request
for the purpose. The execution of pro-note and agreement of
hypothecation by Madhusudan in favour of the bank have also been
denied. It is next stated in the alternative that even if there remains any
promissory note, the same is invalid in the eye of law.
It is stated that the defendant has never executed any such
deed of guarantee in favour of the plaintiff-Bank and had simply lent his
signatures on some blank forms when no such cash credit facility had
been availed of by Madhusudan. Thus it is said that the question of
defendant standing as guarantor does not arise. The deed of guarantee if
at all is there is therefore said to be of no legal effect and consequence.
The allegation against the credit facility holder, Madhusudan Pansari is
also defended by this defendant stating that said Madhusudan had
never sold the stocks of the cloth store and those were actually destroyed
when the shop room got gutted with fire on 28.9.90 which was to the
knowledge of the plaintiff-Bank. It is however again stated that the
stocks of that cloth store have been insured by the plaintiff-Bank and
they have received the compensation for destruction of the stocks.
This defendant is the elder brother of Madhusudan Pansari
and claims to have received no such assets of Madhusudan after his
death in presence of his other successors.
5. The trial court on the above rival pleadings has framed in
total 12 issues. The crucial finding has been rendered on issue no.4
which has ultimately led to the dismissal of the suit.
Finding stands that the plaintiff-Bank has failed to prove
that Madhusudan had been advanced with any such sum by the
plaintiff-Bank having availed the cash credit facility. It has also been the
finding that there is no proof of any guarantee being given by the present
defendant undertaking any such liability as a guarantor to the said
financial transaction between the plaintiff-Bank and Madhusudan for its
payment in case of default. It has further been held that the materials
are not available to conclude that the defendant was the heir of
Madhusudan and has thus succeeded to his property. The plaintiff is
found to have not even proved the promissory note and any such 5
agreement with Madhusudan for the said advancement of money
in the form of cash credit facility. It is stated that the only document as
proved by the plaintiff-Bank being the certified copy of a partial
statement of account, the same is wholly insufficient to prove the cash
credit transaction between the plaintiff-Bank and Madhusudan; so also
the position of defendant as the guarantor to the said financial
transaction by tendering his property described in schedule of the plaint
in equitable mortgage by depositing the title deeds has also been held in
the negative as not established through acceptable evidence.
6. The present second appeal has been admitted by order dated
9.2.2000, formulating the substantial questions of law which are the
followings:-
“(i) As to whether the statement of accounts which are
exact extract of the Books of Accounts maintained in
usual and ordinary course of business by the Bank
should be construed to be prima facie correct and are
protected under the provisions of Bankers Book of
Evidence Act (Act XVIII of 1891)?
(ii) As to whether the learned court i.e., the Appellate
court committed an error in not disposing of the
petition for additional evidence first before hearing the
appeal on merit?”
7. Learned counsel for the appellant submits that in the first
appeal, this appellant had filed the petition under order 41 rule 27 of the 6
Code and the lower appellate court without deciding the petition first
has gone to decide the same while disposing the appeal by finally
rejecting it. If the document which is said to be letter of guarantee would
have been accepted as additional evidence, the finding of the trial court
on that score against the plaintiff-Bank ought to have been held to be
unsustainable. It is stated that the first appellate court ought to have
allowed the same since its non-proof was on account of inadvertent
mistake and therefore the said document had not been proved during
trial and marked as an Exhibit. He further submits that even if it is said
to have been rightly taken up for being decided after hearing of the
appeal and at the time of its disposal, the first appellate court ought to
have remanded the suit to the trial court for its disposal afresh by
affording the opportunity to the plaintiff-Bank in proving the said
document. He also next contends that based on the statement of
account which has the due certification as required under the Banker’s
Book of Evidence Act by the competent officer as per law, the court’s
below ought to have found themselves in no difficulty in fastening the
liability upon the defendant who is the guarantor having stood as the
surety for payment of overdue amount to the Bank under that cash
credit facility as had been availed of by Madhusudan.
8. Learned counsel for the respondent on the contrary submits
that when the suit has been filed after the death of the so called debtor in
seeking the decree against the defendant on the foundation that he is
the guarantor of the cash credit facility to Madhusudan for running his
cloth store and business, non-production and non-proving of letter of
guarantee all through the trial under no circumstance can be termed as
inadvertent omission. According to him, it has to be held that during
trial, said document was not in existence and that has been somehow
managed to be so created for the purpose at a later stage after disposal of
the suit for which that had not been proved.
He also submits that several opportunities have been given
to the plaintiff-Bank in that regard and they have intentionally avoided in
placing and proving any such letter of guarantee. It is again stated that
said letter of guarantee even if would have been accepted as additional
evidence could not have been so taken to fasten the liability upon the
defendant as guarantor since the very factum of advancement of money
under the cash credit facility by the plaintiff-Bank in favour of
Madhususan Pansari has not been proved.
9. In addressing the above rival submission at the cost of
repeatation for better appreciation, it may be stated that the so called
cash credit facility holder, Madhusudan being dead, his liability towards
the so called cash credit facility as is said to have been availed by him
from the plaintiff-Bank is now sought to be fastened upon the defendant
assigning him in the position as that of a guarantor.
Undeniably, the plaintiff-Bank neither proved any loan
document i.e. promissory note, nor any such agreement for said cash
credit facility said to have been availed of by Madhusudan from the
plaintiff-Bank nor the agreement of the hypothecation being executed by
Madhusudan Pansari. The document which the bank has proved is the
statement of account certified under Banker’s Book of Evidence Act.
Thus the factum that Madhusudan had availed of any such cash credit
facility from the plaintiff-Bank has not been established. So when the
plaintiff-Bank has not proved the factum of lending of money by way of
cash credit facility to said Madhusudan, there arises no question of any
person coming to be saddled with the liability on that score merely
basing upon the statement of the account that too on being said as a
guarantor. There being no relationship of creditor and debtor between
the plaintiff-Bank and Madhusudan, the creation of relationship putting
a person in the position of a guarantor / surety does not arise. This
assignment of position of a guarantor to the defendant is based upon the
relationship between the person who has taken the cash credit facility
standing as the debtor which stands as the basic precondition so as to be
satisfied. Then only the question of the defendant standing as guarantor
as the surety in securing the payment of dues of the plaintiff- Bank
remaining unpaid by Madhusudan for its recovery on account of default
of Madhusudan would arise.
The law is quite well settled that mere statement of
account is not sufficient to charge the person of the liability unless of
course with the relationship first, the liability if on that score is accepted
by giving a nod to the correctness of the entry of account. This is not the
case here. In every such monetary transaction, the relationship between
the parties must be established first with the availment of the facility and
thereafter the accounts relating to the said transaction as between the
parties as maintained in due course of business when is proved would go
to determine the rights and liability of the parties to the transaction. The
statement of the account has been filed with the plaint. The correctness
of the same has been challenged with the denial of relationship between
the plaintiff-bank and Madhusudan and thereafter the position of this
defendant as assigned by the Bank as a guarantor. When it is stated in
the plaint that Madhusudan has executed a promissory note, no such
pro note has been proved in the case. P.W.1 on behalf of the Bank has
merely gone to depose that the bank record reveals about the advance of
cash credit facility to the extent of Rs.50,000/- to Madhusudan on
21.3.1971 according to his request. Evidence of P.W.1 being read with
the relevant pleading in the plaint, it is seen that the agreement of
hypothecation also is said to have been executed in the year 1976
whereas facility is said to have been so advanced on 21.3.78 which is one
year and four months after the execution of the so called agreement of
hypothecation. Those documents are not going to establish the
advancement of the cash credit facility to Madhusudan and about such
other documents, it has neither been spoken by P.W.1 nor those have
even been produced and proved in accordance with law. Said documents
have not seen the light of the day. The statement of account filed by the
bank containing the certificate as required under section 3 of the
Banker’s Book of Evidence Act undoubtedly raises a presumption with
regard to correctness of the statement of account until so rebutted by the
adversary. But the same itself is not taken as the document from which
the court can got to hold that the plaintiff-Bank’s case as regards the
advancement of cash credit facility to Madhusudan and the factum as
stated that the defendant stood as guarantor / surety for the same by
tendering the title deeds with the plaintiff-Bank in creating with
equitable mortgage for the purpose of repayment of loan in case of
default by mortgaged has been so established. Mere entry in the books of
account even though maintained therein the Bank in course of official
transaction and by those in due discharge of official duty cannot be
taken as enough and sufficient or the basis so as to fasten the liability
upon the (so called debtor) or a person sought to be proceeded with in
connection with said transactions and dues recoverable by the creditor
being arraigned as a guarantor as to have been given his property as
equitable mortgage through deposit of title deeds for recovery of said
outstanding dues due to default by the so called debtor and in the
absence of proof of any documents laying the foundations in creating the
relationship between parties.
10. For the aforesaid discussion and reasons, the above
substantial questions of law do not receive their answer in favour of the
case of the plaintiff-Bank for successful culmination of this second
appeal in upsetting the concurrent findings. In the above premises, the
judgments and decrees passed by the courts below in finally dismissing
the suit filed by the plaintiff-Bank do get herewith the seal of approval.
11. Resultantly, the appeal fails. There shall however be no order
as to cost.
….………………
D.Dash, J.
Orissa High Court, Cuttack,
Dated the day of April, 2017/Aswini
Print Page
repeatation for better appreciation, it may be stated that the so called
cash credit facility holder, Madhusudan being dead, his liability towards
the so called cash credit facility as is said to have been availed by him
from the plaintiff-Bank is now sought to be fastened upon the defendant
assigning him in the position as that of a guarantor.
Undeniably, the plaintiff-Bank neither proved any loan
document i.e. promissory note, nor any such agreement for said cash
credit facility said to have been availed of by Madhusudan from the
plaintiff-Bank nor the agreement of the hypothecation being executed by
Madhusudan Pansari. The document which the bank has proved is the
statement of account certified under Banker’s Book of Evidence Act.
Thus the factum that Madhusudan had availed of any such cash credit
facility from the plaintiff-Bank has not been established. So when the
plaintiff-Bank has not proved the factum of lending of money by way of
cash credit facility to said Madhusudan, there arises no question of any
person coming to be saddled with the liability on that score merely
basing upon the statement of the account that too on being said as a
guarantor. There being no relationship of creditor and debtor between
the plaintiff-Bank and Madhusudan, the creation of relationship putting
a person in the position of a guarantor / surety does not arise. This
assignment of position of a guarantor to the defendant is based upon the
relationship between the person who has taken the cash credit facility
standing as the debtor which stands as the basic precondition so as to be
satisfied. Then only the question of the defendant standing as guarantor
as the surety in securing the payment of dues of the plaintiff- Bank
remaining unpaid by Madhusudan for its recovery on account of default
of Madhusudan would arise.
The law is quite well settled that mere statement of
account is not sufficient to charge the person of the liability unless of
course with the relationship first, the liability if on that score is accepted
by giving a nod to the correctness of the entry of account. This is not the
case here. In every such monetary transaction, the relationship between
the parties must be established first with the availment of the facility and
thereafter the accounts relating to the said transaction as between the
parties as maintained in due course of business when is proved would go
to determine the rights and liability of the parties to the transaction. The
statement of the account has been filed with the plaint. The correctness
of the same has been challenged with the denial of relationship between
the plaintiff-bank and Madhusudan and thereafter the position of this
defendant as assigned by the Bank as a guarantor. When it is stated in
the plaint that Madhusudan has executed a promissory note, no such
pro note has been proved in the case. P.W.1 on behalf of the Bank has
merely gone to depose that the bank record reveals about the advance of
cash credit facility to the extent of Rs.50,000/- to Madhusudan on
21.3.1971 according to his request. Evidence of P.W.1 being read with
the relevant pleading in the plaint, it is seen that the agreement of
hypothecation also is said to have been executed in the year 1976
whereas facility is said to have been so advanced on 21.3.78 which is one
year and four months after the execution of the so called agreement of
hypothecation. Those documents are not going to establish the
advancement of the cash credit facility to Madhusudan and about such
other documents, it has neither been spoken by P.W.1 nor those have
even been produced and proved in accordance with law. Said documents
have not seen the light of the day. The statement of account filed by the
bank containing the certificate as required under section 3 of the
Banker’s Book of Evidence Act undoubtedly raises a presumption with
regard to correctness of the statement of account until so rebutted by the
adversary. But the same itself is not taken as the document from which
the court can got to hold that the plaintiff-Bank’s case as regards the
advancement of cash credit facility to Madhusudan and the factum as
stated that the defendant stood as guarantor / surety for the same by
tendering the title deeds with the plaintiff-Bank in creating with
equitable mortgage for the purpose of repayment of loan in case of
default by mortgaged has been so established. Mere entry in the books of
account even though maintained therein the Bank in course of official
transaction and by those in due discharge of official duty cannot be
taken as enough and sufficient or the basis so as to fasten the liability
upon the (so called debtor) or a person sought to be proceeded with in
connection with said transactions and dues recoverable by the creditor
being arraigned as a guarantor as to have been given his property as
equitable mortgage through deposit of title deeds for recovery of said
outstanding dues due to default by the so called debtor and in the
absence of proof of any documents laying the foundations in creating the
relationship between parties.
HIGH COURT OF ORISSA: CUTTACK.
S.A. NO.240 of 1998
U.Co.Bank, Bolangir V Bipin Bihari Pansari
PRESENT:
SHRI JUSTICE D.DASH
Citation: AIR 2017 (NOC)776 Orissa
Date of hearing-13.04.2017 : Date of judgment- 19.04.2017
1. The appellant in this second appeal questions the
judgment and decree passed by learned Subordinate Judge, Balangir (as
then) in T.S. No. 5 of 1983 confirmed by learned Addl. District Judge,
Balangir in the first appeal under section 96 of the Code of Civil
Procedure which stood numbered as Title Appeal No. 71/57 of 1991-92.2
The appellant is the unsuccessful plaintiff as also the
appellant in the first appeal. The suit has been filed by the appellantBank
as the plaintiff for recovery of a sum of Rs. 85,435.32 by selling of
the land described in the schedule of the plaint as mortgaged before it by
the respondent-defendant, the guarantor for the cash credit facility
granted in favour of Madhusudan Pansari, running the business in the
name and style of M/s. Sarita Clothes Store.
2. For the sake of convenience, in order to bring in clarity and avoid
confusion, the parties hereinafter have been referred to as they have
been arraigned in the trial court.
3. The plaintiff-Bank’s case is that cash credit facility has been
granted to the extent and limit of Rs.50,000/- to one Madhusudan
Pansari with minimum interest of 16.5% per annum for the purpose of
cloth business run in the name and style of M/s. Sarita Clothes Store.
Said Madhusudan Pansari is thus said to be the debtor. This defendant
for the purpose of said cash credit facility is said to have stood as
guarantor. It is stated that the defendant had mortgaged the property
described in the schedule of the plaint as collateral security for smooth
recovery of the outstanding dues on account of said cash credit facility to
Madhu Sudan, in case of default in due payment by the debtor which in
the case has been done.
It is further stated that the mortgage was an
equitable one by deposit of the title deeds by the defendant with the
plaintiff. The stocks of the cloth store also stood hypothecated. The
allegation is also levelled that in violation of agreement of hypothecation,
cash credit facility holder namely Madhu Sudan sold away the entire
stock hypothecated without the knowledge of the plaintiff. Madhu Sudan
died on 7.6.82 and the business came to total close.
4. The defendant in the written statement denied the grant of
any cash credit facility by the plaintiff-Bank in favour of Madhusudan
Pansari and that the same to have been so availed of by said
Madhusudan. It is stated that the defendant had never made a request
for the purpose. The execution of pro-note and agreement of
hypothecation by Madhusudan in favour of the bank have also been
denied. It is next stated in the alternative that even if there remains any
promissory note, the same is invalid in the eye of law.
It is stated that the defendant has never executed any such
deed of guarantee in favour of the plaintiff-Bank and had simply lent his
signatures on some blank forms when no such cash credit facility had
been availed of by Madhusudan. Thus it is said that the question of
defendant standing as guarantor does not arise. The deed of guarantee if
at all is there is therefore said to be of no legal effect and consequence.
The allegation against the credit facility holder, Madhusudan Pansari is
also defended by this defendant stating that said Madhusudan had
never sold the stocks of the cloth store and those were actually destroyed
when the shop room got gutted with fire on 28.9.90 which was to the
knowledge of the plaintiff-Bank. It is however again stated that the
stocks of that cloth store have been insured by the plaintiff-Bank and
they have received the compensation for destruction of the stocks.
This defendant is the elder brother of Madhusudan Pansari
and claims to have received no such assets of Madhusudan after his
death in presence of his other successors.
5. The trial court on the above rival pleadings has framed in
total 12 issues. The crucial finding has been rendered on issue no.4
which has ultimately led to the dismissal of the suit.
Finding stands that the plaintiff-Bank has failed to prove
that Madhusudan had been advanced with any such sum by the
plaintiff-Bank having availed the cash credit facility. It has also been the
finding that there is no proof of any guarantee being given by the present
defendant undertaking any such liability as a guarantor to the said
financial transaction between the plaintiff-Bank and Madhusudan for its
payment in case of default. It has further been held that the materials
are not available to conclude that the defendant was the heir of
Madhusudan and has thus succeeded to his property. The plaintiff is
found to have not even proved the promissory note and any such 5
agreement with Madhusudan for the said advancement of money
in the form of cash credit facility. It is stated that the only document as
proved by the plaintiff-Bank being the certified copy of a partial
statement of account, the same is wholly insufficient to prove the cash
credit transaction between the plaintiff-Bank and Madhusudan; so also
the position of defendant as the guarantor to the said financial
transaction by tendering his property described in schedule of the plaint
in equitable mortgage by depositing the title deeds has also been held in
the negative as not established through acceptable evidence.
6. The present second appeal has been admitted by order dated
9.2.2000, formulating the substantial questions of law which are the
followings:-
“(i) As to whether the statement of accounts which are
exact extract of the Books of Accounts maintained in
usual and ordinary course of business by the Bank
should be construed to be prima facie correct and are
protected under the provisions of Bankers Book of
Evidence Act (Act XVIII of 1891)?
(ii) As to whether the learned court i.e., the Appellate
court committed an error in not disposing of the
petition for additional evidence first before hearing the
appeal on merit?”
7. Learned counsel for the appellant submits that in the first
appeal, this appellant had filed the petition under order 41 rule 27 of the 6
Code and the lower appellate court without deciding the petition first
has gone to decide the same while disposing the appeal by finally
rejecting it. If the document which is said to be letter of guarantee would
have been accepted as additional evidence, the finding of the trial court
on that score against the plaintiff-Bank ought to have been held to be
unsustainable. It is stated that the first appellate court ought to have
allowed the same since its non-proof was on account of inadvertent
mistake and therefore the said document had not been proved during
trial and marked as an Exhibit. He further submits that even if it is said
to have been rightly taken up for being decided after hearing of the
appeal and at the time of its disposal, the first appellate court ought to
have remanded the suit to the trial court for its disposal afresh by
affording the opportunity to the plaintiff-Bank in proving the said
document. He also next contends that based on the statement of
account which has the due certification as required under the Banker’s
Book of Evidence Act by the competent officer as per law, the court’s
below ought to have found themselves in no difficulty in fastening the
liability upon the defendant who is the guarantor having stood as the
surety for payment of overdue amount to the Bank under that cash
credit facility as had been availed of by Madhusudan.
8. Learned counsel for the respondent on the contrary submits
that when the suit has been filed after the death of the so called debtor in
seeking the decree against the defendant on the foundation that he is
the guarantor of the cash credit facility to Madhusudan for running his
cloth store and business, non-production and non-proving of letter of
guarantee all through the trial under no circumstance can be termed as
inadvertent omission. According to him, it has to be held that during
trial, said document was not in existence and that has been somehow
managed to be so created for the purpose at a later stage after disposal of
the suit for which that had not been proved.
He also submits that several opportunities have been given
to the plaintiff-Bank in that regard and they have intentionally avoided in
placing and proving any such letter of guarantee. It is again stated that
said letter of guarantee even if would have been accepted as additional
evidence could not have been so taken to fasten the liability upon the
defendant as guarantor since the very factum of advancement of money
under the cash credit facility by the plaintiff-Bank in favour of
Madhususan Pansari has not been proved.
9. In addressing the above rival submission at the cost of
repeatation for better appreciation, it may be stated that the so called
cash credit facility holder, Madhusudan being dead, his liability towards
the so called cash credit facility as is said to have been availed by him
from the plaintiff-Bank is now sought to be fastened upon the defendant
assigning him in the position as that of a guarantor.
Undeniably, the plaintiff-Bank neither proved any loan
document i.e. promissory note, nor any such agreement for said cash
credit facility said to have been availed of by Madhusudan from the
plaintiff-Bank nor the agreement of the hypothecation being executed by
Madhusudan Pansari. The document which the bank has proved is the
statement of account certified under Banker’s Book of Evidence Act.
Thus the factum that Madhusudan had availed of any such cash credit
facility from the plaintiff-Bank has not been established. So when the
plaintiff-Bank has not proved the factum of lending of money by way of
cash credit facility to said Madhusudan, there arises no question of any
person coming to be saddled with the liability on that score merely
basing upon the statement of the account that too on being said as a
guarantor. There being no relationship of creditor and debtor between
the plaintiff-Bank and Madhusudan, the creation of relationship putting
a person in the position of a guarantor / surety does not arise. This
assignment of position of a guarantor to the defendant is based upon the
relationship between the person who has taken the cash credit facility
standing as the debtor which stands as the basic precondition so as to be
satisfied. Then only the question of the defendant standing as guarantor
as the surety in securing the payment of dues of the plaintiff- Bank
remaining unpaid by Madhusudan for its recovery on account of default
of Madhusudan would arise.
The law is quite well settled that mere statement of
account is not sufficient to charge the person of the liability unless of
course with the relationship first, the liability if on that score is accepted
by giving a nod to the correctness of the entry of account. This is not the
case here. In every such monetary transaction, the relationship between
the parties must be established first with the availment of the facility and
thereafter the accounts relating to the said transaction as between the
parties as maintained in due course of business when is proved would go
to determine the rights and liability of the parties to the transaction. The
statement of the account has been filed with the plaint. The correctness
of the same has been challenged with the denial of relationship between
the plaintiff-bank and Madhusudan and thereafter the position of this
defendant as assigned by the Bank as a guarantor. When it is stated in
the plaint that Madhusudan has executed a promissory note, no such
pro note has been proved in the case. P.W.1 on behalf of the Bank has
merely gone to depose that the bank record reveals about the advance of
cash credit facility to the extent of Rs.50,000/- to Madhusudan on
21.3.1971 according to his request. Evidence of P.W.1 being read with
the relevant pleading in the plaint, it is seen that the agreement of
hypothecation also is said to have been executed in the year 1976
whereas facility is said to have been so advanced on 21.3.78 which is one
year and four months after the execution of the so called agreement of
hypothecation. Those documents are not going to establish the
advancement of the cash credit facility to Madhusudan and about such
other documents, it has neither been spoken by P.W.1 nor those have
even been produced and proved in accordance with law. Said documents
have not seen the light of the day. The statement of account filed by the
bank containing the certificate as required under section 3 of the
Banker’s Book of Evidence Act undoubtedly raises a presumption with
regard to correctness of the statement of account until so rebutted by the
adversary. But the same itself is not taken as the document from which
the court can got to hold that the plaintiff-Bank’s case as regards the
advancement of cash credit facility to Madhusudan and the factum as
stated that the defendant stood as guarantor / surety for the same by
tendering the title deeds with the plaintiff-Bank in creating with
equitable mortgage for the purpose of repayment of loan in case of
default by mortgaged has been so established. Mere entry in the books of
account even though maintained therein the Bank in course of official
transaction and by those in due discharge of official duty cannot be
taken as enough and sufficient or the basis so as to fasten the liability
upon the (so called debtor) or a person sought to be proceeded with in
connection with said transactions and dues recoverable by the creditor
being arraigned as a guarantor as to have been given his property as
equitable mortgage through deposit of title deeds for recovery of said
outstanding dues due to default by the so called debtor and in the
absence of proof of any documents laying the foundations in creating the
relationship between parties.
10. For the aforesaid discussion and reasons, the above
substantial questions of law do not receive their answer in favour of the
case of the plaintiff-Bank for successful culmination of this second
appeal in upsetting the concurrent findings. In the above premises, the
judgments and decrees passed by the courts below in finally dismissing
the suit filed by the plaintiff-Bank do get herewith the seal of approval.
11. Resultantly, the appeal fails. There shall however be no order
as to cost.
….………………
D.Dash, J.
Orissa High Court, Cuttack,
Dated the day of April, 2017/Aswini
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