® IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH DAY OF AUGUST, 2019 B E F O R E THE HON’BLE Dr.JUSTICE H.B.PRABHAKARA SASTRY REGULAR FIRST APPEAL No.618 OF 2011 BETWEEN:
Sri. K.Ravindra Shetty, Aged 40 years, S/o. Late B. Babu Banga, Residing at Kayandur House, Kadaba Post, Puttur Taluk, Dakshina Kannada District.
Pin-520 021.
…APPELLANT (By Sri. P.P.Hedge, Advocate) AND:
Vijaya Bank, Damlur Branch, No.208, 1st Main, 5th Cross, Domlur, Bangalore-560071 Represented by its Principal Officer-
Branch Manager Sri Jayaram Shetty K Son of K.M.Shambu Shetty, Aged 55 years, Pin-560 071. …RESPONDENT (By Sri. K.N.Mahabaleshwara Rao, Advocate) This Regular First Appeal is filed under Section 96 read with Order XLI, Rule 1 of Code of Civil Procedure against the judgment and decree dated 01.11.2010 passed in O.S.No.8248/2007 on the file of the XII Addl. City Civil and Sessions Judge, Bangalore, decreeing the suit for recovery of money.
This Regular First Appeal coming on for Hearing this day, the Court delivered the following:-
JUDGMENT This is a defendant’s appeal. The present respondent as a plaintiff had instituted a suit against the present appellant in the Court of XII Addl. City Civil and Sessions Judge, Bengaluru ( for short, the ‘Trial Court’) in O.S. No.8248/2007 for recovery of a sum of `3,20,835.20ps. with interest @ 17% p.a. compounded with monthly interests and for costs. The said suit came to be decreed with costs against the defendant holding that the plaintiff is entitled for recovery of a sum of `3,20,835.24 ps. with interest at the rate of 17% p.a. compounded with monthly interests from the date of suit till realisation. Challenging the said Judgment and Decree, the defendant in the Trial Court has preferred this appeal.
2. Summary of the case of the plaintiff in the Trial Court is that the defendant was having a Savings Bank Account No.13509 with it and was operating the same. On 12.12.2003, the plaintiff – Bank received a letter along with two cheques one for `3,20,000/- belonging to one Sri B.S. Hussain Beary and another cheque for a sum of `2,67,856/- pertaining to the defendant, along with a letter from Employees Provident Fund Organisation. The plaintiff in the course of business transaction inadvertently and by mistake, on 19.12.2003, credited both the cheque amounts to the account of the defendant instead of the cheque amount of `2,67,856/- alone. As such, the cheque amount to be credited to the account of B.S. Hussain Beary was, by mistake credited to the SB account of the defendant. The defendant knowing the mistaken credit of the said amount of `3,20,000/- which amount was not belonging to him but fraudulently and with an ill-intention withdrew the said amount. When the plaintiff came to know about the said mistake and also about the wrong credit to the SB account of the defendant, it informed the defendant about the mistaken credit and requested and demanded the defendant to remit the same to the bank. In this regard, the plaintiff – bank also wrote a letter dated 30.06.2005 to the defendant. The defendant replied to the said letter on 27.07.2007 (appears to be incorrect date), but did not repay the amount. The plaintiff – bank on 23.07.2004 reversed the amount from SB account of the defendant as a result of which the SB account of the defendant was showing the debit balance. The plaintiff – bank has received in all a sum of `1,82,010/- towards the defendant’s account in respect of the amount withdrawn by him. On 28.11.2005, the defendant has acknowledged his liability to pay the amount which is showing the debit balance in his SB account. Thus, the plaintiff got issued a legal notice dated 31.08.2007 to the defendant to his Bengaluru address which came to be returned with a postal endorsement “no such person”. However, the subsequent legal notice sent to the residential address of the defendant was duly served upon him. For the said notice, the defendant gave an untenable reply on 19.09.2007. It is the contention of the plaintiff that since the defendant has withdrawn the mistaken credit given to his Savings Bank account for which he was not entitled to and did not repay the entire loan amount, he is liable to pay interest at the rate of 17% p.a. compounded with monthly interests. The plaintiff claims that as on the date of institution of the suit, the defendant was due to it in a sum of `3,20,835.24 ps.
3. In response to the summons served upon him, the defendant appeared through his counsel and filed his written statement. In his written statement, the defendant did not deny about he having SB account No.13509 with the plaintiff bank but denied that `3,20,000/- was belonging to Sri B.S. Hussain Beary. He pleaded that he got an intimation from the Employees Provident Fund Organisation regarding payment of two different cheques and therefore both the cheques belong to him and plaintiff has concealed the said fact.
4. It is further contended by the defendant that there was no mistake on his part and he has not withdrawn the amount fraudulently whereas the plaintiff bank has forcibly and highhandedly obtained his signature on certain documents. He also contended that plaintiff unilaterally and arbitrarily reversed SB account entry on 23.07.2004 causing injustice and damage to him. However, he admitted the payment of `1,82,000/- by him to the plaintiff but stated that the same was obtained by the bank by holding threat and coercion. He denied execution of acknowledgement of liability on 28.11.2005. He pleaded that on account of the alleged mistake by the plaintiff, he has suffered and he had to pay income tax on the amount so credited in his SB account and the plaintiff is liable to reimburse the loss sustained by him. He claimed himself to be an innocent receiver of the amount in question. Learned counsel stated that the bank had kept quiet for two years and it is only thereafter coming with the contention of alleged wrong credit. However, he stated that the defendant has admitted his liability to repay the amount after deducting the amount paid by him towards income tax. Instead of acceding to his honest request, the plaintiff started harassing him and is putting forward exorbitant demands. He further stated that the suit is barred by limitation and as also bad for non joinder of necessary parties. With this, he prayed for dismissal of the suit.
5. Based on the pleadings of the parties, the Trial Court framed the following issues and additional issues:
1. Whether the plaintiff bank proves that, it is entitled to recover Rs.3,29,835.24ps. from the defendant together with interest at 17% p.a.?
2. What order or decree?
Additional issues as per order dated 29.01.2010:
1. Whether defendant proves that plaintiff has waived its right to claim suit claim amount?
2. Whether suit is barred by time?
3. Whether suit is bad for non-joinder of necessary parties?
6. The plaintiff examined two witnesses as PW-1 and PW-2 from its side and got marked documents from Exs.P1 to P9. The defendant got himself examined as DW-1 but no documents were marked from his side as exhibits. After hearing both side, the Trial Court by its impugned Judgment and Decree dated 01.12.2010, answered issue No.1 in the affirmative and additional issue Nos.1, 2, 3 in the negative and decreed the suit of the plaintiff as above. It is against the said Judgment and Decree, the defendant has preferred this appeal.
7. Lower Court records were called for and same were placed before the Court. For convenience sake, the parties in this appeal would be referred with reference to their respective rank in the Trial Court.
8. Heard the arguments of the learned counsel from both side. Perused the materials placed before this Court.
9. The points that arise for my consideration are:
(i) Whether the plaintiff has proved that it is entitled to recover the suit claim of Rs.3,20,835/20ps. from the defendant along with interest at 17% p.a. with compounded monthly interests?
(ii) Whether the Judgment and Decree under appeal deserves any interference at the hands of this Court?
10. On behalf of the plaintiff one Sri M. Venkareddy, its Managing Director of Domlur Branch was examined as PW-1 who in his examination in chief in the form of affidavit in evidence has reiterated the contentions taken up by the plaintiff in its plaint. He stated that the amount of `3,20,000/- pertaining to one Sri Hussain Beary was by mistake credited to the SB account of the defendant on 19.12.2003. Immediately after coming to know about the said mistake, the plaintiff – bank requested the defendant to repay the said amount. However, the defendant did not accede to the request of or/and demand of the bank. The plaintiff bank reversed the amount from SB account of the defendant on 23.07.2004. Though the plaintiff bank could receive in all a sum of `1,82,010/- from the defendant in respect of the amount withdrawn by him, the balance amount has not been paid by the defendant. He also submitted that the defendant has acknowledged his liability on 28.11.2005. Stating that the defendant gave an untenable reply to the legal notice sent by it, PW-1 stated that the defendant is liable to make good the suit claim in favour of the plaintiff. In his support, he got marked two letters both dated 12.12.2003 said to have been received by it from the Employees Provident Fund Organisation under Exs.P1 and P2. The letter dated 30.06.2005 addressed to the defendant is at Ex.P3. The reply letter dated 17.11.2005 of the defendant is at Ex.P4. The acknowledgement of liability said to have been executed by the defendant in bank’s favour is at Ex.P5. A copy of its legal notice sent to the defendant is Ex.P6. The reply by the defendant to the said notice is at Ex.P7. The returned registered postal cover with the address of the defendant is at Ex.P8 and statement of account of the defendant with the plaintiff – bank is at Ex.P9. He was subjected to detailed cross examination. He adhered to his original version.
11. The plaintiff also got Smt. Sandhya Shetty, its Manager of Regional Office South, Primrose Road, Bangalore examined as PW-2. She in her examination- in- chief in the form of affidavit has stated that while she was working as the Manager of the plaintiff’s branch, the defendant had SB account No.13509 with it. On 12.12.2003, the plaintiff bank received letter from Employees Provident Fund Organisation with two cheques one for `3,20,000/- and another for `2,67,856/- to be credited to two different accounts. During that time, she was working as the Manager of the plaintiff bank. Inadvertently and by mistake, both the cheque amounts were credited to the SB account of the defendant when in fact, he was entitled for the second cheque of `2,67,856/- only. As such, the another cheque amount of `3,20,000/- was by mistake credited to defendant’s account. Since the defendant did not repay the entire amount despite the demand made by the plaintiff, the amount was reversed in his SB account and consequently his SB account started showing debit balance. She further stated that on 28.11.2005, the plaintiff executed an acknowledgement of liability as per Ex.P5 in her presence. She has identified the said document at Ex.P5 and identified the signature of the defendant therein at Ex.P5(a). She also stated that since the defendant has received an amount which does not belong to him and also failed to repay the same, the plaintiff is entitled for its recovery. She was subjected to cross examination from the defendant’s side wherein she denied the suggestion that amount of `3,20,000/- credited to the defendant’s SB account was his own money and not belonging to Sri Hussain Beary.
12. The defendant in his examination-in-chief as DW-1 has reiterated the contention taken up by him in his written statement. Though he has not denied that two credits of `3,20,000/- and `2,67,856/- was made to his account by the plaintiff bank but contended that both the amounts were belonging to him. He stated that due to he resigning his job at INTEL on 04.07.2003, the provident fund proceeds were given to him which was credited to his SB account with the plaintiff bank. DW-1 admitted the payment of `1,82,000/- made by him to the bank however, he denied that the credit of `3,20,000/- by the bank to his SB account was by mistake. He contended that the plaintiff-bank by allowing him to withdraw the amount and by keeping silent for long period by its negligence has waived off its right to claim the said relief. He stated that the plaintiff bank had forcibly and highhandedly got obtained his signature on certain documents. He reiterated that on account of the mistake by the plaintiff, he had to pay income-tax on the said amount which was credited to his bank account. As such, the bank is liable to reimburse the loss sustained by him on account of income-tax payment.
He was subjected to a detailed cross examination from the plaintiff’s side wherein he admitted that as per Ex.P9 which is statement of his SB account with the plaintiff bank, his account was credited with `3,20,000/- and `2,67,856/- on 19.12.2003. he also admitted a suggestion as true that he has withdrawn certain amount from his SB account from 20.12.2003 and 27.02.2004. He expressed his ignorance as to the suggestion that an amount of `3,20,000/- credited to his SB account as per Ex.P2 was not pertaining to him. He admitted that on 23.07.2004, an amount of `3,20,000/- was transferred from his SB account to that of B.S. Hussain Beary. He stated that he has not lodged any complaint to the plaintiff about the said transfer from his account to the account of B.S. Hussain Beary. He did not admit the suggestion that since there was a wrong credit he did not complain the plaintiff, as true. He owned his letter at Ex.P4 and his signature at Ex.P5(a). He conceded that he has not produced the income-tax returns and not given complaint to the higher officers of the plaintiff bank for the alleged harassment said to have been given to him by the staff of the plaintiff bank. He denied that he was liable to the plaintiff bank for the suit claim.
13. In the light of the above pleadings and evidence of the parties, it is the argument of the learned counsel for the appellant / defendant that there is no bad intention or ill motive on the part of the defendant for using the alleged wrong credit of a sum of `3,20,000/-, since the defendant was expecting two cheques from the Employees Provident Fund Organisation. The same is clear in the statement of account at Ex.P9 which shows that the second cheque from the PF office has also been credited to his account at a later date and the same has been admitted by PW-2 in her cross examination. As such, when the defendant was ignorant of the alleged mistake committed by the petitioner bank by wrongly crediting an amount to the defendant’s account and also in view of the fact that the plaintiff did not notice the said mistake immediately but kept quiet for itself for nearly two years, now it cannot claim any amount from the defendant.
Learned counsel further contended that the alleged acknowledgement of debt at Ex.P5 was signed by the defendant in its blank form. However the contents were later written by the plaintiff bank. Still the document is left with several unfilled portions in it which make it unenforceable. He vehemently submitted that absolutely there is no fault of the defendant in any manner. The entire fault is of plaintiff bank. In such a situation, the plaintiff bank is not justified in charging interest at the rate of 17% p.a. compounded with monthly interests. He also submitted that since the defendant has paid income-tax on the alleged wrong credit of `3,20,000/- to his account, the defendant is entitled for reimbursement of the said amount. Learned counsel further stated that the suit is barred by limitation. To substantiate his contention that the plaintiff ought not to have charged interest on the amount, learned counsel relied upon a Division Bench Judgment of the Delhi High Court in STATE BANK OF INDIA Vs. NATIONAL OPEN SCHOOL SOCIETY, reported in ILR (2003) I Delhi 223. He further submitted that the Trial Court has committed an error by relying upon Ex.P5 and awarding an exorbitant rate of interest at 17% p.a. treating the alleged transaction as a commercial transaction. It did not appreciate the conduct of the plaintiff bank properly. However, while concluding his argument, learned counsel submitted that in case the Court comes to any opinion that defendant is liable to pay any amount to the plaintiff, in such an event, it may give income-tax refund certificate to enable the defendant to claim income-tax refund from the Department.
14. Learned counsel for the respondent in his arguments submitted that the plaintiff without any delay has brought to the notice of the defendant about the wrong credit. But the defendant has made use of the amount mistakenly credited to his account, by that time. He further submitted that the defendant has not challenged the validity or disputed he having executed Ex.P5. As such acknowledgement of it is binding on the defendant which has also given a fresh limitation period for the plaintiff to institute the suit. He stated that the suit being one for monetary recovery and it was based on a running account, the suit filed is well within limitation. With respect to the interest awarded by the Trial Court, learned counsel submitted that the plaintiff- bank has charged the then prevailing commercial rate of interest since the defendant had utilised the excess amount credited to his account. He also submitted that in the absence of any documentary evidence by the defendant to show that he was an income-tax assessee and that he has declared this excess credit of `3,20,000/- in his income-tax return and paid the tax thereof, the claim of the defendant for reimbursement of the said amount is not at all acceptable. To substantiate his contention that, in similar situation the Court is required to award interest on the amount to be recovered from the defendant, learned counsel relied upon a Division Bench Judgment of this Court in S.KOTRABASAPPA Vs. THE INDIAN BANK, reported in AIR 1987 KARNATAKA 236.
15. As observed above, it is an admitted fact that the defendant was holding a Savings Bank Account No.13509 with the plaintiff-Bank and Branch. It is also not in dispute that on 19.12.2003, two credits were made to the Savings Bank Account of the defendant, one for a sum of `3,20,000/- and another for a sum of `2,67,856/-. It is also the case of the parties that both the payments were through cheques and the drawer of the cheques was the Employees Provident Fund Organisation. However, the contention of the defendant is that he was not aware of the said credit of `3,20,000/- as a mistaken credit given to his account and since he was expecting one more cheque from the Employees Provident Fund Organisation, he thought that both the cheques credited to his account were of his entitled amount only. The said contention taken up by the defendant on his side has not been further corroborated with any documentary evidence. On the other hand, a perusal of the statement of account at Ex.P-9 would go to show that, after the above said two credits to the account of the defendant, that were made on 19.12.2003, there were two more proceeds that was made to the account of the defendant on 21.12.2004 and 24.12.2004, for a sum of `13,325/- and `43,685/- respectively.
Thus, even if the defendant was in expectation of two cheques or two credits from the Employees Provident Fund Organisation, still, the amount that was credited to his account in the form of transfer on 21.12.2004 and 24.12.2004 would in no way come nearer to a sum of `3,20,000/- that was credited to his account which is said to be by mistake on 19.12.2003. Admittedly, a sum of `2,67,856/- that was credited to the defendant’s account on 19.12.2003 was under a cheque of Employees Provident Fund Organisation in the name of the defendant only. Excluding that, if the defendant was expecting one more cheque from the Employees Provident Fund Organisation, then, according to the defendant, it is shown in the credit dated 21.12.2004 and 24.12.2004. Thus, taking subsequent credits also into consideration, the total of those two credits would come only to a sum of `57,010/-. The defendant himself being a resigned employee of his job at Intel, he is required to know as to what his entitlement in the second cheque or what was the due payable to him towards the Provident Fund which he was expecting in the second cheque. Therefore, when his such balance entitlement would not in any imagination exceeds `57,010/-, he being under an impression that the second amount of `3,20,000/- credited to his account on 19.12.2003 was the said balance amount of Provident Fund, is not at all convincing and acceptable. Therefore, the argument of the learned counsel for the appellant on the said amount that the defendant was under an impression that the said amount of `3,20,000/- must have been his entitlement under Provident Fund, is not acceptable.
16. The contention of the defendant is also that he was not aware about the said credit of `3,20,000/- to his account till the plaintiff caused a letter to him dated 30.6.2005 as per Ex.P-3. It is only thereafter, he came to know about the alleged excess credit to his account, which the plaintiff calls as made by mistake on its part. However, a perusal of the undisputed statement of Savings Bank Account of the defendant with the plaintiff Bank and Branch, which is at Ex.P-9, would go to show that the closing balance of the defendant’s account as on 12.12.2003 was only a sum of `1,074.20 ps. After the credit of the disputed amount of `3,20,000.- and another sum of `2,67,856/- to his account on 19.12.2003, the balance in his account rose to `5,88,930.20 ps. The defendant without any delay withdrew a total sum of `75,060/- on the very next day i.e., on 20.12.2003 through two cheques. Thus, the closing balance in his account was reduced to a sum of `5,13,870.20 ps. Within three days thereafter, i.e., on 23.12.2003, the defendant got transferred the amount of `4,90,000/- probably to his another account, reducing the balance in his Savings Bank Account to a sum of `23,870.20 ps. It is interesting to note that the said transfer of a sum of `4,90,000/- was to another account appearing to be standing in his own name. Thus, it clearly go to show that he had every knowledge or belief that the credit of `3,20,000/- made to his account just four days earlier was not his amount. As such, showing some hurriedness, he has withdrawn the entire amount. Therefore, it is a clear case where the defendant when had every reason to believe that he was not entitled for a sum of `3,20,000/- has acknowledged such a credit of the said amount of 3,20,000/- to his account not on 30.6.2005, when the plaintiff wrote a letter as per Ex.P-3 to him, but, within four days of the credit i.e., on 23.12.2003. As such, the argument of the learned counsel for the appellant that the defendant was totally innocent person and that he had no reason to believe that any amount that does not pertain to him had mistakenly credited to his account, is also not acceptable.
17. It is in the said circumstances, the plaintiff- Banker had to reverse the entry of the said sum of `3,20,000/- from the account of the defendant, which was done by the plaintiff-Bank on 23.7.2004. Though the defendant contends that he was not aware of the said alleged excess credit, but, the above analysis would go to show that he had the knowledge of the said excess credit on the very next day or at the maximum, three days of the said mistaken credit made by the plaintiff. It is for the said reason, the defendant has not placed any material in regard to show that the alleged excess credit was not to his knowledge till 30.6.2005. Even his letter dated 17.11.2005, which is at Ex.P-14, also go to show that he had the knowledge of the said excess credit of `3,20,000/- to his account. Otherwise, in the said letter, he would have specifically mentioned that it was for the first time, he came to know about the alleged excess credit only on 30.6.2005. He has not whispered about the date of his knowledge about the excess credit in his letter at Ex.P-4. On the other hand, he has only pleaded that all this happened because of the non-comfortable words used by an employee of the plaintiff-Bank. Thus, the said letter at Ex.P-4 further makes it clear that the defendant knew about the alleged excess credit to his account and with the said knowledge only, he has made use of the said amount.
In such a situation, under Section 72 of the Indian Contract Act, 1872, he has got a duty to repay the said excess amount credited to his account by the plaintiff, which is a sum of `3,20,000/-.
18. It is an admitted fact that the plaintiff has recovered in total a sum of `1,82,010 from out of the excess credit of `3,20,000/- made by it to the account of the defendant. The defendant has admitted the recovery of the said amount by the plaintiff in his written statement itself. As such, after deducting the said amount of `1,82,010/- in the mistaken credited amount of `3,20,000/-, the principal amount that becomes due by the defendant which is payable to the plaintiff would be a sum of `1,37,990/-. The defendant has not denied or disputed to pay the balance amount, however, it is his contention, as well his evidence that, with respect to the said excess credit of `3,20,000/-, he has already filed his Income-tax return for the year 2003-2004 with tax deduction. Therefore, he has stated that from out of the said amount of `3,20,000/-, a deduction of 30% as the slab amount towards income-tax is to be given by the plaintiff and the other deductions towards the recovery made by the plaintiff. Reiterating the said submission, learned counsel for the appellant submitted that after deducting the recovered amount of `1,82,010/- and 30% income-tax in a sum of `3,20,000/-, which comes to 96,000/-, the remaining balance due, which may come around `41,990/-, only the appellant/defendant is liable to pay to the plaintiff if ordered so.
The said argument of the learned counsel for the appellant was vehemently opposed by the learned counsel for the plaintiff/respondent, who submitted that no where the defendant has stated that on the sum of `3,20,000/-, he has paid any income-tax. Further, he has not produced any Income-tax return to show that he is an Income-tax assessee and has paid the income-tax on the said excess credit of `3,20,000/- to his account. Learned counsel further submitted that even assuming that he has paid, still, he had an opportunity to file a rectified Income-tax return and to claim refund if he has paid in excess. I do not find any reason not to accept the said argument of learned counsel for the respondent/plaintiff on the said point.
19. Though the defendant in Ex.P-4 and Ex.P-5 has referred to his alleged Income-tax returns, but, no material has been placed by him basically to show that he is an Income-tax assessee. Had he really been an Income-tax assessee and has filed his returns for the relevant years and also if he had shown the credit of `3,20,000/- as an income, then, nothing had prevented for him to produce necessary documents, including his Income-tax returns and the certified statement of income and expenditure and the balancesheet to substantiate his contention. If the defendant was an Income-tax assessee and has complied all those obligations, then, the necessary documents would have been in his custody and he should have produced them to substantiate his contention of claiming a rebate towards his alleged payment of tax on the amount of `3,20,000/-. Since he has not produced those documents or withheld those documents, an adverse inference can be drawn that he has no such documents in his support and his contention that his alleged payment of income-tax on the said amount of `3,20,000/- is not a true statement. As such, the argument of the learned counsel for the appellant that the defendant is entitled for a rebate equivalent to the income-tax which he claims to have paid at the rate of 30% on the said amount of `3,20,000/-, is also not acceptable.
The above reason also gain one more support on the fact that, even according to the defendant and as already observed above, neither the second cheque nor presumed third cheque in their amount would not in any way come nearer to the deposited amount of `3,20,000/-. As already observed above, by perusal of Ex.P-9, it clearly go to show that, assuming that the defendant had two more payments to be received from the Employees Provident Fund Department, still, the total sum of the said amount would come only to `57,010/-. As such, the question of the defendant showing `3,20,000/- as income from Provident Fund and paying any income-tax thereupon becomes more doubtful.
20. In view of the finding that the plaintiff could able to successfully prove that a sum of `3,20,000/- was by mistake credited to the account of the defendant by it on 19.12.2003 and since it has been established that the said amount was not the entitlement of the defendant, as such, under Section 72 of the Indian Contract Act, he is required to refund the said amount after deducting a recovery of `1,82,010/- made by the plaintiff. The question that would remain for consideration is the alleged entitlement of the plaintiff to claim interest at the rate of 17% on the said excess paid amount.
21. Learned counsel for the appellant on the point of interest claimed by the plaintiff has submitted in his argument that there is no basis to treat the said alleged excess payment as a commercial loan taken by the defendant. As such, without there being any basis or any norms or on the support of law, the claim of interest at 17% compounding monthly is an exorbitant charging of interest and that the plaintiff is also not entitled for any interest. In his support, learned counsel for the appellant relied upon the judgment of Division Bench of Delhi High Court in State Bank of India’s case (supra). In the said case, which also involves the question of recovery of the amount along with interest thereupon, under Section 72 of the Indian Contract Act, the Delhi High Court was pleased to observe as below :
“ It is the duty of the bank to maintain correct account because maintenance of account is in the domain of the bank. Account holder cannot be held responsible for the mistake which has been committed by the officials of the bank. It is the duty of the bank to reconcile and give true statement of account to the account holder. That duty cannot be shifted to the account holder when the account holder has not availed of any benefit either in terms of overdraft facilities or loan facilities, it was a mistake on the part of the officials of the appellant who have credited more amount in the account of the respondent. Respondent cannot be held responsible for payment of interest, that is the only issue which has been agitated in this appeal before us.”
The facts and circumstances of the said case differs from the one on hand. In the instant case, as analysed above, the defendant at the time of withdrawing the amount credited in excess to his account, had the knowledge that the said amount does not pertain to him and that there being all the reason for him to believe that he had the knowledge that the said amount does not belong to him, without any delay, he withdrew the entire amount, including the amount that was payable to him by the Provident Fund Organisation, which, in fact, was credited to him. Thus, the plaintiff without any delay i.e., within three to four days of the credit of excess amount to his account, which was a mistaken credit by the plaintiff-Bank, utilised the entire amount for his purpose. That being the case, the defendant being a account holder with the plaintiff-Bank and continuously operating his account, was required to know the correctness of the debits and credits that has been made in his Savings Bank Account with the plaintiff-Bank. He cannot enjoy the benefit of any credit made to his account for which he was not entitled to and then raise his finger towards the Banker and say that it is because of the fault of the Bank, as such, he is not liable to pay any interest on the said amount.
In a similar circumstance, in the case relied upon by the learned counsel for the respondent i.e., in S.Kotrabasappa’s case (supra), a Division Bench of this Court was pleased to hold that, in view of the fiduciary relationship established between the parties, the beneficiary of the amount was liable to pay interest under Clause (b) of sub-section (2) of Section 4 of the Interest Act, 1978, for the period from the date of cause of action up to the date of the institution of the proceedings. With the said observation, the Court further proceeded to observe that the appellant before it who had enjoyed the benefit of excess amount credited to him by the respondent-Bank was liable to pay interest at the rate of 9% p.a. from the date of cause of action, which was the date of mistaken credit of a sum of `1 lakh to his account, till the date of filing of the suit. It was further ordered in the said case that the appellant was further liable to pay interest at the rate of 6% p.a. from the date of the suit till the date of realisation under sub-section (1) of Section 34 of Code of Civil Procedure, as a mistaken credit cannot be characterised as a commercial transaction falling within the purview of proviso to sub-section (1) of Section 34 of Code of Civil Procedure. The same reasoning holds good in the facts and circumstances of the present case also. Since the excess credit of `3,20,000/- was made to the defendant by the plaintiff on 19.12.2003, from the date of deposit till the date of institution of the suit, which is on 11.10.2007, the appellant/defendant is liable to pay interest at the rate of 9% p.a. However, it would be on the reduced balance through which the plaintiff has made its recovery, which in total, has amounted to `1,82,010/- and for the remaining amount of `1,37,990/-, the interest is payable at the rate of 6% p.a. from the date of the suit i.e., on 11.10.2007 till the realisation of the amount.
22. The last point that was canvassed by the learned counsel for the appellant is regarding limitation aspect. It was canvassed that the suit was barred by limitation, however, the trial Court has erroneously held that the suit was within the limitation.
It is the contention of the appellant/defendant that the acknowledgement of liability at Ex.P-5 was not duly executed by him, but, his signature was obtained on a blank form which has been subsequently misused by the plaintiff. In that connection, learned counsel for the appellant while drawing the attention of this Court to some of the blanks that has been left out unfilled in the said document, contended that the said document become unenforceable. Learned counsel for the respondent in his argument submitted that since the outstanding liability had not arisen from any loan availed by the defendant, the relevant portions in Ex.P-5 has been left blank, by that itself the entire instrument cannot be treated as unenforceable.
23. A perusal of the document at Ex.P-5 goes to show that it is shown as an acknowledgement of liability said to have been executed by the defendant on 28.11.2005. The defendant, as DW-1, in his cross- examination has admitted his signature in the said document which is marked as Ex.P-5(a). His only contention was that the said document was blank when it was executed by him. Except a bare allegation, nothing has been placed by him before the Court to show that his signature was obtained on a blank format at Ex.P-5. On the contrary, PW-2, who is undisputedly the Manager of the plantiff-Bank as on the relevant point of time, in her evidence has clearly stated that it was in her presence, defendant executed the acknowledgment of liability as per Ex.P-5 on 28.11.2005. PW-2 being the Manager of the plaintiff- Bank as on the relevant date being an admitted fact, her presence while defendant executing Ex.P-5 cannot be suspected, rather, which has not been denied in the cross-examination of PW-2.
24. Therefore, the evidence of PW-2, which is trustworthy, go to show that it is the defendant who has executed the acknowledgement of liability as per Ex.P-5 on 28.11.2005. Though the interest portion in the said document and the loan amount in the said document have been left blank, but, the present case is not based on any alleged loan, alleged to have been availed by the defendant, but, it is regarding an excess drawing made by the defendant by virtue of a mistaken credit given to his account and those two spaces in Ex.P-5 have been left blank. As such, Ex.P-5 does not get automatically disqualified while considering its evidentiary value. Thus, when Ex.P-5 is appreciated in its evidentiary value, it goes to show that the defendant has admitted his liability towards the plaintiff at a particular sum of `2,54,672.80 ps. as on 28.11.2005, which is admittedly within three years from the date of arising of first cause of action, which was on 19.12.2003. As such, Ex.P-5 has extended the period of limitation under Section 18 of the Limitation Act. Therefore, the suit instituted by the plaintiff on 11.10.2007 can be held as the one filed within the period of limitation. As such, the said point of argument of learned counsel for the appellant on the question of limitation also, is not acceptable.
25. The trial Court though has appreciated all these aspects in proper perspective, has decreed the suit of the plaintiff. However, while awarding the interest, since it has treated the transaction on par with the commercial transaction and has awarded the interest at 17% p.a. compounded monthly and in view of the fact that said awarding of interest was held to be exorbitant, the judgment and decree impugned in this appeal deserves only a modification to such an extent. It is only to such limited extent, the appeal of the appellant deserves to be allowed.
26. Accordingly, I proceed to pass the following order:
ORDER The Appeal is allowed in part. The judgment and decree dated 01.12.2010, passed by the learned XII Addl.City Civil & Sessions Judge, Bengaluru, in O.S.No.8248/2007, is modified and held that the plaintiff is entitled for recovery of a sum of `1,37,990/- only from the defendant. The plaintiff is also entitled for the interest at the rate of 9% p.a. on the amount of `3,20,000/- as on 19.12.2003 and on the reduced balance thereafter and the interest at the rate of 6% p.a. on the outstanding principal amount of `1,37,990/- from 11.10.2007 till the date of realisation of the said amount, from the defendant.
Draw decree accordingly.
The Registry is directed to transmit a copy of this judgment along with lower Court records to the lower Court without delay.
Sd/- JUDGE sac*/bk/-