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Constitution of India - Arts. 136-141-Substantial justice - If erroneous order of remand results in substantial justice whether this Court should interfere -Limitation Act 1908 - Schedule - Articles 57, 115 - Continuing guarantee - When does limitation run - Liability of Bank guarantee - lf claim given up without specifying any particulars whether it can be taken into consideration against the unproved debts. The respondent plaintiff is the lndo Commercial Bank Ltd. now taken over and represented by the Punjab National Bank. In 1943 C. B. Samuel, the husband of the appellant-defendant with other persons floated a company known as the Modern Hindustan Food Products Ltd. Co. at Poona. The company opened with the plaintiff Bank a current account which was later converted into an over-draft Account with the maximum limit of Rs. 10/- Iakhs. C. B. Samuel, the Managing Director of the company executed a Promissory Note for Rs. 10 lakhs and he and his wife, the defendant executed a guarantee bond by which they jointly and severally guaranteed to the Bank, the repayment of all moneys which shall at any time be due to the Bank from the Company, on the general balance of their account with the Bank or on any account whatever. The guarantee was to be a continuing guarantee to the extent of Rs. 10 lakhs at any one time. The Company ceased business on 30th June, 1946 and thereafter the Company entered into an arrangement with the Bank by which the Bank was authorised to receive all amount due from the Director General of Food Supplies, or from any other person or Department and appropriate the sums collected towards the money due to the Bank from the Company. An irrevocable power of attorney authorising the Bank to do so was executed by the Managing Director. All Bills and documents were accordingly handed over to the plaintiff bank for realisation of the amount due to the Company. C. B. Samuel died on 27th April, 1951. The defendant by her letter dated 2nd February, 1952, acknowledged her personal guarantee to repay to the plaintiff the sum of Rs. 2,71,531 which was stated to be balance due to the plaintiff from the Company as on 31st December, 1951. To that, a sum of Rs. 21,886/- was to be added by way of interest. The Bank recovered a sum of Rs. 57,964 and thus the balance due was Rs. 2,35,453/-. The Bank filed the present suit In November, 1954 to enforce the guarantee bond against the defendant and to recover a sum of Rs. 1,50.000. It was stated in the plaint that a sum of Rs. 85,453 was given up and the suit was filed to recover the sum of Rs. 1,50,000/- only. The defence of the defendant was that the suit was barred by limitation, that the letter dt. 2nd February, 1952 was obtained from her by fraud and that she was, in any case, not liable to pay amounts disputed by her in para 15 of her written statement. She also pleaded that the plaintiff had deliberately withheld production of the accounts between 1943- 46 during which period most of the transactions took place and that if these accounts were produced, she would be in a position to challenge other items as well. Soon after filing the written statement, the defendant filed an application in the trial court to direct the plaintiff to produce among other documents, the accounts from 1943 onwards. The Trials Judge by his Order dt. 10th March, 1955 directed the plaintiff to produce the documents within two weeks from that date. The plaintiff did not produce the documents. Subsequently, however, an extract of the accounts from 1943 to 1946 was produced. On the date of the hearing of the suit, the defendant filed an application Ext. 85, seeking a direction from the Court, that the plaintiff be allowed to produce any documentary evidence which they might possess in support of the items mentioned in the schedules even till the time the evidence is finished and the defendant be allowed to deny, under the circumstances mentioned, the items mentioned in schedule 'B'. Alongwith the application, the defendant filed two schedules; Schedule 'A' showing the items specifically denied by the defendant in her written statement and Schedule 'B' showing the items which were denied by her after the accounts from 1943 to 1946 were produced in Court by the plaintiff. The application was opposed by the plaintiff. The trial court dismissed the application on the ground that it was belated. The trial court observed that if the defendant wanted to dispute any item from the accounts, she should have got the accounts produced even before she filed the written statement. The court, observed that the defendant had no doubt filed the earlier application but when the plaintiff failed to produce the accounts within two weeks, she did not take further action in the matter. The trial court found that letter dated 2nd Feb. 1952 was not proved to have been obtained by fraud. The court found that the defendant who was a highly educated lady had subscribed her signature to Ext. 55 fully knowing its contents. The trial court however, held that the suit was barred by limitation. The trial court also held that there was no proper proof of the several debit items and that they were suspicious. The plaintiff filed an appeal to the High Court of Bombay. The High Court held that the suit was not barred by limitation but that on the material placed before the Court, it was impossible to pass a decree in favour of the plaintiff, for any amount alleged to be due by the defendant. The High Court also observed that the trial Judge was wrong in dismissing the application. The High Court. however, thought that in order to do justice between the parties, it was necessary to give the plaintiff-bank an opportunity to prove the various items which were challenged by the defendant in her written statement and in her application Ext. 85, and further to give the defendant an opportunity to lead evidence in support of her contention that the entries were in respect of accounts which she was not liable to pay. The High Court remanded the suit to the trial court for fresh disposal in the light of the observations made by it after raising additional issues if necessary. On remand, the trial court raised two additional issues. The trial court held that the plaintiff proved two items in dispute as given in the written statement and Exhibit 85. The trial court negatived the defendant's case that the debit entries were in respect of the amounts which she was not liable to pay. The trial court based these conclusions primarily on the letter dt. 30th June, 1950 passed by the Company in favour of the Bank acknowledging the balance due at the foot of the overdraft account as on 30th June, 1950 was Rs. 4,90,523. The trial Judge held that the letter of acknowledgment was binding on the defendant. The suit was decreed for a sum of Rs. 1,50,000/-. In an appeal filed by the defendant, the High Court considered the evidence relating to each item and found that the debit items amounting to Rs. 68,761/- were not proved to be binding on the defendant. The High Court, however, held that since this amount was less than Rs. 85,453 /- which had been given up by the plaintiff, the High Court affirmed the decree passed by the trial court. The High Court gave a finding relating to three letters signed by the defendant herself as Director of the Company in the year 1945. In an appeal by special appeal, the appellant contended :(1) that there was no justification for the order of remand passed in the first instance by the Bombay High Court. On the finding arrived at by the Bombay High Court that the plaintiff had failed to prove any of the debit items, the original decree of the trial court dismissing the suit should have been affirmed. When the application Ext. 85 was filed by the defendant, the plaintiff opposed it. The appellate Court, therefore, was not justified in giving a further opportunity to the plaintiff to prove the debit items.(2) the suit was time-barred. Each of the debit item constituted a distinct loan and gave rise to a separate cause of action, every one of which was barred by limitation.The respondent contended that :(i) the initial order of remand made by the High Court was justified in the special circumstances of the case. Even if the order of remand could not be fully justified, this is not a fit case for interference under Art. 136 having regard to the justice of the matter as disclosed by the subsequent findings of the trial court and the appellate Court.(ii) the suit was really one to enforce the guarantee bond, that the guarantee was a continuing guarantee and, therefore, the suit could not be said to be barred by limitation. |
