THE COURT OF THE PRINCIPAL DISTRICT JUDGE AT L.B.NAGAR
RANGA REDDY DISTRICT
PRESENT: C.Hare Krishna Bhupathi,
Principal District Judge,
Ranga Reddy District.
Monday, the 31st day of July, 2023.
A.S.No.9 of 2023
Between:
Kandimalla Kushalava Reddy S/o.Rama Krishna Reddy, Aged about 70 years, Occ: Retd.Employee, R/o.H.No./o.H.No.3-12-92, SUN05511, Behind Mahindra Showroom, Rock Town Colony, L.B.Nagar, Ranga Reddy District. … Appellant/Plaintiff AND
1. Mogulla Raji Reddy S/o.Krishna Reddy, Aged: 48 years, Occ: Business, R/o.H.No.11-13-36, Plot No.24/V, Road No.1, Alkapuri Colony, Saroornagar, Hyderabad.
2. The Industrial Development Bank of India, Represented by its Branch Manager, Mansoorabad, Ranga Reddy District, Hyderabad, Plot Nos.15 and 28, Srinivasa Chambers, Mususurabad, Ranga Reddy District.
3.The Andhra Bank, Represented by its Branch Manager, L.B.Nagar, Hyderabad. … Respondents/Defendants
Appeal against the Judgment & Decree dated 26.10.2022 passed by the learned Principal Senior Civil Judge, Ranga Reddy District at L.B.Nagar, in;
O.S.No.24 of 2017
Between:
Kandimalla Kushalava Reddy S/o.Rama Krishna Reddy, Aged about 63 years, Occ: Retd.Employee, R/o.H.No./o.H.No.3-12-92, SUN05511, Behind Mahindra Showroom, Rock Town Colony, L.B.Nagar, Ranga Reddy District. … Plaintiff AND
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1.Mogulla Raji Reddy S/o.Krishna Reddy, Aged: 48 years, Occ: Business, R/o.H.No.11-13-36, Plot No.24/V, Road No.1, Alkapuri Colony, Saroornagar, Hyderabad.
2. The Industrial Development Bank of India, Represented by its Branch Manager, Mansoorabad, Ranga Reddy District, Hyderabad, Plot Nos.15 and 28, Srinivasa Chambers, Mususurabad, Ranga Reddy District.
3.The Andhra Bank, Represented by its Branch Manager, L.B.Nagar, Hyderabad. … Defendants
This appeal coming before me on 19.07.2023 for final hearing in the presence of Sri Kiran Palakurthi, counsel for appellant and Sri K.Sudhakar Reddy, counsel for respondent No.1, Sri V.Suresh Babu, counsel for respondent No.2, Sri V.Ravinder Reddy, counsel for respondent No.3, and upon hearing both sides, perusing the material on record and the matter having stood over for consideration till this date, this court passed the following:
JUDGMENT
1.This is an appeal preferred under Order XLI Rule 1 C.P.C., by the appellant, who is the plaintiff in O.S.No.24/2017 on the file of the Principal
Senior Civil Judge, Ranga Reddy District at L.B.Nagar (in short ‘the trial court’),
thereby challenging the legality of the Decree and Judgment dated 26.10.2022 passed by the trial court, whereunder the suit was decreed against the 1st defendant (1st respondent herein), but dismissed against the defendants 2 and 3 (respondents 2 and 3 herein).
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2.For the sake of convenience and for the better understanding of the facts, the parties to this appeal will hereinafter be referred to as arrayed in the pleadings before the trial court.
3.The case of the plaintiff (appellant herein), as averred in the plaint filed before the trial court, is briefly stated as follows:-
(i)The plaintiff and his friend G.Bhaskar Reddy (PW2) approached the 1st defendant for the purchase of a house plot to an extent of 1,117 Sq.yards in
Sy.No.63, situated at Door No.12-1-338/1 in Plot No.15 within the revenue village of Fathalguda in Uppal Mandal, Ranga Reddy District, for a sale consideration at the rate of Rs.1,350/- per Sq.Yards and, accordingly, an agreement of sale was entered into between them, thereby fixing the due date for payment of the sale consideration and for execution of the sale deed on or
before 07.03.2013.
(ii) Accordingly, the plaintiff and PW2 promptly paid the entire sale consideration to the 1st defendant and the 1st defendant, in turn, executed a sale deed vide Doc.No.1512/2013 in favour of Smt.Kandimalla Sruthi, Sathi
Reddy and three others, who are the daughters of the plaintiff, and three others, who are the relatives of PW2, but failed to hand over the link document to them.
(iii) In spite of several demands made by the plaintiff and PW2, the 1st defendant evaded to handover the link document and, subsequently, the plaintiff and PW2 came to know that the 1st defendant mortgaged the same property with the State Bank of Hyderabad, L.B.Nagar Branch and availed a
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Page 4of 17 loan for M/s.Thirumala Enterprises, for which, the 1st defendant is the
Managing Director.
(iv) The plaintiff could understand that the 1st defendant cheated the plaintiff without disclosing about that mortgage transaction with the bank and then, the plaintiff got issued a notice to the 1st defendant through his advocate one G.Sanjeeva Reddy and also sent a notice to the Credit Manager, State
Bank of Hyderabad, L.B.Nagar Branch, Hyderabad.
(v)The 1st defendant admitted the mortgage done by him with the bank in respect of the same property, but insisted the plaintiff and PW2 to extend the financial support to him, so that he would discharge the loan amount due to the bank and get back the document, so as to hand over the same to the purchasers.
(vi)The plaintiff and PW2 had no other go, except to yield to that request of the 1st defendant. Accordingly, they deposited an amount of
Rs.9,00,000/- with the State Bank of Hyderabad, L.B.Nagar Branch,
Hyderabad, where the loan account of the 1st defendant was lying and also gave an amount of Rs.1,00,000/- to the 1st defendant on 22.12.2014 to clear of the loan. The 1st defendant executed a promissory note on the same day, i.e., on 22.12.2014 for Rs.10,00,000/- in favour of the plaintiff, agreeing to repay the said amount on demand along with an interest thereon at 18% p.a.
(vii) On several demands made by the plaintiff to the 1st defendant to clear of the loan, no payment was made by the 1st defendant, but finally, he issued a cheque bearing No.120502 dated 09.10.2016 for Rs.10,00,000/-
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Page 5of 17 drawn on the 2nd defendant bank, where the 1st defendant is having a Savings
Bank Account bearing A/c.No. 1057104000028246 towards the part discharge of the amount due under the promissory note.
(viii)The plaintiff deposited the said cheque with the Andhra Bank,
Ashoknagar Branch, Miryalaguda on 29.10.2016, but the same was dishonoured due to insufficient funds in the account of the 1st defendant. At the request of the 1st defendant, the plaintiff again deposited the said cheque with the Andhra Bank, Ashoknagar Branch on 24.12.2016. On 26.12.2016, the plaintiff received a message from the 3rd defendant bank, with whom the plaintiff is having account bearing Ac.No.146810100107717, that the cheque bearing No.120502 issued by the 1st defendant was honoured and, accordingly, the amount of Rs.10,00,000/- was credited to his account. But, to the surprise of the plaintiff, on 27.12.2016, the plaintiff received second message from the 3rd defendant bank that the cheque amount of
Rs.10,00,000/’- was debited from his account due to stop payment instructions issued by the 1st defendant to the 2nd defendant bank. The plaintiff immediately approached the 3rd defendant bank and expressed his grievance, but, the 3rd defendant bank evaded to give a proper reply.
(ix) The plaintiff got issued a legal notice dated 04.01.2017 to the defendants, informing them that the plaintiff would take appropriate action against them.
(x)The 1st defendant, knowing fully well about his legal obligation to discharge the loan and despite having sufficient funds in his account failed to
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honour the chque by giving stop payment instructions to the 2nd respondent
bank and thereby he committed the offences U/s.138 of the Negotiable
Instruments Act, 1881 and U/s.420 IPC.
(xi) The 2nd defendant acted against the banking norms and violated the business rules.
(xii) The 3rd defendant, being a banker of the plaintiff, has no authority to debit the amount from the plaintiff’s account, without the consent of the account holder, when once the amount was credited to the account of the plaintiff.
(xiii)Hence, the plaintiff filed the suit, seeking a decree for the suit amount of Rs.13,65,500/- from the 1st defendant and also from the defendants 2 and 3 jointly and severally along with an interest at 24% p.a thereon from the date of the suit till the date of realization.
4. On the receipt of the summonses issued by the trial court, the 1st defendant remained ex-parte, whereas the defendants 2 and 3 filed their respective written statements, thereby resisting the claim of the plaintiff.
5.The contentions raised by the 2 nd respondent in the written statement are concisely stated as follows:-
(a)This defendant denied the liability to pay the suit amount to the plaintiff by contending that, there is no privity of contract between the plaintiff and this defendant and that there is no enforceable claim for the plaintiff against this defendant.
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(b)This defendant has also denied the allegation of the plaintiff that this defendant violated the banking norms and the rules and guidelines issued by the Reserve Bank of India.
(c)It is maintained by this defendant that this defendant acted bonafidely by honouring the instructions of the customer in relationship of banker and customer between this defendant and the 1st defendant.
With these main contentions, this defendant prayed the court to dismiss the suit with costs.
6.The contentions raised by the 3 rd defendant in the written statement are summarily stated as follows:-
(i)This defendant has also denied the liability to pay the suit amount to the plaintiff by contending that, the plaintiff has unnecessarily made this defendant as a party to the suit and that there is no legally tenable right for the plaintiff against this defendant to claim the suit amount.
(ii)It is submitted by this defendant that, the plaintiff never deposited the cheque with this defendant, but, on the other hand, the plaintiff deposited the cheque with the Andhra Bank, Ashok Nagar Branch at Miryalaguda and upon the receipt of the instructions from the 2nd defendant, the Andhra Bank,
Ashok Nagar Branch at Miryalaguda intimated this defendant about the instructions given by the 1st defendant to the 2nd defendant and, accordingly, the amount was debited from the S.B.Account of the plaintiff, since a mistaken credit entry was made.
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(iii) This defendant denied the allegation of the plaintiff that there was violation of the rules and guidelines of the Reserve Bank of India.
(iv) It is further maintained by this defendant that, this defendant had no knowledge of the communications between the 1st defendant and the 2nd defendant and also about the amounts of the 1st defendant lying with the 2nd defendant.
(v)It is pleaded by this defendant that, there is absolutely no cause of action for the plaintiff against this defendant and this defendant is no way responsible to pay the suit amount to the plaintiff.
With these main contentions, this defendant prayed the court to dismiss the suit with costs.
7.Upon the pleadings of both the parties, the following issues were settled by the trial court on 29.06.2018:-
(1) Whether the suit of the plaintiff is maintainable in the
present form?
(2) Whether the defendant No.2 and 3 are necessary
parties to the suit?
(3) Whether the plaintiff is entitled to sue for recovery of
the suit amount from defendants with interest?
(4) Whether defendants 2 and 3 are jointly liable for the
suit amount as pleaded by plaintiff?
(5) To what relief?
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8. During the course of the trial, the plaintiff examined himself as PW1 and got marked Exs.A1 to A7 on the side of the plaintiff and also examined
PW2 as the other witness for the plaintiff. The Asst.General Manager of the 2nd defendant was examined as DW1 and no document was marked for the defendants.
9.After the completion of the trial and on hearing the arguments of both sides, the trial court passed the impugned judgment dated 26.10.2022, wherein the suit was partly decreed against the 1st defendant with costs and was dismissed against the defendants 2 and 3.
10.Aggrieved by the impugned judgment of the trial court in dismissing the suit against the defendants 2 and 3, the plaintiff (appellant herein) preferred this appeal with the grounds of appeal, of which, the core of the contentions is stated as follows:-
(i)The grievance of the appellant is that, the trial court failed to take note of the purport of the legal principle U/s.72 of the Indian Contracts Act, 1872 and hence, the dismissal of the suit against the defendants 2 and 3 is bad in law.
(ii)It is also a further contention of the appellant that, the defendants did not place any document before the court and, despite the same, the trial court committed a glaring mistake in dismissing the suit claim against the defendants 2 and 3.
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(iii)It is also further contended by this appellant that, the trial court failed to see that no record is placed by the defendants to show that the amount has been reversed on the instructions of the customer and that, the defendants 2 and 3 have no such authority to make any debit entry in the account of the plaintiff, after once the credit entry was made.
With these main contentions, the appellant prayed the court to allow the appeal by setting aside the dismissal of the suit against the defendants 2 and 3 and to consequently decree the suit against them.
11.During the course of the hearing on this appeal, the learned counsel for both sides submitted their detailed arguments in reference to both oral and documentary evidence adduced during the course of the trial before the trial court and, thereafter, the appeal is coming for passing of the judgment.
12.Now, the following points arise for determination:- (1)Whether the plaintiff (appellant herein) is entitled to seek a decree against the defendants 2 and 3
(respondents 2 and 3 herein) jointly and severally
along with the 1 st defendant, against whom the suit is
already decreed, so as to recover the suit amount
from them?
(2)Whether the impugned decree and judgment dated 26.10.2022 passed by the trial court in partly
dismissing the suit against the defendants 2 and 3
(respondents 2 and 3 herein) suffered from any infirmity or irregularity or illegality and called for any interference by this court?
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Page 11of 17 (3)To what result?
13.POINT No.1: The plaintiff filed the suit against the defendants 1 to 3, seeking a decree against them jointly and severally for the recovery of the suit amount based upon Ex.A1 suit promissory note dated 22.12.2014 for
Rs.10,00,000/- executed by the 1st defendant in favour of the plaintiff.
According to the plaintiff, the 1st defendant failed to repay the amount due under Ex.A1 and also failed to honour Ex.A3 cheque issued by the 1st respondent for the partial discharge of the loan due under Ex.A1 and hence, the 1st defendant is liable to pay the suit amount to the plaintiff.
14.In so far as the claim of the plaintiff against the defendants 2 and 3 is concerned, the plea of the plaintiff is that, the 2nd defendant, being the banker of the 1st defendant, acted in accordance with the directions given by the 1st defendant to stop the payment of Ex.A3 cheque deposited by PW1 and that the 3rd defendant, being the banker of PW1, initially credited the cheque amount under Ex.A3 to the bank account of PW1 with the 3rd defendant on 26.12.2016, but immediately debited the amount on 27.12.2016 on the instructions of the 2nd defendant to that effect and thereby both the defendants 2 and 3 violated the banking norms and business rules and, accordingly, they are also jointly and severally liable to pay the amount to the plaintiff.
15.At the outset, it is an admitted fact that, the 1st defendant did not choose to honour Ex.A3 cheque issued by him and, accordingly, gave instructions to the 2nd defendant to stop the payment and, in fact, the same cheque presented earlier by PW1 in the Andhra Bank, Ashok Nagar Branch, Miryalaguda, during
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Page 12of 17 the month of October, 2016 was dishonoured due to insufficient funds in the account of the 1st defendant.
16.The plaintiff has filed Ex.A2 voucher to show that the plaintiff deposited an amount of Rs.9,00,000/- towards the loan payable by the 1st defendant in connection with a house plot already sold to the nominees of PWs.1 and 2 and, as a matter of fact, the plaintiff was successful in establishing the fact that the 1st defendant, having been indebted to the plaintiff prior to the execution of
Ex.A1 promissory note, executed Ex.A1 promissory note in favour of the plaintiff on 22.12.2014 and subsequently failed to discharge the amount due under the said promissory note to PW1.
17.The trial court was satisfied with the evidence adduced by the plaintiff in respect of the claim of the plaintiff against the 1st defendant and, accordingly, decreed the suit against the 1st defendant.
18.In so far as the claim of the plaintiff against the defendants 2 and 3 is concerned, the trial court dismissed the suit against them by holding that there is no liability for the defendants 2 and 3 to pay any amount to the plaintiff. It is also the conclusion arrived at by the trial court that, in case of any deficiency in the services of a banker, as alleged by PW1, the course open to PW1 is to agitate the same before the proper forum, i.e., the Consumer Forum or
Consumer Commission, whatever name with which the same is called, but not by way of seeking the relief in the present suit.
19.In the grounds of appeal filed by the appellant, it is the contention of the appellant that, the defendants failed to adduce any evidence in support of the
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Page 13of 17 contentions of the defendants 2 and 3, but, in fact, the said plea is not correct, as DW1 is a witness examined for the 2nd defendant and he deposed about the contentions taken up by the 2nd defendant in the written statement. DW1 is the Asst.General Manager of the 2nd defendant and he deposed that the 2nd defendant, being the banker of the 1st defendant, acted in accordance with the instructions given by the customer, i.e., the 1st defendant, and that the bank is obliged to follow the instructions given by the customer and that the 2nd defendant has no knowledge of any transactions between the plaintiff and the 1st defendant.
20.As far as the 3rd defendant is concerned, the plea of the 3rd defendant is that, Ex.A3 cheque was not presented before the 3rd defendant, but before the branch of Andhra Bank at Miryalaguda on both the occasions, i.e., in the month of October, 2016 as well as in the month of November, 2016 and the said branch of Andhra Bank acted as per the instructions of the 2nd defendant, who is the banker of the 1st defendant and acted in accordance with the instructions given by the 1st defendant.
21.The plaintiff has filed Exs.A6 and A7 to show that an amount of
Rs.10,00,000/- was credited to the S.B Account of the plaintiff with the 3rd defendant, as per the entry shown on 26.12.2016 and immediately the same was debited from the same account, as per the entry dated 27.12.2016.
22.The 3rd defendant maintained that, the said nothings were made as per the instructions given by the Ashok Nagar Branch of Andhra Bank at
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Miryalaguda as well as the 2nd defendant and that the 3rd defendant has nothing against PW1 in this regard.
23.It is further submitted by the learned counsel for the 3rd defendant that, the 3rd defendant has to act in accordance with the instructions given by the
Ashok Nagar Branch of Andhra Bank at Miryalaguda, where Ex.A3 cheque was deposited for collection, which, in fact, acted in accordance with the directions of the 2nd defendant and, therefore, no malafides can be attributed to the act of the 3rd defendant.
24.As against the argument of the learned counsel for the plaintiff that
Section 72 of the Indian Contract Act applies to the present case on hand, the learned counsel for the 3rd defendant submitted that, said Section has no application to the present case on hand, as that Section speaks about the liability to pay back the amount, which was mistakenly paid to a particular individual. This is a quasi contract created by law and, in fact, this is an exception to the general principle of ‘the doctrine of privity of contract’. There is no privity of contract between the plaintiff and the 3rd defendant in respect of the transaction under Ex.A3 and, as rightly argued by the learned counsel for the 3rd defendant, Section 72 of the Indian Contract Act has no application to the present case on hand, as the facts of the present case are not that, some amount, which ought not to be paid to a particular individual, was paid and hence, that individual is under a legal liability to pay back the amount, which was mistakenly paid. This court is in full agreement with this argument of the learned counsel for the 3rd defendant.
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25.The learned counsel for the appellant (plaintiff) has relied upon the judgment of the Hon’ble Supreme Court in ‘Iswar Bhai C.Patel & Bachi Bhai
Patel Vs. Harihar Behera and another (AIR 1999 SC page 1341)’, wherein the Apex Court held that ‘in case of a party to the suit failed to enter the witness box to speak about the facts pleaded by the party, on oath, so as to afford an opportunity to the other side to cross-examine the party on those facts and has practically shunned and eschewed the witness box, that failure on the part of the party would give raise to an adverse inference U/s.114(g) of the Indian Evidence Act, 1872, that the case of that party is not true and correct’.
26.The learned counsel for the appellant (plaintiff) prayed the court to draw that presumption against the 3rd respondent (3rd defendant), in view of the failure of the 3rd defendant to place any oral evidence on record, so as to depose on oath before the court.
27.This is a sound principle of law reiterated in a catena of judgments by the
Hon’ble Apex Court and various High Courts from time to time. But, here, the
pleas taken by the 3rd defendant in the written statement are purely the legal pleas, but not those based upon the factual aspects. It is an admitted principle of law that, there is no estoppel against law and that the principle of waiver does not operate against a legal plea, unless barred by the Law of
Limitation. Therefore, the presumption U/s.114(g) of the Indian Evidence At, 1872 cannot be applied to the present case on hand.
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28.The learned counsel for the 3rd respondent relied upon the judgment of the Apex Court in ‘Arun Bhatia Vs. HDFC Bank and others (Judgment
dated 08.08.2022 in Civil Appeal Nos.5204-5205 of 2022 arising out
of SLP (C) Nos.29765-29766 of 2019 passed by the Hon’ble Supreme
Court)’, wherein the Apex Court is of the view that ‘in case of any deficiency in the service of a banker towards the customer, the proper remedy is to avail the relevant provision under the Consumer Protection Act by filing a consumer complaint, but not that of choosing a civil court for relief’. In this case, the
Apex Court held that, all the banking services availed by the customers come under the definition of ‘consumer services’ and reversed the judgment of the
National Consumer Redressal Commission, wherein the NCDRC held that, the subject matter of the case has to be decided by the civil court and the
Consumer Forum has no jurisdiction. On a detailed discussion of the relevant aspects, the Apex Court finally set aside the orders of the NCDRC and restored the file and directed for its disposal within four months.
29.In the light of this principle of law relied upon by the learned counsel for the 3rd respondent (3rd defendant), the remedy, if any, open to the appellant/plaintiff is to take recourse to a ‘consumer complaint’ before the proper forum, i.e., the Consumer Commission, in case there is any deficiency in the services rendered by the respondents 2 and 3 (defendants 2 and 3) and in so far as the present suit is concerned, the appellant/plaintiff is not entitled to seek any relief against them, as there is practically no privity of contract between the plaintiff and any of the defendants 2 and 3 in respect of the transaction under Ex.A3 in between the plaintiff and DW1.
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30.For the reasons stated in the foregoing discussion, this court is of the considered opinion that the appellant/plaintiff is not entitled to seek a decree against the defendants 2 and 3 and, accordingly, this point is decided against the appellant/plaintiff.
31.POINT No.2: In the light of the detailed discussion under point No.1 above and the conclusions arrived at against the appellant/plaintiff in respect of the relief sought for by the appellant/plaintiff against the respondents 2 & 3/defendants 2 & 3, the judgment of the trial court in partly dismissing the suit against the defendants 2 and 3 does not call for any interference by this court and, accordingly, this point is decided against the appellant/plaintiff.
32.POINT No.3: In the result, the appeal is dismissed with costs, thereby confirming the Decree and Judgment dated 26.10.2022 in O.S.No.24/2017 passed by the Principal Senior civil Judge, Ranga Reddy District at L.B.Nagar in partly dismissing the suit against the respondents 2 & 3/defendants 2 & 3.
Dictated to the Stenographer, transcribed and typed by her, corrected and
pronounced by me in the open court on this the 31 st day of July, 2023.
PRINCIPAL DISTRICT JUDGE
RANGA REDDY DISTRICT
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
NONE
EXHIBITS MARKED
NIL
PRINCIPAL DISTRICT JUDGE
RANGA REDDY DISTRICT
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