TMI Blog1978 (9) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... h June, 1944, the limit of the overdraft account was raised to ₹ 10 lacs. C. B. Samuel, as Managing Director of the Company, executed a promissory note for ₹ 10 lacs and he and his wife Margaret Samuel (defendant) executed a guarantee Bond (Exhibit 57) by which they jointly and severally guaranteed to the bank the repayment of all money 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 ₹ 10 lacs at any one time. We will have occasion to refer to the terms of the bond in detail later. The overdraft facility was utilised by the Company and amounts were drawn from the Bank at various times. The Company ceased business on 30th June 1946, and thereafter the Company entered into an arrangement with the plaintiff bank by which the plaintiff bank was authoroised to receive all amounts due from the Director General of Food Supplies, Government of India, 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 authorsin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 all the items mentioned in Schedule B , with her explanation for the items . 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. No doubt she had filed an application soon afterwards to direct the plaintiff to produce the accounts and other documents within two weeks, but when the plaintiff failed to produce the accounts within two weeks, she did not take any furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n an elaborate consideration of the evidence, the Trial Judge answered issue No. 9 in the affirmative and issue No. 9-A in the negative basing his conclusion primarily on Exhibit 99 a letter dated 30th June 1950, passed by the Company in favour of the bank acknowledging that the balance due at the foot of the over-draft account as on 30th June, 1950 was ₹ 4,90,523-5-7. The Trial Judge held that the letter of acknowledgement was binding on the defendant. The suit was decreed for a sum of ₹ 1,50,000/- with further interest and costs. The defendant preferred an appeal to the High Court of Bombay. The High Court considered the evidence relating to each item of debit in great detail and found that debit items amounting to ₹ 68,761-7-0 were not provide to be binding on the defendant. As this amount with interest was less than the amount of ₹ 85,453-1-0 which had been given up by the plaintiff in the plaint, the High Court affirmed the decree passed by the Trial Court. The finding of the High Court in regard to the various debit items were greatly influenced by a group of three letters Exhibit 104, dated 30th June, 1945, Exhibit 105 dated 27th November, 1945 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit case for interference under Article 136 of the Constitution, having regard to the justice of the matter as disclosed by the subsequent findings of the Trial Court and the Appellate Court. On the question of limitation he submitted that 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. He urged that the defendant was an educated person well versed in business affairs and the High Court was right in attaching importance to the three letters Exhibit 104, 105 and 106. We may first consider the question of limitation. As already mentioned by us, the submission of Shri Bal was that every item of an overdraft account was an independent loan, limitation for the recovery of which was determined by Article 57 of the schedule to the Limitation Act, 1908. Limitation, according to the learned Counsel, started to run from the date of each loan. He relied on Basante Kumar Mitra v. Chota Nagpur Banking Association Ltd,.(1) Brajendra Kishore Ray Chowdhury v. Hindustan Cooperative Insurance Society Ltd. National and Grindlays Bank Ltd. v. Tikam Chand Daga Anr., and Uma S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no refusal on the part of the guarantor to carry out the obligation, we do not see how the period of limitation could be said to have commenced running. Limitation would only run from the date of breach, under Article 115 of the schedule to the Limitation Act, 1908. When the Bombay High Court considered the matter in the first instance and held that the suit was not barred by limitation, J. C. Shah, J., speaking for the Court said: On the plain words of the letters of guarantee it is clear that the defendant undertook to pay any amount which may be due by the Company at the foot of the general balance of its account or any other account whatever ..... We are not concerned in this case with the period of limitation for the amount repayable by the Company to the bank. We are concerned with the period of limitation for enforcing the liability of the defendant under the surety bond ........ We hold that the suit to enforce the liability is governed by Art. 115 and the cause of action arises when the contract of continuing guarantee is broken, and in the present case we are of the view that so long as the account remained a live account, and there was no refusal on the part of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uarantee, by the surplus of the total debits over the total credits, and accordingly at the date of the counterclaim the Association s claim against the plaintiff for payment of the unpaid balance due from the Nosworthys, with interest, was not statute-barred. This was precisely the view which J.C. Shah, J., expressed in the passage already extracted by us, with which we expressed our agreement. We may add here that in Wright s case the Privy Council appeared not to approve of the decision in Parr s Banking Company Ltd. v. Yates(1), where it had been observed that the statutory limitation would run from the date of each advance. As noticed in Paget s Law of authority of Parr s case has been overruled so far as the guarantor is concerned by the judgment of the Court of Appeal in Bradford old Bank Ltd. v. Sutcliffe(1). Now, the overdraft account which was guaranteed by the defendant by the execution of the guarantee bond dated 23rd October, 1944, continued to be a live account even after the Company ceased its business on 30th June, 1946. A power of Attorney was executed by the Company in favour of the plaintiff bank and amounts due to the Bank were realised and credited in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rising out of the final judgment pronounced in the action vide Satyadhyan Ghoshal Ors v. Smt. Beorajin Debi Anr.(1); Lonankutty v. Thomman Anr.(2); Jasraj Inder Singh v. Hem Raj Multan Chand(3). It does not, however, mean that the Supreme Court will, every time, exercise its discretionary power under Article 136 of the Constitution merely because it finds that the High Court had wrongly passed an order of remand at an earlier stage of the case. If the Supreme Court is satisfied that as a result of the order of remand substantial justice has been done to the parties in the consequential proceedings, the Supreme Court may decline to exercise its discretionary power to interfere. The jurisdiction under Article 136 is not meant to correct every illegality brought to the notice of the Supreme Court, nor to undo, merely on account of such illegality, an adjudication which has done substantial justice to the parties. On the other hand, Article 142 of the Constitution expressly confers powers upon the Supreme Court, in the exercise of its jurisdiction, to pass such decree or make such order as is necessary for doing complete justice in any case or matter pending before it. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior to 1st December, 1945. We think that the High Court was right in doing so. The first of the letters Exhibit 104, is a letter addressed by the Bank to the Company informing the latter that the balance due at the foot of the account as on 30th June, 1945, was ₹ 6,81,242- 9-5. The letter contains an endorsement by the defendant as a Director of the Company confirming the correctness of the statement. The second letter dated 27th November, 1945 (Exhibit 105) is a letter addressed by the Company to the Bank. It is signed by the defendant on behalf of the Company. By this letter the Company complained about the dishonour of two cheques for ₹ 20,000/- each despite the fact that the Company had not exceeded the overdraft limit. In the letter it was pointed out that while the overdraft balance was ₹ 10,14,380-7-6, a bill for ₹ 89,789/- had been sent by the Company to the Bank on 22nd November, 1945. The letter while taking the plaintiff to task for dishonouring the cheque requested the bank to send a statement of account as on 30th November, 1945. This letter is of great importance since it shows that the Company was aware of the correct balance of the overdr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Govt., the Bank was entitled to receive the amount of Security lying in deposit with the Government and therefore, the item of debit of ₹ 50,000/- made on 17th July, 1944, in the loan account of the Company should be deducted from the total of the debit items. We are unable to agree with the submission of Shri Bal. In the first place no dispute concerning this item was raised either in the written statement of the Company or in Exhibit 85. In the 2nd place. this is also one of the items of debit made prior to 1st December, 1945 and it must have been duly verified before the letters Exhibit 104, 105 and 106 were written. Shri Bal also objected to two items of debit dated 30th September, 1944 and 30th June 1945, representing amounts transferred from the Company s account to the personal account of C.B. Samuel. Both these debits were made prior to 1st December, 1945, and, therefore, we do not think we will be justified in excluding them. As a result of the foregoing discussion we agree with the High Court that the plaintiff bank failed to prove items of debit totalling ₹ 68,761-7-0. Allowing interest from the various dates of debit, the total amount which has to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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