TMI Blog1985 (4) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us. On Oct. 11,1971 defendant 1 made an application to the Bandra Branch of the plaintiff Bank for opening a current account. That application was signed by defendants 2 to 4. Along with the said application defendants 2 to 4 handed over a letter stating, inter alia, that they were partners of defendant No. 1 firm and gave special instructions that the current account to be opened could be generally operated by cheques signed by any one of the partners. A copy of the said letter is Exhibit 'A' on record. Pursuant to this request of the defendants, a current account bearing No. 115 was opened by the plaintiff Bank. That account was operated upon by defendant 3 on behalf of defendant 1. The case of the plaintiff is that in August, 1973 the defendants requested for an over-draft facility and that facility was sanctioned. Pursuant to this facility, defendant 3 on behalf of the defendant 1 withdrew several amounts from the account and on Sept. 30,. 1975 there was a debit balance of ₹ 63,397.37 due from the defendants. The suit was filed by the plaintiff Bank for recovery of this amount with interest at 17%. The plaintiff served a notice of demand on Oct. 6, 1975 on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was as to whether he was authorised to give a temporary over-draft facility and Sathe asserted that he was so authorised to give such facility up to the limit of ₹ 25,000/-. No other question was put to him, which is very unfortunate, looking to the nature of the case of the plaintiff and the state of the accounts, which have been tendered by the plaintiff. Defendant 3 entered the witness box on the side of the defendants and all that was stated, by him in his evidence in chief was that he had not made any request to the said Branch Manager Sathe for the grant of any over-draft facility. In cross-examination, he admitted having signed the application Exhibit 'A' and also having signed the aforesaid cheques tendered by Sathe. He further admitted that the defendants had deposited in the said account a sum of ₹ 14,511.01 by way of a transfer entry and after this amount was deposited there was a credit balance of ₹ 6,880. 90 left in the account. He denied that he had orally applied to the plaintiff Bank for any temporary overdraft facility. 5. In his judgment the learned Judge took the view that the only question which really arose for determination was wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, this would show that defendant 3 had impliedly admitted that-there was an oral agreement whereby defendant 1 firm had secured over-draft facility from the plaintiff and that it would also show that interest was agreed to be paid at 17% on the amount overdrawn, because ₹ 30.20 represented interest at 17% per annum on the debit balance for the relevant period. In our view, this contention of Mr. Tulzapurkar must be rejected. In the first place, this theory which he has propounded was nowhere put to the witness. It was not shown to the witness that ₹ 30.20 was interest calculated at the rate of 17% on the amount overdrawn. Nor was it put to the witness, viz. defendant 3, that his admission of the credit because in the account would lead to the conclusion which Mr. Tulzapurkar wants to support. There is nothing on record before us to show that the amount of ₹ 30.20 has been calculated at the rate of 17% as aforesaid and, if that was the case of the plaintiff Bank, it surely ought to have put to the defendant No. 3. It is also significant that the extracts of accounts at Exhibit 'C' show that entries in respect of the major items of interest in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of his current account, it is really a request for a loan, and if the cheque is honoured the customer has borrowed money . Further observations go on to show that it was held that such borrowing would be simple transaction of borrowing and would not amount to borrowing upon security. But we are not concerned with that question here. Paged in his classic treatise on Law of Banking (1972 Edition) at page 132 has observed as follows: A banker is not obliged to let his customer overdraw unless he has agreed to do so or such agreement can be inferred from course of business; borrowing and lending are a matter of, contract not necessarily premeditated but possibly, spontaneous, as where a customer, without previous arrangement, draws a cheque, payment of which overdraws his account. Unfortunately, the aforesaid decision and the aforesaid hooks were not shown to the learned trial judge. If the legal position set out in the same is taken into account there is no doubt that where a customer, namely an account holder in bank, even without any express grant of an over-draft facility overdraws on his account and the cheque issued by him is honoured, the transaction amounts to a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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