GRINDLAYS BANK LIMITED vs Messrs CHEAP JOHN
This matter concerns a suit for the recovery of Rs. 52,104.19 filed by Grindlays Bank Limited against Messrs Cheap John, arising from an unpaid overdraft facility. The defendants admitted the debt but contended that the suit was time-barred and that the surrender of life insurance policies by the partners constituted full and final settlement of the bank's claim. The core legal questions were whether the suit was barred by limitation and whether the bank had agreed to accept the surrender value of the insurance policies in full satisfaction of the debt. The Court held that the suit was within the limitation period, as the defendants had acknowledged the liability in writing through various letters, the last being dated 22-4-1975. Furthermore, the Court found that the defendants failed to discharge the burden of proof regarding the alleged full and final settlement agreement. Consequently, the Court decreed the suit in favor of the plaintiff, holding that the bank's statement of accounts was admissible and correct under the Bankers Books Evidence Act, 1891, and awarded the claimed amount with interest.
- Does a written acknowledgment of debt by the debtor extend the limitation period for a recovery suit?
- Upon whom does the burden of proof lie when a defendant claims that a partial payment or collateral realization constitutes full and final settlement of a debt?
- Is a statement of accounts produced by a bank admissible in evidence under the Bankers Books Evidence Act 1891?
- Section 4, Bankers Books Evidence Act 1891
' This is a suit for recovery of Rs,52,104.19. Plaintiffs M/s. Grindlays Bank Ltd. Had in March, 1958 at their request granted banking facilities and accommodation by way of Overdraft upto the limit of Rs,40,000 to the Defendants in their current account. The Defendants as security hypothecated their stock-in-trade with the Plaintiff and executed such letter on 27-3-1958. Thereafter, at the request of Defendants the limit of Overdraft was increased to Rs,1,50,000 and Supplemental Letter of Hypothecation was executed on 15-8-]960. As collateral security for the advances made, the six partners of the Defendant firm assigned to the plaintiff-Bank their respective Life Insurance Policies.
The Defendants utilised the said facility and made' part payments. As they could not clear the dues, therefore, the Plaintiffs after notice to the Defendants surrendered five Life Insurance Policies of the partners of Defendants' firm and collected in all Rs,39,925.58 and yet on 27-12-1975 a sum of Rs,52,104.19 was due to the Plaintiffs from the Defendant which has not been paid in spite of repeated demands. Hence the suit.
2. The Defendants filed written statement wherein they admitted all the averments made in the plaint. They, however, averred that it was agreed by the Plaintiffs Bank that the amount recovered from the surrender of the above Life Insurance Policies will be taken in full and final satisfaction of their claim. It was also pleaded that the suit was time-barred.
3. On the pleadings of the parties the following issues were framed:-"(1) Whether the suit is barred by limitation?
(2) Whether the Plaintiffs received the surrender value of life policies in full satisfaction of its claim?
If so, whether the suit as framed is not maintainable?
(3) Whether the accounts filed by the Plaintiffs are not correct? If so, in what respect?
(4) Whether any amount is due to the Plaintiffs from the Defendants as claimed? If so, what amount?
(5) What should the decree he?"4. My findings on these issues are as follows:- Issue No,1 No Issue No,2 No Issue No,3 Yes Issue No,4 Sum of Rs,52,104.19.
Issue No,5 as prayed. REASONS Issues Nos.1 ' Since all these issues are interconnected, hence I have decided to discuss all of them together.
' The Plaintiffs have examined Syed Mustafa, Officer of their Bank as Exh.5, and have produced Statement of Accounts as Exh.5/A, Notice as Exh.5/2, Letter of Defendants in reply of the notice as Exh.5/3, second notice as Exh.5/4 and third notice as Exh.5/5, and have closed their side. The Defendants have not led any evidence whatsoever in spite of a number of adjournments taken by their Advocate. Hence the Defendants' side was closed. Suit has been filed on 27-4-1976. The liability was acknowledged in writing by the Defendants from time to time by their various letters, first of which is dated 23-10-1968 and the last is dated 22-4-1975. The last letters have been produced as Exhs. 5/3 an,( 5/5 and have been admitted by the Defendant. In these letters the Defendartc ad acknowledged the debt and in the last letter requested for three moon as time. The suit is, therefore, within time. The Defendants' counsel was only 'o point out as to how the suit was time-barred. Hence findings accordingly. The plaintiffs' witness was briefly cross-examined. His examination-in-chief and the documents produced by them were not rebutted, nor even challenged. The burden of proof that there was an agreement that the Life Insurance Policies were surrendred in full satisfaction of Plaintiffs' claim, was on the Defendants which they have miserably failed to discharge as they have not led any evidence whatsoever. I am, therefore,. Satisfied that the Plaintiffs had not agreed to receive the surrender value of the Life Insurance Policies of the Defendants in full satisfaction of their claim. The statement of accounts filed by the Plaintiffs is admissible in evidence under the Bankers Book Evidence Act. The Defendants' counsel has neither rebutted the said evidence, nor has shown as to how this statement of accounts is incorrect. Hence I hold that the accounts filed by the plaintiffs are correct.
' In view of the above findings I hold that at the time of filing of this suit a sum of Rs,52,104.19 was due to the Plaintiffs from the Defendants. I, therefore, decree with costs the Plaintiffs' suit for the said amount. I also allow interest thereon @ 14% per annum from 1-1-1976 till the recovery of decretal amount.
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