Delhi State Cooperative Bank Ltd vs Dharamvir Rana

Neena Bansal Krishna, J.

The present Regular First Appeal under Section 96 of the Code of Civil Procedure, 1908 (hereinafter referred to as ‘CPC’) has been filed on behalf of the Defendant/Appellant, against the Judgment and Decree dated 16.09.2023 whereby, the learned Additional District Judge decreed the Suit of the Plaintiff/Respondent for recovery of Rs. 3,87,064/- along with interest @ 6% per annum towards the pre-litigation period as well as for pendente-lite period and future interest @ 9% per annum.

The Plaintiff/ Respondent had filed a Civil No. 652/2017 for Recovery of Rs. 4,48,654/- along with the pendent-lite and future interest @ 24% per annum.

The facts in brief, as stated in the Plaint, are that the Plaintiff/Respondent was recruited as a Clerk on 11.10.1973, by Defendant/Appellant i.e. Delhi State Cooperative Bank. The Plaintiff claims that he was hardworking and had an unblemished Service record and was promoted to the post of A.G.M., at the time of his retirement. Before his retirement on 31.05.2016, the relieving Orders were given by all the concerned Departments of the Bank, without any objection of any kind, whatsoever.

The Plaintiff stated that during his Service, he was posted as Manager at Moti Nagar Branch in October, 2007, but no formal charge or record was handed over to him by the then Manager, despite several oral requests, and it was brought to the knowledge of the superior authorities, as well.

During the normal course of business, the Plaintiff came to know that certain files were not traceable in the Branch. He accordingly, he informed his superior authorities and also gave a Letter in writing to the previous Manager, but no action was taken by the bank authorities, only to save the skin of the earlier manager or the concerned Staff of the Bank, who are the kith and kins of the Bank management.

The Plaintiff had given a written Letter to the bank authorities, but no positive response was given, nor any Departmental Enquiry was initiated, against the erring officers of the Bank who were posted in the Branch, prior to the Plaintiff.

Repeatedly, the Plaintiff requested time and again orally, as well as, in writing, in regard to the missing Files of which charge was never handed over to the Plaintiff. The Bank authorities transferred the amount of these missing Files in the shadow account, being the non-recoverable amount.

After three months of the retirement of the Plaintiff, after having served 40 years in the bank, he got a setback when he received Letter no. H.O./Esst.7845/16-17 dated 30.08.2016 from the Defendant, giving details of the dues payable and the deductions. The Bank had made deduction of Rs. 3,87,064/- from his hard earned money and savings, on account of recovery of some loan cases, of which the files had been missing at Moti Nagar Branch.

The Plaintiff stated that the Bank never conducted any enquiry in respect of alleged missing files, nor was any Notice ever given to the Plaintiff, during his service time. Even otherwise, the Plaintiff had no concern with the missing of Files, nor was he liable for recovery of the amount pertaining to those missing Files. The Bank was completely silent with regard to recovery efforts of the missing Files.

The Plaintiff asserted that the Deductions Letter dated 30.08.2016 was issued without Notice, enquiry or any departmental proceedings and without considering the fact that the charge of the Files was never handed over to him nor was the loan granted, during his tenure. The Defendant have deducted the amount in a preplanned conspiracy, only with the malafide intention to cause the unnecessary and unjust loss to the Plaintiff.

The Plaintiff asserted that the deduction of this amount, has been made illegally; in fact, amounts to an offense of criminal breach of trust, punishable under Section 406/120B of the Indian Penal Code, 1860. The Plaintiff issued a Legal Notice dated 19.10.2016, to which the Bank sent a vague, false and concocted reply.

The Plaintiff, thus, filed the Suit for Recovery of Rs. 4,48,654/-along with the pendent-lite and future interest @ 24% per annum.

The Defendant/Appellant in his Written Statement, took preliminary objections that the Suit of the Plaintiff is barred by limitation; the Plaintiff has not approached the Court with clean hands and has suppressed material facts. He has also failed to pay the proper Court Fee in accordance with law.

Furthermore, the Suit is liable to be dismissed in terms of Sections 70, 129 and 132 of the Delhi Co-Operative Societies Act, 2003. It is also not maintainable under Section 41 of Specific Relief Act, 1963.

On merits, it was admitted that the Plaintiff, who was recruited as a clerk on 11.10.1973, had retired on 31.05.2016. During his service tenure, he had taken charge as Manager, Moti Nagar Branch of the Bank, on 22.10.2007 and was entrusted with the entire record of the Branch. He, however, brought some loan files in the Head Office of the Defendant Bank with a recommendation to transfer these loans in the shadow Account, as no recovery could be affected in respect of those files.

These loan amounts were transferred to Shadow Account, while the files remained in the custody of the Plaintiff, being the Branch Manager. Thereafter, the Branch Managers were asked by the Management to pursue the recovery on the loan cases, which had been transferred to Shadow Account, which included the aforementioned loan cases, as well.

After expiry of around 1 year and 7 months, the Plaintiff apprised the higher authorities of the Bank vide Letter dated 01.05.2009, that certain files were missing and not traceable. The Plaintiff neither informed the higher authorities about the missing files at the time of taking charge of the Branch, nor did he pursue the recovery of the loan amounts, for which he was duty bound.

An Enquiry Officer was appointed to give his finding, and the Defendant Bank had written several Letters dated 11.05.2009, 04.06.2009, 24.06.2009, 07.09.2009, 21.10.2009 and 03.01.2013 to the Plaintiff and other officials, to clarify their situation with regard to the missing files, but Plaintiff neither gave a sufficient Reply nor cooperated in any manner, with the Enquiry Officer. It was crystal clear and apparent from these facts, that the Plaintiff was in collusion with the loan defaulters or other subordinate Officials of the Bank and had misplaced the files with a malafide intention to cause loss to the Bank and to grant benefit to the loan defaulters, in his own interest.

It was asserted that the Plaintiff has wilfully and intentionally committed criminal breach of trust, fraud, and cheating by misplacing the loan Files, so that recovery could not be made. The Plaintiff had caused a loss of Rs. 14,30,468.65/- along with the interest, as on 31.03.2007, to the Bank.

The Plaintiff, though being the Manager of the Branch, had failed to take any steps to seek the recovery pertaining to the missing Files. He kept on sleeping over the matter and reported about the missing Files for the first time, on 01.05.2009, i.e. at a highly belated stage. He did not inform the higher authorities of the Defendant Bank about the missing files at the time of taking charge of the Branch, nor did he report that he had not been handed over the entire record by the earlier Manager.

It is a clear-cut case of wilful negligence on the part of the Plaintiff, for which he is liable to be prosecuted under section 406/417/419/420/468/471 of the Indian Penal Code, 1860. The Plaintiff was liable to maintain the missing Files in his safe custody, being the branch Manager and was also liable to recover the amount from the subject loan defaulters, but he did nothing with malafide intention.

It was asserted that the amount has been rightly deducted from the retirement benefits of the Plaintiff, and the Suit was without merit, and was liable to be dismissed.

The Plaintiff in his Replication, reaffirmed the assertions as made in the Plaint and denied the averments made in the Written Statement. The Plaintiff asserted that he is not a member of the Bank and hence, Section 70, 129 and 132 of the Delhi Co-Operative Societies Act, 2003 does not apply.

It was asserted that the Award had been already passed with respect to the missing loan Files and the same is sub-judice for execution of the Awards before the Assistant Collector of the Bank, which were being looked by the litigation branch of the bank. The funds of the Loan Accounts in which the recovery could not be effected, had been transferred in the Shadow Account of the Bank, by and at the recommendation of the Head Office only. The recovery could had been proceeded by the Assistant Collector, who is the competent authority as per the Delhi Co-Operative Societies Act, 2003.

The Plaintiff asserted that there was no Enquiry Officer appointed to conduct the enquiry of the missing loan Files. No loss was caused due to or by the Plaintiff to the Defendant Bank; therefore, the Plaintiff is not liable to pay amount to the Defendant Bank. The Plaintiff had no relation with the loan defaulters and loan Files, nor he was the surety in the loan. He had not even sanctioned/recommended the subjects loan and he cannot be liable for the payment in the said Loans.

The Issues on the pleadings, were framed on 07.03.2020, as under:

The Plaintiff in support of his case examined himself as PW-1 and tendered his Evidence by way of Affidavit, Ex. PW-1/A. He proved the following documents:

The Defendant examined DW-1, Shri Jitender Singh, Assistant General Manager in the Defendant Bank, who tendered his Evidence by way of Affidavit, Ex. DW1/A.

The learned Additional District Judge, on appreciation of the evidence, vide Judgment dated 16.09.2023, observed that the Defendant had taken an objection that the Plaintiff had not sought any Declaration challenging the Letter dated 30.08.2016, Ex. PW-1/3 and unless the declaration that the Defendant should have first led the foundation to prove that the action of the Defendant for deducting the amount from the total amount due and payable to the Plaintiff, was valid in law. If the action of the Defendant in deducting the amount was non-est in the eyes of law, then there was no occasion for the Plaintiff to have challenges the action, by seeking a declaration against the letter.

The learned ADJ further held that the plea that the Defendant Bank had suffered loss due to the fault of the Plaintiff, is not only vague but remained unsubstantiated. Therefore, the action of the Defendant in deducting the amount was not tenable in the eyes of law, as DW-1 himself admitted that no enquiry was conducted against the Plaintiff, by the Defendant Bank.

It was thus, held that there was no occasion for the Defendant Bank for deducting Rs. 3,87,064/- from the amount, which was payable to the Plaintiff. The Suit was accordingly, decreed for Rs. 3,87,064/- along with interest @ 6% per annum towards the pre-litigation period as well as for pendente-lite period i.e. from 30.08.2016 and future interest @ 9% per annum till the actual realisation of decretal amount.

Aggrieved by the said Judgment, the present Regular First Appeal has been preferred by the Defendant/Appellant, under Section 96 CPC.

The grounds of challenge are that the Letter dated 30.08.2016 by which the amount was deducted by the Defendant, had not been challenged by the Plaintiff. There was no prayer made for Declaration for setting aside the Letter dated 30.08.2016, and the Suit of the Plaintiff was not maintainable without seeking the requisite declaration.

The simple interest @ 6% per annum on the decretal amount for the pre-litigation period as well as pendente-lite period, has been erroneously granted. Moreover, the future interest granted to the Plaintiff @ 9% per annum, is exorbitant and much higher than the rate at which the Plaintiff would have earned by keeping the amount in the fixed deposit, as the rate of interest on Fixed Deposit, was around 4% to 5% per annum.

The Files of loan defaulters were in the custody of the Plaintiff, which had gone missing and the loan amount could not be recovered, leading to a loss to the Bank. This was the only reason for deduction of Rs. 3,87,064/-from the Plaintiff. These facts have not been rightly appreciated by the learned Trial Court.

The Plaintiff has also made an admission about the missing loan Files, which in itself was sufficient for deduction of the amount from the Plaintiff since the Files went missing, the loan amount from the defaulters could not be recovered and the Defendant Bank suffered loss. It was, therefore, submitted that the Impugned Judgment dated 16.09.2023 passed by the learned Trial Court be set aside.

Submissions heard and record perused.

At the outset, an objection had been taken by the Defendant that the Suit was not maintainable in the absence of a Declaration of the Letter dated 30.08.2016, Ex. PW-1/3. It was claimed that unless the Declaration is sought, the Plaintiff could not have sought the recovery of the Suit amount i.e. Rs. 3,87,064/-. However, this argument is absolutely fallacious as this is a simple Suit for recovery of the amount allegedly illegally deducted, from the dues of the Plaintiff.

The Defendant had issued a Letter dated 30.08.2016, Ex. PW-1/3, which was nothing but intimation to the Plaintiff regarding the deductions made. This Letter in itself did not declare any independent liability or right, but was clearly a culmination of the Defendant's assertions for deduction of the Suit amount, of which the intimation was given to the Plaintiff. No declaration could have been sought, in respect of this Letter. Rather, it was for the Defendant to prove from its record that the deductions as reflected in the Letter dated 30.08.2016, Ex. PW-1/3, was justified.

The learned ADJ has rightly held that there was no Declaration required, in respect of Letter dated 30.08.2016, Ex. PW-1/3.

On merits, it is an admitted fact that Plaintiff, who had been recruited as Clerk in the Defendant Bank on 11.10.1973 and had retired as an Assistant General Manager, on 31.05.2016. It is further not in dispute that he was posted as a Manager in the Moti Nagar Branch in October, 2007.

However, the Plaintiff deposed that the charge or record of the Branch had not been handed over to him by the erstwhile Manager, despite repeated requests. He subsequently, came to know that there were certain Files missing in the Branch, which was brought to the knowledge of the Defendant. The bank Authorities had transferred the loan amount of the missing Files, to the Shadow Account.

Further, in the cross-examination of PW-1, wherein the Plaintiff denied that when the loan defaulters account are transferred to Shadow Account, all the related files are taken to Head Office. He clarified that whenever a defaulter account is transferred to Shadow Account, then only the Account Statement is sent to the Head Office. The PW-1 also explained that he had no role to play in the missing of loan defaulters account Files and the recovery of loan was the duty of Recovery Cell, which was a specialized Agency created by the Bank.

It is significant to note that the Plaintiff had deposed that the recovery of the loan amounts was not his duty, and this has been admitted by the Defendant.

The DW-1 in his cross-examination, had explained that the Bank Manager does not take any action himself in personal capacity and the matter is referred to the Legal Cell of the Bank to take appropriate action in accordance with law. Thereafter, the Registrar Cooperative Society appoints an Arbitrator, who after following the procedure, passes the Award against the loan defaulter and his Surety. The Award is then sent to Assistant Collector/Recovery Cell of the Bank for recovery of the loan amount. DW1 admitted that the Bank Manager has no role to play for the recovery of the loan amount.

From the admissions made by DW-1 himself in the cross-examination, it emerges that it is not the personal responsibility of the Bank Manager to affect the recovery against the defaulted loans, but it is the responsibility of a Legal Cell, specifically created for the purpose.

The testimony of the Plaintiff that the files were missing even prior to the taking over of the charge by the Plaintiff as Bank Manager of Moti Nagar Branch on 22.10.2007 and that he had not received this record from the erstwhile Managers, has not been effectively rebutted by the Defendant.

The Defendant had asserted that it had written various Letters dated 11.05.2009, 04.06.2009, 24.06.2009, 07.09.2009, 21.10.2009 and 03.01.2010 to the Plaintiff seeking explanation from the Plaintiff for the missing files, but not even a single letter was proved on record. The Defendant did not proved as to what all steps were taken or approved by the Board before coming to the conclusion to deduct the amount of Rs. 3,87,064/- from the retirement benefits. The witness who had signed and approved the Note Sheet, Ex. DW-1/PB had not been produced by the Defendant Bank.

The document of deduction produced by the Defendant Bank, contains a Note Sheet, Ex. DW-1/PB. The subject of this Note Sheet was “Fixation of Liability for missing files at Moti Nagar Branch.” The Note Sheet stated that as per the decision of the Board, the Branches transferred some loan accounts to Shadow Ledger, on 30.03.07 and 31.03.09. Mrs. Gurvinder transferred Accounts on 30.03.07 and the Plaintiff, Mr. Dharamvir Rana on 31.03.09. However, the witness who had signed and approved the Note Sheet, Ex. DW-1/PB had not been produced by the Defendant Bank.

Furthermore, DW-1 admitted that no enquiry was conducted against the Plaintiff. DW-1 produced one Letter dated 30.08.2016, Ex. DW-1/PA addressed to Smt. Gurvinder Kaur, the earlier Manager of the Moti Nagar branch, from whom a deduction of Rs. 2,84,635.65/- had been made. Furthermore, as per the Note Sheet, Ex. DW-1/PB, the matter was directed to be put in E.S.C. AGM (Estt.) for considering fixation of liability of the erring official.

There was no action, whatsoever, taken by the Defendant to fix the liability, on any of the Managers. It has claimed by the Defendant Bank that there was an Enquiry Officer appointed, but there is neither any evidence nor any document produced, to establish if the Enquiry Officer had concluded the enquiry or fixed the liability on any person. The Defendant has also not been able to explain the reason, why the loan amounts were shifted to Shadow Account and had not contemporaneously conducted an Enquiry, in the year 2007-2009.

Further, the defence taken by the Defendant Bank that there was an appointment of Enquiry Officer and the Plaintiff did not cooperate the Enquiry Officer, was without any iota of truth. The Plaintiff got superannuated from his services on 31.05.2016 and nothing had been proved by the Defendant that at the time of the retirement, any enquiry was pending against the Plaintiff. The Relieving Order dated 31.05.2016, Ex. PW-1/2, signifies that the Plaintiff was allowed to be superannuated without any objection.

While the Defendant had claimed that the files had gone missing, but neither any details nor any other cogent evidence has been led either to establish that the files were missing or that they went missing during the tenure of the Plaintiff as his Manager.

Moreover, it has been rightly observed that though various Letters have been referred by the Defendant as having been sent to the Plaintiff for seeking explanation on the missing files, not a single Letter has been placed on record. No Enquiry Report of any kind has been placed on record, fixing the responsibility of the Plaintiff for missing files.

The learned ADJ has, therefore, rightly appreciated the evidence to conclude that that the Suit amount i.e. Rs. 3,87,064/- had been wrongly deducted from the dues payable to the plaintiff.

The other main grievance of the Defendant is that the learned Trial Court has awarded future interest at the exorbitant rate of 9% per annum to the Plaintiff. However, under Section 34 CPC, it is the discretion of the Court to grant the interest, having regard to the prevailing interest rates. There is no illegality shown in the grant of the interest by the learned District Judge.

The Suit has been, accordingly, rightly decreed for the suit amount of Rs. 3,87,064/- along with interest @ 6% per annum towards the pre-litigation period as well as for pendente-lite period i.e. from 30.08.2016 and future interest @ 9% per annum till the actual realisation of decretal amount.

In view of the aforesaid discussion, there is no merit in the present appeal, which is hereby, dismissed.

The pending Applications, if any, are also disposed of.