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Judgment
Ranjit Singh, J
While allowing the O.A. filed by the Bank for recovery of Rs. 16,18,994.42, the Tribunal below has directed the recovery of the amount from appellants and respondents 2 to 4. Aggrieved against this order, the present two appellants have filed this appeal. In this case, the erstwhile New Bank of India had granted temporary overdraft facility to respondent No. 2 in its current account. Thereafter, the said Bank had allowed Cash Credit (Hypothecation) Limit and on the request of respondent No. 2, the debit balance of the current account was transferred to the Cash Credit account of the said respondent. Respondent No. 3 being Managing Director of respondent No. 2 executed documents required in regard to Cash Credit (Hypothecation) account. These documents comprised of Demand Promissory Note, Letter of Waiver, Letter of continuity, Agreement of Cash Credit, Hypothecation Agreement, Letter declaring that respondent No. 2 would not deal with any other Bank. New Bank of India had even allowed respondent No. 2 to avail Cash Credit Limit against the Bills in OBC to the extent of Rs. 1 lac. This limit was enhanced later to Rs. 2 lac for which requisite documents were executed. Respondent borrower had agreed to pay interest @ 6.5% p.a. over the RBI rate of interest with minimum of 16.5% p.a. with quarterly rests.
Respondents 3 and 4 stood as guarantors in their personal capacity and had signed combined continuing guarantee on 14.1.1989 in favour of New Bank of India. The present appellants being owners of Industrial Plot No. B-136, Phase-II, NOIDA, Ghaziabad with leasehold rights are alleged to have deposited the title deeds of the said plot with New Bank of India to create equitable mortgage of the said property in favour of the Bank. When the borrower failed to maintain Banking discipline and both of their accounts became irregular, the Bank filed OA to claim a sum of Rs. 16,18,994.42 along with pendente lite and future interest.
Respondents 2 to 4 did not appear despite notice and were proceeded ex-parte on 1.2.1996 before the Addl. Civil Judge, Senior Division, Ghaziabad. The present appellants contested the O.A. and filed written statement. The appellants denied averments made in the O.A. and stated that they had never agreed to create equitable mortgage of the property in question. Their plea was that they were only lessee subject to the terms and conditions of the lease deed dated 26.6.1986 executed by New Okhla Industrial Authority in favour of M/s. R.T.S. Engineering Company of which they were the partners. The appellants had urged that they never deposited document/lease deed in favour of the Bank with the intention to create equitable mortgage. The appellants would state that they were not liable to pay any amount to the Bank. In addition, the appellants have disclosed that they became acquainted with one Mr. Raman Mehta while they were in the process of getting the flat allotted to them. Ultimately, the plot in question was allotted to them by New Okhla Development Authority. The appellants would plead that they with limited sources could neither raise any construction nor establish any industry functional on the plot in question within three years from the date of allotment. This was necessary as per the terms and conditions of the lease deed. Apprehending that lease may be terminated, they approached respondent No. 3 who advised them that he would soon arrange a buyer for disposing of the plot. Respondent No. 3 demanded original lease deed and other documents pertaining to the plot which appellants delivered to him in good faith. Respondent No. 3 then introduced the appellants to Mr. Amrit Lal Grover as prospective buyer who advised the appellant that they may not be able to sell the industrial plot as per the terms of the lease and so the appellants should form a private limited company whereafter Mr. Grover can purchase the shares in the company of the appellants. Accordingly, a private limited company was constituted in the name and style of M/s. R.T.S. Engineering Company (India) Pvt. Ltd. Respondent No. 3 obtained signatures of the appellants on printed forms on behalf of Mr. Grover. It later transpired that respondent No. 3 and his wife respondent No. 4 in conspiracy with the Bank staff with mala fide and fraudulent intention had obtained financial assistance by depositing this original lease deed of the property in question by forging the signatures of the appellants on letter dated 14.1.1989 confirming delivery of the title deeds. The appellants came to learn from the newspaper that respondents 3 and 4 had committed fraud on MMTC for which they had lodged a complaint with the police as well.
The Bank and the appellants led evidence in support of their pleas. Mr. B.S. Bhandari, Special Assistant appeared on behalf of the Bank as witness who deposed on the lines of the plea raised in the O.A. This witness was subjected to cross-examination when he admitted that sanction letter was not available on record. The witness also admitted that document Ex. AW-1/7 did not contain details of the stock hypothecated. As per the witness, the appellants came to the Bank to deposit the title deeds. Simultaneously, he admitted that the signatures on the leased deed Ex. AW-1/5 are not similar to signatures appearing on Ex. AW-1/16 and AW-1/5A. The witness also admitted that the New Okhla Industrial Authority vide its letter Ex. D-4/10 had declined permission to mortgage this property.
Appellant Mr. Rakesh Talwar appeared and deposed on the lines of written statement. He proved documents Ex. D-4/1 to Ex. D-4/11. The witness also stated that Mr. A.L. Grover through respondent No. 3 had desired to purchase this property in question and the property was sold to Mr. Grover on 8.6.1989. Agreement in this regard was executed between the parties. Since it was leasehold property, no lease could be executed and he was given to understand that the original lease deed was handed over to Mr. Grover. Appellant No. 2 had also deposed on the similar line.
While rejecting the plea of the appellants, the Tribunal has held that witness Mr. B.S. Bhandari was not questioned about his expertise in comparing the signatures and the points of dissimilarity between the signatures on lease deed Ex. AW-1/5 and on documents Ex. AW-1/16 and AW-1/5A.
I am unable to appreciate the approach adopted by the Tribunal below. The burden to prove that the title deed of the property was deposited by the appellants and that the signatures appearing on letter Ex. AW-1/16 confirming delivery of title deeds were of the appellants was on the Bank as it was asserting this fact. The witness produced by the Bank was the one who introduced serious doubt about the signatures of the appellant being different. Thus the stand of the Bank did not receive support or the whole hearted support from the deposition of its own witness. Mr. B.S. Bhandari during his cross-examination conceded that signatures appearing on lease deed Ex. AW-1/5 were not similar to signatures as appearing on Ex. AW-1/16 and AW-1/5A. This evidence would go to demolish the case set up by the Bank. If the Bank was not to rely on this version, it could get this witness declared hostile to enable the Bank's Counsel to question the witness in the nature of cross-examination or to test his competence to state so. There was no burden cast on the appellants to question the witness on his expertise in comparing the signatures or in pointing out dissimilarities between two signatures once he has given deposition in their favour. Question, if any, to show that witness was competent to say so should have been on the side of the Bank. Once the witness had supported the stand of the appellants, appellants could not be expected to question his expertise in comparison or to prove this before the Tribunal below. The Tribunal below has unfairly cast this burden on the appellant while adopting this approach to negate the plea of the-appellants.
I find that the Tribunal's action in ignoring the examiner of the questioned document was a bit harsh. The Tribunal has observed that the appellants had not proved this report and hence it could not be taken into consideration. The Bank was asserting that the signatures on the documents confirming delivery of the title deeds were that of the appellants. Burden to prove this fact was on the Bank. The appellants succeeded in proving that the signatures appearing on those documents were not similar. Even if the appellants did not prove the report of the examiner of the questioned documents, they were not under any burden to establish this fact.
The appellants had also moved an application for sending the documents to CFSL for comparison. This application was dismissed for default on 25.2.2008. The Tribunal below has attributed mala fides to the appellants on this count. It may not be fair to allege mala fides to the appellants on this count when, especially, they had sought recall of this order but remained unsuccessful. The appellant even had sought review of the orders which was also declined. The appellant would not have acted so if they had any mala fide intentions. The observation by the Tribunal that with the lapse of time writing skills keep on changing is also a speculative finding. If the Tribunal was feeling any difficulty in this regard, it could have easily sent these signature for examination of these documents by an expert from CFSL. This aspect is to be appreciated in the background that the appellant had placed in evidence the report of examiner of questioned documents. If this was not proved then may be due to some lapse on the part of the Counsel.
The Tribunal has observed that the statement of Mr. B.S. Bhandari did not inspire confidence. If that be so, then the whole case of the Bank may become doubtful. If the evidence of this witness does not inspire confidence, then it may need to be discarded on other aspects as well.
The bona fide of the appellant are well apparent from their action in filing criminal complaint which was investigated by CBI. Record shows that one of Bank official was suspended as well. The mortgage of the lease hold property was accepted when the Noida authority had declined to grant permission for mortgaging the property. All these infirmities have been glossed over by the Tribunal below. The finding returned by the Tribunal below thus apparently is against weight of the evidence. The burden rested on the Bank to prove that the appellants had created mortgage of the property by deposit of title deeds. It was for the Bank to prove that the appellants had indeed created mortgage and title deed of the property was deposited for this purpose. Once there is doubt about the signatures on the documents showing deposit of title deeds, then the Bank was required to prove to the satisfaction of the judicial conscious, on the strength of evidence, that mortgage was created by the appellants. I am of the considered view that the Bank failed to discharge the burden resting on it to prove that the mortgage of this purpose was willingly created. The case of the appellants, of course, is that the property had been sold to Mr. A.L. Grover. The appellants could not be faulted for litigating once they were made parties. The Tribunal below has even failed to appreciate the fact that respondents 2 to 4 never chose to appear before the Tribunal to contest the claim. They have very cleverly shifted their burden of liability to the appellants who are neither borrowers nor were concerned with the facilities enjoyed by respondents 2 to 4. What for then the appellants would come forward to create the mortgage is not disclosed or made out. The story projected by the appellants appears plausible and reasonable. In view of above, the finding returned by the Tribunal below cannot be sustained qua the appellants. The direction by the Tribunal below for recovery of this amount from respondents 2 to 4, however, will stand. The part of the order holding the appellants liable for recovery to the extent of sale consideration of mortgaged property is set aside. The present order will not have any effect on direction to recover this amount for respondent 2 to 4.
The appeal is allowed in above terms.