Dismissed

Union Bank of India v. M/S.G.K.Engineering Works

Kerala HC17 Oct 2017RFA/134/2012

Case brief

AI extract

What is this about?

The High Court of Kerala dismissed the bank's appeal, holding that the lower court correctly decreed the return of excess money paid by borrowers. The court rejected the bank's argument that voluntary payments or lack of mistake negated the claim, emphasizing unjust enrichment principles and the bank's admission of incorrect calculation.

What did the court decide?

The appeal was dismissed; the judgment and decree of the Sub Court in OS.No.347 of 2009 were upheld.

Union Bank of India Vs M/S.G.K.Engineering Works — Banking and Recovery | Kerala HC (2017)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN

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THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN

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TUESDAY, THE 17TH DAY OF OCTOBER 2017/25TH ASWINA, 1939

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RFA.No. 134 of 2012 ()

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AGAINST THE DECREE/JUDGMENT IN OS 347/2009 of ADDL.SUB COURT,NORTH PARAVUR DATED 29-07-2011

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APPELLANT(S)/DEFENDANT:

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UNION BANK OF INDIA ALUVA BRANCH REPRESENTED BY ITS BRANCH MANAGER, ALUVA.

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BY ADVS.SRI.A.S.P.KURUP, SC, UBI SRI.SADCHITH.P.KURUP

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RESPONDENT(S)/PLAINTIFFS:

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1. M/S.G.K.ENGINEERING WORKS REPRESENTED BY ITS PROPRIETOR V.A.DAVID, S/O.ABRAHAM, VADAKKOTTU HOUSE, C.S.I. COMPOUND, ALUVA KARA, ALUVA VILLAGE, PIN-683 101.

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2. MRS.MARIYAMMA ABRAHAM ALIAS MARIYAM, W/O.ABRAHAM, VADAKKOOTTU HOUSE, CSI COMPOUND, ALUVA KARA, ALUVA VILLAGE, PIN-683 101.

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R1 BY ADV. SMT.DAISY A.PHILIPOSE R1 BY ADV. SRI.JAI GEORGE

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THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 17-10-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

VPV

“C.R.”

P.N. Ravindran &

Devan Ramachandran, JJ.

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- - - - - - - - - - - - - - - - - - - - -- - - R.F.A.No.134 of2012

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- - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 17^th October, 2017

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JUDGMENT

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Devan Ramachandran, J.

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Ingenious and cleverly inventive contentions and submissions are not new in courts - but what has been asserted and claimed by the appellant here really takes the cake.

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The appellant is a public sector bank concededly coming within the sweep of Article 12 of the Constitution of India. This appeal has been preferred against the judgment and decree of the Sub Court, North Parur in O.S.No.347 of 2009, which was filed by respondents 1 and 2 herein for return of amounts of money which they claim that they had paid to the bank being under its illegal inducement and because they were made to believe by it that such amounts were legally due to it, while it was not.

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The defence of the Bank to this claim is, to say the least, stupefying. They admit that respondents 1 and 2 have paid more than what was required of them under the decree, but assert that they are entitled to it because it was paid to them voluntarily and without the respondents 1 and 2 being subject to duress. The Bank concedes that

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RFA 134/2012

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respondents 1 and 2 paid as per the calculation of the decree debt made by it; but predicate that they were empowered to charge and accept more than what the decree had awarded because the loan account was settled not in execution proceedings but “out of court.”

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The artfulness of these submissions strike us and we are amazed how a Bank, that too a State owned Bank, could be allowed even to be heard so. We will come to our conclusions presently after we narrate the essential facts.

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The proximate cause that led to the filing of the suit was that respondents 1 and 2 had availed certain sums of money from the appellant Bank as a business loan and when the loan became in arrears, the bank filed O.S.No.42 of 2000 before the Additional Sub Court, North Parur. This suit was decreed on 18.12.2006 thus entitling the bank to realise an amount of Rs.1,96,795/- with interest at the rate of 6% per annum from the date of suit till realisation. After such decree was passed, respondents 1 and 2 approached the bank and offered to remit the entire amount under the decree which was then calculated by the bank to be an amount of Rs.6,15,000/-. Respondents 1 and 2 say that they were constrained to make such remittance, without verifying the correctness of the figure calculated by the Bank, since they were in dire need of the title deeds of the property equitably mortgaged by them with the bank, for their business purposes, and

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also because they never expected the Bank to charge and collect more than what was legally due to them under the decree. However, according to them, after such remittance was made, they became aware that the bank had collected a larger amount than what was entitled to be collected under the decree. Respondents 1 and 2 allege that even the bank was aware of this excess remittance because it had thereafter returned an amount of Rs.68,000/- on 17.8.2007 and that on 13.11.2007 it had again issued a letter informing them that an additional amount of Rs.22,087/- is also ready for payment being the excess amount collected from them. Respondents 1 and 2 say that they were not satisfied with the calculation of excess remittance arrived at by the bank and that they, therefore, refused to accept the said amount because, according to them, the alleged excess amount collected by the Bank is to the tune of Rs.2,65,395/-. They asserted that the bank is liable in law to return the said amount to them and that the action of the bank in refusing to do so amounts to illegality.

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On the above assertions and allegations respondents 1 and 2 filed O.S.No.347 of 2009 before the Additional Sub Court, North Parur seeking a decree for an amount of Rs.2,66,309/- with interest, being the alleged excess amount collected from them under the decree obtained by the bank in O.S.No.42 of 2000.

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The court below took the suit to trial and on the side of the

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plaintiffs/respondents 1 and 2 herein, Exts.A1 to A4 were marked and PW1, Sri U.A.David was examined. On the side of the defendant/appellant herein Exts.B1 to B3 were marked and no oral evidence was let in by them. After an assessment of the pleadings on record and the evidence let in by the parties, the court below decreed the suit holding that as on 3.3.2007 the plaintiffs/respondents 1 and 2 herein have paid an excess amount of Rs.2,66,039/-, after deducting the amount of Rs.65,000/- already refunded by the Bank, and declaring that such amounts are due to the plaintiffs with interest. The suit was thus decreed allowing respondents 1 and 2 herein to realise an amount of Rs.2,36,497/- with interest at 6% per annum from the date of suit till realisation along with costs from the defendant bank and its assets. It is this judgment and decree that is assailed by the bank in this appeal.

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We have heard Sri Sadchith P.Kurup, learned counsel for the appellant and Smt.Daisy A.Philipose, learned counsel for the first respondent.

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Pending this appeal, the second respondent died and an application to bring her legal heirs on record as additional respondents 3 to 7 have been filed. We have issued notice to additional respondents 3 to 7 in the said application. But the records reveal that the appellant has not taken steps or filed process for serving such

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RFA 134/2012 5

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summons to additional respondents 3 to 7. Normally, in such circumstances we could have been even justified in dismissing this appeal for default on account of the fact that the appellant has not taken steps to serve notice on the additional respondents. We, however, propose not to do so because even otherwise, on an appraisal of the facts and materials pleaded and placed in this case, we are of the view that this appeal lacks merit that it does not even deserve an admission in this court.

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From a reading of the pleadings on record and assessment of the the submissions made before us, we see that not many facts are in dispute in this case. The fact that respondents 1 and 2 had paid certain amounts in excess of the decree in O.S.No.42 of 2000 to the bank is virtually admitted. The defence of the bank in refusing to make repayment of such excess amount is solely on the premise that the respondents 1 and 2 had volunteered to make the payment in order to ensure that the bank did not file an appeal against the judgment in O.S.No.42 of 2000. This submission is founded on the conjectural assertion that the bank would have filed an appeal against the judgment and decree in O.S.No.42 of 2000, since it had allowed interest only at the rate of 6% whereas the claim was for 12%, and that it was since the plaintiffs had paid the excess amount which constituted the decree amount along with interest at 12% as was

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calculated by the bank, that the bank did not choose to file an appeal. In effect, the submission of Sri Sadchith Kurup, the learned counsel for the bank is that the payment made by respondents 1 and 2 were intended to ensure that the bank did not file an appeal against the judgment and decree in O.S.No.42 of 2000. Learned counsel therefore says that it was valid consideration for the bank for forbearing from a legitimate action that was available to them. He has an adjuvant submission that what has been paid by respondents 1 and 2 being done voluntarily and without it duress would not attract the provisions of section 72 of the Indian Contract Act and would not obligate the Bank to return it. He read through the provisions of this section and contends that only a person to whom money has been paid or delivered by mistake or coercion is liable to repay it and that in this case since the alleged excess amounts paid were not by respondents 1 and 2 under mistake or coercion, they cannot then be heard to say that the amount should be returned to them.

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We must at once say that we do not in any manner find favour with any of the above submissions made on behalf of the bank for more than one reason.

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For the first, the bank is a public sector undertaking coming within the sweep of Article 12 of the Constitution of India. They are inherently bound to act only within the parameters of the principles of

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RFA 134/2012 7

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equity, fairness and fair play. Even if it is assumed that the payments were made voluntarily, the question remains as to how the bank would be entitled to retain the said amount. Going by the submissions of the learned counsel for the appellant, when a party goes and makes a payment voluntarily, be that it is under a mistake or wrong notion, the bank would not be liable to return the said amount unless the plaintiffs show and demonstrate that such amounts were paid under coercion thus bringing it under the confines of section 72 of the Indian Contract Act.

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For the second, it is indubitable that the submission that the Bank can retain amounts, even if it is not legally due to it solely because respondents 1 and 2 paid the amounts voluntarily is completely unfair. The Bank has to first show that it is entitled to retain the said amount. Even the learned counsel does not have a case that under the decree in O.S.No.42 of 2000 the bank had any entitlement to retain any amount more than what is decreed therein.

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For the third, it is also luculent that the submissions regarding the intention of the Bank to file an appeal against the judgment and decree in O.S.No.42 of 2000 are mere surmises and conjectures since we cannot prophesy what would have been the fate of such appeal because such an appeal was never attempted at all. This is particularly because under Section 2(d) of the Indian contract

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Act, 1872, consideration has been defined as under:

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“2. Interpretation clause. -- In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:--

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(a) to (e)

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xxxxxxxxxx

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(d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise.”

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Obviously therefore the submission of the Bank that excess payment was made by respondents 1 and 2 was as consideration for the promise made by the Bank not to file an appeal cannot find force in law or the facts of this case. Even if there was any such promise, it ought to have been made by the Bank in writing and the intention of respondents 1 and 2 to make this payment in lieu of the Bank not filing the appeal ought to have been manifestly exhibited and demonstrated in writing or by such other explicit conduct. In this case, apart from the base allegations made by the Bank, there is nothing to show that either the Bank had made such a promise or that the respondents 1 and 2 made the payment as consideration against this promise. We cannot therefore find merit in these submissions.

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Further, the records do not disclose that respondents 1 and 2

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have made any request to the Bank not to file an appeal or that the said amounts were accepted by the bank under any such promise. If the bank, as has been submitted by the learned counsel, had accepted the amount in lieu of them not filing an appeal, we fail to understand as to why it did not issue a notice under Section 21 of the Indian Contract Act under the provisions of which they could have accepted this amount without prejudice. That not being done, we are not in a position to accept the contention of the bank that the payment of the excess amount would, in fact, enure to the benefit of respondents 1 and 2 since the Bank did not file an appeal against the judgment and decree in O.S.No.42 of 2000.

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Coming to the submission made by Sri Sadchith Kurup that the amounts paid by respondents 1 and 2, not having been made by mistake or under coercion, the Bank cannot be found liable for repayment, we must say at once that we are not impressed at all, and we will cite the reasons below. This submission of Sri Sadchith Kurup is evidently underpinned on Section 72 of the Indian Contract Act, which is as under:

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“72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion. -- A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.”

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The afore extracted portion is the embodiment of the principle of unjust enrichment. When the defendant shows that the plaintiff has made an unjust enrichment at his expense the amount paid by mistake or under coercion the law obligates him to return it. The submission before us is that respondents 1 and 2 have not paid the amounts by mistake or under coercion. The submission is completely without merit because it is conceded by the Bank that respondents had made the payment as per the calculation arrived at by them representing the amounts due under the decree. There is no case even for the Bank that the calculation made by them was not authorised to them under the decree, their case being only that they have charged a higher rate of interest than that was awarded because that was their original claim and that when it was then paid by the respondents they did not file an appeal against the decree. The excess amounts thus charged and held by the Bank was admittedly unauthorised but unilaterally claimed as being justified by them on the ground that it was paid voluntarily. This is a classic case of unjust enrichment and since the doctrine itself is equitable in nature, we cannot in any manner give any benefit to the Bank because respondents 1 and 2 had been induced to make payment based on a wrong or unauthorised calculation made by the Bank, since they could not have charged more than what was awarded under the decree. We, therefore, reject these submissions also.

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We see that Sri Sadchith Kurup, the learned counsel for the bank has a still further contention that since the amounts paid by the plaintiffs were not certified under the provisions of Order XXI of the Code of Civil Procedure, they cannot be construed to be payments made under the decree. This submission according to us is undeserving of any merit because the bank has no case that the plaintiffs have any other liability towards them. In the absence of any pleading or averment that the plaintiffs have another liability, it would not have been proper for them to receive any excess amount under the decree and then to retain it merely because no certification under Order XXI of the Code of Civil Procedure was applied for. In such view, these submissions of the appellant in justification of their attempt to retain and refuse repayment of the concededly excess amounts under the decree in O.S.No.42 of 2000 would hold no water.

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Once the facts as above are noticed, we would not be out of place if we conclude in this context that the bank is also in admission that they had accepted amounts from the plaintiffs on an incorrect calculation of the dues. This is because they had admittedly repaid an amount of Rs.68,000/- on 17.8.2007 and that a further amount of Rs.22,087/- was offered to be repaid by them on 13.11.2007. This clearly and unequivocally demonstrates that the bank had also been aware that their calculations were wrong and that certain excess

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amounts have been paid. However, they chose to retain those amounts knowing fully that it could not be so retained by them but maintaining that they are entitled to 12% interest on the decree amount in O.S.No.42 of 2000 though they were only granted 6%. The fact that the bank has returned amounts and had offered to return more would also indicate with substantial certainty that they were also aware that the payments made by the plaintiffs, even as per their calculation, was in excess and that it were not intended as a consideration for the bank forbearing from filing an appeal against the judgment and decree in O.S.No.42 of 2000.

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In such view of the matter and in a compendium of what we have indited above, we see no merit in the contentions raised in the appeal and we see no reason to maintain this on the files of this court to await service of notice to respondents 3 to 7. Since the judgment that we are now delivering enure to the benefit of respondents 3 to 7, we deem it appropriate to dismiss this appeal after hearing Smt.Daisy A. Philipose, learned counsel appearing for the first respondent, whose contentions would obviously be to the benefit of respondents 3 to 7, who are the legal heirs and children of the second respondent.

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We thus dismiss this appeal holding that the judgment and decree of the Sub Court, Paravur in O.S.No.347 of 2009, which is assailed in this court, is not vitiated by any error and does not deserve

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to be interfered with.

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In the peculiar facts and circumstances that we have noticed in this case we, however, deem it appropriate not to make any order as to costs and leave the parties to suffer their respective costs in this appeal.

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Sd/-

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(P.N. Ravindran, Judge)

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Sd/-

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(Devan Ramachandran, Judge)

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kav/vpv

Union Bank of India v. M/S.G.K.Engineering Works

Case brief

What is this about?

What did the court decide?

Union Bank of India v. M/S.G.K.Engineering Works

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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