Planters (Bangla­desh) Ltd. Vs. Mahaluxmi Bank Ltd. (in liquidation) and others

Planters (Bangla­desh) Ltd. (Appellents)


Mahaluxmi Bank Ltd. (in liquidation) and others (Respondents)

Supreme Court

Appellate Division




Shahabuddin Ahmed J

Chowdhury ATM Masud J

Syed Md. Mohsen Ali J


February 9, 1984.

Words and Phrases

Nobody can be allowed to take advantage of his own fault.

The Defendant no. 2 himself being Managing Director of the Defendant Company and at the same time Director of the Plaintiff Bank and the statement by him before Court of Law about liability of the company towards the Plaintiff Bank and admission of such liability burdens the defendant to the agreed amount of money. In the manner aforesaid if defendant no. 2 committed fraud on the defendant Company, actions must have been taken by the Managing Director for committing fraud upon it. Nobody can take advantage of his own fraud.

Lawyers Involved:

Syed Ishtiaq Ahmed, Senior Advocate (Habibul Islam Bhuiyan, Advocate with him) instructed by Syed Sakhawat Ali, Advocate-on-Record—For the Appellant.

Rafiqul Huq, Senior Advocate instructed by Abu Backkar, Advocate-on-Record—For the Respondent No. 1.

Civil Appeal No. 2 of 1984.

(From the judgment and order dated 20.3.83 passed by the High Court Division, Dhaka in appeal No.11 of 1967.


Fazle Manim CJ. — This appeal arises from Appeal No.11 of 1967 disposed of by the High Court Division on 20 March 1983.

2. Respondent No.1, Mahaluxmi Bank Limited (in liquidation) instituted Mortgage Suit No. 26 of 1960 in the 1st court of Subor­dinate Judge, Chittagong against respondent No. 2, Hill Top Tea Company Limited (in liquidation) for foreclosure of mortgage on the total claim  of Tk.6,40,000/-. Under the provisions of the Banking Companies Ordi­nance, 1962 the suit was transferred to the Dhaka High Court. Appellant, a public limi­ted company, purchased the entire assets of the defendant company in 1959 and was, there­fore, joined as a defendant in the suit.

3.  On 29 March, 1927 one Sarada Kripa Lala sold the suit properties to Dr. Beni Mohan Das who mortgaged them to the plaintiff-Bank on 31 March, 1927 for Tk. 75.000/- only and the latter transferred his rights, title and interest in the suit properties to Rangapani Tea Co. Ltd. Without men­tioning the mortgage the transferee company and the mortgagor sold their right, title and interest in the mortgaged property to the plaintiff-Bank, on 28 August, 1935 for Tk.1,25,000/-. The plaintiff Bank which was put in possession of the properties invested further sums of money thereon. Defendant Hill Top Tea Company Limited purchased the proper­ties with all their Machineries for Tk. 4, 00,000/- which was borrowed from the Model Bank Limited. The defendant company approached the plaintiff Bank for loan. One S.N. Mookerjee who was Managing Director of the defendant company and also a Director of the Plaintiff Bank succeeded in obtaining the loan of Tk. 400,000/- from the Bank by depositing the title deeds to the Bank, as a security against, the loan. Under section 114 of the Companies Act, 1913 the mortgage was regis­tered. Having failed to recover the principal or interest, accruing thereon amounting to Tk. 2,40,000; the plaintiff Bank instituted the aforesaid suit,

4. The Hill Top Tea Company Limited filed a written statement contending that as no consideration was passed nor any payment was made mere depositing of title deeds did not create any mortgage. No debt, therefore, ac­tually existed. Further, the plaintiff Bank being pressured by the Reserve Bank of India took resort to some fraudulent devices and created the defendant company to which the tea estate was sold. As a result of an understanding between the Directors of the plaintiff Bank and the defendant company and in collusion with the Directors of the Model Bank Limi­ted, Calcutta, a cheque for Tk. 400,000/- was drawn by it upon the Model Bank Limi­ted, Calcutta in favour of the Mahaluxmi Bank, Calcutta. According to the defendant-company the whole transaction was only but a paper transaction and the Bank manipulated its books and accounts in order to show payment of the aforesaid sum.

5. By His judgment dated 22-6-67 the learned Judge of the Dhaka High Court dec­reed the suit. An appeal, being Appeal No.11 of 1967, was filed by the petitioner before a Division-Bench of the Dhaka High Court which allowed the appeal upon setting aside the trial court’s judgment and decree. Plain­tiff-respondent No. 1 obtained leave from this Court to consider whether a judgment of reversal could be passed taking into considera­tion the entries which were not considered by the trial court as those pasted papers could not be opened and without considering in detail all the evidences on record relied on by the learned Single Judge. After hearing the parties in Civil Appeal No.129 of 1977 this Court remanded back the case to the High Court Division to dispose of the appeal in the light of observations made in the judg­ment. After remand so ordered the appeal was heard by a Bench of the High Court Division which decreed the suit. By their judgment dated 20-3-82 the High Court Divi­sion affirmed the judgment and decree passed by the learned Single Judge.

6. The appellant moved this Court and obtained leave to consider whether the learned Judges of the High Court Division, in view of the evidence produced by the parties correctly arrived at the finding that the defendant-company owed the plaintiff Bank a sum of Tk. 4,00,000/- which it   had obtained by mortgaging the suit property with the plaintiff Bank.

7. To have a better look at the substance of the contentions advanced before us now by the respective Counsels of the parties, it may well be that some of the observations made by this Court (in Civil Appeal No.129 of 1977 disposed of on April 10, 1978) before remanding the case to the first appellate court may be seen. As previously the first appellate court had dismissed the suit of the plaintiff Bank for the recovery of the sum owed to the Bank by the defendant-appellant, the plaintiff Bank appealed to this Court against its judgment. This Court’s observations were as follows:

“The learned Judges of the Division Bench failed to consider   the   detailed discussion of the evidence on record by the learned Single Judge and only on noticing the entry at page 163 of the cash book which was detached from its pasted condition, concluded that if the learned Judge had noticed the entry of those pasted pages he would have reac­hed a different conclusion. The learned Judges of the appellate Court without discussing the evidence on record reversed the finding of the Trial court and as such it can not be said to be a proper judgment of reversal. The appellate court’s reversal of the finding of the trial Judge and holding that entries at the pasted page 163 were conclusive in disregard of the other evid­ence which formed the basis of the finding of the learned Single Judge is wrong and cannot be sustained.

(Another aspect of the case was missed by both the Courts below. The written statements of respondent No.1 show that respondent No.1 was trying to get the benefit of its own fraud. The lower appellate court wrongly shifted the onus of proving genuineness of the transac­tion upon respondent No.1 to prove the fraud as set up by it.”)

8. In disposing Appeal No.11 of 1967 on March 20, 1983 the learned Judges of the High Court Division in repelling the contentions of the defendant-appellant company that cert­ain paper transactions relating to the amount loaned in the name of defendant No.2 were shown but actually no amount was paid by the plaintiff Bank so as to create any liability in the name of defendant No. 2, the learned Judges observed:

“It however seems from the case of the defendant in the previous suit also that for amount of Rs. 4,00,000/- the defen­dant created an equitable mortgage in respect of the defendant Tea Estate in favour of the Model Bank who in its turn created a second mortgage in favour of the plaintiff Bank. So, the plaintiff paid that amount and the property was mortgaged with the plaintiff Bank The same position is accepted by the then Managing Director of the defendant Com­pany that the Bank was indebted to the plaintiff for the said amount. In that view of the matter it is not very impor­tant as to how the Model Bank was paid back the money which the plaintiff gave to the defendant No.2. But the fact remains that the mortgage debt of the .Model Bank was satisfied with the money that was taken from the plaintiff-Bank. In that view of the matter the plaintiff having filed the documents as mentioned above to prove the debt and the defe­ndant having not been able to prove that fraud was perpetuated in showing a loan on paper only though actually no loan was advanced by the plaintiff to the defendant No.2. We do not find anything to interfere with the judgment and decree passed by the learned Single Judge of this Court.”

9. In accepting the submissions made by the Counsel of the plaintiff Bank that the evidence produced on its behalf were admis­sible under section 65 of the Banking Compa­nies Ordinance, section 4 of the Bankers Evid­ence Act, 1891 and the entries in the books of the plaintiff Bank regularly kept in course of business were relevant and also that D.P. notes, the resolution of the defendant comp­any, Ext.3, letter Ext.3 (b),certificate under section 114 of the Companies Act, original Title deeds Exts.1 and 2, passbook and the balance sheet of the defendant Company which were filed by the plaintiff-Bank, the learned Judges of the High Court Division arrived at the finding that the defendant took a loan from the plaintiff Bank and was, there­fore, liable to pay the same to the Bank. The judgment and decree passed by Abu Md. Abdullah, J. in Transferred Suit No. 8 of 1965 (arising out of Mortgage Suit No.26 of 1960) was affirmed by the trial court.

10. Syed Ishtiaq Ahmed, Counsel for the defendant appellant, made strenuous efforts to prove that no loan was ever adva­nced by plaintiff Bank to the defendant Hill Top Tea Company Limited and what appears from the Bank’s papers and entries therein and also title deeds alleged to be deposited with the plaintiff Rank were all collusive and fraudulent. There was no liability of the Defendant Company for the payment of the alleged lean. What appear from the papers of the plaint ff Bank were mere manipulations for the purpose of sho­wing the loan and the mortgage deposit of title deeds. The learned Counsel particu­larly stressed that such manipulations were evident from the pasting in the Bank’s clean cash book, Ext.5. Apart from the legal effects of the deposit of title deeds and other relevant papers referred to above showing the advance loan to the defendant company by creating a mortgage of their property, vide, deposit of title deeds with the plaintiff Bank, which have been discussed and considered by the learned Judges of the High Court Division, they had considered at length the arguments relating to the pasting in the aforesaid Exts. This   appears from their ob­servations:

”It is further contended that  there being pasting in the Clean Cash Book Ext. 5 and Ext ‘A’ the entry of said amount could not be taken as genuine. With regard to the pasting in the-Ext.5 an explanation was given by the P.W.1 to the effect that it was done by the Binder the Court tried to unfold it but noted that it could not be done without causing damage to the book itself. Ultimately it was unfolded and we find that on the pasted page the entry on the page previous to the pasted page the account that was noted in the clean cash book was dated 29th June, 1948 on the next page i.e. the pasted page we find, that the account entered was dated 10th August, 1948. On the next page, the account was dated 29th June, 1948. The clean cash books were entered not at the time when transactions were being made. These are entries effected subsequently at subsequent intervals. These are copies from rough cash book. The entry at page 163 also finds place at page 195 and we find that the same entries at page 163 have been entered at page 196 with minor discrepancies with regard to total. So this entry in page 163 cannot be a fabrication but it is merely a mistake which occurred in the clean cash book at the time of copying it from the Kuchha register. Of course, the explana­tion that has been given by the P.W.1 has been given without looking into the contents of the pasted page and as such he made certain statements which were incorrect and the learned Single Judge did not accept the said explanation. We have considered the said entry and from this entry we cannot come to a conc­lusion that this pasting materially affec­ted the result of the case, because the pasting page finds place in some other page of the clean cash book i.e. at page 196.”

11. The clean cash book was also pro­duced for our examination. We are also satisfied that there is nothing amiss therein excepting what has been noted in the afore­said observations of the learned judges. No manipulation appears to have been made by the plaintiff Rank regarding the loan amount recoverable from the defendant company.

12. Whatever little discrepancies were introduced, they did not obliterate the broad fact of the advance of the loan amount by the plaintiff Bank, that being the main question for determination in this appeal, these discrepencies may even be due to chaotic position in which the Bank was placed after liquidation, taking advantage of which some members of the clerical staff may have tried to attempt their hands in tampering with the pages of the clean cash-book. It may, how­ever, be mentioned that there is no positive evidence for this supposition.

13. The argument that no amount was actually paid by the plaintiff Bank would seems more surprising in view of the fact that title deeds were deposited with the Bank along with all other usual documents which were executed by the predecessor of the defen­dant company for securing the loan amount. To this must also be added the regular entries in the ledger book and the clean cash book of the plaintiff Bank in respect of this loan. In this context, the attempt to disprove the actual payment appears like trying to disprove something which is obvious and a fact that cannot be negatived by any means. To prove that no cash amount was at all paid by the plaintiff Bank for payment to the Model Bank, it was stated that, firstly, no permission was taken from the authority to transmit this amount to Calcutta which is in a different state and secondly, it was stated to have been deposited in the Model Bank on 30th, Jane, 1948 which, was a Bank holiday.

14. Mr. Rafiqul Huq, Counsel for the respondent Bank gave satisfactory explanations on both these points. It was not necessary to obtain permission of the State Bank to transmit to India at that time since the foreign exchange regulations were introduced later. Next, though all formal banking transactions were closed on 30th June since it was a banking holiday, no Bank was actually closed but remains open for the purpose of closing the account of the year. It was difficult on the part of the appellant’s Counsel to refute this explanation.

15. As to payment of the actual amount of Taka 4 lacs, there is even the admission of defendant No.2 who is the Managing Dire­ctor of the defendant company. In a previous suit, being Money Suit No.64 of 1950, he, in his deposition, stated that “the defendant company is liable for Rs.4 lacs on one account and this account is still outstanding with interest”. This admission refers to the loan advanced by the plaintiff Bank which is the subject matter of the present dispute. It may be mentioned that defendant No.2 was at the relevant time also one of the Directors of the plaintiff Bank. There is no reason why defen­dant No.2 who held the position of a Director in the plaintiff Bank as well as the defendant company, should make a false statement reg­arding the liability of the defendant company. Even assuming it to be false, why the defend­ant company did not take any action against defendant No.2 for making such a false stat­ement in a Court of law as well as saddling it with liability for payment of the aforesaid sum to the plaintiff Bank. Also, in such circu­mstances when the defendant company allow­ed its Managing Director, defendant No. 2, to make a solemn statement admitting its liability to the plaintiff Bank, it does not lie in its mouth not to say that defendant No. 2 perpetrated a fraud upon itself. If it is a fraud, it was perp­etrated at its own instance since the statement was made by nobody else than its own Mana­ging Director and it did not take any action against him for committing the fraud. As is well-known, nobody can be allowed to take advantage of his own fraud. It is also not understood nor any satisfactory explanation was given as to why defendant No.2 should make such a fraudulent statement creating liability for the defendant company of which he was the Managing Director. As to presum­ptions to be drawn under the provisions of section 118 of the Negotiable Instruments Act, 1881 regarding the payment of consideration from the creation of any negotiable instrument when there is no other evidence to the contrary and also presumption available under section 65 of the Banking Companies Ordinance, 1962 and section 4 of the Bankers Books Evidence Act, 1891, right conclusions have been drawn by the learned Judges of the High Court Division. We find no reason to differ with them.

For the reasons stated above, the appeal is dismissed with costs. Decretal amount will be paid within three months; in default decretal amount will be paid with interest at the rate of 15% till realisation of the amount.


Source: 37 DLR (AD) (1985) 129