Case Note & Summary
The plaintiff, a registered company engaged in manufacturing television and monitor components, imported goods and stored them in a bonded warehouse. To clear goods for production, the company paid customs duty through cheques drawn on defendant No.1 bank, which acted as an authorized agent for customs under a public notice. The bank handled TR-6 challans and duty payments, releasing goods upon proof of payment. Between July 1987 and August 1990, 143 cheques were issued for duty. In late August 1990, the plaintiff discovered that cheque No.157890 dated 22.08.1989 for Rs.6,64,135, drawn in favour of 'Yourselves-037 Customs' and crossed 'Account payee only', was not credited to the customs account. Instead, the bank had issued eight demand drafts in favour of 'Reserve Bank of India A/c Collector of Customs, Bombay' without authority, and had diverted proceeds to other private parties. The plaintiff informed the Collector of Customs and lodged a police complaint on 30.08.1990. The customs authorities then issued five notices demanding unpaid duty aggregating Rs.3,95,11,321.51, less a credit of Rs.6,64,135. A show-cause notice followed for prosecution. The plaintiff challenged the show-cause notice in W.P.No.14092/1991 and obtained a stay. The plaintiff filed O.S.No.6303/1993 for recovery of money against the bank, Union of India, Collector of Customs, and two employees. The trial court dismissed the suit on 08.10.1999 with costs to defendant No.1. The plaintiff appealed to the High Court. The provided judgment text does not contain the court's analysis or final decision.
Issue of Consideration
Case Details
2020 LawText (KAR) (12) 53
S. Sujatha, Jyoti Mulimani
For Appellant: Dhananjay Joshi; For Respondent 1: Udaya Holla, Pushpalatha G.; For Respondents 2 & 3: Akash Shetty; For Respondent 4(a): G.C. Shanmukha; For Respondent 4(d): Ashwin S. Halady
Electronic Research Private Ltd.
Canara Bank, Union of India, Collector of Customs, A.W. Akram (deceased through LRs), M. Muralidharan
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Nature of Litigation
Suit for recovery of money
Remedy Sought
Plaintiff sought recovery of money from defendants; trial court dismissed suit; appeal filed seeking reversal
Filing Reason
Discovery that bank had unauthorizedly issued demand drafts and diverted cheque proceeds, leading to customs demanding unpaid duty
Previous Decisions
Trial court dismissed suit with costs to defendant No.1
Judgment Excerpts
the defendant No.1 – Bank without plaintiff’s due authority and contrary to the mandate in the cheque issued eight demand drafts in favour of ‘Reserve Bank of India’ A/c Collector of Customs, Bombay.
After noticing the said irregularity, plaintiff by its letter dated 30.08.1990 addressed to the Collector of Customs (defendant No.3) about the said irregularity suspecting that one of the employee by name A.W.Akram (defendant No.4) must have had indulged in it and accordingly a complaint was lodged on the same day with the jurisdictional police station.
Procedural History
Plaintiff filed O.S.No.6303/1993 before II Addl. City Civil Judge, Bengaluru, for recovery of money. Trial court dismissed suit with costs to defendant No.1 on 08.10.1999. Plaintiff filed RFA No.253/2000 under Section 96 read with Order 41 Rule 1 CPC before the High Court of Karnataka. During pendency, defendant No.4 A.W. Akram died and his legal representatives were brought on record vide court order dated 05.01.2005. The appeal was heard on 22.09.2020 and judgment pronounced on 22.12.2020.
Acts & Sections
- Companies Act, 1956:
- Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970:
- Customs Act, 1962:
- Customs Tariff Act, 1975:
- Code of Civil Procedure, 1908: Section 96, Order 41 Rule 1
