The Indian Overseas Bank, vs SREE GOKULAM CHIT AND FINANCE CO. PVT. LTD.,

OSA No. 151 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 23-09-2026
DATE OF DECISION : 28-10-2026
CORAM
THE HONOURABLE MR.JUSTICE P.VELMURUGAN
AND
THE HONOURABLE MR.JUSTICE GK.MUTHUKUMAAR
OSA No. 151 of 2022
CNR:{HCMA011042692021}
and
CMP No. 9223 of 2022
1. The Indian Overseas Bank
Rep.by its Chairman and Managing Director
No.763, Anna Salai, Chennai - 600 002
2. The Branch Manager
Indian Overseas Bank
Koyambedu Branch
No.57, Kaliamman Koil Street, Sai Nagar,
Virugambakkam, Chennai - 600 092
Appellants
Vs
Sree Gokulam Chit and Finance
Company (Private) Limited
Rep. by its Director (Operations) Mr.V.C.Praveen
having their Corporate office at
Sree Gokulam Towers
No.66, Arcot Road, Kodambakkam
Chennai - 600 024
Respondent
Memorandum of Grounds of Original Side Appeal under Order XXXVI,
Rule 1 of the Original Side Rules read with Clause 15 of the Letters Patent,
against the Judgment and Decree dated 15.10.2020 passed in C.S.No.698 of
2014.
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OSA No. 151 of 2022
For Appellants: Mr.AR.L.Sundaresan
Senior Counsel for Mr.D.Saikumarran
For Respondent: Mr.B.Arvind Srevatsa
JUDGMENT
P.Velmurugan J.
This original side appeal, at the instance of the defendants in the suit, is
directed against the judgment and decree passed by the learned single Judge in
C.S.No.698 of 2014 dated 15.10.2020.
2. The respondent/plaintiff filed the suit in C.S.No.698 of 2014 seeking to
direct the appellants/defendants to jointly and severally pay to the plaintiff a
sum of Rs.4,94,15,400/- together with interest at 24% per annum on
Rs.3,28,72,751/- from the date of the plaint till the date of realisation and for
costs, claiming that it is a company registered under the provisions of the Indian
Companies Act, 1956 and primarily carries on business in Chit Funds in
accordance with the provisions of the Central Chit Funds Act. The respondent
has fixed deposits in various bank branches all over India. While so, the
respondent had issued three crossed account payee cheques in favour of the
second appellant, the Branch Manager, IOB, Koyambedu Branch, Chennai for
issuing fixed deposit receipts in favour of the respondent, as detailed below:
Chq. No. Date Amount Rs. Favouring
198688 Drawn
on Catholic
22.08.2011 1,00,00,000/- Indian Overseas
Bank,
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OSA No. 151 of 2022
Syrian Bank,
Kodambakkam
Branch,
Chennai
Koyambedu for
FDR Favouring
Sree Gokulam
Chit & Finance
Co. Pvt. Ltd.,
200872 Drawn
on Catholic
Syrian Bank,
Kodambakkam
Branch,
Chennai
28.09.2011 2,00,00,000/- Indian Overseas
Bank,
Koyambedu for
FDR Favouring
Sree Gokulam
Chit & Finance
Co. Pvt. Ltd.,
201082 Drawn
on Catholic
Syrian Bank,
Kodambakkam
Branch,
Chennai
07.10.2011 3,00,00,000/- Indian Overseas
Bank,
Koyambedu for
FDR Favouring
Sree Gokulam
Chit & Finance
Co. Pvt. Ltd.,
3. The cheques were sent to the second appellant through one Venkatesh,
the previous partner of Gokulam Cards. The three cheques were encashed by the
second appellant by debiting the current account of the respondent with
Catholic Syrian Bank Limited, Kodambakkam, Chennai 600 024. The debit of
the three cheques from the account of the respondent is evident from the bank
statement issued by the Catholic Syrian Bank, Kodambakkam Branch, Chennai.
Thereafter, the second appellant issued three fixed deposit receipts in favour of
the respondent, as detailed below:-
Date Fixed Deposit Receipt no. Amount, Rs.
22.09.2011 2011/NDRJ 306537
166504501100636
1,00,00,000/-
03.10.2011 2011/NDRJ 306556 2,00,00,000/-
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OSA No. 151 of 2022
166504501100655
18.10.2011 2011/NDRJ 306595
166504501100689
3,00,00,000/-
4. The second fixed deposit receipt mentioned as ‘joint’ instead of ‘self’.
This was sought to be corrected by the respondent and accordingly corrected by
the second appellant. In the third fixed deposit receipt, the interest rate, which
was shown as 9.25%, was subsequently improved to 9.60% by the second
appellant. On 03.11.2011, when the respondent contacted the second appellant,
they were informed that loans had been availed as against the first and second
fixed deposit receipts. The respondent went to the second appellant branch,
who claimed that as against the first and second fixed deposit receipts totalling
to Rs.3,00,00,000/-, the second appellant had advanced a loan of Rs.2.70 crores
to third persons. The respondent claimed that they had never authorised anyone
to avail such loan. It was also stated that the third fixed deposit was also about
to get discharged with a fake seal of the respondent’s company and timely
intervention prevented loan being advanced as against the same also.
5. The respondent, apart from lodging a complaint on 05.11.2011 to the
Commissioner of Police, Egmore, Chennai, also sent a letter dated 05.11.2011
to the Senior Manager, Indian Overseas Bank, Koyambedu Branch, calling upon
them to restore the fixed deposit receipts. There was no reply for the said letter.
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OSA No. 151 of 2022
The complaint given to the Commissioner of Police was transferred to the
Economic Offences Wing of Central Bureau of Investigation (CBI), and
thereafter, on completion of investigation, the CBI had filed a final report. This
was taken cognizance by the XI Additional Special Judge for CBI cases,
Chennai. It was stated that the first fixed deposit dated 22.09.2011 matured for
payment on 22.09.2012. The second fixed deposit dated 03.10.2011 matured
for payment on 03.10.2012. The respondent received the maturity value only
for the third fixed deposit receipt. The respondent claimed that various third
persons had committed a fraud by impersonation and had obtained loan on the
strength of the first and second fixed deposits standing in the name of the
respondent. It was stated that since the cheques issued by the respondent had
been encashed by the second appellant, the second appellant was obligated to
return back the amounts on maturity of the fixed deposit. The respondent
issued a legal notice dated 23.12.2013, for which a reply was sent by the second
appellant on 01.02.2014. Therefore, the respondent laid the suit concerning the
first and second fixed deposit of Rs.1,00,00,000/- and Rs.2,00,00,000/- together
with accrued interest and future interest.
6. A written statement was filed by the second appellant stating that the
loans were sought by one Yuvarajan impersonating as Sabarish and S.Zeenath
impersonating as S.Priya. It was stated that the second defendant had no reason
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OSA No. 151 of 2022
to doubt the identity of the two individuals, as the said two individuals
deposited the cheques and thereafter again visited the bank and collected the
original fixed deposit receipts. Bogus FDRs were received by the respondent
from two further individuals, Martin and Prem. It was stated that the fraudsters
availed loan against the first and second fixed deposit receipts.
7. In this regard, the bank had also given a complaint to CBI. Since
specific loans had been availed over the two fixed deposit receipts and the trial
was also pending before the XI Additional Special Judge for CBI cases and the
matter was subjudice, the appellant was not able to repay the amount which had
matured on the two fixed deposit receipts. However, a fraud had been
committed on the second appellant and as a matter of fact, the second appellant
was a victim of the fraud. Hence the suit was liable to be dismissed owing to
the negligence of the respondent and also for the act of assisting the fraudsters
by handing over the cheques to them.
8. A reply statement was filed on behalf of the respondent stating that it
was the bank which has been negligent and the bank had no right to give the
original fixed deposit receipts to any person without due verification. It was
stated that for obtaining loan on the fixed deposit receipts, there was a
procedure prescribed and the second appellant had not followed the said
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OSA No. 151 of 2022
procedure. The loan was processed even without any enquiry with the
respondent. Even thereafter, the respondent had deposited further amounts
under fixed deposit with the second appellant and the second appellant should
have realised that the respondent had no reason to avail loan. The pendency of
a criminal case cannot be a ground for denying repayment of the proceeds of
fixed deposits on maturity to the respondent and hence the suit should be
decreed as prayed for.
9. Based on the above pleadings, the following issues were framed:-
“(i) Whether the plaintiff is entitled to a judgment and
decree as prayed for, de hors pendency of the case in C.C.No.7
of 2013, on the file of the XI Additional City Civil Court,
Chennai (Special Court for Trial of CBI Cases);
(ii) Whether the defendants, who had received Rs.3
crores from the plaintiff by way of crossed account payee
cheques for issuing the Fixed Deposit Receipts in favour of the
plaintiff, is bound to return the said amount along with interest,
as they have encashed the said cheques?;
(iii) To what other reliefs, the plaintiff is entitled to?”
10. In order to substantiate their case, the plaintiff examined their
Director (Operation), Mr.V.C.Praveen as PW1 and marked Exs.P1 to P36. On
the side of the defendants, the Branch Manager of the second appellant
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OSA No. 151 of 2022
Mrs.Anuradha Ransingh was examined as DW.1 and three documents Exs.D1 to
D3 were marked.
11. On consideration of the oral and documentary evidence adduced by
the parties, the learned single Judge decreed the suit with costs, against which
the appellants have filed the present appeal before this Court.
12. The learned Senior Counsel appearing for the appellants would
submit that the learned Judge decreed the suit without adverting to and
considering the crucial points involved in the present case, because the entire
sums were swindled by certain third parties who are not arrayed as parties in the
above suit. The plaint did not reflect the true facts of the case and the pleadings
are contrary to the final report filed by CBI, EOW and as such, the plaintiff,
having come to the Court with unclean hands, is not eligible for any equitable
relief from this Court. The learned Judge completely accepted the version of
the plaintiff that the cheques were deposited by one Mr.Venkatesh, the previous
employee of Gokulam Chit Funds, but as per the final report filed by CBI,
EOW, the cheques were originally handed over by one Mr.Yuvarajan
impersonating as Sabarish and another lady Zeenath impersonating as S.Priya,
who happens to be the deceased son and daughter-in-law of the founder
A.M.Gopalan of Gokulam Chit Funds. The claim of the plaintiff that the
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OSA No. 151 of 2022
cheques were handed over by the erstwhile partner Mr.Venkatesh is false, as
there is no answer from the plaintiff till date how the cheques went into the
possession of Mr.Yuvaraj who impersonated as Sabarish and Zeenath who
impersonated as S.Priya. The learned Senior Counsel would further submit that
it was the second appellant who has originally complained before the CBI about
the alleged fraud, which unearthed the scam and identified the actual fraudsters.
However, it is still a mystery as to why the plaintiff failed to array the actual
fraudsters who took over the plaintiff’s money by way of a well schemed scam.
The public money of the bank is at stake and for the negligence on the part of
the plaintiff, the appellants cannot be made as scapegoats. It was also pointed
out that the fraudsters alone carried the cheques and also opened current account
with the bank and the loan was disbursed on the strength of the FDR, which
itself is a reliable security document. The learned Judge decreed the suit
believing Exs.P3, P5 & P7, namely, the 3 letters submitted by the plaintiff, in
which it was stated “do not create any lien or security on the deposit’, but failed
to note the final report submitted by CBI, which clearly reads that the 2 letters
have never reached the bank and it is only the impersonators who brought the
plaintiff’s cheques for getting the FDRs and as such the plaintiff is guilty of
creating self styled fraudulent documents for the purpose of the case. In any
event, the bank cannot be held liable, because so far as the original FDRs are
concerned, after encashing the cheques, the original FDRs were handed over to
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OSA No. 151 of 2022
the impersonators who also opened current account in the name of the plaintiff
company and loan has been availed by the impersonators. The obligation on the
part of the bank got exhausted because FDRs have been handed over to the
impersonators for the very reason they carried the original cheques of the
plaintiff company and there is no reason to disbelieve them. The plaintiff has to
blame themselves for the poor management and for handling the cheques in
such a bad manner for which the bank cannot be made a scapegoat and the
public money cannot be swindled, as it is the conspiracy of third parties and
also the officials of the plaintiff themselves. Therefore, the learned Senior
Counsel sought for interference with the impugned judgment and decree.
13. Per contra, the learned counsel appearing for the respondent would
submit that when the plaintiff had never authorised anyone to obtain loan on
behalf of the plaintiff company, the version of the appellants that two persons
claiming to be Sabarish and Priya, being the son and daughter-in-law of
Gokulam Gopalan, brought the original cheques and availed the loan, is totally
false. He also pointed out that Sabarish, the son of Gokulam Gopalan had died
in a car accident even in the year 2008. The Branch Manager had been
convicted by the CBI Court with respect to fraud in the said transaction after a
full trial. Having encashed the cheques, the bank is obligated to pay back the
amounts on maturity and they cannot shirk their responsibility. The learned
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OSA No. 151 of 2022
counsel also would submit that the final report of CBI clearly shows that the
loan application form was practically blank and did not contain the details
regarding PAN number, date, name and other important details. Obviously, in
the absence of these crucial details, the loan had been sanctioned. Therefore,
the learned counsel contended that the judgment and decree require no
interference at the hands of this Court.
14. We have considered the rival contentions and perused the materials
available on record.
15. The specific case of the appellants is that when a loan of Rs.2.70
crores had been availed for and on behalf of the respondent company against the
maturity value of the two fixed deposit receipts, the appellants are not liable to
repay the proceeds to the respondent, as a fraud has been committed on the
Bank owing to the negligence of the respondent.
16. The specific case of the respondent is that when the three cheques
issued by the respondent were encashed by the second appellant Bank by
debiting the current account of the respondent with Catholic Syrian Bank
Limited, Kodambakkam, Chennai, which is evident from the bank statement
issued by the Catholic Syrian Bank and the second appellant had also issued the
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OSA No. 151 of 2022
three Fixed Deposit Receipts for the value of Rs.6,00,00,000/- and subsequently,
when the respondent received the proceeds for the third fixed deposit, the
appellants cannot deny the proceeds of the first and second fixed deposits to the
respondent on the premise that loan had been availed, since the respondent had
not authorised anyone to avail the loan against the said two fixed deposit
receipts.
17. The point for consideration in this appeal is whether the respondent is
entitled to the suit claim concerning the first and second fixed deposits and
whether the judgment and decree passed by the learned single Judge are liable
to be interfered with?
18. A perusal of the records would show that admittedly, the respondent
has fixed deposits in various bank branches all over India and while so, the
respondent had issued three crossed account payee cheques, namely, Cheque
No.198688 dated 22.08.2011 for Rs.1,00,00,000/-, Cheque No.200872 dated
28.09.2011 for Rs.2,00,00,000/- and Cheque No.201082 dated 07.10.2011 for
Rs.3,00,00,000/- all drawn on Catholic Syrian Bank, Kodambakkam Branch in
favour of the second appellant, the Branch Manager, Indian Overseas Bank,
Koyambedu Branch for issuing fixed deposit receipts in favour of the
respondent. The cheques were sent to the second appellant through one
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OSA No. 151 of 2022
Venkatesh, the previous partner of Gokulam Cards and the three cheques were
encashed by the second appellant by debiting the current account of the
respondent with Catholic Syrian Bank Limited, Kodambakkam Branch. The
debit of the three cheques from the account of the respondent is also evident
from the bank statement issued by Catholic Syrian Bank, Kodambakkam
Branch. Thereafter, the second appellant also issued the three fixed deposit
receipts in favour of the respondent, namely, FDR No.306537 dated 22.09.2011
for Rs.1,00,00,000/-, FDR No.306556 dated 03.10.2011 for Rs.2,00,00,000/-
and FDR No.306595 dated 18.10.2011 for Rs.3,00,00,000/-. On 03.11.2011,
when the respondent contacted the second appellant, they were informed that
loans had been availed as against the first and second fixed deposit receipts.
Immediately the respondent went to the second appellant branch, who claimed
that as against the first and second fixed deposit receipts totalling to
Rs.3,00,00,000/-, the second appellant had advanced a loan of Rs.2.70 crores to
third persons. The claim of the respondent is that they never authorised anyone
to avail such loans and further the third fixed deposit was also about to get
discharged with the fake seal of the respondent company and that timely
intervention prevented loan being advanced as against the same also.
Immediately the respondent lodged a complaint on 05.11.2011 to the
Commissioner of Police, Egmore, Chennai and also sent the letter dated
05.11.2011 to the Senior Manager, Indian Overseas Bank, Koyambedu Branch
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OSA No. 151 of 2022
calling upon them to restore the fixed deposit receipts. There was no reply. The
investigation into the criminal complaint also revealed that various third persons
had committed fraud and impersonation and had obtained loans on the strength
of the first and second fixed deposits standing in the name of the respondent. It
is to be noted that when the cheques issued by the respondent had been
encashed by the second appellant, the second appellant was obligated to repay
the amounts on maturity of the fixed deposits. Therefore, the respondent was
constrained to issue the legal notice dated 23.12.2013, for which the second
appellant only sent a reply on 01.02.2014 without repaying the proceeds,
thereby necessitating the respondent to file the suit for recovery of the amount
covered in the first and second fixed deposits totalling to Rs.3,00,00,000/- along
with accrued interest thereon.
19. When the respondent proved and established their case that they made
the first and second fixed deposits with the second appellant for
Rs.3,00,00,000/- with documentary evidence, it is for the second appellant to
prove the contrary that the respondent obtained the loan for Rs.2.70 crores
against the first and second fixed deposits through authorised persons and
therefore they are not obligated to return the proceeds for non-payment of the
loan. It is also to be noted that even the loan document is not in order and
subsequently the investigation into the criminal complaint proceeded and the
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OSA No. 151 of 2022
official of the second appellant was admittedly convicted for the charged
offence. Once the respondent proved the foundational fact that they made the
fixed deposits and the proceeds on maturity were not paid to the respondent by
the second appellant, having discharged their initial burden, the onus has been
shifted on the appellants to prove that the respondent obtained loan on the fixed
deposits and subsequently failed to repay the same. The learned single Judge
had dealt with the case and from the oral and documentary evidence found that
the respondent is entitled for a decree representing the suit claim. This Court, as
an appellate Court, while re-appreciating the pleadings and oral and
documentary evidence, finds that the respondent has proved their claim and the
appellants have failed to discharge their onus.
20. For the aforementioned reasons, finding no merits whatsoever to
interfere with the impugned judgment and decree, the original side appeal
stands dismissed. Consequently, the connected civil miscellaneous petition is
closed. Considering the facts and circumstances of the case, there shall be no
order as to costs.
(P.VELMURUGAN J.) (GK.MUTHUKUMAAR J.)
28-10-2026
Index:Yes/No
Speaking/Non-speaking order
Internet:Yes
Neutral Citation:Yes/No
ss
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OSA No. 151 of 2022
To
1. The Sub Assistant Registrar (O.S.)
High Court, Madras
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OSA No. 151 of 2022
P.VELMURUGAN J.
AND
GK.MUTHUKUMAAR J.
ss
Judgment in OSA No.
151 of 2022
28-10-2026
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