The City Union Bank Ltd. Vs M/S Suraj Plastowelds and Ors.

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 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 ORDINARY ORIGINAL CIVIL JURISDICTION

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 SUMMONS FOR JUDGEMENT NO.721 OF 2003
 IN

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 SUMMARY SUIT NO.2005 OF 2003

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 The City Union Bank Limited Plaintiff

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 versus

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 M/s.Suraj Plastowelds & others Defendants

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 Mr.Ravi Ramnath i/by Ramnathsekhar & Co. for
 plaintiff.

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 Mr.Rajesh Kachare i/by Shriram S.Redu for
 defendants.

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 CORAM : S.C.DHARMADHIKARI, J.

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 DATE : 6th July 2005

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 PC :

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 1. Heard Mr.Ramnath Ravi for plaintiff and

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 Mr.Kachare for defendants.

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 2. On an application made by defendant no.2 in

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 his capacity as a Sole Proprietor of defendant
 no.2, the plaintiff bank sanctioned certain

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 facilities on the terms and conditions of the
 sanction letter dated 14th June 2000. The
 facilities were for a period of one year. The
 facilities were sanctioned on the condition that

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 a Demand Promissory Note is executed by the
 defendants. One of the terms and conditions
 stipulated was execution of letter of guarantee
 by defendants 3 and 4. It is the case of the
 plaintiff bank that amount was disbursed and the
 facility was availed of. However, neither the
 amount was paid nor the demand notice addressed
 on 26th October 2002 complied with. The
 plaintiff duly forwarded statement of account
 maintained by them in their books in ordinary and
 regular course of business. since the amounts
 which are due and payable, according to the
 plaintiff bank, on a written contract as
 evidenced by letter of sanction and also on the
 promissory note have remained unpaid, the present
 summary suit is filed.

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 3. Affidavit in reply is filed by defendants.
 As far as defendants 1 and 2 are concerned,
 Mr.Kachare contends that the promissory note has
 not been executed inasmuch as signatures on blank
 documents were obtained by the officials of the
 bank and, therefore, the defendants are not
 liable to pay. It is also contended that if the
 facilities are for a period of one year, then the
 account forwarded from 14th June 2000 to 20th May
 2003 cannot be made basis of the recovery,

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 inasmuch as entries therein pertain to the year
 2002-2003 which is much beyond the period
 sanctioned. In any event, once the facilities
 have been extended and for such extension neither
 any letter nor any acknowledgement is obtained
 from defendants 3 and 4, then they stand
 discharged as guarantors. Therefore, the
 execution of the promissory note being disputed
 by the principal borrower and the guarantors
 standing discharged as above, according to
 Mr.Kachare, this is a fit case for grant of
 unconditional leave.

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 4. With the assistance of learned counsel

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 appearing for both sides I have perused the
 plaint and the annexures thereto. It is
 pertinent to note that Mr.Kachare does not
 dispute that defendant no.2 applied for
 facilities vide his application at Exhibit-A. He
 does not dispute that the letter sanctioning the
 facilities has been duly received incorporating
 the terms and conditions stipulated therein. All
 that he disputes is that although the contract
 stipulates execution of a promissory note by the
 principal borrower as well as the guarantors,
 such promissory note has not been executed. In
 my view, it was for nothing that the bank was

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 insisting upon a promissory note. If the
 application for sanction is admitted and if grant
 and disbursement of the amount is admitted, then
 the promissory note is valid. One of the terms
 on which amount is sanctioned and disbursed is
 execution of Demand Promissory Note. It is not
 the case of defendants 1 and 2 that a particular
 officer of the bank has pressurised them or
 coerced them and that is how the blank documents
 have been signed. That is not the reply or the
 stand taken when the demand notice was addressed.
 It is only in affidavit in reply that such a
 contention is raised. Therefore, at least
 insofar as principal borrowers are concerned, I
 do not see any defence, leave alone a substantial
 one. However, interest of justice would be
 served if the defendant nos.1 and 2 are granted
 conditional leave to defend, on deposit of a sum
 of Rs.2.75 lakh (Rs.Two lakh seventy five
 thousand only) in this Court within a period of
 16 weeks from today. As far as defendants 3 and
 4 are concerned, in my view, the terms and
 conditions are clear. Although their names are
 mentioned in the application and they have signed
 the promissory note, it appears that have not
 executed any letter of guarantee nor any letter
 or deed is placed on record. That apart, even if

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 they are liable, their liability prima facie is
 up to 15th June 2002. Therefore, there is some
 substance in their contention that if the
 facilities were continued, that would amount to
 giving concessions contrary to any agreement with
 them. This alters the original terms.
 Therefore, in my view, insofar as defendants 3
 and 4 are concerned, they being sued as
 guarantors, they are entitled to unconditional
 leave to defend. Summons for Judgement disposed
 off in the above terms.

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 5. On the amount being deposited, the plaintiff
 bank would be entitled to apply for withdrawal of
 the same and such application would be dealt with
 appropriately.

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 6. Needless to state that in default, further
 consequences in law will follow. On deposit of
 the amount, the suit shall transferred insofar as
 principal borrowers are concerned, to the list of
 commercial causes with usual directions as to
 written statement, inspection and discovery.
 Suit stand transferred to the list of commercial
 causes as far as defendants 3 and 4 are concerned
 with usual directions.

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 (S.C.DHARMADHIKARI, J.)

The City Union Bank Ltd. v. M/S Suraj Plastowelds and Ors.

Case brief

What is this about?

What did the court decide?

The City Union Bank Ltd. v. M/S Suraj Plastowelds and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Coram

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