Indian Overseas Bank Vs Narindra Singh Dbona and Ors.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

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SUIT NO. 3143 OF 1986.

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Indian Overseas Bank,
A body corporate constituted and
established under the Banking
Companies (Acquisition and Transfer
of Undertakings) Act, 1970, having
its head office at 762, Anna Salai
Madras in the State of Tamilnadu and
also among others, a branch office
at Plot No.4, Revised Schedule No.3,
Anex Nataraj Cinema, 1st Road,
Chembur, Mumbai 400 071.... Plaintiff.

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Versus.
1. Narinder Singh Dhanoa,
residing at 14/117, Acharya
Commercial Centre, Chembur,
Bombay 400 071.
2. M.N. Sankaran,
residing at 4/421, Delite House,
S.D.Sandhu Marg, Chemhur,
Bombay 400 071.
3. Kushal Singh,
residing at 129/2367, Vikhroli,
Tagore Nagar, Bombay 400 083.... Defendants

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Shri P.N.Singh i/by M/s.Vyas and Bhalwal for the
Plaintiff.

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None for the Defendants.

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CORAM : ABHAY S.OKA, J.

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DATED : 27th August, 2007.

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ORAL JUDGMENT.:

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1.The Plaintiff-Bank has filed this suti for
recovery of a sum of Rs.1,46,171.89 with further
interests at the rate of 11.85% per annum. The

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Plaintiff has prayed for various other reliefs. The
case of the Plaintiffs is that sometime in October 1980,
the 1st Defendant approached the Plaintiff and applied
for grant of financial assistance for the purpose of
purchasing a truck. On 21st October 1980, the Plaintiff
sanctioned term loan in the sum of Rs.1,97,000/- under
the IDBI Refinance Scheme. The interest was at the rate
of 18.35% per annum till the date of refinance from IDBI
is obtained and thereafter at 11.85% from February 1981
against the hypothecation of the new truck valued at
Rs.2,68,705/- with 25% margin. The 1st Defendant was
granted facilty of clearing the loan by 36 equal monthly
instalments of Rs.5450/- and the last instalment of
Rs.6250/-.

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2.In consideration of the grant of loan of
Rs.1,97,000/- the 1st Defendant executed a demand
promissory note dated 21st October 1980 for the sum of
Rs.1,97,000/- by which the 1st Defendant agreed to repay
the loan amount with interest as agreed. The 1st
Defendant also executed a deed of hypothecation dated
21st October 1980 by which the truck was hypothecated in
favour of the Plaintiff by way of security for repayment
of loan with interest thereon. The 2nd and 3rd
Defendants executed a deed of guarantee dated 21st
October 1980 by which they agreed to guarantee the
repayment of the amount due and payable by the 1st

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Defendant together with interest, costs, charges and
expenses. According to the case of the Plaintiff, the
1st Defendant availed of the loan. The 1st Defendant
executed a letter of acknowledgement of debt dated 20th
October 1983. The 1st Defendant executed a revival

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letter Form III dated 19th January 1986 and acknowledged
that the said sum of Rs.1,97,000/- was secured under the
demand promissory note. As the Defendant failed and
neglected to pay the monthly instalments, by demand
notice dated 26th April 1994 the Plaintiff called upon
the Defendants to pay the amount due and payable under
the loan facility. According to the case of the
Plaintiff as on 20th December 1985, a sum of
Rs.1,37,713.45 was due and payable by the 1st Defendant.
As compliance was not made with the notice by the
Defendants, the present suit has been filed.

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3.The suit was contested by the 1st Defendant by

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filing written statement. The 1st Defendant did not
dispute that financial assistance was granted by the
Plaintiff and that he hypothecated the truck in favour
of the Plaintiff by way of security. It is contended
that the signatures of the 1st Defendant were taken on
blank documents, writings and papers without explaining
the contents thereof to him. It is contended that the
1st Defendant is an illiterate person and therefore,
does not know English. It is stated that on 28th August

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1981 the hypothecated truck met with an accident and the
cleaner died in the accident. It is stated that the 1st
Defendant lodged a claim with the Insurance Company and
the Insurance Company paid a sum of Rs.1,15,000/- to the
Plaintiff. It is stated that the 1st Defendant
deposited the said cheque of Rs.1,15,000/- with the
Plaintiff with specific understanding to adjust the said
amount against the outstanding loan. It is alleged that
the 1st Defendant made various payments aggregating to
Rs.91,085.25 and thus excessive payment of Rs.43,266/-
has been made by the 1st Defendatn.

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4.Issues were settled on 24th February 2006, which

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reads thus:

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(1)Whether the plaintiffs prove that sum of
Rs.1,46,171.89 is due and payable by the
Defendants to the Plaintiffs with interest at
18.35% as per the statement of account being
Exh.G and particulars of claim being Exh.H to
the plaint?

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(2)Whether the Plaintiffs prove that the Defendants
have executed the documents being Exh.A to Exh.E
to the plaint as and by way of security for the
repayment of the aforesadi amount?

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(3) Whether the Plaintiffs prove that the truck bearing No.MWT-2278 is hypothecated or charged and/or pledged by the Defendant No.1 in favour of the Plaintiffs as and by way of security for repayment of the amount mentioned in Exh.G and Exh.H to the plaint?

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(4) Whether the Defendants prove that they have paid excess amount to the Plaintiffs and are liable for refund of an amount paid with interest?

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(5) Whether the Defendants Nos.12 and 3 prove that they have executed guarantee for the due repayment of loan amount due to the Plaintiffs under hypothecated vehicle No.MWT 2278?

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(6) Whether the Defendants prove that they have not admitted and acknoweledged an amount of Rs.1,46,177.89 secured under the Promossory Note dated 20.12.1985?

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(7) Whether the Defendants prove that the suit is barred by the law of limitation?

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(8) Reliefs, if any?

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5. The Plaintiff filed affidavit in lieu of

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evidence of Shri K.Parthasarathy, Chief Manager. The
Plaintiff also produced on record original documents
along with a list. The examination-in-chief of the said
witness Shri K.Parthasarathy was recorded on 16th August
2007. None appeared for the Defendants. Therefore, on
that day cross-examination of the said witness was
closed. As the Counsel for the Plaintiff made a
statement that the Plaintiff does not desire to lead any
further evidence, the suit was adjourned till today for
recording evidence of the Defendant and for hearing of
arguments. Today none appears for the Defendants and
therefore, I have heard the argument of the learned
Counsel for the Plaintiff.

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6.The Plaintiff has produced and proved demand
promissory note dated 21st October 1980 (Exh.P-1)
executed by the 1st Defendant by which he agreed to pay
Rs.1,97,000/- with interest. The Deed of hypothecation
dated 21st October 1980 is also produced and proved by
the Plaintiff. The Deed of hypothecation has been
marked as Exh.P-2. The said deed of hypothecation
establishes that the truck, more particularly described
in the schedule to the said deed of hypothecation was
hypothecated with the Plaintiff-bank by way of security
for repayment of the loan amount. Letters of
acknowledgement dated 20th October 1983 (Exh.P-4) and
19th January 1986 (Exh.P-5) have been duly proved by the

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Plaintiff.

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7.A deed of guarantee dated 21st October 1980 is
also produced and proved by the Plaintiff. Shri
K.Parthasarathy, the witness examined by the Plaintiff
has identitied signatures of the Defendants on the said
document. A copy of the demand notice dated 26th April
1994 issued by the Advocate for the Plaintiffs is also
placed on record. An extract of the loan account of the
1st Defendant is produced and proved and the same has
been marked as Exh,P-6. A copy of an extract of the
loan account of the 1st Defendant has also been annexed
to the plaint.

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8.It must be stated here that the 1st Defendant
has not disputed that the Plaintiff granted loan for
purchase of a truck against hypothecation of the truck.
By way of answer to the said claim, the contention of
the 1st Defendant is that a sum of Rs.1,15,000/-
received from the Insurance company was paid to the
Plaintiff and the Plaintiff was to adjust the said
amount against repayment of loan. It is also contended
that the 1st Defendant has paid various amounts from
29th January 1982 till December 1985 aggregating to
Rs.91,085.25. The contention is that if the sum of
Rs.1,15,000/- allegedly received from the Insurance
Company and the sum of Rs.91,085.25 are taken into

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consideration, an excess payment of Rs.43,266/- has been
made by the 1st Defendant.

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9.The burden was on the 1st Defendant to prove
that the sum of Rs.1,15,000/- was paid to the Plaintiff
and the same was paid on the understanding that the said
amount would be adjusted against the suit claim. The
1st Defendant has not led any evidence to substantiate
the said case. The 1st Defendant has not even
cross-examined the only witness of the Plaintiff. Thus
there is no evidence on record to show that a sum of
Rs.1,15,000/- was received by the Plaintiff as contended
by the 1st Defendant. In the written statement and in
particular clause (d) of paragraph 5 thereof, the 1st
Defendant has given particulars of various payment smade
by him to the Plaintiff from 29th January 1982 till the
end of December 1985. A perusal of the extract of
account of the Defendant produced by the Plaintiff shows
that the Plaintiff has given credit to all the amounts
set out in clause (d) on page 5 of the written
statement. In any event the burden to prove that excess
payment of Rs.43,266/- was made by the 1st Defendant to
the plaintiff was on the 1st Defendant. As stated
earlier, the 1st Defendant has not led any evidecne and
has not cross-examined the only witness examined by the
Plaintiff. The 2nd and 3rd Defendants have not
contested the suit. The 2nd and 3rd Defendants are the

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guarantors. The deed of guarantee dated 21st October
1980 October 1980 (Exh.P-3) and in particular clause 2
thereof records that the guarantee shall be for an
amount not exceeding the sum of Rs.1,97,000/- together
with interest and charges thereon. The execution of the
deed of guarantee has been duly proved by the aforesaid
witness of the Plaintiff. Considering the aforesaid
discussion the issue Nos.1, 2 and 3 will have to be
answered in the affirmative and the issues Nos.4 to 6
will have to be answered in the negative.

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10.Another contention raised by the Defendants is
as regards bar of limitation. The loan was disbursed on
21st October 1980. On 20th October 1983 the 1st
Defendant has admitted the claim by way of a letter of
acknowledgement (Exh.P-4). There is one more letter of
acknowledgement dated 19th January 1986 (Exh.P-5)
whereby the 1st Defendant has admitted the claim. The
suit has been lodged on 15th October 1986. Therefore,
considering the docuemnts at Exh.P-4 and P-5, the suit
will have to be taken as filed within limitation.
Therefore, issue No.7 will have to be answered in favour
of the Plaintiff.

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11.In prayer clause (a), the Plaintiff has sought
further interest at trhe rate of 11.85% per annum or at
the revised rate of interest as declared by the Reserve

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Bank of India from time to time. Considering the facts
and circumstances of the case, the interest at the rate
of 11.85% per annum will have to be granted on the sum
of Rs.1,37,713.45 from the date of institution of the
suit till realisation. The learned Counsel for the
Plaintiff has stated that the Plaintiff is pressing for
a decree only in terms of prayer clauses (a) and (b).

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12.Hence the following order is passed:

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(i)The Defendants Nos.1 to 3 are ordered and
decreed to jointly and severally pay to
the Plaintiff a sum of Rs.1,46,171.89 ps.
with interest on the sum of Rs.1,37,713.45
at the rate of 11.85% p.a. from the date
of the suit till realisation.

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(ii)The Defendants Nos.1 to 3 are ordered and
decreed and decreed to pay costs of the
suit to the Plaintiff.

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(iii)Certified copy is expedited.

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Judge.

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Indian Overseas Bank v. Narindra Singh Dbona and Ors.

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Indian Overseas Bank v. Narindra Singh Dbona and Ors.

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