Suit by bank for recovery of loan. Court found evidence of promissory note, hypothecation, and guarantee proved. Defendants absent. Decree allowed with interest fixed at 11.85%.
Decree for recovery of Rs. 2,18,242.70 with interest at 11.85% per annum from date of suit till realization.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SUIT NO. 3199 OF 1986.
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, Annex Nataraj Cinema,
1st Road, Chembur, Bombay 400 071.... Plaintiff.
Versus.
1. Manekrao Sarjerao Khaire,
C/o. Narinder Road Lines,
14/117, Acharya Commercial
Centre, Near Basant Cinema,
Chembur, Bombay 400 074.
2. Narinder Singh,
14, Acharya Commercial Centre,
Near Basant Cinema, Chembur,
Bombay 400 074.
3. Ajit Singh,
Group No.4, Chawl No.346,
Room No.41/61, Tagore Nagar,
Vikhroli, Bombay 400 083.... Defendants.
Shri P.N.Singh i/by M/s.Vyas & Bhalwal for the
Plaintiff.
None for the Defendants.
CORAM : ABHAY S.OKA, J.
DATED : 27th August, 2007.
ORAL JUDGMENT:
1.The Plaintiff has filed this suit against the
Defendants for recovery of a sum of Rs.2,39,973.86 with
further interest at the rate of 11.85% per annum or at
the revised rate as determined by the Reserve Bank of
India. There are other prayers made in the suit.
: 2 :
2.According to the case of the Plaintiff, the 1st
Defendant is carrying on business as a transport
operator. According to the case of the Plaintiff,
sometime in August 1980 the 1st to 3rfd Defendants
approached the Plaintiff and applied for grant of
financial assistance. Accordingly, on 12th August 1980
the Plaintiff granted to the 1st Defendant a sum of
Rs.1,97,000/- by way of loan under the IDBI’s Refinance
Scheme with interest at the rate of 18.35% per annum
till the date of obtaining refinance from the IDBI and
thereafter at the rate of 11.85% from January 1981
onwards. The loan was against hypothecation of the new
Ford Truck valued at Rs.2,85,922/- with 25% margin.
Facility of repayment of loan with interest by monthly
instalments was granted to the Defendants. The 1st
Defendant executed a demand promissory note dated 12th
August 1980 in the sum of Rs.1, 97,000/- in favour of
the Plaintiff. By the said demand promissory note, the
first Defendants agreed to repay the loan amount with
interest as agreed. On the same day the 1st Defendant
executed a deed of hypothecation in favour of the
Plaintiff by which the truck more particularly described
in the said document was hypothecated in favour of the
Plaintiff. The 2nd and 3rd Defendants executed a deed
of guarantee dated 12th August 1980 in favour of the
Plaintiff by which they guaranteed repayment of the loan
amount by the 1st Defendant.
: 3 :
3.The 1st Defendant by a letter of acknowledgment
dated 24th June 1983 confirmed, admitted and
acknowledged that the amount of Rs.1,97,000/- was
secured under the demand promissory note dated 12th
August 1980. The 1st Defendant executed a revival
letter in Form III on 23rd September 1985 and thereby
admitted and acknowledged the liability to pay
Rs.1,97,000/- to the Plaintiff.
4.As the 1st Defendant committed defaults in
payment of the instalments, the Plaintiff by its
Advocate’s notice dated 27th April 1984 called upon the
1st to 3rd Defendants to pay the outstanding amount.
According to the case of the Plaintiff, as on 20th
December 1985 a sum of Rs.2,18,242.70 ps. was due and
payable by the 1st Defendant to the Plaintiff. As there
was no response to the legal notice, the present suit
for recovery of the outstanding amount has been filed.
5.The 2nd Defendant filed his written statement.
In the written statement, it was contended that the said
Defendant was having an account with the Plaintiff. As
the 1st Defendant who was known to the 2nd Defendants
was intending to open an account with the Plaintiff, the
1st Defendant approached the 2nd Defendant for
identification. On the request of the 1st Defendant,
the 2nd Defendant attended the branch of the Plaintiff
: 4 :
when the then Branch Manager of the Plaintiff obtained
signatures of the 2nd Defendant on certain blank forms
and documents under the pretext that the same were
required for the purpose of introduction and
identification of the 1st Defendant to enable him to
open an account. The 2nd Defendant pleaded ignorance
about the transaction between the Plaintiff and the 1st
Defendant. The 2nd Defendant has denied of having
executed any deed of guarantee.
6.The settled issues are as under:
i)Whether the Plaintiffs prove that sum of
Rs.2,39,937.86 is due and payable by the
Defendants to the Plaintiffs with interest
@ 18.35% as per statement of account being
Exh.G and particulars of claim being Exh.H
to the plaint?
ii)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 aforesaid amount?
iii)Whether the Plaintiffs prove that the
truck bearing No.MWT 2145 is duly
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 prayed in prayer
(a) of the plaint?
iv)Whether the Defendants prove that they
have paid excess amount to the Plaintiffs
and are liable for refund of an amount
paid with interest?
v)Whether the Defendants Nos.2 and 3 prove
that they have executed guarantee for the
due repayment of loan amount due to the
Plaintiffs under hypothecated vehicle
No.MWT 2145?
vi) Whether the Defendants prove that they: 5 :
have not admitted and acknowledged an
amount of Rs.1,97,000/- secured under the
Promissory Note dated 12.08.1980?
vii)Whether the Defendants prove that the suit
is barred by the law of limitation?
viii)Reliefs, if any?
7.On 24th February 2006 issues were settled. The
Plaintiff filed an affidavit in lieu of examination-in-
chief of Shri K.Parthasarathy, Chief Manager of the
Plaintiff. The Plaintiff has also placed on record
original documents along with a list. The evidence of
the said witness was recorded on 16th August 2007. On
that day none appeared for the Defendants. Therefore,
the cross examination of the said witness was treated as
closed. The suit was thereafter fixed on 22nd August
2007 for the evidence of the Defendants. However, none
appeared for the Defendants on that date. Therefore,
arguments were heard.
8.The Plaintiff has produced and proved the demand
promissory note dated 12th August 1980 in the sum of
Rs.1,97,000/- executed by the 1st Defendant. The said
demand promissory note has been exhibited as exhibit
P-1. The Plaintiff has also produced and proved deed of
hypothecation dated 12th August 1980 executed by the 1st
Defendant. The said document has also been admitted in
evidence and the same is marked Exh.P-2. The deed of
guarantee dated 12th August 1980 (Exhibit P-3) executed
by the 2nd and 3rd Defendants is also produced and
: 6 :
proved by the Plaintiff. The letters of acknowledgement
dated 24th June 1983 and 23rd September 1985 are also
produced and proved and are marked as Exh.P-4 and P-5
respectively. A copy of the demand notice dated 27th
April 1984 is placed on record. An extract of the loan
account of the 1st Defendant has been annexed to the
plaint and another extract showing the total amount due
and payable by the 1st Defendant is also produced. The
same has been proved and is marked as Exh.P-6. There is
no cross-examination of the witness of the Plaintiff
made by the Defendants. The Plaintiff has proved
execution of the demand promissory note, deed of
hypothecation, the deed of guarantee, letters of
acknowledgement dated 24th June 1983 and 23rd September
1983. The extract of the loan account shows that on
20th December 1985 the amount due and payable by the 1st
Defendant was Rs.2,18,242.70. The Plaintiff has claimed
further interest at the rate of 11.85% per annum. Thus
the first three issues have to be answered in the
affirmative.
9.Issue No.4 as settled does not arise out of the
pleadings and the material on record and the said issue
will have to be deleted. The same is the case as
regards issue No.5 and 6. In so far as the bar of
limitation is concerned, the 1st Defendant has signed
letter of acknowledgement and letter received on 24th
June 1983 and 23rd September 1985 respectively. The
: 7 :
suit was lodged on 15th October 1986. Therefore, the
present suit is filed within limitation.
10.The contention that the signature of the 2nd
Defendant was obtained by the Plaintiff-Bank on blank
documents while introducing the 1st Defendant for
opening a new account cannot be accepted for the simple
reason that none of the Defendants have stepped into the
witness box. Therefore, a case is made out for passing
a decree in favour of the Plaintiff. However,
considering the facts and circumstances of the case, the
rate of interest will have to be fixed at 11.85% per
annum on the sum of Rs.2,18,242.70 from the date of
filing of the suit till realisation.
11.In so far as the 4th Defendant is concerned, no
relief can be granted as no material is available
against him.
12.The learned Counsel appearing for the Plaintiff
states that he is pressing only the prayer clauses (a)
and (b).
13.Hence there will be a decree in terms of prayer
clauses (a) and (b) of the plaint with a modification
that the further interest will be payable at the rate of
11.85% per annum on the sum of Rs.2,18,272.70 from the
date of institution of the suit till realisation or
: 8 :
payment.
14.Certified copy is expedited.
Judge.
3 issues framed by the court
Whether the sum claimed is due and payable with interest?
Whether the security documents were duly executed?
Whether the suit is barred by law of limitation?
1 provisions across 1 enactments
ABHAY S OKA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court