Allowed

Central Bank of India v. M/S. Sanzgiri Graphics and Ors.

Bombay HC24 Aug 2007S/709/1996

Case brief

AI extract

What is this about?

In an undefended suit, the High Court decreed the plaintiff bank's claim against the defendants, who borrowed under a hypothecation facility and failed to repay. The suit was proceeded ex parte as all defendants remained absent.

What did the court decide?

Suit decreed for Rs. 4,87,603.41 plus interest; receivership maintained for six months.

Central Bank of India Vs M/S. Sanzgiri… — Contract and Commercial Disputes | Bombay HC (2007)

¶1

-1-

¶2

VPH

¶3

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

¶4

ORDINARY ORIGINAL CIVIL JURISDICTION

¶5

SUIT No. 709 OF 19 96

¶6

Central Bank of India, ) a body corporate constituted ) under the Banking Companies ) (Acquisition and Transfer of ) Undertakings) Act V of 1970, ) having its Central Office at ) Chandermukhi, Nariman Point, ) Mumbai-400 021 and a Branch ) Office inter alia, known as ) Peddar Road Branch, situate ) at Poornima Apartment, 23, ) Peddar Road, Mumbai 400 026. Plaintiff Vs. 1. M/s. Sanzgiri Graphics ) a proprietory firm, having) its office at 307, Dhanraj) Industrial Estate, A Block) 3rd floor, Sunmill Lane, ) Lower Parel, Mumbai 400 013

¶7

Shri R.K. Sanzgiri, ) adult, Indian Inhabitant, ) residing at Dnyan Jyoti, ) Block No.8, 1st Floor, ) Shivmandir Compound, Ram ) Nagar, Dombivali (East) ) 421 201, District Thane )

¶8

Shri R. M. Kapdi, adult )

¶9

-2-

¶10

Indian Inhabitant, residing at Block No. 303, Creek ) Side Co-Op. Housing Society Ltd., Kishanchand Marg, ) Bandra Reclamation, Bandra) (W), Mumbai 400 050. )

¶11

Shri Prakash Keshav Chitnis adult, Indian inhabitant, ) Enpee Apartments, 105/3, ) S.L. Matkar Marg, Elphinston Road, Mumbai 400 025.

¶12

Defendants

¶13

Mr. R. M. Vasudeo, advocate for plaintiff. None for the defendants.

¶14

CORAM: Smt. RANJANA DESAI, J. DATE : AUGUST 24, 2007.

¶15

ORAL JUDGMENT:

¶16

.	This	suit is kep	t under cap	tion
"undefended	suits	for	exparte	decree	".	The
learned	counsel	for	the	pla	intiffs	has
tendered	in the	Court	affidavit	of	Mr.	P.
Sampath	Kumar,	Branch	Manag	er, in	lie	u of
examination	in	Chief.	The	list	of	original
documents	is also	tender	ed in	the	Court.	The
affidavit	of Mr.	P.	Sampa	thkumar	is	marked

¶17

-3-

¶18

"X" and list along with documents is marked

¶19

"Y" (Colly.)

¶20

2.	The plaintiffs’ case as evident from
the	plaint, the affidavit of	evidence	and
documents	may be stated. The	plaintiffs ar	e a
body	corporate, constituted under	the	Banking
Companies	Act (Acquisition &	Transfer	of
Undertaking	s) Act V of 1970, doi	ng business	of
banking.	The case of the	plaintiffs is	that,
defendant	No.1 is a proprietary	concern	and
defendant	No.2 is the sole	proprietor	of
defendant	No.1. Defendant No.1	is having	its
office	at 307 Dhanraj Industrial	Estate,	Lower
Parel,	Mumbai. Defendant Nos. 3	and 4	have
executed	letters of guarantees,	guar	anteeing

¶21

the repayment of amounts advanced by the

¶22

plaintiffs to defendant No.1.

¶23

3.	According t	o the plain	tiffs, on or
about	7th May	1990	defendant	No.1	requested
the	plaintiffs to		grant	Cash	Credit
(Hypothecati	on) facility	to	it.	The	said
application	is at	Serial	No.1	of	the
compilation	of do	cuments.	It	is	marked
Exhibi-1.	The re	quest	of defenda	nt No.1	was

¶24

-4-

¶25

considered	by	the plaintiffs in	or	about
August	1990 and	it was decided	that	on
defendant	No.1	executing necessary	d	ocuments
and	defendant	Nos. 3 and 4		executing
necessary	letters	of guarantees,	the	said
facility	should	be granted to defe	ndant	No.1.
Defendant	No.1	agreed to pay the		interest,
charged	by	the plaintiffs, according	to	the
rates	stipulated by	the Reserve Bank	of	India.
Defendant	Nos.	3 and 4 agreed to	stand	as
guarantors	in	respect of the advances	to	be

¶26

granted by the plaintiffs to the first defendant.

¶27

4.	In	consideration of	the plaintiffs
granting	Cash	Credit	(Hypothecation)	Facility,
defendant	No.1	executed	and delivered to	the
plaintiffs		documents,	the particulars	whereof

¶28

are given in paragraph 4 of the plaint. They are as under -

¶29

-5-

¶30

(c) Agreement of hypothecation of goods, dated 3-8-1990, whereby defendant No.1 hypothecated in favour of the plaintiff all tangible movable property, such as products, stock-intrade and goods, whether finished or raw or in process of manufacturing and all articles manufactured, therefrom belonging to the borrower, which at the that time or thereafter from time to time during the security would be brought in or stored or be in or about the premises, warehouses or godowns of the defendant No.1, and also raw materials like films, zinc and copper sheets, mat cards, art papers, glue, hypofixers, nitric acid, etc.(Exh. C).

¶31

Originals of these documents are tendered in the Court and are before the Court. They are marked as Exh. A, B & C respectively. I have perused those documents.

¶32

-6-

¶33

particularly	sp	elt	o	ut in	the	Schedule;	so
also	letter	da	ted	3-8-1990	whe	reby	defendant
Nos.	1	and	2	declared	that	defendant	No.2 is
the	sole	prop	rietor	of d	efendant	No	.1, and
letters	of		guara	ntees ex	ecuted	by	defendant
Nos.	3	and	4	,	both	dated	3-8-1990
guaranteeing		the	re	payment	of	the	loan
advanced	to	defe	ndant	No.1,		are	also on
record.	They	are	at	Exhibits	D, E	and	F and G

¶34

respectively. I have perused the said

¶35

documents.

¶36

¶37

According to the plaintiffs, the

¶38

plaintiffs	had	adv	anced	diverse amounts	under
the	said	Cash	Credit	(Hypothecation)	Facility
and	maintained	the	account	of defendant	No.1

¶39

in its books of accounts, in the ordinary and

¶40

usual course of business.

¶41

Defendant No.1 on or about 13-7-1993

¶42

confirmed	by le	tter date	d	13-7-199	3 that	a sum
of	Rs.2,62,700.41	Ps.	is	due	and payable	by
defendant	No.1	to		the	plaintiff	bank.
Original	of	said lett	er	dated	13-7-1993	is at
Exh.	H.	Defendant	No	.1 aga	in on	12-10-1993
confirmed	that	a sum	of	Rs.	2,64,397.91	Ps.

¶43

-7-

¶44

is due and payable by defendant No.1 to the plaintiff bank. Copy of balance confirmation

¶45

letter dated 12-10-1993 is on record at Exh.

¶46

¶47

According to the plaintiffs, on

¶48

4-1-1994 the defendants renewed the following

¶49

documents-

¶50

. (a) A Demand Promissory Note dated

¶51

4-1-1994 for Rs.2,00,000/-( Exh. J).

¶52

(b) A letter of continuing security,

¶53

dated 4-1-1994 (Exh. K).

¶54

(c) Agreement of hypothecation of goods, dated 4-1-1994, whereby defendant No.1 hypothecated in favour of the plaintiffs all tangible movable property, such as products, stock-intrade and goods, whether finished or raw or in process of manufacturing and

¶55

all articles manufactured, which at

¶56

the that time or thereafter from time

¶57

to time during the security would be brought in, stored or be in or about

¶58

-8-

¶59

the premises, warehouses or godowns of the defendants, and also copper sheets, zinc mat cards, film packets, itching powder ink, acid, kerosene paper at Defendant No.1’s place at 307, Dhanraj Industrial Estate, A Block, Sunmill Lane, Lower Parel, Mumbai 400 013 (Exh. L).

¶60

		(	d) Letter of	hypothecation dated
	4-1-1994		hypothecating	the machinery
	(Exh.			M)
The	demand		promissory note	dated 4-1-1994,
letter	of	cont	inuing guarantee	dated 4-1-1994,
agreement		of	hypothecation	dated 4-1-1994 and
letter of hyp	othecation d	ated	4-9-1994 are on

¶61

record at Exhs. J, K, L and M respectively.

¶62

9.		It is the case of	plaintiffs	that
since	defen	dant No.1’s	acc	ount	was	out	of
order,	the	plaintiffs	by	their		various	letters
informed		defendant No.		1,	that	their	account

¶63

had become irregular and called upon defendant

¶64

No.1 to regularize the same.

¶65

-9-

¶66

Since defendant No.1 failed and

¶67

neglected	to a	djust	the	a	ccount,	the
plaintiffs	vide	their	Advoca	te’s	letter	dated
23rd	January 1996	calle	d upon	the		defendants
to pay	the entire	dues.	Defen	dant	No.1	by its
letter	dated 1-2-1	996	replied	to	the	said
notice.	Defendant	No.1	asked	for	further	time
to settle	the dues	and	stated	that	the	balance
of R	s.4,76,264.41	is	wro	ngly		calculated.
Notice	dated 23-1	-1996	and	reply	of	defendant
No.1	dated 1-2-1996	are	on reco	rd.	They	are

¶68

marked as Exhs. 1 and 2 respectively. I have

¶69

perused them.

¶70

In the circumstances, it is the case

¶71

of the	plaint	iffs	that the	plaintiffs		granted
to the	first	d	efendant	the Cash		Credit
Facility	and		advanced	diverse		amounts
thereunder.		In	respect of	the said		facility
an a	mount	of	Rs.4,87,603.4	1 Ps., as	per	the
particulars	of	claim,	annexed	to the	plaint	at
Exh.	"O"	with	further int	erest at the	rate	of
19.75%	per	annum	is due	and payable	by	the
first	defendant	t	o the	plaintiffs	and	the

¶72

defendants are bound and liable to pay to the

¶73

plaintiffs the said dues.

¶74

-10-

¶75

12.		According to	the p	laintiffs	, the
repayment	o	f the	afor	esaid	dues	mentioned	in
Exh.	O	is secu	red	by	hypothecati	on of	goods
and	machiner	y,	which	are	m	ore p	articularly
described	in	Exh.C,	D	and	L, M	to the	plaint.
The	plaintif	fs’	case	is	that	the	plaintiffs
are	entitled	to	enfo	rce	the	security	to
realize	the	dues.	A	dmitted	ly on	1-7-1996	this
Court	has	appointed	a	rec	eiver in	respect	of
the	hypothec	ated		goods,		movables	and
machinery,	mo	re pa	rticula	rly	described	in	Exh.
C, D	&	L, M.	A	dmitted	ly the	said order	was
confirmed	by	this	Co	urt.	Pursuan	t to	said
order,	the	said	goo	ds,	movables	and	machinery
are	in p	ossession	of	the	Court	receiver.	The

¶76

possession was taken by the Court receiver on

¶77

26-11-1996.

¶78

13.		The plaintiffs c	ontend tha	t defendan	t
No.2	being	the	Sole	Propriet	or of	defendant
No.1,	is	liable to	pay	the	outstanding	claim
to the	plai	ntiffs.	The	guara	ntees exe	cuted by
defendant	Nos.	3	and	4	are	continuing
guarantees,		and the	refore,	defend	ant Nos.	1,
2, 3	and	4 are	jointly	and	severally	liable to

¶79

-11-

¶80

pay	the	outstanding amount which	they	have
failed	and	neglected to pay.	The	plaintiffs
have	therefore,	prayed for a	decree,	directing
the	defendants	to pay jointly	and severally	to
the	plaintiffs	a sum of Rs.	4,87,603.41	Ps.
with	further	interest at the rate	of 19.75	per
cent	till	decree, and thereafter	at the	same
rate	till	the payment and	realization,	with
quarterly	rests	. The plaintiffs	have	also
prayed	that	the goods and	machinery	in
possession	of	the receiver be	ordered to	be
sold	through	the receiver, and	the net	sale

¶81

proceeds thereof be applied in or towards

¶82

satisfaction of the plaintiffs’ claim.

¶83

14.	The defendants have not contes	ted the
suit.	Mr. Sampath Kumar,	Branc	h	Manager	of
the pla	intiffs who is present	in	the	Court	has
confirmed	the contents of	the		plaint,	the
affidavit	in lieu of examin	ation	in	chief	and
the	documents on which th	e	pla	intiffs	have
placed	reliance. He has	prov	ed	the	said
documents.	Having perused	the		plaint,	the
documents,	the affidavit of	evide	nce	of	Mr.
Sampath	Kumar, Branch	Manag	er,	of	the
plaintiffs,	I am of the	opini	on	that	the

¶84

-12-

¶85

plaintiffs	are	ent	itled	to a	de	cree	in	terms
of	prayer	Clau	se (a)	and	(b)	of	the	plaint.
Hence,	the	suit	is	decreed	in	term	s of	prayer
Clause	(a)	and	(b).	The	pla	intiffs	are	also
entitled	to in	terest	at	the	rate	of	19.75%	per
annum	on	its	claim	till	the	date	of	decree,