Dismissed

M/S Gopalpur Minerals And Ors. v. Branch Manager,S.B.I. And Ors.

Jharkhand HC3 Aug 2017FA/48/1999

Case brief

AI extract

What is this about?

In this first appeal against a decree in a Title Suit, the Single Bench held that the appellant-borrowers could not challenge the lower court's finding on the loan factum. The court dismissed the appeal, noting that the borrower-defendants failed to displace the trial court's findings despite arguments regarding the prior charge held by another financial institution. The second charge held by the

What did the court decide?

The First Appeal was dismissed; the decree in Title Suit No. 175 of 1993 was upheld, holding the borrowers liable to pay loan amount with interest, with the Bank having a valid second charge over asse

M/S Gopalpur Minerals And Ors. Vs Branch… — Contract and Commercial Disputes | Jharkhand HC (2017)

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First Appeal No 48 of 1999 ®

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Against the judgment and decree dated 24.2.99 and 12.3.99 passed by Second Sub Judge, Dhanbad in Title (Mortgage) Suit No. 175 of 1993.

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M/s. Gopalpur Minerals, Gopalpur, Dhanbad

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Sri Kailash Singh

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Smt. Savitri Singh

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..... Appellant

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vs.-

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The Branch Manager, State Bank of India, Dhanbad

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...Respondent.

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Bihar State Financial Corporatoin, Patna ...... Proforma Respondents. --- For the Appellant : Mr. Mahesh Tewari For the Respondents-Bank : Mr. Rajesh Kumar

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P R E S E N T

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HON’BLE MR. JUSTICE APARESH KUMAR SINGH

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By Court

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Heard learned counsel for the parties.

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Defendants in Title (Mortgage) Suit No. 175/93 is the appellant herein being aggrieved by the judgment and decree dated 24^th February, 1999/12^th March, 1995 passed by learned Second Sub-Judge, Dhanbad, whereunder the plaintiff-Bank has been held to be entitled to the relief(s) claimed for with pendentilite and future interest at the contractual rate on the principal amount.

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The case of the parties as set up before learned trial court through their pleadings is being referred to hereinafter in brief: 3. The plaintiff a Body Corporate duly constituted under the Banking Companies Act, 1970 had in course of its business extended cash credit loan of Rs. 4 lakhs and a credit (bill) for Rs. 1 lakh on the application of defendant no. 2 being the sole proprietor of defendant no.1 for the purpose of calcillation of refractory minerals business. The defendant no. 3 stood as guarantor for defendant nos. 1 and 2 for the loan in question. Defendants agreed to pay interest at the rate of 1 % per annum below State Bank Advance Rate (SBAR) rising and falling. Defendant nos. 2 and 3 also created equitable mortgage by depositing their title deeds of land and building dated 12^th December, 1988 and 4^th October, 1989 against the loan. The second charge over plant and

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machineries was with the plaintiff and the first charge over plant and machineries was with the Bihar State Financial Corporation ( in short 'BSFC')-defendant no. 4. On acceptance of the terms and conditions of the loan, the defendants executed agreement letter for loan, D.P. note, delivery letter under PDR, agreement executed by the guarantor, agreement for cash credit for hypothecation of the goods and undertakings of assets dated 18^th January, 1991. It is also the case of the plaintiff that the defendant nos. 1 and 2 availed cash credit loan of Rs. 4 Lakhs for their running business, but did not avail the loan of Rs. 1 lakh under cash credit. As per the agreement, the defendants would deposit the entire sale proceeds in the Bank and submit statement of assets hypothecated at regular intervals. However, defendants defaulted to comply with the terms and conditions leading to filing of the suit. 4. Defendant nos. 1, 2 and 3 contested the suit by filing written statement. According to them, the suit was not maintainable and barred under the provisions of Specific Relief Act. They had taken financial assistance of Rs. 5 lakhs from B.S.F.C in the year 1988-89 against the hypothecation of all fixed assets of the unit i.e., land, building, shed plant and machineries in June, 1990. They got a working capital loan from the plaintiff-bank against the second charge on the entire fixed assets of the unit and collateral securities were also provided by defendant nos. 2 and 3 and also against the mortgage of raw material, work and finished stocks. According to defendant nos. 1 and 2, cash credit limit of Rs. 4 lakhs was availed of, but due to uncertainty in calcillation job, defendant no. 2 started diversification of the Unit into the refractory plant with the consent of the then Branch Manager of the plaintiff-Bank. They completed the expansion through unsecured loan from friends and relatives and also the credit availed in the market. It was contended by the defendants that the plaintiff had assured that interest charged would be nominal on easy terms. They accepted putting their signatures on various forms with the Bank. Defendants alleged that original documents were not filed with the plaint. Therefore, mandatory provisions of law was not complied with.

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Plaintiff had also not taken prior consent of B.S.F.C, which has got first charge over all the fixed assets of defendant no. 1.

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The defendant no. 4- B.S.F.C contested the suit by filing a written statement taking the plea that the same is not maintainable and was barred by principles of waiver, estoppel and acquiescences and also under the Indian Contract Act. They also pleaded that under Sections 29 and 30 of S.F.C Act, 1951, the suit would not be maintainable. The defendant- B.S.F.C stated that a term loan of Rs. 5 lakhs was sanctioned in favour of defendant no. 1 on 25^th May, 1988 in lieu whereof they had mortgaged and hypothecated the entire fixed assets to the corporation with first charge. It also contended that the suit was filed without prior consent of the defendant no. 4. The learned Trial Court framed the following issues for adjudication:

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Is the suit as framed maintainable?

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Has the plaintiff got valid cause of action for the suit?

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Is the suit barred by limitation ?

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Is the suit barred by the principle of waiver, estoppel and acquiescence ?

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Is the plaintiff entitled to recover the loan money as

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claimed for from the defendant no. 1 to 3?

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Has the plaintiff advanced loan to the defendant no. 1 to 3?

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Is the plaintiff entitled to get any relief, if so, to what extent?

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Issue nos. 5 and 6 were discussed and decided together in favour of the plaintiff-Bank. Plaintiff adduced two witnesses. P.W.1 being the officer of the plaintiff-Bank; P.W. 2 being a formal witness, who proved two advocates notices as Exts.- 13 and 13/A. P.W. 1 stated that the defendant no. 1 availed cash credit loan of Rs. 4 lakhs, but did not avail of credit(bill) of Rs. 1 lakh sanctioned by plaintiff-Bank on their request. He also proved the sanction-cum- agreement letter dated 18^th January, 1991, D.P note delivery letter of the same date, demand note dated 18^th January, 1991, agreement for cash credit of the same date, guarantors agreement of the same date, 18^th January, 1991. He also proved the letters executed by the defendant not to create any further charge, letter of agreement to mortgage, two recital letters, two confirmation letters dated 15^th January, 1991 and two statements of

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account as well as endorsement made by defendant no. 3 on demand note as Exts. 1 to 12 respectively. He also proved two letters of Assistant General Manager as Exts. 7 and 7/A. The said witness was cross-examined as well. Postal receipts were adduced as Ext.-14 to 14/B showing that legal notices were sent to the defendants. Fresh statement of accounts was also filed by the plaintiff as Exts.-15, 15/A and 11/B respectively on the basis of waiving formal proof of these documents. Defendant no. 2, who is the proprietor of defendant no. 1, has been examined as D.W-1. He accepted taking of loan for the purpose of calcillation of refractory minerals business and also hypothecated the entire assets of the factory as second charge with the plaintiff-bank. He also accepted giving collateral security of land and building by equitable mortgage with the plaintiff bank. Exts.-A and A/1 were adduced as proof of payment of loan amount on regular basis. Ext.- B series were receipts of part payment of Rs. 1.55 lakhs to the plaintiff-bank during pendency of the suit.

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Defendants also contested the suit on the plea of non-compliance of the provisions of Order 7, Rules 14 and 17 CPC alleging that the plaintiff had not filed the documents at the time of presentation of the plaint. Learned Trial having analyzed the material exhibits and depositions of the witnesses on record, came to the finding that the plaintiff-bank had successfully established the factum of loan taken by the defendants. It also overruled the objection relating to non-filing of the documents at the time of presentation of the plaint by holding that photocopies of the documents were filed at the time of presenting plaint and it is already on record. Accordingly, it went on to hold in favour of the plaintiff that the defendant nos. 1, 2 and 3 were jointly and severally liable to pay loan amount with pendentilite and future interest. Further , it also held that the plaintiff-bank had got valid and subsisting second charge over the hypothecated goods of the factory as well as collateral security given in the mortgage in view of the first charge existing in favour of B.S.F.C– Defendant No. 4. Since no relief was claimed against the defendant no. 4, learned Trial Court only ventured to make

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the observation that the plaintiff-bank had a subsisting second charge over the hypothecated goods and collateral securities given in the mortgage. Issue nos. 3 and 4 were not pressed. Issue nos. 1,2 and 7 were given in favour of the plaintiff and the suit was found to be maintainable with a valid cause of action.

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Learned counsel for the appellant has questioned the findings in the impugned judgment inter-alia stating that the Learned Trial Court has committed an error while decreeing the suit in spite of the objection by the BSFC-defendant no. 4, who had the first charge on the mortgaged securities and hypothecated goods of the factory in their favour.

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The instant ground of challenge is not something open to be raised on the part of the defendant borrower. The defendant no. 4 – BSFC who is Respondent No. 2 herein, has never laid any challenge to the impugned judgment on those counts. They have also been noticed and have appeared through their counsel. There is no reason either for the defendant no. 4 to be aggrieved apparently in view of the observation made by the learned Trial Court that the plaintiff bank has got subsisting second charge only over the hypothecated goods and the collateral security furnished, over which BSFC has got first charge. It means that in the process of realization of the decreetal amount, the BSFC will have the first charge over mortgaged assets and hypothecated plant and machinery.

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Learned counsel for the appellant has despite strenuous argument, not been able to dislodge the findings relating to the factum of loan advanced in favour of the defendant borrower through the Agreement executed by them. Learned Trial Court has also taken note of the plea raised by the defendant and observed that at no point of time, did the defendant no. 2 ever made any protest before any authority of the bank for taking his signature as well as signature of defendant no. 3 on blank paper. The appellants have therefore failed to dislodge the findings recorded by learned Trial Court on the basis of entire material documents relating to banking transaction between the parties and oral

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evidence adduced by the plaintiff witnesses. Learned Trial Court while decreeing the suit also made it clear that interest pendentilite and future would be realizable only on the contractual rate as agreed between the parties. The contractual rate is evident from the Ext.-1 which is a loan Agreement dated 18.01.1991.

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Learned counsel for the Respondent Bank has supported the findings. He submits that interest of defendant no. 4-BSFC has also been taken care of by the Learned Trial Court by making the aforesaid observation relating to their first charge over the mortgaged and hypothecated assets such as plant and machinery. It is further stated on their behalf that the entire transaction between the parties, is based on the documentary evidence. Therefore, the factum of loan and default on the part of the defendant no. 1 and 2 are clearly established. The plaintiff bank is a public sector nationalized bank and is entitled to realize the outstanding loan in case of default by the borrower.

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I have considered the relevant material pleadings, exhibits relied upon by the parties and also the submissions made on behalf of their counsel. In view of the detail discussion and the reasons recorded above, the appellant has failed to make out any sustainable grounds on facts or in law to dislodge the findings arrived at by the Learned Trial Court in the impugned judgment. The appeal is therefore devoid of merit, it is accordingly dismissed. Decree accordingly.

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(Aparesh Kumar Singh,J)

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Jharkhand High Court, Ranchi Dated 3.8.2017 Jk/NAFR

M/S Gopalpur Minerals And Ors. v. Branch Manager,S.B.I. And Ors.

Case brief

What is this about?

What did the court decide?

M/S Gopalpur Minerals And Ors. v. Branch Manager,S.B.I. And Ors.

Case brief

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What did the court decide?

What the court decided

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