State Bank Of India vs Tarlok Singh And Others
1991 Latest Caselaw 93 Del

JUDGMENT

1. The plaintiff-bank has filed this suit under Order 37 of the Code of Civil Procedure (Code for short) for recovery of Rs. 1,00,391 .74 and also for sale of the hypothecated vehicle under Order 34, Rr. 4, 5 and 15 of the Code against the defendants. The allegations are that the plaintiff-bank is a body corporate constituted by the State Bank of India Act, 1955 with its local head office at 11, Parliament Street, New Delhi and central office at Madam Cama Road, Nariman Point, Bombay. The branch at Azadpur is one of its branches. Shri M. P. Singh being the Branch Manager and principal officer of the bank at the time of filing of the suit is authorised by the concerned officers of the bank in the local head office to sign, verify the pleadings and institute the suit.

2. On or about 2nd June, 1980, defendant No. I approached, requested and applied to the bank vide an application for a medium term loan of Rs. 1,36,000/ - for purchasing, a transport vehicle, Ashok Leyland Comet176" (1980) for use in his business of transportation. The loan was sanctioned to defendant No. I payable in 40 monthly Installments of Rs. 3400 / - plus interest commencing from 2nd June, 1980. Defendant No. I purchased the truck from Delhi Automobiles Pvt. Ltd. on the strength of advance/ finance granted by the plaintiff. Its body was got made from M / s. Royal Body Builders at an expenditure of Rs. 25,000/ -. Defendant No. I executed an agreement of hypothecation of the vehicle on 2nd June, 1980 agreeing to repay the principal amount with interest at the rate of 5.50% above the State Bank of India advance rate with minimum of 11% per annum rising and falling therewith calculated on the daily balance of the amount due subject to enhancement. It was also agreed that in the event of any Installment being not paid, the bank shall have the option to determine the agreement and the whole balance of the said loan shall become payable

immediately and the bank will be entitled to charge enhanced rate of interest on the outstandings. Defendant No. I also furnished a third party guarantee duly executed by defendants 2 and 3. Defendants made themselves jointly and severally liable for the repayment of the principal and interest in accordance with the terms of agreement of hypothecation and guarantee. Defendants, however, did not co-operate and did not maintain any proper or regular payment from time to time despite requests, reminders and assurances of the defendants. Defendant No. I did not even produce the vehicle for inspection and verification in terms of the agreement between the parties. The books of accounts maintained regularly by the plaintiff-bank show a debit balance of rupees 1,00,91.74 with interest accrued therein up to the date of the suit.

3. On being served, defendants put in appearance within time. It was stated on their behalf that only a copy of the plaint was served on them while copies of the documents relied upon were not served. The defendants also moved IA 29-86 under Order 7, Rule 14 of the Code in January, 1986. From the proceedings dated 4th April, 1986 it appears that copies of the documents were supplied and, therefore, the aforesaid application was not pressed. The proceedings of the same date also show that IA7154/86 was moved on behalf of the plaintiff for issue of summons for judgment.

4. Ultimately the present application i.e. I.A. No. 4028/86 was moved on behalf of defendant No. 1 for leave to defend the suit. It is stated as a preliminary objection that the suit is time-barred. On merits it is stated that the suit under Order 37 is not maintainable because the plaintiff did not file original documents and also did not supply copies of the same to the answering defendants. Plaintiff is also alleged not to have filed the true statements of accounts for all the dealings and transactions between the parties. Interest is alleged to have been charged at a rate higher than the agreed rate of interest. The bank is also alleged to have been guilty of gross negligence, misconduct, malfeasance, misfeasance and breach of contract. As per

agreement between the parties and also by a specific understanding, by conduct and practice plaintiff-bank undertook to keep the vehicle insured comprehensively with some nationalised insurance company and have the premium, paid by the. plaintiff-bank to,! be debited in the account of defendant No. 1. M/s. United India Insurance Company Ltd. vide registered notice dated 16th May, '1983 informed the plaintiff-bank that the renewal of the vehicle in question was expiring on 3rd June, 1983 and urged the bank to renew the insurance policy. But the bank forgot and neglected to get the said policy renewed for the year 4-6-1983 to 3-6-1984. The plaintiff bank also did not inform defendant No.1 to get the insurance policy renewed. Unfortunately the vehicle in question bearing No. DHL-4502 was involved in a very serious road accident on 26-8-1983 resulting in almost a total loss. The defendant got registered an ITR on 26-8-1983 with P.S. Nand Nagari, Shahdara and, also duly in formed the plaintiff in this respect vide telegraph dated 29-8-1983 an d by regd.A/I notices dated 3-9-1983 and 23-971983, also informing the plaintiff-bank the damage caused to the vehicle was of about Rupees 72,750/-. It is alleged that the amount is payable by the plaintiff-bank to the defen dants due to breach of contract and non fulfillment of its obligations. The defendant claims that interest charged by the plaintiff was also mala fide and illegal, being at a higher rate than the agreed rate. Therefore, according to defendant No. I bona fide friable issues arose and so defendant No . I was entitled for leave to defend the suit. This application is duly supported by an affidavit.

5. The plaintiff also replied to this application controverting all the allegations made in the application and prayed that leave to defend should not be granted and the plaintiff's suit should be decreed.

6. I have heard arguments advanced by learned Counsel for the parties.

7. The first plea taken up by the defendants is that the suit of the plaintiff is timebarred. To rebut this argument, learned Counsel drew my attention to the copy of the statement of account filed by the bank. He also submitted that vide letter dated 31-10-1983, defendant had sought adjustment of his FIRs in the aforesaid loan account and accordingly a credit of Rs. 12,561.95 was given to the defendant on 14-8-1984. Defendant No. I had also deposited Rs. 15,760/ -on 18-5-1983. Therefore, limitation for filing the present suit stood extended. The statement of account shows that the defendant did, deposit Rs. 15,760 on 18-5-1983 in his medium term -loan account The deposit of such a huge -amount in his account by defendant No. I clearly amounts to an acknowledgment in writing about the dues of the plaintiff-bank towards him. The present suit was filed on 30-10-1984. The suit is clearly within time.

8. Another objection taken up by the defendant is that the plaintiff did not file original documents along with the plaint and also did not supply copies thereof to the answering defendant. In this respect it may be noted that the original documents were filed on 5-8-1986. Copies of the documents were filed along with the suit. Appearance on behalf of the defendant was put in by Sh. S. K. Paul, Advocate on 11-10-85 as is apparent from the proceedings of the case. An objection by that time was taken by him that copies of the documents were not supplied to him. Later on he moved IA 29/ 86 also for supply of copies of documents. Copies were ultimately supplied as is apparent from the proceedings dated 4-4-1986. It was only after the disposal of that application that the plaintiff applied for issue of summons for judgment. Therefore, it will be seen that copies of the documents had been supplied to counsel for the defendant before summons for judgment were ordered to be issued. Original documents were also filed in Court in August, 1986. The application for leave to defend the suit was filed by defendant No.1 alone on 8th July, 1986. Therefore in my opinion the non-filing of original documents along with the plaint does not have any very material effect in the circumstances of the present case because copies of the documents were supplied by the plaintiff to counsel for defendant before issue of summons for judgment. This point raked up by the defendant, therefore, also does not raise any friable issue because it *does not go to the root of the case.

9. It is then contended on behalf of, the defendant that the plaintiff-bank had charged interest at more than the agreed, rate and had also made some extra charges and expenses to which the plaintiff-bank is not legally entitled. This argument of learned Counsel also has no force because it is clearly stated in reply to this application that the interest has been charged by the plaintiff-bank strictly in conformity with the agreement and rates applicable from time to time as per the directives issued by the Reserve Bank of India. Learned Counsel for the defendant should have drawn my attention to the relevant entries in the statement of accounts regarding interest which according to him were debited by the plaintiff-bank to the account of the defendant without being legally entitled to claim the same. In the absence of this circumstance, it is not possible to say that the plaintiff-bank has charged interest at more than the agreed rate of interest. It is in fact one of the terms in the agreement of hypothecation between the parties that the borrower shall pay interest at 5 1/2 per cent above the State Bank advance rate with a minimum of 11% per annum on the daily balances of the amount due. It is also provided in clause 9 of this agreement that in case the borrower fails to pay any Installments due hereunder on the due date in the agreed manner, the bank is at liberty to terminate the agreement and recover the whole balance of the unpaid loan immediately with enhanced rate of interest without prejudice to the bank's other rights and remedies. It is the case of the plaintiff-bank in para 7 of the plaint that the defendant defaulted in the payment of Installments in time. Learned Counsel for the defendant, at the pain of repetition, has not pointed out any entry from the statement of account to show that the bank has debited interest to the account of the defendant at a rate and to an extent to which the bank was not entitled. The argument that the plaintiff-bank has charged interest at the rate of 15.91% per annum also has no substance because in case of default, plaintiff-bank could charge interest at the enhanced rate. Otherwise, there is a presumption attached to a statement of account filed by a bank under the Bankers' Books Evidence Act -th4i it has maintained a true and correct statement of account in respect of its various' clients including the defendant. Therefore, I am of the view that this plea also does not raise any friable issue.

10. Lastly, it is urged on behalf of the defendant that the plaintiff under the agreement as also under an agreed practice, was liable, to keep the vehicle in question comprehensively insured. But this was not done and, therefore, when the truck met with an accident on 26-8-1983, it suffered heavy damage to the tune of Rs. 72,750/-. The plaintiff was liable to pay that amount to the defendant and this plea raised a friable issue. In this respect it may noted that Clause 8, of the agreement duly entered into by the parties is as follows:

"The borrower shall pay all fees and taxes payable in respect of the said vehicle I (s) vessel(s) as and when the same become due and shall also keep 'the said vehicle(s)/ vessel(s) at the borrower(s) risk and expenses, in good condition and fully insured against loss or damage as may be required by the bank from time to time or such basis and for such value as may be satisfactory to the bank with such insurance office of repute to be approved of in writing by the bank and shall pay all premiums or sums of money of loan necessary for such purposes or for renewal thereof at least one week before the date on which the same become payable and will on every occasion deposit with the bank the policy of insurance and the receipt for such payment or shall obtain from the insurance company concerned, an acknowledgment to the effect that the interest which the bank has in such insurance claim and shall deposit the said acknowledgment with the bank ..........

..........and in case insured as aforesaid fails to renew such insurance, it shall be lawful but not obligatory upon the bank pay such fees and taxes and to keep the said vehicle/vessel in good condition or to insure and keep insured the said vehicle(s)/ vessels(s) .........................

11. A bare perusal of the above clause shows that the primary duty of keeping the vehicle comprehensively insured is that of the borrower. The bank may, in case borrower fails to insure the vehicle, insure the vehicle but such duty is not obligatory upon the bank. If for prior years, the bank insured the vehicle, because the defendant (could) not keep the vehicle insured in violation of the agreement, it would not mean that a duty was cast upon the plaintiff bank to keep the vehicle insure for subsequent years also. There is an express condition between the parties that it is the responsibility of the borrower to keep the vehicle insured. In the face of such an express provision it does not lie in the mouth of the defendant to say that the plaintiff bank should have insured the vehicle for him. Therefore, the alleged counter-claim set up by the defendant in the press suit does not arise from the written agreement between the parties. Defendants has filed a suit in this respect for recovering-the alleged amount of damages/losses from the plaintiff bank. The full import of the implied understanding between the parties can be explored in the suit filed by the defendant. So far as this suit is concerned, it can be said with certainty that the alleged counter-claim does not arise from the agreement between the parties. If that be so, it is possible to say that the alleged defense of a counter-claim against the plaintiff bank does not raise any friable issue in the present suit.

12. Therefore, I am of the view that the defense raised on behalf of the defendant is so unreasonable that it could not reasonably be expected to succeed and as such the defendant is not entitled to the grant of leave in this case. The suit of the plaintiff is liable to be decreed. Therefore, rejecting the application of the defendant the plaintiff is hereby granted a decree for recovery of Rs. 1,00,391.74 with costs and pendente lite and future interest at the rate of 12.5% per annum on the decretal amount till realisation.

13. Suit decreed.