Punjab Nationa Bank vs M/S Rinkoo Plastice Insustries & ...
2001 Latest Caselaw 196 Del

ORDER

J.D.Kapoor,J.

1. This is a suit under Order XXXIV CPC for recovery of Rs. 8,91,827/- being principal sum due as on 13.12.1995 payable by the defendants jointly and severally to the plaintiffs bank together with pendente lite and future interest along with cost of the suit.

2. The plaintiff bank is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The defendant No. 2 is the sole proprietor of defendant No. 1 duly registered as Small Scale Industries Firm with Directorate of Industries, Kashmere Gate, Delhi. It is averred that defendant No. 2 approached the plaintiff for grant of certain banking facilities for the establishment and enhancement of trade/business activities and after processing the application the following credit facilities were sanctioned in favor of defendant No.1 on 30.3.1991:

Cash Credit (Hypothecation) Rs. 2.00 lakhs against hypothecation of Stocks of raw material, dyestee, PVC compound, PVC granuals etc.

B) Term Loan of Rs. W.50 lakhs for purchase of one plastic Injection Moulding Machine;

C) D.D. Clean - Rs. 1.00 lakh for purchase of third party cheques and Bank drafts arising out of trade transaction.

3. In consideration of the sanctioning/granting of the above said credit facilities the defendant No.1 through defendant No. 2 executed various banking documents of hypothecation of goods to secure a demand, supplementary agreement dated 30.3.1991 in respect of cash credit and also executed hypothecation of assets (machine) to secure term loan of Rs. 2.50 lakhs. A demand draft of Rs. 1.00 lakh was also issued but there is no demand against that. The cash credit facility was payable on demand and the term loan was payable in 60 equal monthly Installments plus interest at the agreed rate commencing three months after the disbursement of the loan. The interest was payable at the rate of 15% towards cash credit facility and 14% towards the term loan facility. The defendant No.1 undertook to repay the entire credit facilities, as per the terms of the agreement and offered personal guarantees of defendant No. 3 and defendant No. 4 In order to secure further loan amount defendant No. 1 also offered simple registered mortgage of property of defendant No. 2 and thereby deposited the duplicate copy of original title deeds with the plaintiff bank and also executed registered mortgage in the office of the Sub-Registrar. The details of the property for the purpose of Order 34 are as under:

1.   Date of Mortgage :    21-12-1992  
 
2. Name of Mortgagor  :    Mr. Balwant Singh   

3. Name of Mortgagee  :    Punjab National Bank
                           Preet Vihar, Delhi-92. 

4. Property mortgaged :    Bearing No. 93-A/1,
                           measuring 50 sq. yards
                           out of Khasra No. 178,
                           East Azad Nagar, Gali
                           No. 8, in the area of
                           Village Ghondli, Ilaqa
                           shahdara, Delhi-110051.

5. Nature of Mortgage :    Simple registered
                           mortgage of property
                           bearing No. 93-A/1,
                           East Azad Ngr. Gali
                           No.8, Krishan Nagar,
                           Delhi-110051 in the O/o
                           Sub Registrar,
                           Seelampur Delhi vide
                           document NO.2837, Addl.
                           Book No.1, Volume No.
                           2443, pages 136-180 dt.
                           21-12-1992 and
                           deposited the
                           duplicate certified
                           copy along with the
                           Affidavit with
                           Plaintiff Bank.

6. Amount originally :     Rs. 4,50,000.00
                           secured by Mortgage.

7. Amount due at the :     Rs. 8,91,827.00
                           time of filing of
                           the Suit. 

 

4. It was agreed that in case of default defendants would be further liable to pay additional interest of 2% with quarterly rests over and above the RBI rate fixed from time to time. Since the defendants have committed default they are now liable to pay interest on account of CC A/c 16% per annum and in term loan account 19.25% per annum (inclusive of 2% as additional interest).

5. It is further averred that since the inception of the sanction of the CC facility to the defendant No. 1, defendant No.1 failed to maintain the proper stock of goods to the tune of loan sanctioned at the factory premises and also failed to give the stock statement and balance sheet as agreed in time. Defendant No. 1 also failed to regularise the account despite various persuasions and personal visits of the officials of the bank; to route the entire transaction through the said loan account; to deposit the Installments due in term loan account in time and to pay the quarterly interest in time and thus neglected the account totally as a result of which the account became irregular and sticky. Formal notices were sent to the defendants and finally plaintiff bank was compelled to recall the entire outstanding dues in cash credit and term loan accounts through registered legal notice dated 15.9.1993. However, despite legal notice defendants did not make any payment nor did they send any reply; hence the suit.

6. It is averred that as on 13.12.1995 a sum of Rs.8,91,827.00 was due and outstanding which includes recorded interest calculated at the agreed rate plus additional interest and also the outstanding in cash credit account No. 78/91 amounting to Rs. 2,87,093.00 and term loan facility account No. 11/91 amounting to Rs.6,04,734.00 It is pertinent to mention that no amount was due in demand draft clean facility. The above amount was calculated at the agreed rate so due and outstanding in cash credit/term loan/protested account of defendant No. 1. Defendants were further liable to pay interest at the agreed rate and additional interest from 14.12.1995 till its realisation. Since the transaction between the parties was of commercial transaction in connection with business of defendant No. 1 and there was a valid contract between of defendants and the plaintiff and as such plaintiff bank is entitled to the interest at the agreed rate. Similarly defendants 3 and 4 are jointly and severally liable to pay the amount due and outstanding in the account of defendant No. 1 as guarantors. The cause of action last arose on the date when the legal notice was issued and balance security confirmation letter was executed by the defendant No. 2.

7. Summons of the suit were served upon the defendants. Written statement was filed by the defendants but subsequently defendants were proceeded ex parte. However, the factum of availing facilities of cash credit as well as the term loan were admitted in the written statement. The defense taken was that blank documents were got executed by the bank officials and defendant No. 2 was asked to sign the blank papers and 12% per annum simple interest was agreed to be paid. Similarly the factum of having mortgaged the properties mentioned in para 8 of the plaint was also admitted. It is also admitted that a sum of Rs. 1 lakh was raised by mortgage of the property but the loan was at 12% per annum only on simple basis. Neither the cause of action was disputed nor the limitation was disputed. The defendants expressed their readiness and willingness to pay the outstanding at reasonable rate of interest in 60 equal monthly Installments.

8. In support of its claim the plaintiff bank has examined its Manager, Mr. Puneet Jain by way of affidavit. Mr. Jain has proved the following document:

"1. Copy of General Power of Attorney executed by Dr. Ram Das, Director , PNR, in favor of Sh. Surender Mohan - Ext. P-1:

2. Copy of Provisional Registration Certificate, Ext. P-2.

3. Hypothecation of goods to secure a demand cash credit dated 30.3.1991, Ext. P-3.

4. Supplementary agreement dated 30.3.1991, Ext. P-4.

5. Hypothecation of assets (machine) to secure term loan dated. 30.3.1991, Ext. P-5.

6. Term loan application dated 30.3.1991, Ext. P-6.

7. Letter of Insurance dated 30.3.1991, Ext. P-7.

8. Clean & documentary D/D dated 30.3.1991, Ext. P-8.

9. Agreement of Guarantee executed by Shri Mela Singh, Ext. P-9.

10. Agreement of Guarantee executed by Shri Palwinder Singh, Ext. P-10.

11. Certified copy of sale deed, Ext. P-11.

12. Attested copy of the affidavit, Ext. P-12.

13. Copy of letter of intent to create a simple registered mortgage confirmed by guarantor Shri Mela Singh, Ext. P-13.

14. Notice dated 14.9.1991, Ext. P-14.

15. Notice dated 29.1.1992, Ext. P-15.

16. Notice dated 14.1.1993, Ext. P-16.

17. Notice dated 28.5.1993, Ext. P-17.

18. Registered legal notice dated 15.9.1993, Ext. P-18.

19. True and certified copy of statements of account bearing CC No. 78/91, Ext. P-19.

20. True and certified copy of statements of account of Term Loan A/c No. 11/91, Ext. P-20.

21. Balance security confirmation letter dated 13.12.1991 executed by defendant No. 2 for CC facility, Ext. P-21.

22. Balance security confirmation letter executed by defendant No. 2 for term loan facility, Ext. P-22.

23. Balance security confirmation for CC facility and term loan executed by defendant No. 3, Ext. P-23.

24. Balance security confirmation for CC facility and term loan executed by defendant No.4, Ext. P-24.

25. Balance security confirmation executed again on 15.9.1994 by defendant No. 2 for cash credit facility, Ext. P-25.

26. Balance security confirmation executed again on 15.9.1994 by defendant No.2 for term loan facility, Ext. P-26.

27. Balance security confirmation for CC facility and term loan executed by defendant No. 3, Ext. P-27.

28. Balance security confirmation for CC facility and term loan executed by defendant No.4, Ext. P-28."

9. He has also verified the signatures of the officials of the bank appearing on the aforesaid documents as he was conversant with their hand-writing and signatures.

10. In view of the admission of the defendants in the written statement as to having availed the facilities of cash credit and term loan and in view of the unrebutted and uncontroverter testimony of the witness, Puneet Jain, and the documents which purport to bear the signatures of defendants 1 and 2 as principal borrowers as well as the defendants 3 and 4 as guarantors the claim of the plaintiff bank stands established and proved.

11. Decree for a sum of Rs. 8,91,827.00 (Rupees Eight lakhs ninety one thousand eight hundred and twenty seven only) in favor of the Plaintiff Bank and against the defendant Nos. 1 to 4 jointly and severally with pendentelite and future interest at the agreed rate of 16% in C.C. A/c and 19.25% in Term Loan A/c per annum with quarterly rests with effect from the date of filing of the suit till its realisation.