Punjab National Bank vs Laxmi Enterprises And Ors.
2001 Latest Caselaw 1775 Del

JUDGMENT

B.N. Chaturvedi, J.

1. The plaintiff Bank has sued the defendants for recovery of Rs. 7,36,380.40 with interest.

2. The defendant No. 1, Laxmi Enterprises, a partnership concern of defendants 2 & 3, approached the plaintiff Bank vide their application dated 31.12.1990 for grant of cash credit limit of Rs.4 lakhs as working capital and term loan of Rs. 1.20 lakhs for the purchase of machinery. The plaintiff Bank sanctioned cash credit limit of Rs. 3 lakhs @ 6.5% per annum over RBI rate with minimum of 16.5% p.a. with quarterly rests against hypothecation of raw materials etc. A term loan of Rs. 1.20 lakhs wit interest @ 6.5% per annum over RBI rate with minimum of 16.5 % p.a. against hypothecation of machinery was also sanctioned.

3. In consideration of aforesaid facilities, defendants 2 & 3 on behalf of defendant NO. 1 executed various documents in favor of the plaintiff Bank, as detailed in paragraph 6 of the plaint. The defendant No. 4 executed an agreement of guarantee in respect of the said facilities in favor of the plaintiff Bank agreeing to abide by all the terms and conditions of the loan transactions, and had given an undertaking to pay jointly and severally to the plaintiff Bank the amount which may become due from the defendants 1 to 3. The guarantee was a continuing one.

4. The defendant NO. 4, in addition to agreement of guarantee dated 2.3.1991, also created equitable mortgage on the properties in favor of the plaintiff Bank by deposit of original title deed on 28th of February, 1991. The particulars of the properties are as follows:-

(a) Date of Mortagage : The title deed were deposited by Pt. Balwant Singh on 28.2.91 with the intention to create equitable mortgage.

(b) Name of the Mortagagor : Pt. Balwant Singh, S/o Pt. Urrimal R/o 37-A, Block NO. 31, Khasra No. 223, Vishwas Nagar, Shahdara

(c) Name of the mortgagee : Punjab National Bank, Krishna Nagar, Delhi-51, Plaintiff Bank.

(d) Property subject to : Property bearing mortgage and No. 37-A and 38-B, Block description thereof. No. 31, Khasra No. 223, Vishwas Nagar, Shahdara, Delhi-32 purchased by Pt. Balwant Singh from Shahdara Housing Corporation, Shahdara through Shri Kesho Ram Bansal and Shri Yoginder Nath Sarvaria, partners vide sale deed registration No. 165 in add. Book

pages 320 to 326 on 18.2.1958 registered with sub-Registrar, Delhi.

(e) Sum assured : Advance made by the plaintiff Bank to the first defendant under cash credit limit of Rs. 3 lacs and term loan of Rs. 1.20 lacs.

(f) Rate of interest : The amounts were sanctioned @ 6.5% p.a. over RBI rate with minimum of 16.5 p.a.

5. The defendants failed to abide by the terms and conditions of the loan transactions and as they could not keep the term loan account and cash credit limit account in conformity with the terms and conditions of the loan documents/agreements, the accounts became highly irregular. The defendants failed and neglected to adjust and clear the said accounts. In spite of repeated requests, a number of letters and reminders, the defendants did not regularise the accounts in question. The plaintiff Bank, therefore, sent a legal notice of demand dated 16.12.1992, through its Advocate, by registered AD post and under certificate of posting, calling upon the defendants to pay the balance amount of Rs. 4,05,770/- in case credit account and Rs. 1,47,761.40 in term loan account with interest up to 30th of September, 1992. The defendants, however, did not pay any heed to that notice and, as a matter of fact, defendants 2 & 4 actually refused to accept the notice.

6. The amount due with interest up to 28th of February, 1992 on account of cash credit account is claimed to be Rs. 5,51,693/- and Rs. 1,84,687.40 in term loan account, making the total claim to the tune of Rs. 7,36,381.40.

7. The defendants were served by publication and also by display on the notice board of the Court and affixation at the given address. There was, however, no appearance on their behalf, hence, they were proceeded ex parte vide order dated 15.9.1998.

8. The plaintiff produced its evidence by way of affidavits. One of the affidavits so filed is of Shri O.P. Sharma, who was working as Loan Officer to the plaintiff Bank at its Krishna Nagar Branch, Delhi, during the relevant period when the loans in question were sanctioned. The other affidavit is of one Shri V.K. Puri, Manager of the Branch concerned at the time the ex parte evidence by way of affidavits was produced. These affidavits apart, various documents, executed by the defendants, constitute documentary evidence in support of the suit claim.

9. I have heard the oral submissions made on behalf of the plaintiff Bank. I have also examined the evidence and the documents on record.

10. Ex. PW-1/1 is the application made on behalf of defendants 1 to 3 for sanction of cash credit limit to the tune of Rs. 4 lakhs and term loan to the extent of Rs. 1.20 lakhs. In view thereof, a cash credit limit of Rs.3 lakhs @ 6.5% per annum over RBI rate with minimum of 16.5% per annum with quarterly rests, and a term loan of Rs. 1.20 lakhs @ 6.5% per annum over RBI rate with minium of 16.5% per annum were sanctioned in favor of defendant No.1 vide Ex. PW-1/2. In consideration, the defendants 2 & 3 executed various documents vide Ex. PW-1/3 to Ex. PW-1/11 in favor of the plaintiff Bank. The defendant No.4, as guarantor, executed an agreement of guarantee, Ex. PW-1/12. In addition, the defendant No.4 is stated to have created an equitable mortgage in favor of the plaintiff Bank in respect of his properties by deposit of original title deeds vide letter, Ex. PW-1/13. which was acknowledged by the plaintiff Bank vide their letter, Ex.PW-1/14.

11. From the affidavit of Shri O.P. Sharma and the documents on record, it is evident that the plaintiff Bank sanctioned a cash credit limit to the tune of Rs. 3 lakhs and a term loan to the extent of Rs. 1.20 lakhs in favor of defendant No.1 and the defendants 2 & 3 in consideration thereof executed various documents. The defendant No.4 stood as guarantor for defendant No.1 vide agreement of guarantee, Ex. PW-1/12, which is a continuing one, guarantying to pay jointly and severally to the plaintiff Bank, on demand in writing, the principal, interest, cost charges and expenses etc. On account of the said loan transactions. Ex. PW-1/34 and Ex. PW-1/35 are balance confirmation letters dated 8.2.1994 in respect of term loan and cash credit limit respectively executed on behalf of defendant No.1, confirming the correctness of balance of Rs. 1,61,793.40 in term loan account and Rs. 4,75,168/- in cash credit account as on 30th of September, 1993. A statement of account, Ex. PW-2/2, in relation to term loan shows outstanding amount of Rs. 1,84,687.40, including interest up to 28th of February, 1994, and Ex.PW-2/2A in respect of cash credit account shows a balance of Rs.5,51,693/-, including interest up to 28th of February, 1994.

12. From the affidavit of Shri O.P. Sharma and the documents, it is proved that the defendants 1 to 3 availed of term loan and cash credit facilities and executed various documents to repay the same, but failed to adjust the accounts on being called upon to do so. Even service of legal demand notice, Ex. PW-1/32, vide postal receipts Ex.PW-1/31A to Ex.PW-1/31D and the certificate of posting, Ex.PW-1/25 to Ex.PW-1/30, did not yield any response from them. The defendant NO.4 also in spite of having stood as guarantor for the payment of the amount outstanding against defendant NO.1, failed to honour his commitment by ignoring to repay the outstanding amount. Being a guarantor, the defendant No.4, apart from defendants 1 to 3, is rendered liable to pay the suit amount to the plaintiff Bank jointly and severally. Having created equitable mortgage in respect of property owned by him by deposit of original title deed as security for the re-payment of the amount due, the amounts adjudged due are liable to be recovered by way of sale of the mortgaged property in the event of defendants 1 to 4 failing to repay the same within the time granted for the purpose.

13. The defendants 1 to 3 also hypothecated the goods and other assets including machinery as security for repayment of the amounts of loan vide Ex.PW-1/11 & Ex.PW-1/12. The plaintiff Bank is thus entitled to seek seizure and sale of such hypothecated properties to apply sale proceeds thereof towards realisation of the amount adjudged due from the defendant. No decree for this purpose need be passed as the plaintiff Bank would even otherwise be at liberty to apply for attachment and sale of any movable or immovable properties of the defendants, including hypothecated ones in execution of the decree being passed against them.

14. In the result, the suit is decreed ex parte for Rs. 7,36,380.40 with costs, pendente lite and future interest on Rs. 5,51,693/- @ 19.75% per annum with quarterly rests in cash credit account and on Rs. 1,84,687/40 @ 16.5% per annum with quarterly rests in term loan account against the defendants and in favor of the plaintiff. The decretal amount shall be recoverable jointly and severally from the defendants. A decree be drawn accordingly.

15. Further, an ex parte preliminary decree for payment of Rs. 7,36,380.40 with costs, pendente lite and future interest on Rs. 5,51,693/- @ 19.75% per annum with quarterly rests and on Rs. 1,84,687/40 @ 16.5 % p.a. with quarterly rests, is passed against defendant No.4 and in favor of the plaintiff Bank and on non-payment of the aforesaid amount within six months from the date of the decree, the plaintiff Bank shall be entitled to apply for a final decree directing that the mortgaged property or a sufficient part thereof be sold, and the proceeds of the sale (after deduction there from of the expenses of the sale) be paid into Court and applied in payment of the amount under the preliminary decree together with such amount as may be adjudged due in respect of subsequent costs, expenses and interest. A decree be drawn accordingly.