Central Bank Of India vs Delhi Trade Links (India) Pvt. ...
2001 Latest Caselaw 1834 Del

JUDGMENT

V.S. Aggarwal, J.

1. Central Bank of India, hereinafter described as the plaintiff, has filed the present suit for recovery of Rs. 8,61,295.17 against the defendants. It has been asserted that on 28th April, 1983 defendant No. 1 opened a current account bearing No. 1152 with the plaintiff vide the letter of 26th July, 1983 under signatures of defendant No. 3. It requested the plaintiff bank for overdraft facilities against money multiplier deposit certificates of defendant No. 1 for Rs. 1 lakh. It was sanctioned by the plaintiff with 25% margin against lien on the money multiplier deposit certificates. The defendants exeucted a promissory note for Rs. 75000/-, letter of lien, letter of continuity and letter of waiver, alld ated 26th July, 1983.

2. On 2nd August, 1983 defendant No. 1 through defendants 2 and 3 again approahced and requested the plaintiff for an enhancement of the overdrft limit to Rs. 4,95,000/- against the deposit of money multiplier deposit certificates for Rs. 1 lakh dated 29th July, 1983. Similar documetns referred to above dated 2nd August, 1983 were executed when the request was allowed.

3. On 20th August, 1983 defendant No. 1 through defendants 2 and 3 again approahced and requested the plaintiff for enhancement of overdraft limit to Rs. 8,70,000/- against the deposit of lien upon the money multiplier deposit certificates dated 18.7.1983 for Rs. 1 lakh, 29th July, 1987 for Rs. 1,10,000, 2nd August, 1983 for Rs. 4,50,000/-, 18th August, 1983 for Rs. 2,50,000/-, 20th August, 1983 for Rs. 2,50,000. The same was sanctioned and a promissory note for Rs. 8,70,000/- was executed dated 20th August, 1983 followed by letter of waiver, letter of lien and letter of continuity of the same date.

4. Vide loan application of 1st September, 1983 defendant No. 1 under the signatures of defendant No. 2 and 3 approached and requested the plaintiff for a term loan credit facility of Rs. 8,07,000/- for purchase of land and building, plant and machinery and Rs. 8 lakhs as the working capital for purchase of gas and goods in transit. The plaintiff relying upon the representation and undertakings of the defendants agreed to the terms and conditions in this regard as per the details:

   " Account                    Amount        Margin
                           Rs.

i) Term Loan for the
purchase of plant and
Machinery.               6,97,000/-      25%

ii) Term Loan for the
construction of
building                   50,000/-      50%

iii) C.C.M. Hypothecation
against stocks           1,35,000/-      25%
  
 

7. That Defendant No. 1 under the signatures of Defendants No. 2 and 3 vide letter dated 24th September, 1983 approached and requested the plaintiff to issue two Bankers cheques in the sum of Rs. 1,00,000/- (Rupees one lakh) and Rs. 2,00,000/- (Rupees two lakhs) in favor of the Messrs S.V. Steel and Vessel and Messrs Anil Engineering respectively for the purchase of machinery against their Money Multiplier Deposit Receipts already deposited with the plaintiff, pending the creation of the equitable mortgage of their land and building after the registraiton of the sale Deed in respect of the land by Begum Pataudi who was stated to the available only next week and pending the creation of the equitable mortgage, by opening and debiting the Term Loan Account of Defendant No. 1 with the Plaintiff and the Plaintiff issued the requisite Bankers cheques in the aggregate sum of Rs. 3,00,000/- (Rupees three lakhs) in favor of the above-named suppliers against the execution of the following required security documents by the Defendants for the facilities availed or to be availed:-

i) Term Loan Agreement for Hypothecation of Machinery dated 24.9.1983 for Rs. 6,97,000/- (Rupees six lakhs ninety seven thousand).

ii) Articles of Agreement dated 24.9.1983.

iii) Letter of Continuity dated 24.9.1983.

5. The sanctioned terms loan was for purchase of the plaint and machinery valued at Rs. 9,27,000/-. It was agreed to be repaid in 37 Installments of Rs. 18,837.33 from 24th December, 1983 with interest at the rate of 18% p.a. with quarterly rest. Defendants 2 and 3 had stood personal sureties.

6. On 17th October, 1983 defendants 2 and 3 on behalf of defendant No. 1 approached and requested plaintiff for issue of an irrevocable bank guarantee on behalf of defendant No. 1 to a sum of Rs. 40,000/- in favor of Commissioner of Sales Tax for grant of local registration. The same had been allowed. Defendant No. 1 under the signatures of defendant No. 3 vide the application of 21st October, 1983 applied with Registrar of Companies, Delhi and Haryana for creation and registration of charge on the plaint and machinery belong to defendant No. 1 purchased or to be purchased to a sum of Rs. 6,97,000/-. Defendant No. 3 for and on behalf of defendant No. 1 on 29th November, 1983 called upon Divisional Manager of the plaintiff and requested for release of the second Installment of the term loan for purchase of the machinery and the first Installment towards factory building loan to a sum of Rs. 3 lakh and Rs. 30,000/- respectively. An equitable mortgage in this regard was to be created. It is alleged that certificate of 25th February, 1984 in respect of creation and registration of the charge on plant and machinery to a sum of Rs. 6,97,000/- was received by the plaintiff.

7. Under the authority of Board of Directors of defendant No. 1 vide resolution dated 25th February, 1984 defendant Nos. 2 and 3 for and on behalf of defendant No. 1 approached the plaintiff for issuance of central card facilities in favor of defendants 2 and 3 to the debit of overdraft account. It was recommended by plaintiff No. 1 to the concerned authorities.

8. On 9th March, 1994 defendant No. 3 for and on behalf of defendant No. 1 called upon the Division Manager and admitted that they have not been able to function properly and had shifted their factory to Pataudi and machinery was under installation. It was admitted that their cheque of Rs. 3 lakh were returned unpaid. He pleaded to cope with the stagnancy arisen due to the above development and that they have decided to re-started their replacement of cylinder business. He wanted a temporary accommodation in this regard. Defendant No. 3 reiterated the said representation. Relying on the said representation and also the resolution of 7th March, 1984 passed by the Board of Directors of defendant No. 1, plaintiff allowed the cash credit facilities to defendant No. 1 to the extent of Rs. 1,35,000/-. A promissory note of Rs. 1,35,000/-, a letter of hypothecation and letter of continuity had been executed dated 10th March, 1984. Defendants 2 and 3 stood as the personal guarantors.

9. On 23rd March, 1984 defendant No. 1 for and on behalf of defendant No. 1 again called upon the Divisional Manager of the plaintiff with a request to allow them to withdraw another sum of Rs. 1 lakh in their over draft account by passing a cheque in favor of their supplier M/s Royal Kitchen Corporation Appliances and undertook to liquidate the debit balance in the cash credit account by 2nd April, 1984. Relying on the above assurance the plaintiff acceded to the request and passed a cheque of Rs. 1 lakh issued by defendant No. 1 in favor of Royal Kitchen Corporation. Thereupon defendants 2 and 3 told the plaintiff that they were negotiating with Nawab Pataudi for sale of additional two acres of land at Pataudi and undertook to submit the titles in respect thereto by way of equitable mortgage. The pointed that their business activity was negligible and further accommodation to a sum of Rs. 85,000/- was claimed.

10. Defendant No. 1 under the signatures of defendant No. 3 on 24th May, 1984 admitted that they were unable to provide equitable mortgage at their factory land at Pataudi but offered to create equitable mortgage of property bearing No. C-22/32, 33, 34, 35, Kabir Road, Varanasi, UP of Vidya Wati, mother of defendant No. 1, till such time they are in a position to offer collateral security. The plaintiff on 12th June, 1984 pointed to the defendant that despite numerous visits the defendant has failed to liquidate the deficit of their account and called upon the defendants to clear the deficit. In the meantime, the central card department of the plaintiff at Bombay had issued a central card facility to defendants 2 and 3 as requested and applied for by them. Defendant No. 1 thereafter under the signatures of defendant No. 3 on 25th July, 1984 acknowledged the letters of the plaintiff and admitted the deficit in their account and stated that they were negotiating with their new distributor to be appointed for Gujarat State and were likely to receive advance payment very shortly. On 21st August, 1984 under the authority of Board of Directors, defendant No. 1 under the signatures of defendant 2 and 3 renewed and executed the security document dated 21st August, 1984 Rs. 1,35,000/-, letter of waiver of Rs. 1,35,000/-, letter of hypothecation and letter of continuity. Defendant No. 1 under the signatures of defendant No. 3 on 27th August, 1984 requested the plaintiff to file form No. 8 with the Registrar of Company for creation of charge on the hypothecated goods. The plaintiff informed the defendant that overdraft account amount of Rs. 10,99,008.27 and CCM Account of Rs. 1,53,092.08 had been debited. Defendant No. 1 under the signatures of defendant No. 2 acknowledged the term loan of Rs. 3.00 lakhs and availment of Rs. 1,55,000/- in cash credit account. Thereafter on 4th March, 1985 defendant No. 2 called upon the plaintiff for allowing an overdraft of Rs. 3,000/- for putting the cables at Pataudi and advance to the employees. On 2nd April, 1985 defendant No. 2 on behalf of defendant No. 1 called upon the Deputy General Manager and Divisional Manager and requested for immediate of grant of Rs. 90,000/- as working capital to help their manual work on the categorical undertaking to submit alternate mortgage of freehold land in favor of plaintiff and to release the balance of the machinery loan of Rs. 3,96,000/-. Security document in this regard were executed. Thereupon it is claimed by the plaintiff that presently Rs. 8,61,295.17 is due which have not been paid despite the notice and hence the present suit has been filed.

11. Defendants had been proceeded ex parte. During the pendency of the suit defendant No. 1 had died and legal representatives had been imp leaded.

12. In support of the evidence affidavits had been filed of Mr. M.K. Jain, Shri V.B. Mathur and Shri V.K. Bhatia. They had dealt with different transactions with the defendants. In their respective affidavits they have sworn as to how the amount is due. Brief resume of the sequence of events has already been given above. At this stage, therefore, making a reference to the affidavits would also be repeating what has been asserted in the plaint because the same stands proved from the affidavits of the concerned persons referred to above.

13. Ex. P. 94 to Ex. P.99 shows the debit and the credit balance and that the amount claimed is due. The payments had been made. The same have been noticed. This clearly shows coupled with the facts referred that the amount claimed by the plaintiff bank is due with interest.

14. Accordingly, the suit of the plaintiff is decreed ex parte against the defendants to a sum of Rs. 8,61,295.17 with costs and future interest at 12% p.a. from the date of the filing of the suit till the payment is made.