Indian Overseas Bank vs Supreet Enterprises
2002 Latest Caselaw 1320 Del

JUDGMENT

S. Mukherjee, J.

1. This is a suit for recovery of Rs. 6,41,380/- with pendente lite and future interest. The case of the plaintiff bank is that the defendant No.1 is a partnership firm which through its partners, who are defendants, 2 & 3, obtained cash credit facility to the extent of Rs. 1,55,000/- against the following documentation:-

i) Demand Promissory Note dated 26.3.1987 for Rs. 1, 30,000/- with interest @ 5.5% over the RBI official rate with minimum of 15.5% p.a. at quarterly rests;

ii) Demand Promissory Note dated 26.3.1987 for Rs. 25,000/- with interest @ 5.15% over RBI official rate with minimum of 15.5%

iii) Letter of Hypothecation dated 26.3.1987 for Rs. 1, 30,000/- hypothecating the raw materials, work in progress and finished goods;

iv) Another letter of hypothecation dated 26.3.1987;

v) A letter dt. 26.3.1987 enclosing the demand promissory note for Rs. 1,30,000/- for being held as security;

2. The defendants No. 2 & 4 executed Letters of Guarantee and individually bound themselves for repayment of Rs. 2,95,000/- with interest and other charges, in consideration of the sanction of the abovementioend loan to defendant No.1.

3. On 25.6.1991 the cash credit facility was enhanced by Rs. 45,000/- and thus became Rs. 2 Lakhs in all. Similar documentation was carried out at that time also.

4. On the very next date i.e. 26.6.1991, the defendants 2 & 5 executed Letters of Guarantee and bound themselves to Rs. 5, 25,000/- with interest and charges, and also agreed that any admission or acknowledgement in writing by defendant No.1 regarding his indebtedness, would be binding upon them in the nature of conclusive evidence.

5. The cash credit facility was enhanced by a further amount of Rs. 1 Lakh at the request of defendant No.1 and thereby the latest applicable cash credit facility became Rs. 3 Lakhs and in relation to the same fresh documentation was executed on 20.11.1992. Again on the very next date i.e. 21.11.1992, defendants 2 & 5 executed Letters of Guarantee to pay Rs. 6 Lakhs with interest and other charges and bound themselves, apart from also agreeing that any admission or acknowledgment in writing by defendant No.1 regarding his indebtedness, would be binding upon them in the nature of conclusive evidence.

6. Earlier on 17.1.1981, the defendant No.5 had deposited the title deeds of his plot of land measuring 938.89 sq. yds. situated in Village Gesupur and Datawali Pargana Tehsil, Meerut District, with the intention to create equitable mortgage for securing the loan granted in favor of defendant No.1 which, at that time, had been the proprietorship concern of the defendant No.3. Subsequently on 20.3.1987, the defendant No.5 agreed by his letter in writing that the equitable mortgage will continue in respect of facilities which are granted to defendant No.1 as a partnership concern of defendants 2 & 3. In the present suit, the plaintiff bank has reserved the right to take proceedings in relation to the said equitable mortgage separately.

7. It is the case of the plaintiff bank that the defendant No.1 had acknowledged and admitted the debit balance in their account from time to time. On 13.7.1989, the defendant No.1 acknowledged that as on 30.6.1989, the debit balance in their Cash Credit account was Rs. 1,83,005.52. on 20.6.1994 the defendant No.1 again acknowledged that as on 20.6.1994, the debit balance in their cash credit account was Rs. 4,28,635.22. Apart from the above, the defendant No.1 on 28.12.1989 and on 25.6.1991, acknowledged the execution of the two demand promissory notes dated 26.3.1987. Thereafter again on 20.6.1994 the defendant No.1 acknowledged the execution of the two demand promissory notes dated 26.3.1987 and the promissory note dated 20.11.1992.

8. That the further case of the plaintiff bank is that vide several reminders and legal notices dated 14.11.1995, it claimed Rs. 5, 19, 6901.82 with interest thereon from 1.1.1995 to 31.7.1995 @ 24.75% p.a. at quarterly rests and thereafter from 1.8.1995 till actual payment @ 23.75% p.a. at quarterly rests.

9. That the plaintiff has computed the amount recoverable as Rs. 6,41,383/- as on the date of the filing of the suit, with interest thereon @ 23.75% p.a. at quarterly rests.

10. Written statement had been filed by defendants No.2 & 4 only. The defendant No.2 has merely contended that she is a "Pardanashin" house lady and her signatures had been allegedly obtained by her family friend Mr. S.D.S. Grewal and officials of the plaintiff Bank.

11. The defendant No.4 had taken the defense that documents, as relied upon, had not been signed by the said defendant in that form, and that his signatures had been obtained on blank printed forms, which had been signed by him long back in good faith. The additional submission is that the bank should first realise the amount by disposing of the property by which equitable mortgage has been created.

12. As recorded in the order dated 7.3.2002 the suit has been compromised vis-a-vis defendants 2 & 4 who paid Rs. 2,20,000/- in full and final settlement of their accounts.

13. The remaining defendants 1, 3 & 5 are ex parte.

14. Issues were framed on 6.5.1999, on the basis of the written statement of defendant No.4 which was then on record.

15. However defendants 1, 3 & 5 did not file any written statement at all, and they were proceeded ex parte. Plaintiff was directed to file affidavit by way of evidence, which the plaintiff has done. The documents Ex. PW1/1 to Ex.PW1/6 and Ex. PW2/1 to Ex. PW2/18 and Ex. PW3/2 to Ex. PW3/8 have been exhibited (Ex. PW3/1 is the same as the documents already exhibited as Ex. PW2/11).

16. It has thus come on record in the form of unrebutted evidence, that Shri P.L. Arora was the constituted attorney and the principal officer of the plaintiff bank, and therefore the institution of the present suit is valid in terms of the requirements of Order 29 of the Code of Civil Procedure.

17. Two demand promissory notes dated 26.3.1987 amounting to Rs. 1,30,000/- and Rs. 25,000/- have also been duly exhibited as ex. PW1/1 and Ex.PW1/2 respectively. The letters of hypothecation both dated 26.3.1987 for Rs. 1, 30,000/- are exhibited as Ex. PW1/3 and Ex. PW1/4 respectively. The letter dated 26.3.1987 enclosing the demand promissory note for Rs. 1,30,000/- has been exhibited as Ex. PW1/5. The Letter of Guarantee dated 26.3.1987 for repayment of Rs. 2,95,000/- as exhibited as Ex.PW1/6.

18. The second witness of the bank has exhibited the demand promissory note, dated 25.6.1991 for Rs. 40,000/- and the letter dated 25.6.1991 enclosing the said Demand Promissory note as well as the Letter of Hypothecation is also dated 25.6.1991 for Rs. 45,000/- as Ex. Pw2/1, Ex. PW2/2 and Ex. PW2/3 respectively. Letters of Guarantee by defendants 3 & 5 dated 26.6.1991, have been exhibited as Ex. PW2/4 and Ex. PW2/5 respectively. The documents regarding enhancement of cash credit facility by Rs. 1 Lakh from Rs. 2 Lakhs to Rs. 3 Lakhs, in the form of Demand Promissory Note dated 20.11.1992, letter of hypothecation for Rs. 1 Lakh dated 20.11.1992 and letter of hypothecation for Rs. 1 Lakh dated 20.11.1992 and letter of hypothecation of the same date for Rs. 6 Lakhs, have been exhibited as Ex. PW2/6, Ex. PW2/7 and Ex.PW2/8 respectively.

19. The letter of guarantee by defendant No.3, has been exhibited as Ex. PW2/9. The acknowledgment of debit balance in the cash credit account as Rs. 1, 83, 005.52, as on 30.6.1989, has been exhibited as Ex. PW2/10. The similar acknowledgement dated 20.6.1994 for Rs. 4,28,635.22, has been exhibited as Ex.PW2/12 and Ex. PW2/18.

20. The third witness of the bank has categorically deposed that the amount outstanding in the cash credit account, was Rs. 4,28,635.22 as already contained in Ex. PW2/11 (and therefore the making as Ex. PW3/1 was no required to be taken into consideration).

21. The legal notice dated 14.11.1995 has been exhibited as Ex. PW3/2. The postal receipts are exhibited as Ex. PW3/3 to Ex.PW3/5.

22. The witnesses of the bank has deposed on the rates of interest as applicable from time to time, and have also exhibited the statement of account duly certified under Banker's Books of Evidence Act, as Ex. PW3/6 and the same have been affirmed in the ex parte evidence, to be the true and correct entries in the cash credit account ledger of the plaintiff bank.

23. The power of attorney dated 2.12.1971 and the supplementary power of attorney dated 10.10.1984, have been both exhibited as Ex. PW3/7 and Ex.PW3/8.

24. On a conceptus of the averments on record and the unrebutted evidence, it is established that the bank has duly proved its claim for recovery of Rs. 6,41,383/- as on the date of filing of the suit. The plaintiff bank has also established its entitlement to pendente lite and future interest at 23.75% p.a. at quarterly rests till actual payment, both on account of the contract between the parties and also since the loan has been granted for commercial purposes. Accordingly, the suit is liable to be decreed in the sum of Rs. 6,41,383/- with interest pendente lite and future at 23.75% p.a. with quarterly rests against defendants 1, 3, & 5 holding them jointly and severally liable, provided that upon the defendants 1, 3, & 5 making the payment of the amount which has been so decreed, within a period of four months from the date of this decree, the future interest will be reduced to 9% failing which the pendente lite and future interest applicable would both be at 23.75% p.a. with quarterly rests.

25. However since it has come on record that the defendant 2 & 4 had paid Rs. 2,20,000/- on 25.10.2001 to the plaintiff bank, as recorded in IA No. 2395/2002 and order dated 7.3.2002, as such from the decreed amount and also in the making of the calculation of pendente lite interest for the period beyond 25.10.2001, this amount will have to be deducted.

26. The suit is disposed of as decreed in the above terms with costs.