Delhi High Court
Indian Overseas Bank vs S.N.G. Castorete Pvt. Ltd. And ... on 6 February, 2002
Equivalent citations: 2002 VAD Delhi 174, AIR 2002 Delhi 309, 2002 (62) DRJ 32
Author: J Kapoor
Bench: J Kapoor
JUDGMENT
J.D. Kapoor, J.
1. This is a suit for recovery of rs. 2,29,548.31
towards the outstanding amount against bridge loan
facility.
2. The case of the plaintiff in brief is as under:-
3. The plaintiff is a body corporate constituted
under the Banking Complies (Acquisition and Transfer of
Undertakings) Act, 1970, having its Head Officer at 762,
Anna Salai, Madras and branch office at F-47, Malhotra
Building, Janpath, New Delhi. Defendant No. 1 is a company
registered under the Companies Act, 1956, carrying on
business at 14A/1, Sahibabad industrial City-IV,
Ghaziabad, U.P. Defendant No. 1 was at all material times,
carrying on the business of manufacture of pre-cast, pre
stressed hollow core concrete slabs. Defendant Nos. 2 to 5
are the directions of defendant No.1
4. The plaintiff sanctioned various credit limits
from time to time to defendant No. 1 including the cash
credit, bridge loan and bills purchase and letter of
guarantee. Some time in April, 1977, a bridge loan of Rs.
3.5. lakhs was granted to defendant No. 1 carrying interest
@ 7.5% over bank rate with minimum 161/2% per annum with
quarterly rests repayable on demand. Demand promissory
note for Rs. 3.5. lakhs was executed by defendant No.1.
Defendant also signed a deed of hypothecation to the
extent of Rs. 6 lakhs as security for bills purchase limit
of Rs. 3.5. lakhs and bridge loan of Rs. 2.5 lakhs. Vide
letter dated 8th August, 1977, Managing Director of
defendant No. 6 wrote to the plaintiff bank that at the
request of defendant No.1, defendant No. 6 confirms that it
shall make payment to the plaintiff bank found due to
defendant No. 1. The plaintiff had also informed the Uttar
Pradesh Financial Corporation (in short UPFC) about the
granting of fresh loan of Rs. 3.5. lakhs as against its
letter dated 25.3.1977. The defendant No. 6 was also
informed that the said loan was not liquidated and a sum
of Rs. 2 lakh was outstanding.
5. By letters of acknowledgment of debts/security
dated 10.1.1980, 9.12.1982, 25.3.1980, 12.1.1980 and
31.10.1983, the defendant Nos. 1 to 5 confirmed and
acknowledged the outstanding as mentioned in the said
letters as due to the plaintiff int he bridge loan
facility. Vide letter dated 6.4.1981, defendant Nos. 2 to
5 guaranteed the repayment of the outstanding amount. The
plaintiff by legal notice of demand dated 14.5.1979 sent
under Regd. A.D. post called upon the defendants jointly and
severally to pay inter alia the then outstanding of
Rs. 1,82,901.07 in the bridge loan account together with
interest due thereon within 14 days from the date of
receipt of the said notice. The said notices were duly
served on the defendants. The defendans by way of reply
to the plaintiff's notice never disputed any of the
liabilities. Hence this suit.
6. As nobody was appearing on behalf of the
defendants for the last two/three dates of hearing,
defendants were proceeded exparte vide order dated
19.8.1997. Plaintiff has filled affidavit by way of
evidence and proved the following documents:-
(i) Exhibit PW 1/1 is the power of attorney in
favor of Mr. Raghava Varma to sign, verify & institute the
suit; (ii) Exhibits PW 1/2 & PW 1/3 are the letter dated
8th December, 1976 & 25th March, 1977 whereby defendant
No. 6 requested the plaintiff bank to grant bridge loan
facility to defendant No. 1; (iii) Exhibit PW 1/4 is the
letter dated 8.8.1977 whereby defendant No. 6 confirmed
that defendant No. 6 shall make payment to the plaintiff
bank of the amount due to defendant No. 1; (v) Exhibit PW
1/5 is the statement of accounts duly certified; (vi)
exhibits PW 1/6 to 1/18 are the balance confirmation
letter and revival letters executed by defendant Nos. 2 to
5 dated 13th August, 1979, 10.1.1980 and 9.12.1982; (vii)
Exhibits PW 1/9 to 1/13 are the telegraphic notices dated
26.3.1984 issued to defendant Nos. 1 to 5 respectively;
(viii) Exhibits Pw 1/14 & 1/15 are the telegraphic notices
dated 1./4.1984 to 2.4.1984 to defendant No. 6; (ix)
Exhibit PW 1/16 is the legal notice dated 14.5.1979 to
defendant Nos. 1 to 3; (x) Exhibit PW 1/17 is the
guarantee deed dated 6.4.1981 executed by defendant Nos. 1
to 5; (xi) Exhibits PW 1/18 & 1/19 are the letters dated
7.3.1984 & 5.5.1981 addressed to the plaintiff for
regularisation of CC account; (xii) Exhibits P-1 to P-20
are the loan documents, resolutions passed by defendant
No. 1 and letters addressed by defendant No. 1 to the
plaintiff bank.
7. As is apparent from the aforesaid documents, the
plaintiff has successfully proved its claims against the
defendants 1 to 5 as defendant No. 1 is the principal
borrower and defendant Nos. 23 to 5 are the guarantors.
Defendant No. 6 cannot be held liable as the letter dated
8th August, 1977 was only as assurance by defendant No. 6
to pay the amount and it cannot be construed as a
guarantee deed. It was nothing but a recommendation by
defendant No. 6 in favor of defendant No. 1 to advance the
loan. The legal liability of a person arises only if a
proper document is executed as was done in the case of
defendant Nos. 2 to 5. Defendant Nos. 2 to 5 executed deed
of guarantees. Letter sent by defendant No. 6 was a
general assurance that defendant No. 6 takes the guarantee
of making payment against the outstanding amount. This is
a general assurance of a person without having any legal
force.
8. In view of the foregoing reasons, suit is
decreed against defendant Nos. 1 to 5 for Rs. 2,29,548.31
with cost along with pendentelite and future interest @
19.5% till realisation. Decree sheet be prepared
accordingly.
