Housing Development Finance ... vs Ravindra Dhankar And Another
2015 Latest Caselaw 6915 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

%                               Order delivered on: 14th September, 2015

+              CS (OS) No.2108/2012 and I.A. No.12069/2013

HOUSING DEVELOPMENT FINANCE CORPORATION LTD.
                                       ..... Plaintiff
                Through None

                          versus

RAVINDRA DHANKAR AND ANOTHER                .... Defendants
                Through Mr. Dhruv, Adv. for D-1.

       CORAM:
       HON'BLE MR.JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. The plaintiff has filed the present suit for recovery of Rs.22,53,115/- under Order XXXVII CPC along with pendente lite and future interest @ 18% per annum and costs against the defendants. The amounts claimed in the present suit arise out of the Loan Agreement, Tripartite Agreement which are written contracts and the Promissory Note, executed by the defendants for the amount borrowed from the plaintiff.

2. The plaintiff is engaged in the business of granting loans, especially loans in the category of housing loans. The plaintiff is one of the biggest and most respected institutions in the business of financing of housing loans. The plaintiff is neither a Bank nor a public financial institution.

3. The defendant Nos. 1 and 2 approached the plaintiff in their capacity as borrower and builder respectively, for availing of housing loan by the defendant No.1, for purchase of Flat No.3041, Shivkala Charms, Plot No.-7, Sector-PI-II, Greater Noida, Uttar Pradesh- 201308 (hereinafter referred to as the "flat") in the Apartments by the name of "Shivkala Charms" which were being constructed by the defendant No.2, as a builder.

4. It was represented by the defendant No.1 that he had satisfied himself about the integrity and capability of the defendant No.2 to complete the project on time.

5. The defendant Nos.1 and 2 had thereafter entered into a Tripartite Agreement with the plaintiff on 30th March, 2011. The plaintiff and defendant No.1 also executed a loan agreement on 13th April, 2011 and the defendant No.1 was allotted Loan A/c bearing No. 601379699. The defendant No.2 vide their letter dated 30th March, 2011 also marked lien of the plaintiff on the flat.

6. Based on several representations of the defendant No. 1 and the same being consented and acknowledged by defendant No. 2, the plaintiff sanctioned a sum of Rs.23,00,000/- as loan to the defendant No. 1 for the flat. The loan was sanctioned to the defendant No. 1 for a period of 240 months with variable rate of interest.

7. The plaintiff made total disbursement of Rs.21,45,000/- on behalf of defendant No. 1 to the defendant No. 2 at the request of defendant No. 1 and a cheque bearing No. 78789 dated 13th April, 2011 drawn on HDFC Bank, Suryakiran Building, New Delhi was

issued in favour of the defendant No. 2. The Statement of Account maintained by the plaintiff records that payment of Rs.21,45,000/- was made by the plaintiff.

8. The defendant No. 1 also executed a Promissory Note dated 13th April, 2011 for the sanctioned sum of Rs.23,00,000/- in favour of the plaintiff. The defendant No.1 also executed indemnity bond dated 5th April, 2011, in favour of the plaintiff, wherein, as stated above, the defendant No.1 agreed to complete disbursal under the loan, on account of defendant No.1 to the defendant No.2.

9. As per clause 2.6 of the said loan agreement, so executed between the plaintiff and the defendant No.1, the latter had agreed to pay equated monthly installments (EMI)/ pre equated monthly installments (PEMI) every month.

10. The defendant No.1 further agreed as per clause 2.7(b) of the said Loan Agreement to pay additional interest as per the rules of the plaintiff as in force and all other charges as applicable from time to time as per the policy of the plaintiff, in case of delay/default in making the repayment of the Loan. As per the said Loan Agreement, it was also duly agreed by the defendant No. 1, that under unforeseen or exceptional or extraordinary changes in the money market conditions, the plaintiff shall have the discretion of increasing/decreasing the rate of interest.

11. As per the Tripartite Agreement, the Loan was repayable by the defendant No. 1 by way of EMI/PEMI and it was also agreed between the parties that irrespective of the stage of the construction of the project and irrespective of the date of handing over the

possession of the flat, the defendant No. 1 shall be liable to pay the plaintiff, regularly each month the EMI/PEMI as laid down in the Loan Agreement. Further, under the Tripartite Agreement, the defendant No. 1agreed to secure with the plaintiff, the flat by way of mortgage. Also, the defendant No.2 agreed and confirmed the mortgage to be created by the defendant No.1. The defendant No.2 also undertook not to create any third party rights or security interest of any sort whatsoever, on the flat, without the prior written consent of the plaintiff.

12. In terms of the said Tripartite Agreement it was agreed that in case of default in repayment of the Loan to the plaintiff by the defendant No. 1, any amount payable by defendant No. 2 to the defendant No. 1, on account of cancellation of allotment of flat, shall be paid directly to the plaintiff by the defendant No. 2. It was further agreed that such payment made by the defendant No. 2 directly to the plaintiff shall not absolve the defendant No. 1 from his liability to pay the residual amount outstanding under the Loan Agreement. Therefore, the defendant No. 2 was under an obligation in terms of the Tripartite Agreement to return the money, on account of default committed by the defendant No. 1in repayment of the loan amount, directly to the plaintiff, for appropriation and adjustment by the plaintiff against all monies due from the defendant No.1. The defendant No. 1has also unconditionally and irrevocably subrogated his right to receive any amount payable by the defendant No. 2 to the defendant No. 1, in the event of cancellation, in favour of plaintiff. Hence, as per the agreement, the defendant No. 2 was

under obligation to refund the disbursed amount to the plaintiff. The said agreement is a written contract executed between all the parties to the present suit.

13. It is stated in the plaint that the last payment made by the defendant No. 1 towards the repayment of Loan and accounted for by the plaintiff was on 25th October, 2011. However, after that date, no amount has been paid towards the repayment of the said Loan by the defendant No.1. However, in terms of an agreement/arrangement between defendant No. 1 and defendant No. 2, to which the plaintiff was not privy, the defendant No. 2 has, on behalf of the defendant No. 1, made payment of Rs. 20,346/- towards the outstanding amount in the Loan account of the defendant No. 1. The defendant No. 1 has still not made any effort to clear the outstanding amount and the same shows the malafide intentions of the defendant No. 1 to usurp the money advanced by the plaintiff in good faith and upon assurances made by the defendant Nos. 1 and 2 to pay the same.

14. The plaintiff had sent a Loan Recall Notice dated 6th March, 2012 to the defendant No. 1, whereby, it had recalled the Loan and had made a demand of its outstanding amount, as on the date of the notice. However, the defendant No. 1 chose not to reply to the said legal notice or pay the outstanding amount and has deliberately caused loss to the plaintiff.

15. The plaintiff had also sent a demand Notice dated 26th April, 2012, sent on 27th April, 2012, to the defendant No. 2 for the refund of the amount owed by defendant No. 1 directly to the plaintiff.

However, despite service, the defendant No. 2 failed to refund the amount, to be adjusted against the Loan account of the defendant No. 1. Copy of the said demand notice was also sent to the defendant No. 1. Despite service, the said defendant has not sent any reply to the said notice.

16. As per the official records so maintained by the plaintiff, in the normal course of its business, the outstanding amount due from the defendant No.1, as on 31st May, 2012 has been as under:-

     Principal Outstanding             Rs.21,23,583/-
     EMI Outstanding                   Rs. 1,22,076/-
     Additional Interest               Rs.6,106/-
     Incidental Charges                Rs.1,350/-
     Total Amount Due                  Rs.22,53,115/-

17. As the defendant No.1 failed to make payments towards the loan amount disbursed by the plaintiff and defaulted in fulfilling the obligations, as per the said loan agreement, promissory note and indemnity bond executed by him, therefore, the present suit has been filed by the plaintiff.

18. Upon the service of the said summons, the defendant No.1 had filed an application under Order XXXVII Rule 3(5) read with Section 151 CPC seeking for unconditional leave to defend the suit.

19. It is stated in the application that defendant No.1 has raised various triable issues which disentitled the plaintiff to get the relief of recovery as claimed in the plaint on the following grounds:-

i) As Loan facilities was to be extended by the plaintiff, a Tripartite

Agreement dated 30th March, 2011 was executed between the parties to the instant suit, wherein a specific clause in order to protect the interest of the plaintiff for repayment of loan, was incorporated to the effect that, in case of default in repayment of loan to the plaintiff by defendant No.1, any amount payable by defendant No.2 to the defendant No.1, on account of cancellation of allotment of flat, shall be paid directly to the plaintiff by defendant No.2.

The plaintiff in terms of the Tripartite Agreement directly paid the loan amount to the defendant No.2 towards payment of the flat purchased by the defendant No.1.

ii) Later on, defendant No.1 came to know that defendant No.2 had certain serious disputes with the Noida Authority in relation to the land where the flats were to be constructed and some serious fraud was going on in the society, the defendant No.1 surrendered his allotment which was accepted by the defendant No.2 vide his letter dated 20th March, 2012. It is submitted that defendant No.2 also accepted his liability to repay the loan and through their office bearers also assured that they shall give the remaining EMI. It is submitted that few EMIs qua the flat were given to the plaintiff by the defendant No.2 subsequent to the surrender of flat by the defendant No.1.

Upon coming to know about the fraud, it was revealed by the Greater Noida Authority, that even the allotment of the land on which the apartment was to be constructed had been cancelled vide order dated 9th September, 2011, and an

information to this effect was provided to the defendant No.1 by the Greater Noida Authority vide its letter dated 22nd October, 2012.

iii) It has also come to the notice of the defendant No.1, that there are number of cases filed by different persons against the defendant No.2 before different legal fora. An FIR No.62/2012 has also been registered against the defendant No.2 and its office bearers at PS EOW Cell with regard to fraud being played by defendant No.2. It is submitted that defendant No.1 reserves his right to submit the details of the proceedings being initiated against defendant No.2.

iv) Even as per Tripartite Agreement dated 30th March, 2011, entered into between the parties i.e. the plaintiff, and defendants, it was agreed that in case of default in repayment of loan to the plaintiff by defendant No.1 on account of cancellation of allotment of flat or for any other reason whatsoever, loan amount shall be paid directly to the plaintiff by defendant No.2, which clearly disentitled the plaintiff from making any claim against defendant No.1, and this fact has been admitted by the plaintiff himself in his plaint.

v) There is no default of any nature on the part of the defendant No.1 as he had to surrender his allotment due to the fraud played by the defendant No.2.

vi) In terms of the aforesaid clause of the Tripartite Agreement, the plaintiff ceases his right to raise any claim against the defendant No.1. Even defendant No.2 vide its letter dated 20th March, 2012,

in terms of the clause of the Tripartite Agreement, had accepted its liability of repayment of loan taken by the defendant No.1 from the plaintiff to the plaintiff. It is submitted that since defendant No.2 has accepted its liability to repay the loan in term of theTripartite Agreement, the claim if any by the plaintiff is against the defendant No.2 and not against defendant No.1. Defendant No.1, even gave copy of the letter dated 20th March, 2012 to the plaintiff and the plaintiff acknowledged the same.

vii) As the amount of loan was directly disbursed to the defendant No.2 by the plaintiff and in terms of the aforesaid clause of Tripartite Agreement, the liability to repay the loan amount, in case of default, was of the defendant No.2, the defendant No.1 was not liable to pay any amount whatsoever to the plaintiff.

20. In similar circumstances and on same facts in CS (OS) No. 2502/2012, where the plaintiff was same party, my esteemed brother Justice Jayant Nath has dealt with the same grounds of defence raised by the defendant and passed a decree after rejecting the application for leave to defend. Relevant paras reads as under:-

"6. Learned counsel appearing for defendant No.1/applicant has strenuously urged that in view of Clause 10 of the Tripartite Agreement, the applicant has no liability whatsoever. The entire liability, he submits, is that of defendant No.2. He submits that the plaintiff and defendant No.2 are hand in glove and have cheated defendant No.1. It is urged that the financial institution like the plaintiff verifies the legality of the project and only then sanctions the loan. Pursuant to the fraud played by defendant No.2 in connivance with the plaintiff various FIRs have been lodged against defendant No.2.

7. Learned counsel for the plaintiff has strenuously refuted the above contentions. He has relied upon various clauses of the Home Loan Agreement and Tripartite Agreement to contend that it was a transaction between the plaintiff and defendant No.1. Defendant No.1 is the primary borrower and it is the primary liability of defendant No.1 to repay the dues pursuant to the loan taken. Learned counsel for the plaintiff also relies upon the judgment of this Court in CS(OS) 2894/2012 titled as HDFC Ltd. vs. Umesh Kumar Rai & Anr. dated 02.09.2014 where in similar circumstances and on exactly identical facts relating to a flat financed by the plaintiff with defendant No.2 this court had declined to grant leave to defend and decreed the suit.

8. The controversy centres around Clauses 10 and 11 of the Tripartite Agreement which reads as follows:-

"10. Further, the Builder, in the in the event of default of repayment as mentioned in clause 2 and 3 hereinabove, shall on intimation by HDFC cancel the allotment of the residential apartment in favour of the borrower and refund all monies to HDFC directly under intimation to the borrower for appropriation and adjustment by HDFC against all monies due to it from the Borrower as mentioned above.

11. The Builder also confirms and undertakes that it shall submit to HDFC all documents for the Project as requested by HDFC and shall keep HDFC informed of the progress of the project and shall obtain a clearance from HDFC before handing over possession of the respective apartment to the borrower."

9. The above clauses however have to be read along with the other clauses of Tripartite Agreement. Some of the relevant clauses read as follows:-

"AND Whereas HDFC has considered the said request

with a clear understanding and an irrevocable undertaking by the Borrower that subsequent to the disbursement, if any, as requested by the Borrower, there would be no repayment default for any reason whatsoever including but not limited to any concern/issues by and between the Borrower and the Builder/Developer; ...

3. The housing loan advanced to the borrower by HDFC shall be repayable by the borrower by way of Equated Monthly Instalments (EMI). The date of commencement of EMI shall be the first day of the month following the month in which the disbursement of the loan will have been completed and consequently the due date of payment of first EMI shall in such a case be the last day of the said following month. Till the commencement of EMI the borrower shall pay Pre-EMI, which is the simple interest on the loan amount disbursed calculated at the rate of interest as mentioned in the respective loan agreement of the Borrower.

4. That irrespective of the stage of construction of the Project and irrespective of the date of handing over the possession of the residential apartment to the Borrower by the Builder the Borrower shall be liable to pay to HDFC regularly each month the EMIs as laid down in the Loan Agreement to be signed by and between HDFC and the Borrower. The Borrower shall execute an indemnity and such other documents as may be required by HDFC in favour of HDFC in this regard.

....

9. Further if the Borrower commits a breach of any of the terms and conditions of this Tripartite Agreement it shall treated as an event of default under the Agreement for Sale/Allotment cum

Agreement for sale or any such agreement or document signed by and between the Borrower and the Builder for the sale of the said residential apartment.

That in the event of the occurrence of default under the Loan Agreement which would result in the cancellation of the Allotment as a consequence thereof and/or for any reason whatsoever if the allotment is cancelled, any amount payable to the Borrower on account of such cancellation shall be directly paid to HDFC. However, it is further agreed between the Parties that such payment made by the Builder directly to HDFC shall not absolve the Borrower from his liability to pay the residual amount, if any, from the outstanding under the Loan Agreement."

10. Hence a conjoint reading of above clauses of Tripartite Agreement clearly shows that it was at the request of defendant No.1 that the plaintiff has given a loan of Rs.22 lacs. There is an unconditional undertaking given by defendant No.1 that there would be no repayment default for any reason whatsoever including any issue between defendant No.1 and 2. The payment of EMI is to be made by defendant No.1. Clause 4 clearly states that irrespective of the stage of construction, defendant No.1 shall be liable to pay the plaintiff regularly each month the EMI as laid down in the loan agreement. A conjoint reading shows that it is defendant No.1 who is solely responsible. Clause 10 and 11 of the Tripartite Agreement appear to be for the benefit of the plaintiff rather than for the benefit of defendant No.1. The builder defendant No.2 is obliged to refund all monies to the plaintiff to safeguard the plaintiff. The clause does not shift liability from defendant No.1 to defendant No.2.

11. Similarly the Home Loan Agreement is exclusively between the plaintiff and defendant No.1. It spells out the obligations of

the plaintiff and defendant No.1 respectively and it stipulates the loan amount as Rs.22 lacs repayable in 240 months @ EMI of Rs.20,868/-.

12. This court in the case of HDFC Ltd. vs. Umesh Kumar Rai & Anr. (supra) under the similar facts has declined to grant leave to defend. The argument that defendant No.1 has been duped by the builder and the bank in collusion has also been rejected.

13. It is however clear that defendant No.2 has completely duped defendant No.1. Though there is no clarity from the pleadings as to how much consideration was to be paid by the plaintiff to defendant No.2 as consideration for the flat, it appears that without a brick being laid down at the site the plaintiff and defendant No.1 have advanced a sum of nearly Rs.21 lacs to defendant No.2. Defendant No.2 has merely collected the money and appears to have disappeared leaving the investors to repent. It is an extremely unfortunate situation.

14. The Supreme Court in the case of M/s. Mechelec Engineers & Manufactures vs. M/s. Basic Equipment Corporation, AIR 1977 SC 577 has drawn up the parameters to be considered by the court while dealing with the application for leave to defend. Relevant paras of the judgment reads as under:

"8. In Smt. Kiranmoyee Dassi and Anr. v. Dr. J. Chatterjee 49 C.W.N. 246 , Das. J., after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by order 37 C.P.C. in the form of the following propositions (at p. 253):

(a) If the Defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the Defendant is entitled to unconditional leave to defend.

(b) If the Defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the Defendant is entitled to unconditional leave to defend.

(c) If the Defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he has a defence, yet, shews such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the Plaintiff is not entitled to judgment and the Defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security.

(d) If the Defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the Plaintiff is entitled to leave to sign judgment and the Defendant is not entitled to leave to defend.

(e) If the Defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the Plaintiff is entitled to leave to sign judgment, the Court may protect the Plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the Defendant on such condition, and thereby show mercy to the Defendant by enabling him to try to prove a defence."

15. In my opinion defendant No.1 has failed to make out any ground for leave to defend. In case evidence is lead, no new facts or issues are likely to be clarified or likely to evolve. In the

facts and circumstances of the case, given the legal position there is no option but to dismiss the present application for leave to defend. The present application is without any merit and is dismissed."

21. The appeal against the above said judgement has also been dismissed by speaking judgment passed in RFA (OS) No. 50/2015. The facts and evidence in the present case are same. The judgment passed by the Single Bench and Division Bench are binding upon this Court. Hence application being I.A. No. 12069/2013 for leave to defend is dismissed.

CS (OS) No. 2108/2012

22. In view of the above, the suit is decreed in favour of the plaintiff and against the defendant No.1 for the recovery of Rs.22,53,115/-. The plaintiff shall be entitled to interest @ 6% per annum from the date of filing of the suit till its realization.

23. Defendant No.2 was served on 14th August, 2012. There is no appearance on behalf of defendant No.2. As this is a summary suit filed, the suit is also decreed against the defendant No.2. As passed earlier, in this also it is clarified that it is expected that the plaintiff shall in the facts and circumstances of this case first shall try to execute the decree against the defendant No.2.

24. The suit is disposed of.

(MANMOHAN SINGH) JUDGE SEPTEMBER 14, 2015