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2008 Supreme(Bom) 553
2008(5) ALL MR 126
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
V. C. DAGA, J.
Central Bank of India — Appellant
Vs.
Sion Bakers & Confectioners Pvt. Ltd. & Ors. —Respondent
Suit No.329 of 1981
Decided on : 11th April, 2008.
Mr. V. K. NAIR i/b Little & Co., Advocate for the Plaintiff.
Mr. AJA Y PANICKER, Advocate for Defendant No.3.
Headnote:Contract Act, 1872 - Section 10.-In a suit for recovery by bank defendant can stood as guarantor the bank was allowed to the secondary evidence as it has only letter of the guarantee executed by guarantor it was held by Hon’ble High Court that the loan documents obtained by the bank are in a standard format of contract, standard clauses of the guarantee agreement have been widely adopted because the experience shows the facilitated grant of loan. In the banking transactions, while granting loan and obtaining loan documents, the banks do not compromise on the terms and conditions thereof. In such a contract standard form enables the banker to say "if you want loan or banking services at all, these are the only terms on which they are available. Take it, or leave it." It is a type of contract on which conditions are fixed by one of the party and upon to acceptance by the person appearing from the bank. The contract which, frequently, contain many conditions would present for the acceptance and is not open to discussion. It is settled law that a person who signs document which contains a contractual assumption in normal bound by them even though he is not ready, even though he has ignored all the precise legal effect. In the aforesaid view of the matter suit stands decreed in toto against defendant No. 3. However, defendant No. 3 shall be entitled to and the plaintiff-bank shall be bound to give credit to defendant No. 3, of the part payments made by other defendants from time to time. It is clarified that the future interest shall first be calculated and charged on the decretal amount till the date of receipt of part payment. After adding the amount of interest to the decretal claim, the amount of part payment shall be substracted from the total amount thereof. Remaining balance amount shall be chargeable to future interest till the date of receipt of next part payment. Further part payments received should be accounted for in the same manner as indicated herein till the entire amount of part payments made are exhausted. In other words, the interest shall be chargeable on the reduced debit balance.
FACTUAL MATRIX :
2. Factual matrix borne out from the plaint reveals that the plaintiff is a nationalised Bank; whereas the first defendant is a Company incorporated under the Companies Act; and the third defendant was a Promoter of the said Company,
3. The third defendant, as a Promoter of the first defendant, made application dated 18.9.1976 to b following financial facilities:
(i) The term loan Rs.1.89,000/- with certain other cash credit facilities for the business of defendant no.1-Company. (ii) Term loan limit in the sum of Rs.1,36,000/- against hypothecation of machinery to be purchased costing Rs.1,70,000/- and furniture valued at Rs.10,000/-.
(iii) The demand loan in the sum of loan Rs.53,000/- against pledge of FORs and MIDRs worth Rs.78.000/- standing in the names of the promoter and his family members.
(iv) Clean Overdraft Limit In the sum of Rs.30.000/- to meet advertising expenditure.
(v) Cash Credit Limit in the sum of Rs.20,000/- against hypothecation of raw material.
4. The present suit relates to the outstanding dues, due and recoverable in terms of Term Loan and Cash Credit (Hypothecation) Account.
5. The plaint allegations reveal that defendant no. 1 in respect of the aforesaid Cash Credit (Hypothecation) and the term Loan Accounts In the sum of Rs.20,000/- and Rs.1,36,000/- respectively executed loan documents, the details of which are given in the plaint.
6. The plaint allegations further reveal that the Cash Credit Hypothecation Limit was enhanced from Rs.20,000/- to Rs.50,0001for which defendant no. 1 had executed additional loan documents on 27.6.1977, the details of which are also to be found in para 8 of the plaint.
7. The plaint allegations further reveal that in respect of the aforesaid financial facilities granted to defendant no.1, defendant Nos.2 to 4 stood guarantors (for defendant no. I ) by executing joint letter of guarantee dated 27.6.1977, wherein they have guaranteed the repayments of the loan amounts borrowed by the defendant No.1 to the extent of Rs.3,02,000/-.
8. The accounts of the first defendant were found to be irregular. Number of defaults committed by defendant no. 1 were noticed by the Bank. As such, from time to time, defendant No.1 was put on notice to bring their account within the permissible limits.
9. The plaint allegations further reveal that by a letter of acknowledgement dated 17.10.1979, defendant no.1 confirmed and acknowledged its liability in respect of Term Loan Account as on 30th September, 1979 in the sum of Rs.85,404.90 towards principal liability and Rs.2,454.21 towards interest liability. By another letter dated 17.10.1979 defendant no.1 confirmed and acknowledged its liability in Cash Credit Hypothecation Account due as on 30.9.1979 in the sum of Rs . 54,262.52 ps. towards principal sum and Rs. 1.944.82 ps. towards interest liability.
10. According to the plaintiff, defendant no.1 negotiated for sale of their factory with one M/s. Bhartiya Bakery Workers Association Ltd. The plaintiffs were accordingly informed that prospective buyers will deposit consideration amount directly with the plaintiffs. However, as promised no amount was paid to the bank by either of them. As such, demand notices were issued to all the defendants calling upon them to pay the outstanding dues of the plaintiffs. That is how the present suit is filed against the defendants for recovery of the outstanding dues of the bank recoverable from the defendants.
11. On being served with the writ of summons the defendant Nos. I and 4 submitted to the decree on admission in terms of prayer clauses (a),(b) and (c) of the plaint and applied for payment of decree in installments. The decree. against the defendant Nos.1 and 4, on admission, in terms of prayer clauses (a), (b) and (c) of the plaint, was passed on 11.9.1981.
12.Defendant No.3 has
