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2001 Supreme(Del) 394
High Court Of Delhi
CANARA BANK - Appellant
Versus
SURYA CHEMICALS - Respondent
Suit 459 of 1990
Decided On : 03/26/2001
B.P.AGRAWAL
Non-repayment of loan and credit facilities, joint and several liability of the defendants
Headnote:
Mortgage Suit - Recovery - Banking Companies (Acquisition and Transfer and Undertakings) Act, 1970 - Order XXXIV of the Code of Civil Procedure
Fact of the Case:
Canara Bank filed a suit for the recovery of a loan amount against the defendants, who had failed to repay the loan and credit facilities extended to them. The defendants were found jointly and severally liable for the outstanding amount, and a preliminary decree was passed in favor of the plaintiff.
Finding of the Court:
The court found that the defendants had failed to adhere to the financial discipline and had not repaid the loan and credit facilities as per the agreed terms. The plaintiff's claim for the outstanding amount was upheld, and a preliminary decree was passed in favor of the plaintiff.
Issues: Non-repayment of loan and credit facilities, failure to adhere to financial discipline, joint and several liability of the defendants
Ratio Decidendi: The court held that the defendants' failure to adhere to the terms of the loan and credit facilities, as well as their joint and several liability, justified the plaintiff's claim for the outstanding amount.
Final Decision: A preliminary decree was passed in favor of the plaintiff for the outstanding amount, and the defendants were given six months to deposit the amount. In case of failure to do so, the plaintiff would be entitled to apply for a final decree for the sale of the mortgaged property.
( 1 ) PLAINTIFF-CANARA Bank has filed this Suit for recovery of Rs. 604026. 39p against the defendants. Its a mortgaged Suit under Order XXXIV of the Code of Civil procedure and is based on the basis of the following averments :-
( 2 ) PLAINTIFF is a body corporate constituted under the Banking Companies (Acquisition and Transfer and Undertakings) Act, 1970 having its Head office at 112, J. C. Road, Bangalore. It has its branches throughout India including the one at Tagore Garden, New Delhi. Shri T. S. Prabhu is the duly constituted attorney of the plaintiff-Bank is also one of the Principal Officer of the plaintiff-Bank. He is conversant with the facts of the case and as such is in position to depose about the correctness or otherwise of the facts mentioned in the plaint. He has an authority to sign and verify the plaint and instituted the suit on behalf of the plaintiff-Bank. Defendant no. 1 is a proprietorship firm. Shri Inder Kapoor is its proprietor. Defendant no. 2 is a guarantor for the entire advance granted by the Bank alongwith interest and other expenses and is jointly and severally liable. The defendant no. 3 is also guarantor and has mortgaged her property bearing No. RZ-13, Indira Park, out of Khasra no. 643, Village Nasirpur, Delhi. Defendant no. 1 through its proprietor approached the plaintiff-Bank around January, 1987 for grant of certain credit facilities on various form. The proposal submitted by the defendant no. 1 were examined by the plaintiff-Bank and after certain modifications and imposition of various terms and conditions, these were acceded to.
( 3 ) IN January, 1987 the defendant no. 1 through its proprietor applied for loan for purchase of machinery for the manufacturing of paper mint flakes and crystals. The defendant no. 1 offered to deposit 25% margin on machinery. The defendants 2 and 3 undertook to guarantee repayment of the entire amount together with interest and all other charges which may be found due from the defendant no. 1.
( 4 ) IN January, 1987 the defendant no. 1 through its proprietor applied for loan for purchase of machinery for the manufacturing of paper mint flakes and crystals. It offered to deposit 25% margin on machinery. The defendants No. 2 and 3 undertook to guarantee repayment of the entire amount together with interest and all other charges which may be found due from the defendant no. 1. The proposal submitted by the defendants was considered by the Bank for sanctioning an advance of rs. 71,000. 00 (Rupees Seventy One thousand only) for purchase of machinery. Accordingly, following documents were executed and delivered by the defendant no. 1 to the plaintiff Bank apart from some other letters of undertakings and declarations filed with the plaint:- i. A Demand Pronote for Rs. 71,000. 00dated 13/03/1987. ii. A stamped hypothecation deed for machinery dated 13/03/1987. iii. A letter of authorisation to remit the proceeds/loan amount to supplier. iv. A letter of authorisation dated 13/03/1987.
( 5 ) THE entire amount of loan was agreed to be repaid in thirty six instalments, alongwith interest as and when it becomes due alongwith other charges, as follows :- rs. 2000x35 = 70,000. 00 rs. 1000x01 = 1,000. 00 total: 71,000. 00
( 6 ) THE first instalment was to be due w. e. f. April, 1987. The cost of Rs. 71,000. 00 (plus margin money) was paid by the plaintiff-Bank to the suppliers M/s. Refrigerator and Electric Works, New Delhi in March, 1987 towards the cost of the machinery. The amount was paid to the supplier by means of plaintiff-Bank s pay orders.
( 7 ) IT is further averred in the plaint that defendants did not pay their instalments regularly although they utilised the machinery and have been making good profity. As on 28/01/1990 a sum of Rs. 9639. 20p is due to be payable from the defendants jointly and severally. The plaintiff has also claimed future interest from 21/01/1990 17. 5% per annum to be compounded quarterly.
( 8 ) IN addition to the aforesaid am
