A bank is entitled to recover a loan amount with interest and costs from a defaulting borrower through legal proceedings.

( 1 ) THIS suit was filed by the plaintiff-Punjab National Bank on 5. 2. 1996 against the defendants for recovery of a sum of Rs. 8,93,197. 95 with interest @ 20. 25% per annum. The plaintiff is a body corporate winder the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The defendant No. 1 is a sole proprietorship concern which carries on the business of manufacture and sale of woollen and acrylic yarns used in hand-knitting and machine knitting and the defendant No. 2 Smt. Neelu Singh is the sole proprietor of defendant No. 1.

( 2 ) THE plaint on behalf of the plaintiff inter alia avers as follows : Defendant Nos. 3 to 5 are stated to be the guarantors and defendant No. 4 is also stated to be the mortgagor of property No. 38, DLF Industrial Area, Kirti Nagar, New Delhi. It is also averred that one Smt. Satwant Kaur who was also a guarantor had died and defendant Nos. 2 to 4 are her legal heirs and are also liable in that capacity.

( 3 ) IT is averred that defendant No. 1 was earlier a partnership firm and was enjoying credit facilities from the plaintiff. This firm was dissolved on 31. 3. 1989 and defendant No. 2 took over the assets and liabilities of defendant No. 1 as a Sole Proprietor thereof.

( 4 ) IT is further averred that as far back as in 1983 defendant No. I had requested for grant of Term Loan facility of Rs. 6. 00 lacs, which was sanctioned and on 18. 2. 1983 defendant No. 2 had signed the Term Loan Agreement.

( 5 ) THE plaintiff has further averred that consequent upon the riots which followed the death of Mrs. Indira Gandhi, in October - November, 1984, in terms of a Central Interest Subsidy Scheme promulgated by Government of India, the defendants had become entitled to certain concessions in the interest charged by the plaintiff. Accordingly, plaintiff gave a credit of Rs. 2,62,785. 60 in 1991. A further concession was also granted by the plaintiff to defendant Nos. I and 2 in the year 1995. These concessions are described in paras 12 and 27 of the plaint, respectively.

( 6 ) CONSEQUENT upon the grant of concessions and the irregularity of the accounts, the amount due in 1991 under the Term Loan Facility was bifurcated whereby part of it was converted into Funded Interest Term Loan Facility to the extent of Rs. 2. 82 lacs and the balance of Rs. 1. 30 lacs then due remained as a Term Loan. In para 13 of the plaint it is also averred that apart from the above debit balances a further Term Loan of Rs. 4. 04 lacs was sanctioned and granted by the plaintiff to defendant No. 1 which was duly availed of by making payment to one M/s. Reliable Engineering Corporation towards purcahse of the machinery. It is also averred that in consideration of the grant of these facilities fresh loan documents were signed by defendant No. 2 on 24. 12. 1991 whereby the plaint and machinery was also hypothecated to secure the repayment of the aforementioned loans, besides the mortgage created on 24. 12. 1991 by defendant No. 4, for the same purpose. Service of summons was effected on the defendants and initially on 13. 9. 1996 one Ms. Suman Doval, Advocate appeared for the defendants and was directed to file Vakalatnama and written statements within six weeks. The plaintiff was directed to supply copies of documents to her and the matter was adjourned to 19. 12. 1996. On the said date a further time of six weeks was granted to file written statement and the matter was adjourned to 13. 3. 1997. On 13. 3. 1997 neither the Vakalatnama nor the written statement was found to have been filed by the said Counsel. However, fresh summons were ordered and eventually after numerous attempts, service was effected which resulted in the filing of the Vakalatnama. A further period of six weeks was granted for filing written statement after the filing of Vakalatnama and the case was listed on 14. 8. 1998. On the said date neither the written statement was filed nor was there any appearance for the defendants and