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1993 Supreme(Del) 407
High Court Of Delhi
CANARA BANK - Appellant
Versus
DACRON MANUFACTURERS - Respondent
Suit 10 of 1989
Decided On : 07/28/1993
P.N.Sethi,
A plaintiff bank can succeed in a suit for recovery of a loan amount if it is able to prove its case through evidence and the defendants fail to appear or file a written statement or examine any witness to rebut the averments made in the plaint.
Headnote:
BANKING - RECOVERY OF LOAN - OPEN CASH CREDIT LIMIT - ACKNOWLEDGEMENT OF DEBT - EX-PARTE DECREE - EVIDENCE - SUFFICIENCY - INTEREST - RATE OF INTEREST.
Fact of the Case:
The plaintiff bank filed a suit for recovery of a loan amount of Rs. 3,72,297.15 along with interest from the defendants. The defendants were proceeded against ex-parte and the plaintiff bank filed evidence by way of affidavits.
Finding of the Court:
The court found that the defendants had failed to appear despite service and had not filed any written statement or examined any witness to rebut the averments made in the plaint. The court also found that the plaintiff bank had proved its case through the evidence of its witnesses and the documents exhibited.
Issues: 1. Whether the plaintiff bank had proved its case against the defendants? 2. Whether the defendants were liable to pay the loan amount along with interest?
Ratio Decidendi: The court held that the plaintiff bank had proved its case against the defendants through the evidence of its witnesses and the documents exhibited. The court also held that the defendants were liable to pay the loan amount along with interest as per the terms of the agreement between the parties and the directives of the Reserve Bank of India.
Final Decision: The court decreed the suit in favor of the plaintiff bank and against the defendants for the recovery of a sum of Rs. 3,72,297.15 along with costs, pendente lite and future interest @ 16% p.a. with quarterly rests.
( 1 ) THIS is a suit for recovery of a sum of Rs. 3,72,297. 15 together with pendente lite and future interest @ 16% p. a. with quarterly rest and inclusive of 2% of penal interest from the date of suit till realisation of the amount
( 2 ) THE facts of the case briefly stated are that the plaintiff is a Banking Company constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 having its branches spread all over India. Shri B. K. Shekar Shetty is one of the principal officers of the plaintiff bank and Senior Manager of a Branch of the Bank situated at F-19, Connaught Circus, New Delhi. He is duly authorised to sign and verify the plaint and to institute the present suit and in this regard he holds a power of attorney from the plaintiff Bank.
( 3 ) AS per averments made in the plaint, defendant No. 2 representing himself as Sole Proprietor of defendant No. l approached the plaintiff Bank for grant of open Cash Credit limit to meet its working capital requirements. Defendant No. 3 who is the father of the defendant No. 2 offered to and stood personal guarantee for the repayment of the entire loan amount advanced or to be advanced to the defendants 1 and 2 besides interest and other charges.
( 4 ) IT is further stated in the plaint that pursuant to the request of the defendants, the plaintiff Bank sanctioned to the defendants 1 and 2 the open cash credit limit of Rs. 1. 00 lac and the said limit was secured by hypothecation of the machineries described in schedule a of the hypothecation deed dated 10. 7. 84 and erected, installed or stored at A-32, Street 4, New Rohtak Road, New Delhi. The defendant No. 2 further assigned two Life Insurance Policies in his name bearing No. 74725224 and 74725225 each for Rs. 25,000. 00, as a collateral security. for the said credit limit. It is further alleged in the plaint that the defendants executed and delivered to the plaintiff Bank various documents including request letter for overdraft facilities dated 10. 7. 84, agreement for the grant of open cash credit limit of Rs. 1. 00 lac dated 10. 7. 84, deed of hypothecation dated 10. 7. 84, letter of undertaking not to avail open cash credit facility somewhere else dated 10. 7. 84, Pronote dated 10. 7. 89 for Rs. 1. 00 lac and carrying interest @ 4% p. a. above the Reserve Bank of India rate with a minimum of 14% per annum compounded quarterly and guarantee covering letter dated 10. 7. 84 enclosing agreement of guarantee dated 10. 7. 84 duly executed by defendant No. 3.
( 5 ) IT is further alleged in the plaint that in or about January, 1985 defendants approached the plaintiff Bank and requested for continuation of the above mentioned limit of Rs. 1. 00 lac and further requested for grant/sanction of Rs. 60,000. 00 limit in addition to the then existing limit of Rs. 1. 00 lac. The plaintiff Bank agreed to this request and granted the additional/enhanced limit of Rs. 60,000. 00 in addition to the already existing limit of Rs. 1. 00 lacs. In consideration of the enhanced limit, the defendants executed and delivered various documents including the letter of renewal dated 10. 1. 85, letter dated 10. 1. 85 enclosing demand promissory note, Pronote dated 10. 1. 85 for Rs. 60,000. 00- carrying interest @ 4% p. a. above the Reserve Bank of India rate with a minimum of 14% p. a. compounded quarterly and request letter for over draft facilities dated 10. 1. 85.
( 6 ) IT is further alleged in the plaint that defendants failed to clear the outstanding dues on account of all the credit facilities mentioned hereinabove and consequently their said A/c. showed a sum of Rs. 2,67,458. 65 which included the amount of interest Upto 31. 12. 86 as due and payable by them and this liability was duly acknowledged and confirmed by the defendants vide acknowledgement of debt and security dated 17. 1. 87. The liability for a sum of Rs. 2,79,876. 65 including the amount of interest Upto 31. 3. 87 was acknowledged and confirmed by th
