Defendant's defense found illusory - Suit not barred by Recovery of Debts Due to Banks and Financial Institutions Act 1993 or Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

V.K.JAIN, J.

IA 7213/2011 (O.37 R.3(5) CPC)

This is a suit filed under Order 37 of the Code of Civil procedure for recovery of Rs.39,40,351/-. The case of the plaintiff is that the defendant having approached it for grant of a housing loan, it sanctioned a sum of Rs.35 lakhs as loan to the defendant for purchase of a property located at 1003, 10th floor, Building 15, Unitech Horizon, Plot No.6, Sector Alistonia, Greater Noida, under its Individual Loan Scheme. The loan was paid for 240 months with interest at variable rate of 8% per annum, which at present stands at 10.5%. The plaintiff disbursed a sum of Rs.32 lakhs to the defendant who executed a promissory note dated 21st February, 2006 for the said sum in favour of the plaintiff. Under clause 2.6 of the Loan Agreement, the defendant agreed to pay EMI/Pre EMI every month. As per clause 2.7(b) of the Loan Agreement, the defendant also agreed to pay additional interest as per rules of the plaintiff, in case of delay/default in making the repayment of the loan. An additional sum of Rs.2,22,837/- was disbursed to the defendant on 5th January, 2008, thereby raising the total disbursed amount. The loan was re-payable in EMIs of Rs.34,114/-. The defendant made last payment on 14th April, 2009 and according to the plaintiff, a sum of Rs.33,21,537/- is still due and outstanding towards principal sum besides Rs.5,45,001/- towards EMI out standings, Rs.72,403/- towards additional interest and Rs.1,410/- towards incidental charges.

2. In her application for leave to contest, the defendant has taken a preliminary objection that this Court lacks territorial jurisdiction to try the present suit since the agreement was executed at Gurgaon, the property got financed by the defendant is situated in Greater Noida and the defendant is residing in Chandigarh. On merits, the defendant has admitted having taken the loan from the plaintiff and executing the Loan Agreement in its favour. This is also the case of the defendant in the application that the plaintiff was required to monitor the progress of construction of the property financed by it and carry out periodical inspections in this regard. According to the defendant, the builder Unitech Limited did not carry out construction within the stipulated time and on visiting the site, she found that the work was at a very preliminary stage, running at a very slow pace, and in no likelihood to have completed in 3-4 years. It is also alleged that the material being used for construction was sub-standard, inferior and of poor quality. It appears from the application that the defendant applied to Unitech for refund of the amount paid to it but, that amount was not refunded. The defendant has also filed a complaint under Consumer Protection Act against Unitech and the plaintiff, which is stated to be pending. The learned counsel for the defendant states that the prayer made by the defendant to the Consumer Forum is for a direction to refund the amount paid by her directly to the plaintiff. The defendant is also seeking to file a counter-claim of Rs.50 lakhs against the plaintiff on the ground that it had disbursed the loan in connivance with the Builder without keeping prior check with the project and without looking progress of the project.

3. In M/s Mechalec Engineers and Manufactures v. M/s Basic Equipment Corporation (1977) 1 SCR 1060, the Supreme Court set out the following principles:-

(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,