Delhi District Court
M/S. Computer Embroidery House (P) Ltd vs Delhi Financial Corporation on 23 August, 2017
IN THE COURT OF SH. JITENDRA KUMAR MISHRA, ADDITIONAL
DISTRICT JUDGE - 01, PATIALA HOUSE COURTS, NEW DELHI
DISTRICT, NEW DELHI
( 18 YEARS OLD CASE )
CS No. 112/2017
M/s. Computer Embroidery House (P) Ltd.
(A Company incorporated under the
Companies Act, 1956) having its
Registered office at C-61, Mayapuri
New Delhi
.......Plaintiff
Versus
1. DELHI FINANCIAL CORPORATION
(A Corporation incorporated under
The provisions of The State
Financial Corporation Act, 1951)
Having its office at :
Saraswati Bhawan, E-Block,
Connaught Place, New Delhi - 110001.
2. SHRI S.K. SAXENA
D.G.M.,
Delhi Financial Corporation,
Saraswati Bhawan, E-Block,
Connaught Place,
New Delhi - 110001.
3. SHRI S.K. DUREJA
Manager LLD,
Delhi Financial Corporation,
Saraswati Bhawan, E-Block,
Connaught Place,
New Delhi - 110001.
.... Defendants
Suit presented On : 10.08.1999
Arguments Concluded On : 22.08.2017
Judgment Pronounced On : 23.08.2017
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M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 1 of 21
JUDGMENT
1. This is a suit for recovery of Rs. 34,21,078/- filed by the plaintiff. Brief facts of the case are :
(a) The plaintiff is a Private Limited Company duly incorporated under the Companies Act, 1956. Shri Shyam Lal Garg is the Managing Director of the plaintiff. He is conversant with the facts and circumstances of the case and is thus able to depose about the facts of the case. The plaintiff vide Resolution dated 01.07.1999 has resolved to institute the present suit and has authorized Shri Shyam Lal Garg. Plaintiff is dealing in the business of embroidery through computers and is a reputed Company.
(b) Defendant no. 1 is a body incorporate, constituted under the State Financial Corporation Act, 1951, and one of the objects of defendant no.1 is to grant loan and finances including lease finance to the industrial concerns so as to help them in the promotion of their business activities and the expansion of the said concerns.
(c) Plaintiff was originally is a partnership concern of Sh. Shyam Lal Garg and Smt. Santosh Manocha. A Partnership was sanctioned terms loan of Rs. 25.59 lakhs and a soft loan of Rs. 2.00 lakhs by D.F.C. on 29th of March, 1990 for setting up a new unit for doing embroidery work on fabrics/garments. The partnership availed a term loan of Rs. 25.00 lakhs and a soft loan of Rs. 1.95 lakhs. The term loan was to be repaid in quarterly installments. It was agreed by way of an administrative settlement CS no. 112/2017 M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 2 of 21 in August, 1992 to facilitate the unit to pay the outstanding dues in monthly installments of Rs. 60,000/-. This was punctually done.
(d) The above said partners converted their concern to an incorporated Company under the name and style of plaintiff herein on 28.02.1995. Plaintiff applied vide application dated 7 th of March, 1995, for loan of Rs. 127.35 lakhs. Defendant No 1 examined the proposal. It was agreed to grant the said loan vide letter dated 25 th of April, 1995 for the purchase of machinery and equipment. It was to be repaid in 20 quarterly installments beginning from Ist of February, 1996. However, the main imported machinery was cleared by the Custom authorities in November, 1995, only. It was to be installed by the manufacturers. There was delay in the arrival of engineers of the manufacturing company from Switzerland and the machinery could only be installed in November-December, 1996. Therefore, the plaintiff had to request for deferment of two installments that fell due on 1 st of February, 1996 and 1 st of May, 1996. The parties agreed to an amended repayment schedule. Defendant no. 1 charged Rs. 92,000/- as interest and penalty on account of this late payment.
(e) The plaintiff vide application dated 23 rd of July, 1996 applied for a lease finance of Rs. 235.00 lakhs for purchase of embroidery machines for expansion of its business. The plaintiff also deposited a sum of Rs. 1,12,000/- vide receipt No. 29686, Book No. 297 dated 23rd of July, 1996 being 0.5 % of the amount of lease rent with DFC towards lease processing fee as per defendant no.1.
(f) Defendant no. 1 vide its letter dated 6-8 th of January, 1997 CS no. 112/2017 M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 3 of 21 made a lease offer for leasing of equipment at the estimated cost of Rs. 235.00 lakhs to the plaintiff under a lease agreement. The conditions included the mortgage of Property No. 187, Rajdhani Enclave, Delhi - 110034 owned by Shri Amar Nath Gupta. On 17 th of March, 1997, the plaintiff got published a public notice in the Statesman, Delhi, stating its intention that the Rajdhani Enclave property was offered as collateral security for the lease assistance of Rs. 235.00 lakhs to defendant No 1. No objections to the said publication were filed.
(g) On 14th of March, 1997, plaintiff and Shri Amar Nath Gupta the owner of the said property delivered to defendant No. 1 documents of title of the said immovable property with intent to create a security thereon and thus the mortgage by deposit of title deeds in respect of property No. 187, Rajdhani Enclave, Delhi- 110034, came into effect. The plaintiff also acquired property No. F-5, Udyog Nagar, Rohtak Road, Delhi-110041 as its new premises for the plant and machinery to be imported under the said proposed lease agreement.
(h) On 31st of March, 1997, the plaintiff deposited with defendant no.1 a sum of Rs. 35.25 lakhs is equivalent to 15 % of the assets, costs of security. Defendant No.1 issued a receipt No. 2786, Book No. 28 dated 31 st of March, 1997 in acknowledgement of having received the above said amount from the plaintiff. The plaintiff also executed a hypothecation deed on 31 st of March, 1997, in favour of defendant no 1. It also completed all other formalities required for the purpose as intimated by defendant No.1 vide letter dated 6-8th of January, 1997.
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(i) Upon completion of all aforesaid formalities and requirements the plaintiff and defendant no.1 signed the lease agreement No. 60029 on 31st of March, 1997. The plaintiff requested defendant no 1 to place a purchase order for the first machine under the said agreement of 31 st of March, 1997 costing to Rs. 32.25 lakhs. The machine was purchased by defendant no. 1 and delivered to the plaintiff on 4 th of July, 1997. At the request of the plaintiff, defendant no. 1 placed orders for purchase of two more machines under the said agreement for use of the plaintiff.
(j) Around this time defendant no. 2 assumed the office in the office of defendant no. 1. He made a team with defendant no. 3. It was only thereafter that the plaintiff found all sorts of hurdles to be in its way for getting the approved and committed by way of lease deed amount of loan released to it. Such hurdles were put in the way of the plaintiff as it could not be a party or contributory to the demands of defendant no. 2 and 3 which did not form part of the plaintiff's legal obligations. It is unfortunate that defendant No. 1 did not and could not stop defendants no. 2 and 3 from proceeding with their unlawful demands and for this purpose from putting unreasonable, unlawful restrictions in the way of the plaintiff, in getting the amounts of his approved loan for his machinery released.
(k) Vide communication dated 9-14th of May, 1997 defendant no. 1 raised an objection that the property appeared to be not fit for mortgage as it appeared to be an H.U.F. property and desired that some other property be offered for mortgage. The demand for CS no. 112/2017 M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 5 of 21 replacing the property for mortgage was, therefore, arbitrary, unlawful and for illegal consideration. The plaintiff decided to comply with the requirement of defendant no.1 to provide an alternative property for equitable mortgage.
(l) On 16th of May, 1997, the plaintiff offered property No. 76, Raj Nagar, Pitampura, Delhi-110034 (hereafter Raj Nagar property) for equitable mortgage and delivered the original title documents of the property to defendant No.1 with intend to create a security thereon. Thus, a mortgage by deposit of title deeds was created in respect of this property. Defendants no. 2 & 3 continued their pressure on the plaintiff for illegal gratification. On 13 th of May, 1997, the plaintiff published a public notice in Statesman stating his intention of the mortgage of Raj Nagar property and invited objections, if any, to be delivered to DFC. No objections were received.
(m) The defendants required the plaintiff to file a certificate under Section 271(i) (ii) of Income Tax Act and Encumbrance Certificate from Registrar of Companies in respect of Raj Nagar property. The required documents were delivered to the DFC on 13th of June, 1997 for equitable mortgage. Defendant no.1 was further requested to release the amounts required for the said two machines lying at the Port and incurring demurrage charges. It was further informed that the plaintiff had suffered a loss of Rs. 10.00 lakhs by then due to delay in release of the amount.
(n) No amount was released. However, defendant no. 1 started depositing cheques to recover the lease rental amount which was CS no. 112/2017 M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 6 of 21 protested by the plaintiff vide letter dated 4 th of July, 1997. The defendants changed their mind and required the plaintiff to execute a registered mortgage of the said property instead of equitable mortgage. Thus, vide letter dated 4 th of July, 1997, defendants required the plaintiff to furnish:
(i) ITC form 34-A and Form 37-1
under the Income Tax Act of the property
to be mortgage: and
(ii) Stamp papers of Rs. 40,000/- to be
purchased in the name of the owner
of the property for agreement
related to the mortgage for lease
amount of Rs. 2,35,000/-
(o) The plaintiff had no option but to comply in view of the fact
that his machinery was lying at Madras Port. The plaintiff, therefore, applied for obtaining permission under ITC Form-34A and Form 37-I and deposited the same with the defendants. It also got purchased stamp paper of Rs. 40,000/- for the registered mortgage.
(p) Defendants changed their mind once again. They then required the plaintiff to execute a simple mortgage and required the plaintiff to submit stamp papers of Rs.1.00 lakh for the purpose i.e. 1 % of loan amount for loan of one crore only. The plaintiff was trapped because of heavy demurrage of its machinery at the Madras Port and because of the delay in installation.
(q) It complied and deposited the requisite stamp paper for simple mortgage with the defendants. Defendants No. 2 and 3 then embarked upon the course of getting the said Raj Niwas Property CS no. 112/2017 M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 7 of 21 revalued. The job was entrusted to one Shri Mathur who has since been blacklisted. Shri Mathur at the bidding of defendants No. 2 and 3 gave a report that the property did not value Rs. 85 lakhs (Rupees eighty five lakhs only) but at a value of mere Rs. 35 lakhs. The fact remains that the Raj Niwas property and Rajdhani Enclave property, both were earlier valued for Rs. 85 lakhs each. The valuation was accepted by the defendants. Both properties are similarly situated in Pitampura. Defendants Nos. 2 and 3 had clearly manipulated and procured false report of valuation of Rs. 35 lakhs in respect of Raj Nagar property merely to cause damage and harm to the plaintiff for its failing to concede the demand of illegal gratification.
(r) The plaintiff learns that defendants no. 2 and 3 prepared a note for consideration of the Board of defendant No. 1. They succeeded in getting the Board to approve their recommendations on 28.8.1997 which was informed of the decisions taken in its meetings vide letter dated 18 th of September, 1997, wherein various conditions were decided and the plaintiff had no options but he was made to sign on the dotted lines. It had no freedom to negotiate or take decisions. The plaintiff had to comply against its will. The plaintiff has suffered losses on account of unlawful, unjust and the malafide conduct of the defendants.
(s) It has suffered substantial losses at the hands of the defendants and by its officers who demanded unlawful gratification. The present suit is filed by the plaintiff for various losses and total thereof comes to Rs. 34,21,078/-.
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2. Written statement filed by the defendants wherein it is alleged that the plaintiff applied on 7th of March 1995 to defendant No.1 for a loan of Rs.127.35 lakhs. Defendant No.1 agreed to grant the said loan for purchase of machinery and equipment. As there was delay in the arrival of the engineers of the manufacturing company from Switzerland, the machinery could not be installed in November 1996. It is further alleged that the loan and credit facilities which were sanctioned and disbursed to the plaintiff, but the plaintiff failed to make repayment as per the schedule and on their request the repayment programme was re-scheduled. Its conduct was irregular. It was not repaying the installments in time nor it conformed to the norms of defendant No.1 and the policy as formulated. It is submitted that as the plaintiff did not make the payment of the installments as per the schedule and was defaulter and as such liable to pay interest as paid by the defendant. It is further alleged that the title and marketability of the property at Raj Nagar Enclave was assessed and Legal Adviser of defendant no. 1 opined that the title was not marketable and could not be accepted as the property offered was an HUF property and it could not be accepted as security. It is denied that the defendants made all sorts of obstacles and hurdles.
3. It is further submitted that the property could not be accepted for the creation of an equitable mortgage as it has no clear, marketable and mortgageable title. It is further alleged that no pressure was put on the plaintiff either by the defendants or any other official of defendant no.1. It is further alleged that valuation report given for the property situated at Raj Nagar was over valued and the valuation was inflated. When it came to the mind of the defendant Corporation, it became necessary to get it revalued and when the report came, that valuation was much less than the already disclosed. It is alleged that if any loss has been caused to the plaintiff, it is because of their own conduct, dealing and their fault for which the defendant CS no. 112/2017 M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 9 of 21 cannot be held responsible. It is further alleged that the plaintiff signed and executed the documents after having fully gone through its contents and the consequences flowing out of it. The plaintiff is trying to make somersault of his own doing which were mala fide and did not justify for the defendants to extend or increase the limit more than Rs.100/- lacs. The plaintiff is neither entitled to recover any loss from the defendant nor the plaintiffs have suffered any loss on account of wrong act of defendant no.1. Losses as claimed by the plaintiff are denied by the defendants.
4. Replication filed by the plaintiff wherein the averments made in the plaint are reiterated and affirmed.
5. My Learned Predecessor vide order dated 25.08.2003 framed the following issues :
(1) Whether the plaintiff has been signed, verified and filed by a duly authorised person? OPP (2) Whether the plaint is liable to be rejected as it does not disclose any cause of action against defendants no. 2 & 3? OPD (3) Whether the plaintiff is entitled to suit amount on the grounds pleaded in the plaint? OPP (4) Whether the plaintiff is entitled to interest? If so, on what rate, for what period and on what amount? OPP (5) Relief.
6. To prove its case plaintiff examined Sh. Shyam Lal Gard as PW1. He tendered his evidence by way of affidavit and relied upon documents :
(a) copy of resolution Ex. PW1/1
(b) copy of certificate of incorporation Ex. PW1/2
(c) memorandum Ex. PW1/3
(d) Articles of Association Ex. PW1/4
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(e) letter signed by the then general Manager of DFC Sh.
Vinay Sahni Ex. PW1/5 (already exhibited as P1)
(f) copy of application Ex. PW1/6
(g) DFC's sanction letter of loan of Rs.127.35 lacs to
plaintiff dated 25.04.1995 Ex. PW1/7 (already exhibited as P2)
(h) copy of statement of account showing payment of Rs.1,27,35,000/- Ex. PW1/8
(i) receipt dated 23.07.1996 of Rs. 1,12,000/- Ex. PW1/9
(j) letter containing conditions Ex. PW1/10
(k) copy of newspaper "Statesman" dated 17.03.1997 Ex.
PW1/11 (l) copy of receipt Ex. PW1/11A
(m) copy of document showing DFC's purchase and
delivery of one machine to CEHL Ex. PW1/12
(n) copy of hypothecation deed dated 31.03.1997 by CEHL
in favour of DHC Ex. PW13.
(o) Copy of lease agreement dated 31.03.1997 Ex. PW1/14
(p) Copy of document showing DFC purchase and delivery
of one machine to CEHL Ex. PW1/15
(q) Letter dated 04.07.1997 Ex. PW1/16
(r) Letter dated 18.09.1997 Ex. PW1/17
7. PW-1 was cross examined at length by Ld counsel for defendant.
8. In defence defendants no. 1, 2 and 3 examined Sh. D.S. Khatri as DW1. He tendered his evidence by way of affidavit. He relied upon documents :
(i) Reply dated 15.05.2005 Ex. PW1/D1
(ii) copy of loan ledger Ex. PW1/D2
(iii) copy of loan ledger / recovery statement Ex. PW1/D3
(iv) letter dated 15.03.1996 Ex. PW1/D4
(v) letter dated 03.04.1997 Ex. PW1/D5
(vi) copy of letter of Punjab National Bank to DFC Ex. PW1/D6
(vii) letter dated 04.04.1997 Ex. PW1/D7
(viii) certificate form Punjab National Bank dated 03.04.1997
Ex. PW1/D8
(ix) letter dated 27.03.1997 written by plaintiff to Income Tax
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authorities for issuance of permission u/s 281(1)(H) of Income Tax Act Ex. PW1/D9
(x) letter written by owner of property proposed to be given as collateral security to the Income Tax Authorities duly received by them Ex. PW1/D10
(xi) Certificate furnished by Geeta Shanker & Co, Chartered Accountants to plaintiffs Ex. PW1/D11
(xii) letter dated 09.05.1997 Ex. PW1/D12
(xiii) Letter dated 23.09.1997 Ex. PW1/D13
(xiv) letter dated 26.09.1997 E.x PW1/D14
(xv) minutes of meeting dated 22.10.1997 Ex. PW1/D15 (xvi) letter dated 08.08.1997 Ex. PW1/D16 (xvii) receipt dated 22.12.1997 Ex PW1/D17 (xvii) letter dated 23.05.1997 Ex. PW1/D-18 (xix) lease agreement dated 24.09.1997 Ex. PW1/D19 (xx) letter dated 22/23.12.1997 Ex. PW1/D20 (xxi) letter dated 18.09.1997 Ex. PW1/D21 (xxii) Simple Mortgage deed dated 25.09.1997 executed by Lal Bahadur Goel and Smt Nirmala Goel in favour of DFC Ex. PW1/D22 (xxiii) copy of minutes of meeting of Board of Directors Ex.
PW1/D23 (xxiv) valuation report is Ex. PG (xxv) undertaking dated 26.09.1997 Ex. D2 (xxvi) copy of loan ledger Ex. DW1/1 (xxvii) copy of minutes of meeting held on 27.06.1997 Ex. DW1/2 (xxviii) Resolution of DFC dated 26.07.1997 Ex. DW1/3 (xxix) letter dated 10.07.1997 Ex. DW1/4 (xxx) summary of copy of statement of account of said loan is Ex. PW1/8 (xxxi) provisional lease quotation dated 06/08.01.997 Ex.
PW1/108.1 DW1 was cross examined at length. Thereafter vide separate statement of Ld. counsel for the defendant, defendant's evidence was closed.
9. I have gone through the entire records of the case including pleadings of the parties, evidence led by the parties and documents proved by the parties during trial.
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10. My issue wise findings are:-
ISSUE NO. 11. Whether the plaintiff has been signed, verified and filed by a duly authorised person? OPP 10.1 Onus to prove issue no. 1 was upon the plaintiff. PW1 in Ex. PA proved resolution dated 01.07.1999 in his favour to file the present suit. He also brought original minutes book Ex.PW1/1 which were perused, seen and returned. Moreover, Sh. Shyam Lal Garg had filed the present suit who is Managing Director of the plaintiff. Ex. PW1/2 is the Memorandum and Article of Association wherein his name as Director is mentioned. During cross ex-
amination on 19.05.2009 a suggestion was given on behalf of the defendant that he is not authorized and competent to institute, sign or verify the present plaint and the suggestion was denied. Order 29 rule 1 of CPC provides :
1. Subscription and verification of pleading.- In suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation- by the secretary or by any director or 'other principal officer of the corporation who is able to dose to the facts other case.
11. During cross examination counsel for the defendant could not impeach the testimony of PW1 regarding his competency to file the present suit and thus in view of the observations made herein, the plaintiff has dis- charged his onus to prove this issue and accordingly, this issue is answered in favour of the plaintiff with the observation that the present suit is signed, verified and filed by a duly competent person.
ISSUES NO. 2 and 3.
2. Whether the plaint is liable to be rejected as it does not disclose any cause of action against defendants no. 2 & 3? OPD
3. Whether the plaintiff is entitled to suit amount on the grounds pleaded in the plaint? OPP CS no. 112/2017 M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 13 of 21
12. Since evidence and facts pertaining to both these issues are in common, therefore I am going to decide both these issues by common find- ings. Onus to prove issue no. 2 is upon the defendant whereas onus to prove issue no. 3 is upon the plaintiffs.
13. During cross examination PW1 admitted that M/s Allied Packag- ing Industries is a proprietorship concern in which Smt. Bimla Garg, his wife is sole proprietor. His wife is also Director of the plaintiff as well. PW1 further admitted that in the year 1991 M/s Allied Packaging Industries had taken a loan of Rs.3.61 lacs from defendant no. 1. PW1 further admitted that the said concern went into default and the case was administratively settled on 17.07.1992 @ Rs.20,000/- per month to be paid by the borrower in liquidation of loan amount. PW1 admitted that on 20.03.1990 a term loan of Rs.25.59 lacs and soft loan of Rs. 2,00,000/- was sanctioned to the plaintiff for setting up a new unit for doing embroidery work and the said loan was to be repaid in 32 quarterly installments commencing from 01.08.1991 to 01.05.1999. He has further admitted that the plaintiff did not make the repayment as per agreed re-payment schedule and committed default from 01.08.1991 itself. He further admitted that an administrative settlement was arrived in August, 1992 according to which the plaintiff was required to make a monthly install- ment of Rs.60,000/-. PW1 did not remember if his concern was in default from 01.08.1991 and as on 31.07.1992. The arrears were to the tune of Rs.2.66 lacs.
14. He has further admitted that after the administrative settlement also some payments were delayed. PW1 could not say if there were 13 de- faults in all saying from Rs.60,000/- to Rs.1.8 lacs. PW1 was confronted with loan ledger of the said account and the same is Ex. PW1/D3.
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15. PW1 further admitted that in March 1995 plaintiff applied and availed for loan of Rs.127.35 lacs. He has further admitted that this amount was repayable from 01.02.1996 to 01.11.2000 in 20 quarterly installments. The said loan was given under the extended under credit facility scheme. PW1 has further admitted that he has given letter dated 15.03.1996 which is Ex. PW1/D4 to defendant no. 1. He further admitted that amount of loan ledger of Rs.13.35 lacs as correct but was unable to state regarding the cor- rectness of the loan ledger for the said amount. He has admitted that he had written a letter dated 03.04.1997 to defendant no.1 asking for release of Rs. 23.50 lacs for the first machine.
16. During further cross examination PW1 admitted letters Ex. PW1/D5, Ex. PW1/D6 and Ex. PW1/D7. He has further admitted that he had submitted the annexures alongwith letter dated 04.04.1997 which are Ex. PW1/D8, PW1/D9, PW1/D10 and PW1/D11. PW1 further admitted letter dated 09.05.1997 as Ex. PW1/D12 and endorsements behind the said letter at points D and E in his handwriting. He also admitted his signatures at point A, B and C in the said letter. He has further admitted that Ex. PW1/D21 was received by him. He has further admitted that Ex. PW1/D22 was executed on behalf of the plaintiff. He has further admitted minutes of meeting dated 16.12.1996 Ex. PW1/D23 (OSR). He admitted that undertaking dated 26.09.1997 which is Ex D1 as correct. PW1 admitted that vide Ex. PW1/D17 excess security deposit was refunded to him by the defendants. He has fur- ther admitted that Letter of Credit (LC) was opened by the plaintiff from their bank for the purchase of first machine and defendant no.1 released the said amount to their bank. He has further admitted that no letter to defendant no.1 in this regard is on record.
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17. PW1 denied the suggestion that he has concealed fact about the property bearing no. 187 Rajdhani Enclave being HUF from defendant no.
1. He had further denied the suggestion that title verification and valuation re - port of Raj Nagar property was found to be unsatisfactory. He further denied the suggestion that no lawful demand was ever made from the plaintiff. He further denied the suggestion that first valuer in respect of the Raj Nagar property was black listed by the defendants. PW1 further deposed that he had not given any complaint in writing against defendants no. 2 and 3 to higher officials of defendant no.1 or to anti-corruption branch.
18. During cross examination of DW1 a suggestion was given by the plaintiff and DW1 admitted that Board of Defendant Corporation had ap- proved of grant of lease finance facility against the property no. 187, Rajdhani Enclave, Delhi as collateral security. DW1 further admitted that defendants had also furnished a checklist to the plaintiff and the income tax clearance was not a part of checklist but he has clarified that it was mentioned that party will comply with all legal documents which includes Section 81 of the Income Tax Act. DW1 further admitted that on 14.03.1997 a mortgage was created by deposit of title deeds of the said property to defendant no. 1 but he has fur- ther clarified that mortgage was created subject to condition that the party would submit income tax clearance later on before release of lease finance amount. DW1 further admitted that subsequently the defendants found fault with the collateral security of the said premises but he has further clarified that subsequent to the submission of income tax clearance by the plaintiff out of which defendants found the defect in the title. He has further explained that the defect in title was that the person who had applied for the income tax clearance had stated that it was his HUF property and therefore legal depart- ment raised objection. Defendant no. 1 has a policy not to accept HUF prop- erty as collateral security.
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19. DW1 further deposed that defendant no. 1 never contemplated to reduce the lease finance amount proportionate to the share of plaintiff in the HUF property. He explained that HUF was of Sh. Amarnath and not of plaintiff. DW1 further submitted that as per the title document of the sale deed Sh. Amarnath was the sole and absolute owner of the said property. DW1 denied the suggestion that the consent of the plaintiff to furnish another security was obtained under coercion as defendants were in dominating posi- tion over the plaintiff.
20. Here, this court observes that plaintiff has given a suggestion contrary to the case filed by them. Nowhere, it is the case of the plaintiffs that defendants were in dominating position over the plaintiff. Rather the case of the plaintiff is that the defendants with a view for gratification committed acts against the plaintiff.
21. DW1 further admitted that subsequently, plaintiff offered alter- nate security of 76, Raj Nagar, Pitam Pura, Delhi. DW1 further admitted that from office of Sub Registrar, defendants verified title of Raj Nagar property and found the same valid. DW1 further admitted that valuer on the panel found the value of Raj Nagar property to be a sufficient security. DW1 further admitted that original documents mentioned in Ex. DW1/P4 were deposited with defendant no. 1 on 19.05.1997. DW1 could not admit or deny the sug - gestion that defendants no. 2 and 3 continued to put pressure on plaintiff for illegal gratification as the question was not concerning him, so he could not respond.
22. DW1 further admitted that pertaining to Raj Nagar property in- come tax clearance certificate and encumbrance certificate duly registered by the ROC also was filed with the defendants by the plaintiff. DW1 clarified that CS no. 112/2017 M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 17 of 21 the certificate issued by ROC was of plaintiff company not of Raj Nagar prop- erty. DW1 further admitted that defendants then required for simple mortgage to property no. 76, Raj Nagar, Delhi. The decision was taken in board meet - ing held taken on 26.07.1997 and the said resolution is Ex. DW1/3. DW1 fur- ther admitted that all the original documents pertaining to property bearing no. 76 Raj Nagar were deposited with the defendants and the formalities for the mortgage were completed. DW1 further deposed that to his knowledge there is no other case in defendant no 1 before the case of plaintiff where defen - dants had required registered mortgage. He has clarified that defendants are taking registered mortgages thereafter.
23. Upon specific question DW1 deposed that defendants had virtu- ally stopped lease financing. He denied the suggestion that plaintiff was lone case arbitrarily chosen to require a registered mortgage. A specific question put to DW1 :
"Q. Is it correct that after a registered mortgage was cre- ated you got the Raj Nagar property re-evaluated? (the witness is allowed to look into the record to refresh his memory) A. The mortgage was registered on 24.09.1997 and the property was got re-evaluated on 07.07.1997"
24. A suggestion is denied by DW1 that when the loan was reduced, defendant no. 1 did not return the proportionate amount from the security de - posit of Rs.35.25 lacs. DW1 further deposed that an amount of Rs.17,18,771.20/- was refunded to the plaintiff on 29.12.1997 vide a crossed cheque. A suggestion was given that plaintiff is liable to pay the damages claimed in the suit and it was denied.
25. PW1 in para 22 of Ex.PA deposed that Rajdhani Enclave prop- erty was not HUF property as its title deed makes no mention of being a HUF CS no. 112/2017 M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 18 of 21 property. During cross examination PW1 admitted that he has submitted the annexures alongwith letter dated 04.04.1997 alongwith letter of Punjab Na- tional Bank to defendant no.1 and Ex. PW1/D10 was annexure to that letter. Ex. PW1/D10 is perused. This is copy of letter to Income Tax Officer wherein it is clearly mentioned that property no. 187 situated in lay out of Rajdhani Co- op Group House Building Society Ltd, Delhi - 110 034 was owned by his HUF. This certificate is enclosed with letter dated 27.03.1997 and the said letter is Ex. PW1/D9. Though exhibition of this document is objected during cross examination on the ground that said document was not filed on the court record and could only be shown to the witness for confronting or for re- freshing his memory and the said document cannot be exhibited at this stage. Here this court observes that order 7 rule 14 (4) of CPC provides :
14. Documents relied on in Plaint.- Production of document on which plaintiff sues or relies ......
......
......
(4) Nothing in this rule shall apply to document produced for the cross examination of the plaintiff's witnesses, or, handed over to a witness merely to refresh his memory.
25.1 Since the said document has been produced in the cross-exami- nation of the plaintiff's witness therefore the objection cannot be sustained.
26. On the record there is another document Ex. PW1/D10 which is lease quotation (provisional) wherein it is informed that property no. 187 Rajd- hani Enclave, Delhi owned by Sh. Amarnath Gupta. During cross examina- tion on 19.05.2009 a suggestion was given that property no. 187 Rajdhani Enclave was not accepted for mortgage by the defendant as it was a HUF property. The said suggestion is denied. The own document of the plaintiff CS no. 112/2017 M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 19 of 21 which was submitted before Income Tax prove that the plaintiff has deposed otherwise before the court. Ex. PW1/D9 and Ex. PW1/D10 have not been de- nied by PW1 but rather those were admitted during cross-examination.
27. In respect of Raj Nagar property, it is the case of the plaintiff that the defendant changed his mind and required the plaintiff to execute regis- tered mortgage instead of equitable mortgage. This demand of the defendant was unfair, unreasonable and was not made in good faith. During cross ex- amination PW1 has denied the suggestion that the second valuation report in respect of the Raj Nagar property was based on the recent sale of DDA prop- erty in vicinity, was the correct valuation of the Raj Nagar property. However, PW1 himself clarified that the recent sale of DDA property was considered while valuing the Raj Nagar property only in his case which is the first and last such case. Here this court is of the considered view that defendant no.1 is a financial institution which has to take care of public money. To ascertain the valuation, if defendant no.1 has carried out a second valuation and that valua- tion is based upon a DDA flat in vicinity of the property for which valuation was carried out, in my considered opinion, defendant has not committed any illegality or any arbitrary act. Rather by way of abundant caution, defendant no.1 should have carried out such valuation especially when for earlier prop- erty (Rajdhani Enclave property), the title was wrongly informed by plaintiffs to defendant no.1. Moreover, defendant no.1 is not obliged to believe upon any valuation report without applying its mind and if officials of defendant no.1 have applied the mind and called second valuation report then this court finds nothing wrong in the said valuation.
28. Therefore, this court is of the considered view that defendant has not carried out any illegal and arbitrary act against the plaintiff and there- fore no wrong or illegal action has been committed by the defendant. Then CS no. 112/2017 M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 20 of 21 the plaintiff is not entitled for any damages from the defendant. Rather it is the plaintiff who in his affidavit tendered in evidence makes statement on oath and during cross examination which is against the documents submitted by him before the income tax authorities. Therefore, both issues no. 2 and 3 are answered against the plaintiff.
ISSUE NO. 4.
4. Whether the plaintiff is entitled to interest? If so, on what rate, for what period and on what amount? OPP
29. In view of findings given in issues no. 2 and 3 nothing survives in this issue. Hence, issue no. 4 is also answered agaisnt the plaintiff.
RELIEF
30. In view of the discussions and observations made hereinabove, the suit of the plaintiff is dismissed. No order as to the cost. Decree sheet be prepared accordingly.
File be consigned to record room.
Pronounced in open Court on 23.08.2017 (Jitendra Kr. Mishra) Additional District Judge-01, NDD/PHC/New Delhi/ 23.08.2017 kp CS no. 112/2017 M/s Computer Embroidery House (P) Ltd Vs. Delhi Financial Corporation & ors Page no. 21 of 21