Bangalore District Court
Union Bank Of India vs M/S Kirthi Enterprises on 20 July, 2021
1 Com.O.S.No.7847/2019
IN THE COURT OF THE LXXXVIII ADDL. CITY CIVIL &
SESSIONS JUDGE (EXCLUSIVE COMMERCIAL COURT):
BENGALURU CITY. (CCH-89)
Present: Sri. P.J. SOMASHEKARA, B.A.,LL.M,
LXXXVIII Addl. City Civil & Sessions Judge
Bengaluru City.
Dated this the 20th day of July 2021
Com.O.S.No.7847/2019
Plaintiff: Union Bank of India, HSR Layout,
7th Sector Branch, No.11-36, 17th Cross,
7th Sector, HSR Layout, Bengaluru - 102,
Rep. By its Branch Manager,
Sri. Avulakshmunaidu, Aged 32 years.
(By Sri. T.P.M., Advocate)
-vs-
Defendants: 1. M/s Kirthi Enterprises,
A partnership firm having place of
business at No.2630, 27th Main,
Sector-1, HSR Layout, Bengaluru - 102,
Rep. By its partners Mr. M. Neelakanta &
Mrs. M. Lakshmi Devi.
2. Mr. M. Neelakanta, S/o Madhaneebasanna,
Aged about 58 years,
Parnter, M/s Kirthi Enterprises,
No.2630, 27 th Main, Sector-1, HSR Layout,
Bengaluru - 560 102.
Also R/at: # 60/B, Sainilaya, 16 th Cross,
1st Block, Viswapriya Layout,
Begur Hobli, Bengaluru - 68.
3. Mrs. M. Lakshmi Devi, W/o M. Neelakanta,
Aged about years, Partner, M/s Kirthi
Enterprises, No.2630,27 th Main, Sector-1,
HSR Layout, Bengaluru - 560 102.
Also R/at: # 60/B, Sainilaya, 16 th Cross,
1st Block, Viswapriya Layout,
2 Com.O.S.No.7847/2019
Begur Hobli, Bengaluru - 68.
(Exparte)
Nature of the suit Money suit
Date of institution of the 02.11.2019
suit
Date of commencement of 19.07.2021
recording of the evidence
Date on which the 20.07.2021
judgment was pronounced
Total duration Year/s Month/s Day/s
01 08 18
JUDGMENT
This is a suit filed by the plaintiff bank against the defendants for recovery of Rs.10,45,416/- in aggregate i.e. Rs.5,93,391/- under the term loan and Rs.4,51,025/- under the open cash credit loan with current and future interest @ 10.75% p.a. plus penal interest at 2% p.a. viz., at 12.75% p.a. compounded quarterly from the date of suit till its realization.
2. Brief facts of the plaint are as under :
The plaintiff bank in its plaint has alleged that the defendant No.1 is the partnership concern represented by its partners, who are defendants No.2 and 3. The defendant No.1 through its partners, approached for financial assistance by way of term loan of Rs.5,00,000/- under Pradhan Mantri Mudra Yojana 081 Tarun scheme to establish Ice Cream Parlour business. Considering the application filed by the defendants, term loan and open cash 3 Com.O.S.No.7847/2019 credit loan has been sanctioned to the defendants i.e. term loan of Rs.5,00,000/- at 11.75% p.a. in 60 EMI and open cash credit limit of Rs.5,00,000/- at 11.75% p.a. for one year and renewal on annual basis, for which the defendants have executed composite loan agreement dated 07.4.2016 agreeing to various terms and conditions including to repay the term loan of Rs.5,00,000/- along with applicable interest charges etc. in 60 EMI and undertaking to do satisfactory operations in OCC account and submitted necessary documents for renewal of limit at such intervals as decided to repay the entire dues on demand along with applicable interest and charges etc. The defendants were also executed on demand promissory note on 07.04.2016 for Rs.5,00,000/- undertaking to repay the OCC dues on demand along with applicable interest, but in spite of repeated request and demand, the defendants failed to follow up the repayment schedule agreed upon and committed default.
3. The plaintiff bank in its plaint has further alleged that the defendants were failed to repay the loan amount, thereby legal notice dated 01.03.2018 has been issued to calling upon the defendants to pay the term loan and the OCC facilities due within 15 days from the date of the notice. The defendants are liable to pay a sum of Rs.5,93,391/- as on 25.10.2019 under the term loan and Rs.4,51,025/- under OCCGN. The defendants in total are 4 Com.O.S.No.7847/2019 liable to pay an amount of Rs.10,45,416/- and they are also liable to pay revised rate of interest under the loan accounts from time to time and the latest rate of interest is 10.75% p.a. plus interest 2% p.a. The defendants have utilized the loan for the purpose which granted, though the defendants were agreed to repay the loan amount with interest in 60 EMI, but they did not come forward to repay the loan amount with interest. The cause of action for the suit which arose on 07.04.2016 when the defendants were availed loan and executed composite agreement on demand promissory note and on various dates on which the defendants made repayment in both the loan accounts and last repayment was made on 15.11.2016 in both the loan accounts within the jurisdiction of this court and prays for decree the suit.
4. In response of the suit summons the defendants did not appear nor filed their written statement as they were placed exparte.
5. The plaintiff bank in order to prove its plaint averments has examined its Branch Manager as P.W.1 and got marked the documents as Ex.P.1 to P.10. The plaintiff bank has not examined any witnesses in its favour.
6. Heard the arguments on the plaintiff side.
7. Now the points that arise for court consideration are: 5 Com.O.S.No.7847/2019
1. Whether the plaintiff bank is entitled for the relief as prayed for?
2. What order or decree?
8. My answer to the above points are as under:
Point No.1: In the Affirmative;
Point No.2: As per final order, for the following;
REASONS
9. POINT NO.1: The plaintiff bank has approached the court on the ground that the defendant No.1 is a partnership concern represented by its partners who are defendants No.2 and 3 were approached for financial assistance by way of term loan and open cash credit loan of Rs.5,00,000/- each under Pradhan Mantri Mudra Yojana, accordingly loan has been sanctioned and the defendants were utilized the said amount, but they did not keep up their promise as agreed, in spite of repeated request and demand, thereby the plaintiff bank has filed the instant suit against the defendants.
10. The plaintiff bank in order to prove the plaint averments has examined its Branch Manager as P.W.1, who filed his affidavit as his chief-examination by reiterating the contents of the plaint stating that the defendant No.1 is the partnership concern and the defendants No.2 and 3 who are its partners and the defendants were approached the bank for financial assistance of Rs.5,00,000/- under term loan and Rs.5,00,000/- under open cash 6 Com.O.S.No.7847/2019 credit under Pradhan Mantri Mudra Yojana, accordingly loan has been sanctioned to the defendants and the defendants were agreed to repay the loan amount with interest in 60 EMI and agreed to pay the interest, but in spite of repeated request and demand, they did not keep up their promise as agreed. Now the defendants are due a sum of Rs.10,45,416/-
11. The plaintiff bank has filed the instant suit against the defendants for recovery of loan of Rs.10,45,416/- on the ground the defendants were availed loan amount of Rs.5,00,000/- each for the purpose of Ice Cream business. Now the question is whether the facts which alleged in the plaint comes within the purview of commercial dispute and in the specified value. Thus this court drawn its attention on Sec.2(i)(c) of Commercial Courts Act, 2015 which reads like this:
(c) "commercial dispute" means a dispute arising out of-
(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and 7 Com.O.S.No.7847/2019 financing of the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or commerce;
(viii) franchising agreements;
(ix) distribution and licensing agreements; (x) management and consultancy agreements; (xi) joint venture agreements; (xii) shareholders agreements; (xiii) subscription and investment
agreements pertaining to the services industry including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage;
(xv) partnership agreements;
(xvi) technology development agreements;
(xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits; (xviii) agreements for sale of goods or provision of services;
(xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;8 Com.O.S.No.7847/2019
(xx) insurance and re-insurance; (xxi) contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.
The provision under Sec.2(c)(i) which referred above is very much clear the first category which referred above, includes disputes of ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents including enforcement and interpretation of such documents. The definition naturally will cover the dispute of all kinds of ordinary transactions of merchants, bankers, financiers and traders. The banks are established under Banking Regulation Act for the purpose of business and commerce, naturally all transaction of bank about giving of loans, recovery thereof, deposits in banks etc., should fall within the category of commercial dispute. If the specified value there of is more than Rs.3,00,000/-. So the facts which pleaded in the plaint comes under the commercial dispute.
12. Now the question is whether the dispute which stated supra comes under the jurisdiction of commercial court. Thus, this court drawn its attention on Sec.6 of Commercial Courts Act, 2015 which reads like this:
Section 6: Jurisdiction of Commercial Court.9 Com.O.S.No.7847/2019
6. The Commercial Court shall have jurisdiction to try all suits and applications relating to a commercial dispute of a Specified Value arising out of the entire territory of the State over which it has been vested territorial jurisdiction.
Explanation.-For the purposes of this section, a commercial dispute shall be considered to arise out of the entire territory of the State over which a Commercial Court has been vested jurisdiction, if the suit or application relating to such commercial dispute has been instituted as per the provisions of sections 16 to 20 of the Code of Civil Procedure, 1908 (5 of 1908).
The above provision is very much clear that the commercial court shall have the jurisdiction to try all suits and applications relating to commercial dispute.
13. Now the question is whether this court having the pecuniary jurisdiction to adjudicate the matter which is in dispute. Thus, this court drawn its attention on Sec.3 of Commercial Courts Act, 2015 which reads like this:
Section 3: Constitution of Commercial Courts.
3. (1) The State Government, may after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts 10 Com.O.S.No.7847/2019 under this Act:
2[Provided that with respect to the High Courts having ordinary original civil jurisdiction, the State Government may, after consultation with the concerned High Court, by notification, constitute Commercial Courts at the District Judge level:
Provided further that with respect to a territory over which the High Courts have ordinary original civil jurisdiction, the State Government may, by notification, specify such pecuniary value which shall not be less than three lakh rupees and not more than the pecuniary jurisdiction exercisable by the District Courts, as it may consider necessary.] 3[(1A) Notwithstanding anything contained in this Act, the State Government may, after consultation with the concerned High Court, by notification, specify such pecuniary value which shall not be less than three lakh rupees or such higher value, for whole or part of the State, as it may consider necessary.] The above provision is very much clear that by virtue of the notification specified the pecuniary value of this court which shall not be less than Rs.3,00,000/- Admittedly, the plaintiff in the plaint itself has stated that the defendants are due a sum of 11 Com.O.S.No.7847/2019 Rs.10,45,416/- with interest and the plaintiff bank has filed the instant suit against the defendants on 02.11.2019 i.e. after the amendment of Commercial Courts Act, 2018. Prior to the amendment, the pecuniary jurisdiction of the commercial court is of Rs.1 Crore and above, but by virtue of the amendment of Commercial Courts Act, 2018 the pecuniary jurisdiction of the commercial court shall not be less than Rs.3,00,000/- and above.
So this court having the pecuniary jurisdiction to adjudicate the matter which is in dispute by virtue of the provision which stated supra.
14. Now let me know the materials on record, as the plaintiff bank in support of oral evidence has produced documents which marked as Ex.P.1 to Ex.P.10. Ex.P.1 is the loan application which filed by the defendants clearly reflects the defendants were approached the plaintiff bank and requesting to grant Rs.5,00,000/- under open cash credit and Rs.5,00,000/- under term loan under Pradhan Mantri Mudra Yojana. Ex.P.2 is the letter of sanction reflects the loan has been granted to the defendants under Pradhan Mantri Mudra Yojana. Ex.P.3 is the interview form reflects the defendants were applied the loan for Rs.10,00,000/- for the purpose of Ice Cream business by agreeing to repay the said amount in 60 EMI. Ex.P.4 is the composite agreement which executed by the defendants in favour of the plaintiff bank. Ex.P.5 12 Com.O.S.No.7847/2019 is the on demand promissory note which executed by the defendants to show that the defendants have executed on demand promissory note in favour of the plaintiff bank. Ex.P.6 is the recall notice reflects the plaintiff bank got issued recall notice calling upon the defendants for repayment of the loan amount which due. Ex.P.7 and P.8 are the unserved envelope cover reflects the plaintiff bank got issued legal notice to the defendants to calling upon them for payment of the loan amount with interest. Ex.P.7(a) and P.8(a) are the copies of the notice. Ex.P.9 is the statement of accounts with certificate reflects the defendants were availed loan of Rs.10,00,000/- and utilized the same for the purpose which they availed and they did not repaid the loan amount as agreed and they were due a sum of Rs.10,45,416/- as on the date of the suit. Ex.P.10 is the partnership deed reflects the defendant No.2 and 3 being the partners of the defendant No.1 which is partnership concern and they were running Ice Cream Parlour in the name and style of M/s Keerthi Enterprises. So the documents which marked as Ex.P.1 to P.10 are coupled with the oral evidence of P.W.1.
15. If at all the defendants No.2 and 3 being the partners of the defendant No.1 were not approached the plaintiff bank nor availed the loan of Rs.10,00,000/- under term loan and open cash credit nor executed the documents, in response of the suit 13 Com.O.S.No.7847/2019 summons, they would have appeared and resisted the claim of the plaintiff bank, but the reasons best known to the defendants, in spite of service of summons and the notice, did not come forward nor resisted the claim of the plaintiff bank. On the other hand the plaintiff bank has proved its case through oral and documentary evidence and the materials on record are remained unchallenged. Hence, I am of the opinion that the point No.1 is answered in the Affirmative.
16. POINT NO.2: In view of my answer to point No.1 as stated above, I proceed to pass the following;
ORDER The suit of the plaintiff bank is decreed with cost. The defendants are liable to pay the decretal amount of Rs.10,45,416/- in aggregate, i.e. Rs.5,93,391/- with current and future interest @ 10.75% p.a. plus penal interest at 2% p.a. viz., at 12.75% p.a. compounded quarterly under the term loan and Rs.4,51,025/- under the open cash credit loan with current and future interest @ 10.75% p.a. plus penal interest at 2% p.a. viz., at 12.75% p.a. compounded quarterly from the date of suit till its realization.
Draw decree accordingly.
(Dictated to the Stenographer, transcript thereof corrected by me and then pronounced in the open court on this the 20th day of July, 2021) (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City 14 Com.O.S.No.7847/2019 .
List of witnesses examined on behalf of plaintiff:
P.W.1 Sri. Avulakshmunaidu List of witnesses examined on behalf of defendant:
Nil List of documents exhibited on behalf of plaintiff:
Ex.P.1 Loan application
Ex.P.2 Letter of sanction dt:04.04.2016
Ex.P.3 Interview form - Pradhana Mantri Mudhra
Yojana
Ex.P.4 Composite Agreement dt:07.04.2016
Ex.P.5 On demand promissory note
Ex.P.6 Recall notice dt:01.03.2018
Ex.P.7 Unserved Postal cover (opened in the open
court)
Ex.P.7(a) Notice copy
Ex.P.8 Unserved Postal cover (opened in the open
court)
Ex.P.8(a) Notice copy
Ex.P.9 Statement of accounts with certificate
Ex.P.10 Partnership deed
List of documents exhibited on behalf of defendant:
Nil (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City