Delhi District Court
State Bank Of Inida vs Rakesh on 14 November, 2025
IN THE COURT OF SH.AJAY GUPTA
DISTRICT JUDGE (COMMERCIAL COURT)-05
TIS HAZARI COURTS, WEST: DELHI
CNR No. DLWT01-004858-2025
CS (Comm)/ 424/2025
State Bank of India
(Through its Authorized Officer)
Branch Office at-
West Avenue Punjabi Bagh, New Delhi
2/51, West Avenue Punjabi Bagh
New Delhi, Delhi -110026
Local Head Office At:-
11, Sansad Marg, New Delhi-110001
....PLAINTIFF
Versus
Sh.Rakesh
s/o Sh. Ratan
Saidbhar, Baghpat
Uttar Pradesh -250606
Also at:
Sh. Rakesh
Employment No. 51605844
NDMC (DEMS) Office
Karol Bagh, Ward No. 101
New Delhi, Delhi-110005
....DEFENDANT
CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 1 of 17
Date of Institution of Case : 17.05.2025
Date of Arguments : 28.10.2025
Date of Pronouncement of Judgment : 14.11.2025
JUDGMENT
1. Plaintiff has filed the present suit for recovery of Rs.10,66,807/- (Rs.Ten Lac Sixty Six Thousand Eight Hundred Seven Only) alongwith pendentelite and future interest @ 12.50% p.a. on the basis of following averments:-
i) That defendant is employed with MCD and plaintiff bank had granted him the 'Xpress Credit Loan' of Rs.10.00 Lac vide sanction letter dated 19.06.2023. Defendant had signed and executed the requisite loan documents on 19.06.2023. The said loan amount was disbursed to the defendant through loan account bearing no. 42013473448. The aforesaid loan amount was to be repaid by the defendant alongwith 12.5% p.a. fixed rate of interest in 72 EMIs of Rs.19,812/- each. The first installment was payable on 01.07.2023 and in case of default, defendant was to pay penal interest @ 2% p.m over and above the aforesaid agreed rate of interest.
CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 2 of 17
ii) That the defendant executed an irrevocable standing instruction in favour of the plaintiff bank and thereby undertook to deposit his salary every month in his saving bank account (in the plaintiff's bank) bearing no. 40392271703 till liquidation of the loan amount and also authorized to deduct the amount of EMI of his loan from his salary account beginning from the month of July 2023.
iii) That after availing the loan facility, defendant failed to adhere to the financial discipline and committed defaults in making payment of monthly installments and thus, the account of the defendant became non performing asset on 18.06.2024.
iv) That plaintiff got served a legal notice dated 29.09.2024 upon the defendant thereby calling upon him to pay the outstanding dues but despite issuance of the said notice, defendant neither cared to reply the same nor has made any effort to make the payment of outstanding dues to the plaintiff.
v) That plaintiff bank filed the mandatory pre- litigation mediation application as per section 12-A of Commercial Court Act and notice was issued to the defendant but despite service of the said notice, CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 3 of 17 defendant did not appear and thereafter, a non- starter report was issued by DLSA on 28.01.2025.
vi) That an amount of Rs.10,66,807/-
(Rs.9,25,861/- principal + Rs.1,05,052/- accrued interest from 18.06.2024 to 03.05.2025 + Rs.25,894/- accrued arrears/penalty) became due from the defendant as on 03.05.2025. Thus, on the basis of aforesaid averments, plaintiff has prayed for decree of Rs.10,66,807/- alongwith pendentelite and future interest @ 12.50% p.a.
2. In his written statement, defendant neither denied the factum of taking of aforesaid loan nor that the said loan was to be repaid in installments as specified above, however, according to defendant, he has paid the loan installments through his bank account till 17.09.2024 and thereafter, he could not pay further installments due to his illness. It is stated that the loan account was declared NPA on 18.06.2024 though he was making the repayment of the loan amount. Defendant contended that his loan account has been declared NPA which is against the RBI norms as prior to declaring the same NPA and subsequent to the same, he had been making payment of the loan amount to the plaintiff bank. It is further stated that the as per RBI guidelines, the account cannot be declared NPA CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 4 of 17 before 90 days period of the default but the loan account of defendant was declared as NPA by the plaintiff against RBI rules. It is further stated that the plaintiff bank also did not serve any reminder notice upon the defendant prior to declaring the loan account of the defendant as NPA. It is further stated that the defendant did not receive any legal demand notice from the plaintiff bank before filing of the present suit and even the notice of pre-institution mediation issued by DLSA was not properly served and thus, the non-starter report is not as per law. It is further stated that the plaintiff bank has filed the suit without proper calculation of interest and outstanding amount. In parawise reply, it is stated that the defendant was not properly served with the notice for pre-litigation mediation and it has been denied that the loan was taken by him on the interest of 12.50% p.a. and it was fixed @ 8.60% p.a. It has also been denied that defendant executed irrevocable standing instructions in favour of the plaintiff bank. Defendant has denied that he failed to adhere to the financial discipline and committed defaults in making payments of monthly installments or that he received any legal demand notice from the plaintiff. Thus, it has been prayed that suit of the plaintiff may be dismissed.
3. From the pleadings of the parties, the following issues were framed on 05.08.2025:-
CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 5 of 17
(i) Whether the plaintiff bank did not serve any reminder notice to the defendant before declaring the subject loan NPA? OPD
(ii) Whether the defendant was served with the pre-
institution mediation notice? OPD
(iii) Whether the defendant had taken the loan @8.60% p.a.? OPD
(iv) Whether the plaintiff is entitled to the recovery for an amount of Rs.10,66,807/- OPP
(v) Whether the plaintiff is entitled for the interest on the recovery sought, if so, at what rate and for what period? OPP
(vi) Relief.
4. In support of their claim plaintiff bank has examined their AR/Branch Manager Mr.Shailesh Pant as PW1 who deposed in his affidavit Ex.PW1/A on the similar lines of the claim raised by the plaintiff bank. PW1 has brought on record the following documents:-
(i) Copy of Gazette notification alongwith copy of office ID of AR as Ex.PW1/1
(ii) Copy of office ID card of previous AR as Mark A.
(iii) Original Loan application and ID proofs/KYC of CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 6 of 17 defendant as Ex.PW1/2 (Colly.).
(iv) Original sanction/arrangement letter dated 19.06.2023 as Ex.PW1/3.
(v) Original personal loan agreement as Ex.PW1/4.
(vi) Original irrevocable standing instruction as Ex.PW1/5.
(vii) Office copy of legal notice alongwith original postal receipts as Ex.PW1/6 (Colly.).
(viii) NSR as Ex.PW1/7.
(ix) Certified copy of statement of account alongwith closure report as Ex.PW1/8 (Colly.).
(x) Certificate u/s 2-A of Banker's Books Evidence Act r/w sec.63 of BSA as Ex.PW1/9.
DEFENDANT'S EVIDENCE
5. In defence, defendant examined himself as DW1. In his affidavit Ex.DW1/A, DW1 has reiterated the contents of his written statement.
6. I have heard the arguments from Ld.Counsel for plaintiff. Despite opportunities, no one appeared on behalf of defendant to address the final arguments. My issues wise finding is as under:-
CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 7 of 17 ISSUE NO.1 to 4
(i) Whether the plaintiff bank did not serve any reminder notice to the defendant before declaring the subject loan NPA? OPD
(ii) Whether the defendant was served with the pre-
institution mediation notice? OPD
(iii) Whether the defendant had taken the loan @8.60% p.a.? OPD
(iv) Whether the plaintiff is entitled to the recovery for an amount of Rs.10,66,807/- OPP
7. The Issue no.4 is the main issue which relates to the recovery of the outstanding amount and the onus to prove this issue was on the plaintiff bank. In the present suit, plaintiff bank has claimed that they had granted a personal loan of Rs.10.00 Lac to the defendant who is an MCD employee and defendant failed to repay the installments as per agreed schedule, thus, they declared the subject loan account as NPA on 18.06.2024 and therefore, the plaintiff bank has sought recovery of the outstanding loan amount alongwith interest.
CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 8 of 17 7.1 In order to prove their entitlement to the amount claimed, plaintiff has examined their branch manager/AR as PW1 who has brought on record all the relevant documents as referred above. PW1 has brought on record the loan application as Ex.PW1/2 (Colly.) and sanction/arrangement letter as Ex.PW1/3. PW1 has also brought on record the loan agreement as Ex.PW1/4. PW1 has also deposed that at the time of availing the subject loan, defendant had issued an irrevocable standing instruction (Ex.PW1/5) and he had undertaken that he will keep his salary account with the plaintiff bank and the amount of the outstanding installments can be deducted from his salary account. Defendant has admitted in his WS as well as affidavit of admission denial of documents that he had taken the subject loan. He has also admitted that the said loan amount was to be repaid in 72 EMIs of Rs.19,812/- each. Defendant has also admitted that he had executed the above referred documents while obtaining the subject loan from the plaintiff bank.
7.2 Defendant has opposed the claim of the plaintiff bank mainly on two issues. Firstly, the defendant has claimed that the subject loan was granted @ 8.60% p.a. interest and secondly, according to him, the plaintiff bank has wrongly declared his loan account NPA despite the fact that he had made the payment prior to as well as subsequent to the declaring of his loan account NPA. Both these aspects will be CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 9 of 17 discussed a little later. In view of these facts and circumstances, it is clear that plaintiff bank has established through the evidence of PW1 as well as through he admissions of defendant that they had granted the subject loan to the defendant vide aforesaid documents.
7.3 Defendant has firstly opposed the claim of the plaintiff on the issue of difference in the rate of interest claimed by the plaintiff. Though, the defendant has claimed that he was granted the subject loan at the rate of 8.60% p.a. interest, however, there is no substance in this defence as it is clear from clause 6 of the loan agreement Ex.PW1/4 (which has been admittedly duly signed by the defendant while obtaining the subject loan) that it has been specifically mentioned that the subject loan was granted to the defendant @ 12.50% p.a. It is also clear that in case of default of payment of installments, defendant had also agreed to pay the penal interest @ 2% p.m. Though, the defendant has disputed the aforesaid rate of interest, however, it is clear from the admissions of defendant that defendant has raised this defence for the sake of defence and there is no substance in it. It is clear from the loan agreement that defendant had agreed to repay the loan amount through 72 EMIs of Rs.19,812/- each and it is admitted position of fact that each monthly EMI was calculated on the basis of aforesaid rate of interest i.e 12.50% p.a. CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 10 of 17 7.4 Besides, defendant has also claimed that despite the fact that he was repaying the loan amount to the plaintiff bank, his loan account was declared NPA on 18.06.2024. PW1 has brought on record the statement of loan account of defendant as Ex.PW1/8 and it is clear from the affidavit of admission denial of documents that defendant has admitted the correctness of statement of his loan account. It is clear from the loan agreement that the first installment was to be paid w.e.f July 2023 and it is further clear that after December 2023, the defendant committed consecutive defaults for payment of monthly installments and after 16.12.2023, the defendant paid some amount on 09.04.2024 and after the aforesaid date, defendant again paid a sum of Rs.20,000/- on 22.05.2024 but still he neither paid the previous outstanding amount nor paid the penal interest on the delayed installments. Similar was the position till 17.09.2024, the date when defendant lastly paid the installment. During his cross examination, defendant has categorically admitted that he did not deposit the installments regularly for many months. Furthermore, it is undisputed that at the time of obtaining the subject loan, defendant had given an irrevocable undertaking to the plaintiff bank that the amount of the due installments can be deducted from his saving (salary) bank account which defendant was having with the plaintiff bank and admittedly, he shifted his aforesaid salary CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 11 of 17 account to another bank i.e. Union Bank of India without informing the plaintiff bank. This particular conduct of the defendant also shows that defendant had no intention to repay his loan amount. Thus, it is clear that the outstanding installments of defendant remained unpaid for more than a period of 90 days, therefore, plaintiff has rightly declared the subject loan account as NPA.
7.5 Defendant has also claimed that plaintiff bank had not served any reminder to him before declaring the subject loan as NPA. As per plaintiff, after the defendant had not paid the dues of the outstanding installments despite repeated reminders, they had declared the loan account of the defendant as NPA on 18.06.2024 and thereafter, they had recalled the loan and accordingly, they had demanded the outstanding amount of Rs.9,83,125/-as 17.09.2024 through legal notice Ex.PW1/6. Though, defendant has denied the service of the legal notice, however, it is clear that defendant has not specifically disputed the service. It is clear from the record that the plaintiff had served the defendant with the legal notice at the same address which has been furnished by the defendant in his affidavit filed in support of the WS. Thus, in view of the provisions of Sec. 27 of General Clauses Act., the legal notice is presumed to have been served upon the defendant as the defendant has failed to rebut the said statutory presumption. It is also clear CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 12 of 17 that during cross examination of PW1, the service of legal notice has not been disputed. Thus, it is clear that the legal notice was duly served upon the defendant wherein it was claimed by the plaintiff bank that defendant had failed to clear the outstanding installments despite repeated reminders. The defendant did not rebut the claim of the plaintiff bank either regarding the issuance of reminders or regarding the correctness of the due amount. In case, no reminder would have been given for repayment of the outstanding amount, the defendant would have rebutted the claim of the plaintiff by sending a reply. Moreover, it is clear from the agreed terms and conditions of the loan agreement that it was clearly mentioned in clause 5 of the arrangement letter (Ex.PW1/3) that in case, the installments remain unpaid for a period of 90 days, the loan account will be classified as NPA and it is not the case of the defendant that he had paid these installments regularly and in time and despite that plaintiff had declared the loan account as NPA rather defendant has admitted that he failed to repay the installments as he fell ill. Thus, under these circumstances, it is clear that defendant was fully aware that he was to pay his installments as per agreed schedule else it would be treated as NPA and therefore, no reminder, as such, was required from the side of plaintiff to the defendant for depositing the outstanding installments, however, it is clear that plaintiff had not only issued the reminders but they have also served the defendant CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 13 of 17 with the legal notice and defendant neither rebutted the correctness of the claim of the plaintiff raised through the legal notice nor brought on record any evidence to show that he had regularly paid all the due installments.
7.6 Furthermore, though defendant has claimed that he was not served with the notice of pre-institution mediation in his written statement, however, it is clear from his affidavit of admission denial of documents that he has admitted the correctness of the contents of the non starter report Ex.PW1/7 wherein it has been clearly mentioned that defendant did not join the pre-institution mediation proceeding despite service of the notice upon him. Thus, it is clear that after plaintiff had declared the subject loan as NPA, it had not only demanded the outstanding loan amount through the aforesaid legal notice but in order to proceed further for recovery of the said amount, they had also undertaken the pre-institution mediation proceedings and therefore, after service of the notice of the same, defendant would have come to know that plaintiff bank has already declared this loan account as NPA and in case, plaintiff bank would have wrongly declared his loan account as NPA then defendant had another opportunity at his end to put his defence forth by joining the pre-institution mediation proceedings, however, defendant willingly did not join the pre- institution mediation proceedings. The entire conduct of the CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 14 of 17 defendant discussed above clearly shows that plaintiff bank had not only issued reminders for repayment of the outstanding installments but they had also declared the subject loan account as NPA as per the settled norms and agreed terms and conditions of the loan agreement otherwise defendant would have not only replied to the demand notice but he would have also joined the pre-institution mediation proceedings to show that the same were initiated without any cause of action but it is clear that defendant did not do the needful and remained completely dormant despite the demand raised by the plaintiff bank.
7.7 In view of the aforesaid discussion, it is held that the plaintiff bank has rightly declared the loan account as NPA and after declaring the same as NPA, the plaintiff bank was entitled to proceed for the recovery of the outstanding amount. As per plaintiff, at the time of filing of the present suit, a sum of Rs.10,66,807/- was outstanding against the defendant including interest/penal interest. In order to prove the same, plaintiff has brought on record the statement of loan account as Ex.PW1/8 and it is clear from the affidavit of admission denial of documents that defendant has not disputed the correctness of the loan documents. Furthermore, during cross examination of PW1 also, the correctness of the entries of the statement of aforesaid account have not been disputed. Thus, CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 15 of 17 under these circumstances, it is clear that plaintiff has established that at the time of filing the of suit, the said amount was outstanding and thus, plaintiff is entitled to the recovery of Rs.10,66,807/- from the defendant. All these four issues are decided accordingly.
ISSUE NO.5 Whether the plaintiff is entitled for the interest on the recovery sought, if so, at what rate and for what period? OPP
8. The onus to prove this issue was on the plaintiff. While deciding issue no.1 to 4, it has been held that defendant has not paid the due amount and therefore, defendant is liable to repay the same alongwith interest. As already discussed, the defendant was liable to pay 12.50% interest on the loan amount, therefore, in view of the provisions of Section 3 of Interest Act, plaintiff is entitled to the contractual rate of interest till the filing of the suit. Furthermore, plaintiff had demanded the outstanding amount by way of a legal notice. Though, the defendant has denied receipt of the same, however, it is clear that it was sent at his correct address and therefore, legal notice is presumed to have been served upon him. Thus, it is clear that defendant has not paid the outstanding loan amount despite service of legal notice. Thus, it is held that as far as pre-
CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 16 of 17 suit interest is concerned, plaintiff is entitled to the contractual rate of interest which plaintiff has already claimed and same is shown in the statement of account also. In view of section 4 of Interest Act and section 34 of CPC, the grant of pendentelite and future interest is the discretion of the court and therefore, keeping in view of the facts and circumstances of the case, plaintiff is granted 9% p.a pendentelite and future interest on the outstanding amount. This issue is decided accordingly.
RELIEF
9. In view of the aforesaid discussions and issue wise findings, the suit of the plaintiff is decreed for a sum of Rs.10,66,807/- (Rs.Ten lac sixty six thousand eight hundred seven only) against the defendant. Plaintiff is awarded pendentelite and future interest @ 9% p.a. w.e.f 17.05.2025 on the decreed amount. Plaintiff is also awarded the cost of the suit.
Decree sheet be prepared accordingly.
File be consigned to record room.
Digitally
signed by
Announced in the Open AJAY AJAY GUPTA
Date:
Court on 14.11.2025 GUPTA 2025.11.14
16:08:52
+0530
(Ajay Gupta)
District Judge (Commercial Court)-05
West, Tis Hazari Courts Extension
Block, Delhi/14.11.2025
CS(Comm)/424/2025 State Bank of India Vs. Sh. Rakesh Page no. 17 of 17