Delhi District Court
Canara Bank vs Himanshu Seth on 6 August, 2025
IN THE COURT OF DISTRICT JUDGE
(COMMERCIAL COURT) - 02, NEW DELHI DISTRICT,
PATIALA HOUSE COURTS, NEW DELHI
CS (COMM) 394/2023
CNR No. DLND01-006052-2023
IN THE MATTER OF : -
Canara Bank
A body corporate constituted
under the Banking Companies
(Acquisition and Transfer of Undertakings) Act
having its Head Office at Bangalore
and one of its Branch Office at
74, Janpath, New Delhi
Through its Manager.
....... Plaintiff
VERSUS
1. Sh. Himanshu Seth
Son of Sh. Vimal Seth
2. Smt. Kanchan Seth
Wife of Sh. Vimal Seth
3. Sh. Tarun Seth
Son of Sh. Vimal Seth
All residents of
937, First Floor,
Arjun Nagar, Big Apple,
Kotla Mubarkpur, Lodhi Road,
New Delhi - 110003.
........ Defendants
CS (COMM) No. 394/2023
Canara Bank Vs. Himanshu Seth & Ors. Page 1 of 30
SUIT FOR RECOVERY OF RS. 8,74,373.74/-
(RUPEES EIGHT LAKHS SEVENTY FOUR THOUSAND
THREE HUNDRED SEVENTY THREE AND SEVENTY
FOUR PAISA ONLY)
Date of institution : 10.07.2023
Date when judgment reserved : 07.07.2025
Date of Judgment : 06.08.2025
JUDGMENT:-
1. Vide this judgment I shall decide the present suit filed by the plaintiff against the defendants for recovery of Rs.8,74,373.74/- along with pendentelite and future interest @ 12.70% per annum against the defendants.
FACTS OF THE CASE:
2. The case of the plaintiff in brief as set out in the plaint is that the plaintiff is a body corporate constituted under the provisions of Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980 and Ms. Jyoti Sharma, Chief Manager of the plaintiff bank is duly authorized to file the present suit on behalf of the plaintiff by virtue of a General Power of Attorney executed by the plaintiff bank. The defendants approached the plaintiff bank to avail education loan of Rs. 7,21,000/- vide application dated 19.04.2019 for pursuing two years full time PGPM programme course in Mumbai. Defendant no. 1 is the principal borrower, defendant no. 2 is the co-borrower and defendant no. 3 is the guarantor.
CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 2 of 30The loan of Rs. 7,21,000/- was sanctioned vide sanction letter dated 22.05.2019 and in this regard various loan documents viz. Education Loan Agreement dated 28.05.2019, Letter for loans/advances against term deposits dated 28.05.2019, Undertaking letter by the defendants and Reference undertaking were duly signed and executed between the parties. The loan was to be repaid in 84 months and the repayment was to commence 6 months from the date of getting employment or 12 months after completion of course whichever is earlier. It is alleged that the defendants did not maintain financial discipline and contravened/breached various terms and conditions as stipulated in the loan/security documents and failed to keep up the repayment schedule as a result of which the account of the defendants became persistently irregular. Consequently, account of the defendants was declared Non Performing Asset (in short "NPA") on 26.01.2023 as per RBI guidelines. It is stated that as per statement of account maintained by the plaintiff bank, a sum of Rs.8,74,373.74/- is due and outstanding against the defendants. It is further stated that the plaintiff came to know from the SBI statements that the customer was employed and getting salary in his account and due to malafide intention, he is not paying the loan. Hence, the present suit.
3. Summons of the suit were directed to be issued to the defendants. Pursuant to service, the defendant no. 1 filed written submission along with counter claim under Order VIII Rule 6A CPC which was separately registered as Counter Claim No. 45/2023 titled as "Himanshu Seth vs. Jyoti Sharma CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 3 of 30 & Ors.". However, on the statement of the defendant no.1, the said Counter Claim was dismissed as withdrawn and the said "Written submission along with counter claim under Order VIII Rule 6A CPC" filed by the defendant no. 1 which was separately registered as Counter Claim and withdrawn by him was considered as written statement filed in the present suit by the Ld. Predecessor vide order dated 29.01.2024 and original thereof was directed to be placed in the judicial record of the present suit while retaining copy thereof in the judicial record of Counter Claim No. 45/2023.
4. The defendant no. 1 in his written statement has taken preliminary objections that the present suit filed by the plaintiff is an abuse of law and is not maintainable as the plaintiff failed to disclose as to why fixed deposit kept as a collateral with the plaintiff bank amounting to Rs. 7,21,000/- is not diluted/liquidated as on date and as to why the plaintiff bank has not sent any overdue notice, e-mail between August 2022 till December 20, 2022 if the education loan was ever defaulted and remained under NPA. On merits, it is contended that the plaintiff bank has never communicated or sent any letter/ overdue notice/ email in the month of August 2022, during Special mention Account-0 in the month of September 2022, during Special Mention Account-1 in the month of October 2022, during Special Mention Account-2 in the month of November 2022 and during the month of December 2022. It is further contended that the defendant no. 1 had immediately deposited Rs. 1000/- to his Education Loan Account after getting a call from the plaintiff bank on CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 4 of 30 20.12.2022. He also sent letter dated 01.07.2023 and reminder dated 04.08.2023 to the plaintiff bank of repayment of outstanding education loan. The defendant no. 1 has further contended that on 23.12.2022, he caught Ms. Jyoti Sharma, the Branch Manager and others including one Amit red handed indulging in criminal activities with bundles of notes and in retaliation, they illegally converted the Education Loan Account of the defendant no. 1 as NPA on 26.01.2023. The defendant no. 1 also filed criminal cases against Ms. Jyoti Sharma and others including Amit which are pending in the criminal court and as a counter blast the present suit has been filed against the defendants. It is further contended that Ms. Jyoti Sharma and others did not file any suit for recovery against the defendant no. 1 from January 2023 till July 1, 2023 and their sole purpose and criminal intention was to file a case against the defendant no. 1 in Debt Recovery Tribunal, but since the defendant no. 1 had given letter dated 01.07.2023 to repay the outstanding education loan, their plan to approach Debt Recovery Tribunal failed and they filed the present suit for recovery to harass, torture and extort money from the defendant no. 1.
5. The defendant no. 2 and 3 filed joint written statement taking similar preliminary objections that the present suit filed by the plaintiff is an abuse of law and is not maintainable as the plaintiff failed to disclose as to why fixed deposit kept as a collateral with the plaintiff bank amounting to Rs. 7,21,000/- is not diluted/liquidated as on date and as to why the plaintiff bank has not sent any overdue notice, e-mail CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 5 of 30 between August 2022 till December 20, 2022 if the education loan was ever defaulted and remained under NPA. On merits, the contents of the plaint are stated to be wrong and denied and it is contended that the plaintiff bank has never sent any letter/overdue notice/email during Special Mention Account-0, Special Mention Account-1 and Special Mention Account-2 and never communicated the defendants till the said loan account turned as NPA. The defendant no. 2 and 3 have prayed for dismissal of the suit.
6. The plaintiff has filed separate replications to the written statement filed by the defendant no. 1 and to the joint written statement filed by the defendant no. 2 and 3 reaffirming that the loan was sanctioned and disbursed for two years vide loan agreement dated 28.05.2019 and the repayment was to commence since six months from the date of getting employment or 12 months after completion of the course whatever is earlier. It is stated that EMI was to be deposited from 28.06.2022 and the borrower was aware of the due date of installment and accordingly repayment was done by him. Thereafter, on account of non payment of EMI, the loan account was classified as SMA-0 on 28.09.2022. Further, on 28.10.2022, the said loan account was classified as SMA-1 and on 27.11.2022, it was classified as SMA-2. It is further stated that on 20.12.2022, the defendant deposited a sum of Rs. 1,001/- and then the loan account was recovered to SMA-1 and again on account of non payment of EMI, the said loan account was classified as SMA-2 on 27.12.2022 and ultimately the loan account was classified as NPA on CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 6 of 30 26.01.2023. It is further stated that the prior to NPA, the plaintiff bank sent reminder to all the defendants by mail/registered post which were duly served but were not complied with. It is further stated that the FDR which has been kept by the bank against the loan facility is kept in abeyance for recovery of loan. It is further stated that during proceedings of the present case, the defendants made part payments on several occasions from time to time and as per statement of account maintained by the plaintiff bank, a sum of Rs. 39,833.61 is overdue and the total outstanding is Rs. 7,61,414.61/- as on 28.03.2024 which the plaintiff is entitled to recover from the defendants.
ISSUES:
7. From the pleadings of the parties, following issues were framed by the Ld. Predecessor vide order dated 04.04.2024 for adjudication :-
1. Whether the plaintiff is entitled to recover Rs. 8,74,373.74/- from the defendants? OPP.
2. Whether the plaintiff is entitled to recover interest from the defendants ? If yes, then at what rate and for which period? OPP.
3. Relief.
8. It may be noted that after framing the issues, while exercising the power conferred under Order XV A Rule 6 (o) and (p) CPC, the Court had directed that the evidence shall be recorded by Ld. Local Commissioner, appointed by this Court on commission basis, vide order dated 04.04.2024.CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 7 of 30
Accordingly, both the parties were directed to lead their respective evidence before the Ld. Local Commissioner, in terms of the timeline/ scheduled framed therein. In pursuant thereto, both the parties led their respective evidence before the Ld. Local Commissioner.
PLAINTIFF EVIDENCE
9. In order to prove his case, the plaintiff has examined its Chief Manager Ms. Jyoti Sharma as its sole witness as PW-1 who filed her evidence by way of affidavit which is Ex.PW1/A reiterating the averments made in the plaint. During her deposition, she relied upon and exhibited the following documents:-
Sr. Details of documents Exhibit
No.
1. Copy of Power of Attorney : Mark A
executed by the plaintiff bank (The said
in her favour document was
referred to as
Ex.PW1/1 in the
affidavit and the
same was de-
exhibited).
2. Copy of Loan Application : Ex.PW1/2
3. Copy of sanction letter dated : Ex.PW1/3 22.05.2019
4. Copy of Education Loan : Ex.PW1/4 Agreement dated 28.05.2019
5. Copy of letter for : Ex.PW1/5 loan/advances against term deposits dated 28.05.2019 CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 8 of 30
6. Copy of undertaking letter by : Ex.PW1/6 the defendants
7. Copy of reference undertaking : Ex.PW1/7
8. Copy of reminder notice dated : Ex.PW1/8 (Colly) 23.01.2023
9. Copy of NPA Certificate : Ex.PW1/9
10. Copy of Statement of Account : Ex.PW1/10
11. Copy of Certificate under : Ex.PW1/11 Banker Books Evidence Act
12. Copy of affidavit under order : Ex.PW1/12 XI Rule 6 (3) CPC DEFENDANT EVIDENCE
10. On the other hand, the defendant no. 1 Sh. Himanshu Seth has examined himself as DW-1 as sole witness on behalf of defendant no. 1 to 3. He tendered his affidavit in evidence which is Ex. DW1/A wherein he has deposed as per the averments made in the written statement filed by him. He relied upon and exhibited the following documents:-
Sr. Details of documents Exhibit
No.
1. Power of attorney executed by : Ex. DW1/1 defendant no. 2 and 3 in his favour
2. Certificate under Section 65 B : Ex. DW1/B of the Indian Evidence Act, 1872
3. Power of Attorney : Ex.DW1/C
4. Copy of confirmation received : Mark A from Canara Bank vide email CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 9 of 30 dated 13.07.2023
5. Copy of screenshot of : Mark B WhatsApp conversation dated 20.12.2022
6. Copy of letter (instructions for : Mark C repayment of outstanding education loan) dated 01.07.2023
7. Copy of letter (necessary : Mark D documents/KYC) dated 01.07.2023
8. Copy of letter of request dated : Mark E 04.08.2023
9. Copy of RTI reply received : Mark F from PNB dated 21.08.2023
10. Copy of RTI reply received : Mark G from SBI dated 24.08.2023
11. Copy of RTI reply received : Mark H from Canara Bank dated 24.08.2023
12. Copy of email dated : Mark I 12.07.2023
13. Copy of email dated : Mark J 19.01.2023
14. Copy of bank account : Mark K statement for the period 28.09.2022 to 21.12.2022
11. I have heard the Ld. Counsel for the plaintiff and the defendant no. 1 who made submissions for himself as well as on behalf of the defendant no. 2 & 3 as their attorney. I have also perused the record carefully and gone through the written arguments filed by the defendant no. 1.
CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 10 of 30FINDINGS AND ANALYSIS
12. On the basis of material available on record, my issue-wise findings are as under:-
Issue No. 1Whether the plaintiff is entitled to recover Rs. 8,74,373.74/- from the defendants?
13. The onus to prove this issue was on the plaintiff.
14. From the pleadings of the parties, evidence led and arguments advanced on their behalf in support of their case, there is no dispute that the defendants approached the plaintiff bank for availing education loan of Rs. 7,21,000/- vide application dated 19.04.2019 Ex. PW1/2 for two years full time PGPM programme to be pursued by the defendant no. 1. As per the application Ex. PW1/2, the defendant no. 1 is the principal borrower, defendant no. 2 is the co-borrower and defendant no. 3 is the guarantor, which fact has not been disputed by the defendants. It is also not in dispute that the education loan of Rs. 7,21,000/- was sanctioned vide sanction letter dated 22.05.2019 Ex. PW1/3. In this regard, Education Loan Agreement dated 28.05.2019 Ex. PW1/4 was duly signed and executed between the parties; and the defendants have also executed and signed various loan documents viz. Letter for loans/advances against term deposits dated 28.05.2019 Ex. PW1/5, Undertaking letter Ex. PW1/6 and Reference undertaking Ex. PW1/7. It is also not in dispute that duration of course was for 02 years commencing from 31.05.2019 to 31.05.2021 and the loan was to be repaid within one year of CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 11 of 30 completion of the course or within six months of employment whichever occurred earlier.
15. It is relevant here to refer the cross-examination of DW-1 Sh. Himanshu Seth with regard to aforesaid undisputed facts. He categorically stated in his cross-examination that the loan application dated 19.04.2019 is correct and admitted by them. He also admitted that the duration of the course was for 02 years commencing from 31.05.2019 to 31.05.2021 and that it had to be repaid within one year of completion of course or within six months of getting the job. He volunteered that because of COVID 19 pandemic, the principal borrower was able to obtain a job but at a very nominal pay which was not sufficient to survive and the same was conveyed to the Branch and moratorium was extended till 2022. He admitted the Education Loan Agreement and Letter of loan/advances against term deposit both dated 28.05.2019 along with the undertaking letter and reference undertaking to be correct. He also admitted that notice/letter all dated 23.01.2023 were served to Smt. Kanchan Seth, Sh. Himanshu Seth and Sh. Tarun Seth and further admitted the service report to be correct.
16. The defendants have also not disputed the Statement of Account maintained by the plaintiff bank of the principal borrower i.e. defendant no. 1 Sh. Himanshu Seth Ex. PW1/10 showing outstanding of Rs. 8,74,373.74/- against the defendants as on 28.01.2023. It is also not disputed by the defendants that EMI to repay the loan amount was fixed at Rs.14,388/- per month and the date of EMI was fixed as 28 th CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 12 of 30 day of every month as also admitted by PW-1 Ms. Jyoti Sharma during her cross-examination.
17. From the aforesaid admitted facts, it can be inferred that 02 years course for which the education loan was availed by the defendant no. 1 as principal borrower got completed on 31.05.2021 and the EMI of Rs. 14,388/- towards repayment of the loan was supposed to start from 28.06.2022 i.e. after one year of completion of the course. This fact has been confirmed by the plaintiff in its replication wherein it is averred that EMI was to be deposited from 28.06.2022. The plaintiff has also claimed that the borrower was aware of the due date of installment and accordingly paid EMIs for three months i.e. upto August 2022, but thereafter the borrower failed to keep his loan account regular and the defendants were duly notified about overdue in the account but they failed to regularize the loan account and ultimately the loan account was classified as NPA on 26.01.2023.
18. The defendants have contested the above claim of the plaintiff mainly on 03 grounds. Firstly, that the plaintiff bank has not sent any notice or email regarding overdue in the account of the defendants and illegally by manipulating the record declared the account of the defendant no. 1 & 2 as NPA on 26.01.2023. Secondly, that FDR of Rs. 7,21,000/- which was taken as collateral security by the plaintiff bank at the time of advancing the education loan was not liquidated/diluted towards repayment of the loan amount; and thirdly that the moratorium was extended by the bank till 2022 and, therefore, the loan account could not have been declared as NPA on CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 13 of 30 26.01.2023.
19. The factum of loan account of the defendant no. 1 & 2 being regular on account of payment of EMI till August 2022 is not in dispute. In this regard, PW-1 Ms. Jyoti Sharma has categorically admitted in her cross-examination that the account in question was regular in terms of the payment of the EMI till August 2022. Though there is some discrepancy in this statement of PW-1 as she subsequently stated that payment of amount of Rs. 14,388/- was not paid on 28.06.2022, 28.07.2022 and 28.08.2022. However, during course of the arguments, Ld. Counsel for the plaintiff and the defendant no. 1 have fairly conceded that the account in question was regular till August 2022 and there is no dispute to the said fact.
20. However, the Ld. Counsel for the plaintiff has vehemently argued that the defendants were duly notified about the overdue amount vide emails dated 23.12.2022 and 26.12.2022 and reminder notices dated 02.01.2023 and 16.01.2023, but despite being served with the notice, the defendants failed to pay the EMIs regularly from September 2022.
21. It is to be noted that the plaintiff had not filed the said emails and reminder letters along with the plaint and sought to place on record the said additional documents at subsequent stage by way of an application under Order XI Rule 5 CPC. The said application was dismissed by the Ld. Predecessor vide order dated 04.04.2024 and hence the said additional documents including emails and reminder letters CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 14 of 30 allegedly sent to the defendants informing them about overdue amount in the loan account were not taken on record.
22. On the other hand, the defendant no. 1 while referring to the part of cross-examination of PW-1 Ms. Jyoti Sharma where she has stated that no overdue notice/written communication/email was ever served to any of the borrowers in the month of September, October, November and till 20.12.2022, has vehemently argued that the plaintiff in collusion with its Chief Manager Ms. Jyoti Sharma (PW-1) has illegally declared the loan account as NPA.
23. Of course, PW-1 Ms. Jyoti Sharma during her cross- examination stated that no overdue notice was served to the defendants between September, 2022 till 20.12.2022, but she voluntarily stated that automatic generated SMS was sent to the borrower. She further stated that she is not aware if the calls were made or not, but generally bank calls their defaulting customers for payments. She further stated that the Bank calls from centralized number as well. On these specific assertions made by PW-1 Ms. Jyoti Sharma, she was neither cross-examined nor suggested at all by the defendant no. 1 that no such automatic generated SMS was sent to the borrower or no such call was made by the Bank from centralized number to the borrower/defaulting customer for payment of the overdue amount.
24. PW-1 Ms. Jyoti Sharma has further categorically stated that as the borrower had already made 03 installments commencing from 28.06.2022 and also using online banking, CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 15 of 30 the borrower was very well aware/informed regarding repayment schedule or due dates of the loan amount. Again, this statement has not been disputed by the defendant no. 1 by cross-examining her or giving any contrary suggestion to the witness. Thus, it is an admitted position that the defendant no. 1 has paid 03 installments starting from 28.06.2022 to 28.08.2022 as also fairly conceded by the defendant no. 1 during course of the arguments. Meaning thereby, the defendant no. 1 was fully aware about the due dates of payment of EMIs in respect of the education loan availed by him.
25. During further cross-examination of PW-1 Ms. Jyoti Sharma, the defendant no. 1 put a question to her as to whether the borrower visited the branch on 21.12.2022 regarding rescheduling the said loan to which the witness replied in affirmative and stated that the borrower was called regarding the overdue in the account and then he visited the branch office. Another question was put to PW-1 as to whether the borrower visited the branch on 23.12.2022 to which the witness again answered in affirmative. These questions put to the witness and answer thereto given by her again shows that the defendant no. 1 himself has admitted his visit to the branch/bank on 21.12.2022 and 23.12.2022 and at that time also he was apprised about the overdue in his account which fact has not been disputed by the defendant no. 1 by giving any suggestion to the witness negating the same.
26. As noted above, DW-1 Sh. Himanshu Seth (defendant no. 1) has admitted to have received reminder CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 16 of 30 notice dated 23.01.2023 Ex.PW1/8 (Colly) by all the defendants by which they were asked to pay the overdue amount since 28.10.2022. The defendants have undertaken to pay the installment/interest/EMIs and other charges on due date from time to time as per the terms and conditions of sanction letter Ex. PW1/3. It is, thus, apparent that the defendants were very well aware of the due date of EMI to be paid to the plaintiff bank towards repayment of the education loan amount. Hence, it does not lie in the mouth of the defendants to contend that no notice of default or overdue was sent to them by the plaintiff bank before converting the loan account as NPA. Rather, DW-1 Sh. Himanshu Seth (defendant no. 1) has categorically admitted in his cross-examination that the loan account dated 26.01.2023 was classified NPA as per the banking rules and RBI guidelines. Though he voluntarily stated that the loan account was never under NPA or classified as SMA on or before 25.01.2023 which is mentioned on document Mark A, but the said voluntarily statement is without any basis as admittedly defendants did not pay the installment after 28.08.2022, hence thereafter the account was declared as NPA. This is further substantiated from the fact that during cross-examination of PW-1 Smt. Jyoti Sharma, the defendant no. 1 had put an affirmative suggestion that the overdue amount has to be paid to regularize the said SMA, which was admitted by the witness.
27. It is not the case of the defendants that after August 2022, they have paid the entire overdue amount. Rather despite personal visit by the principal borrower/ defendant no. 1 CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 17 of 30 himself on 21.12.2022 and 23.12.2022 in the branch office of the plaintiff bank and having apprised to him regarding overdue in his loan account, the defendants did not pay the overdue amount and got the loan account regularized.
28. The defendant no. 1 has also vehemently submitted in the written statement as well as in the written arguments that the suit has been filed by the plaintiff with a criminal intention to harass, torture and extort money from the principal borrower and his family members and also an attempt to divert and suppress the criminal cases filed against branch manager of the plaintiff bank i.e. PW-1 Ms. Jyoti Sharma and others including one Amit. The defendant no. 1 has alleged in his written statement that he had given KYC documents to the plaintiff bank vide letter dated 01.07.2023 for the purpose of opening of an Escrow account, but the said documents have been misused by the plaintiff bank because he had caught its Branch Manager Ms. Jyoti Sharma and others red handed indulging in criminal activities with bundle of notes having denomination of Rs. 2000/- on 23.12.2022.
29. However, not a single suggestion has been given to PW-1 Ms. Jyoti Sharma by the defendant no. 1 during her cross-examination about the allegations made in the written statement against her. Although she was asked as to whether Mr. Arvind Khanna was present in the branch on 23.12.2022 to which she answered in negative but stated that Mr. Arvind Khanna was called afterwards. She was again asked as to whether Mr. Arvind Khanna was present in the Police Station on 23.12.2022 till 6 pm accompanying her to which she CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 18 of 30 replied in affirmative. She was also asked the purpose of his presence to which she replied that she could not explain the same. But besides these questions, there is nothing in the cross-examination of PW-1 Ms. Jyoti Sharma regarding allegations of misuse of KYC documents or apprehension of Ms. Jyoti Sharma, the Chief Manager with others with bundle of notes with denomination of Rs. 2000/- as made by the defendant no. 1 in the written statement.
30. DW-1 Sh. Himanshu Seth during his chief examination has placed copy of a letter dated 01.07.2023 Mark C by which he has made request to the plaintiff bank to open an Escrow account; and to deduct EMI amount of Rs. 9999 from the Escrow Account only and to set the date of payment at 27th staring from July 2023. He also requested the plaintiff bank vide another letter dated 01.07.2023 Mark D to do the necessary formalities for opening the Escrow account. Vide letter dated 04.08.2023 Mark E written to the Regional Manager, he again requested to open the Escrow account as the same had not been opened till the said date.
31. However, writing letters to the plaintiff bank to open Escrow account would not render the declaration of account NPA illegal. Even otherwise, the defendants have not proved these documents on record as per law. The defendant no. 1 has also filed copy of RTI applications filed by him and reply thereto received from different banks which are Mark F, Mark G and Mark H by which he sought information from the banks, inter alia, as to how does the Schedule Commercial Bank communicates its customers/borrowers in case a customer fails CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 19 of 30 to pay/clear dues/arrears during Special Mention Account O, Special Mention Account 1 and Special Mention Account 2 to which response received was that the Bank uses SMSes/OVRs/Mails/soft ceiling through dedicated call centres/calling by bank officials/ reminder letters or through personal visits depending upon the risk intensity of account which is based on certain parameters in built in analytical model.
32. In the present case, the plaintiff bank has issued automated generated SMS to the borrowers as stated by PW-1Ms. Jyoti Sharma during cross-examination and even the principal borrower i.e. the defendant no. 1 was apprised about the overdue in the account when he personally visited the branch on 21.12.2022 and 23.12.2022. The plaintiff bank also sent a reminder letter dated 23.01.2023 Ex. PW1/8 to the defendants to pay the overdue amount which was duly received by the defendants as admitted by DW-1 Sh. Himanshu Seth (defendant no. 1) during his cross- examination. Therefore, contention of the defendants that the plaintiff bank has not given any overdue notice before classifying the loan account as NPA is devoid of any merit and is liable to be rejected.
33. So far as the contention of the defendants that the moratorium has been extended upto December 2022 and, therefore, the loan account could not have been declared as NPA on 23.01.2023, is concerned, it is an admitted position that the defendant no. 1 had paid first 03 installments starting from 28.06.2022 upto 28.08.2022 and, thereafter, his account CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 20 of 30 became irregular. Had the moratorium been extended by the bank upto December 2022, the defendant no. 1 would not have even paid the first three installments. Hence, this contention of the defendants is also not tenable and also not supported by any document or any other evidence.
34. Similarly, plea of the defendant no. 1 that FDR of Rs. 7,21,000/- deposited with the bank as collateral security at the time of advancement of loan has not been diluted by the bank towards repayment of the loan, rather illegally declared the account as NPA lacks merit. There is nothing in the documents executed by the defendants with the plaintiff bank that there was any contractual obligation upon the plaintiff bank to adjust the collateral security in the form of FDR against the outstanding dues before declaring the account NPA or initiating the recovery proceedings.
35. In view of the foregoing discussions and evidence led by the parties, this Court finds that the plaintiff has successfully established its case regarding disbursement of education loan of Rs. 7,21,000/- to the defendant no. 1 as principal borrower, defendant no. 2 as co-borrower and defendant no. 3 as guarantor and default made by the defendants in repayment schedule. The defendants have not denied the receipt of loan amount and execution of loan documents and have failed to raise any credible or legally tenable defence. The objections raised are procedural in nature and unsupported by evidence. The defendant no. 1's own admission regarding limited payments further confirms the default. Hence, the defendants are liable to pay outstanding CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 21 of 30 amount to the plaintiff bank which as per the Statement of Account Ex.PW1/10 maintained by the plaintiff bank is Rs. 8,74,373.74/- as on 28.01.2023, which has not been disputed by the defendants. It is, however, to be noted that during course of the proceedings, the defendants made part payment on several occasions from time to time which fact has been confirmed by the plaintiff in the replication and it is averred that as per Statement of Account maintained by the plaintiff bank, a sum of Rs. 7,61,414.61/- is outstanding against the defendants as on 28.03.2024, which fact has not been disputed by the defendants. Hence, the plaintiff is held entitled to recover the said amount of Rs. 7,61,414.61/- from the defendants. This issue is accordingly decided in favour of the plaintiff and against the defendants.
Issue No. 2Whether the plaintiff is entitled to recover interest from the defendants ? If yes, then at what rate and for which period?
36. The onus to prove the aforesaid issue was placed upon the plaintiff.
37. Under Issue No.1, it is held by this Court that the defendants have defaulted in repayment of education loan and the account was declared NPA on 26.01.2023. As such, the defendants withheld the legitimate dues of the plaintiff bank and did not pay the same despite service of the overdue notice vide Ex.PW1/8, this Court is of the opinion that the plaintiff is entitled to interest on the outstanding amount of Rs. 7,61,414.61/ from 29.03.2024 till its realization.
CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 22 of 3038. The plaintiff has claimed pendente lite and future interest @ 12.70 % per annum, however interest so claimed by the plaintiff appears on the higher side and ends of justice will be met if the plaintiff is awarded interest @ 6% per annum on the outstanding amount of Rs. 7,61,414.61/- from 29.03.2024 till its realization.
39. The Issue no. 2 stands decided in favour of the plaintiff and against the defendants in the aforesaid terms.
40. Before parting with the judgment, it is relevant to note that the defendant no. 1 has filed an application under Section 340 Cr.P.C. for initiating the proceedings under Section 195 of Cr.P.C. against Canara Bank/ Jyoti Sharma and others who made false statements and suppressed evidence while submitting information/replication dated 04.04.2024 and thereby committed offence punishable under Section 193 IPC. The said application is separately registered as Misc DJ 3389/2024, titled as "Himanshu Seth vs. Canara Bank & Anr." which is being decided along with this judgment.
41. It is pertinent to note that in the above application, the applicant/defendant no. 1 has quoted the provisions of law and the judgments of the Hon'ble Apex Court and the Hon'ble High Court extensively to contend that a false statement to the Court has to necessarily invite adverse action. However, except averring that the replication filed by the plaintiff bank / Ms. Jyoti Sharma dated 04.04.2024 shows that they have misled the court and committed the perjury, it has not been described that how and in what manner the facts have been CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 23 of 30 misled, distorted and suppressed by the plaintiff bank or its Chief Manager Ms. Jyoti Sharma which amount to perjury.
42. The defendant no. 1 has filed written submissions along with plethora of judgments in support of his case. The following judgments have been relied upon by the defendant no. 1: -
1. State Bank of India vs. Rajesh Agarwal, Civil Appeal No. 7300 of 2022 with Civil Appeal No. 7307/2022 and Writ Petition No. 138/2022 decided on 27.03.2023;
2. State Bank of India vs. M/s Jah Developers Pvt. Ltd., AIR 2019 Supreme Court 2854 ;
3. Canara Bank of V.K. Awasthy, AIR 2005 Supreme Court 2090;
4. D.K. Yadav vs. J.M.A. Industries Ltd., 19693 SCR (3) 930;
5. Delhi Transport Corporation vs. D.T.C. Mazdoor Congress, AIR 1191 Supreme Court 101;
6. Erusian Equipment & Chemicals Ltd, vs. State of West Bengal & Anr., AIR 1975 Supreme Court 266;
7. M/s Sahara India (Firm), Lucknow vs. Commissioner of Income Tax, Central-I; Civil Appeal 2783 of 2008 decided on 11.04.2008;
8. Gorkha Security Services vs. Govt. of NCT of Delhi & Ors. AIR 2014 Supreme Court 3371;
9. M/s Kesar Enterprises Ltd. vs. Stae of UP & Ors., AIR 2011 Supreme Court 2709;
10. Mangilal vs. The State of Madhya Pradesh; Criminal Appeal No. 1651 OF 2023DECIDED ON 12.07.2023;
11. Raghunath Thakur vs. State of Bihar & Ors. , AIR 1989 Supreme Court 620;
12. State of Maharashtra vs. Public Concern for Governance Trust, 2007 (3) SCC 587 .CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 24 of 30
43. From the written arguments filed by the defendant no. 1, it can be deciphered that the case of the defendant no. 1 for initiating the criminal proceedings for perjury against PW-1 Ms. Joyti Sharma is premised on the ground that payment history given in the replication before the account classified as NPA is not in sync with the statement made by her during her cross-examination. Additionally, it is contended that PW-1 Ms. Jyoti Sharma has made false statement regarding sending of letters and misuse of KYC documents; and that her statement in the cross-examination that the borrower had himself informed that he was getting salary is in contradiction to the averment made in the replication filed by her wherein it is averred that the bank had found that principal borrower is getting the salary and intentionally not paying the loan amount.
44. In my considered opinion, on the basis of aforesaid grounds, no case of perjury is made out against PW-1 Ms. Jyoti Sharma.
45. It is true that in the replication filed by the plaintiff bank through Ms. Jyoti Sharma and during her cross- examination, there is discrepancy regarding payment of EMI made by the defendants to the plaintiff bank before classification of account as NPA.
46. It would be relevant here to reproduce the paragraph of the replication in which the said discrepancy has surfaced :-
Prior to NPA the details of repayment of the loan are as under:-
Installment Installment dueAmount Installment number date (In Rs.) paid date 1 28.06.2022 14,388/- 28.06.2022 CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 25 of 30 2 28.07.2022 14,388/- 28.07.2022 3 28.08.2022 14,388/- 28.08.2022 4 28.09.2022 14,388/- 28.09.2022 21.10.2022 01.11.2022 21.11.2022 20.12.2022
47. The defendant no. 1 has contended that in the above table, the plaintiff has shown the details of repayment of the loan from 28.06.2022 to 20.12.2022, whereas PW-1 Ms. Jyoti Sharma in her cross-examination made contradictory statement that the account in question was regular in terms of EMI payment till 28.08.2022 and she further contradicted this statement when in her further cross-examination she stated that payment of amount Rs. 14,388/- was not paid on 28.06.2022, 28.07.2022 and 28.08.2022; and thus she has made false statement and committed perjury.
48. Of course, the above table given in the replication is not properly drafted and not showing the correct picture as to when the installment has been paid, however it is a matter of record and also admitted by the PW-1 Ms. Jyoti Sharma that the account in question was regular in terms of payment of EMI till August 2022 which fact is also not disputed by the defenants. Therefore, it is apparent that the defendant no. 1 had paid the amount of EMI till August 2022 and, thereafter, the default in the payment of EMIs started. This is further strengthened from the later part of cross-examination of PW-1 Ms. Jyoti Sharma where she stated that she could not tell the exact overdue amount which was due on the particular date CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 26 of 30 i.e. 28.09.2022, 28.10.2022, 28.11.2022 and 28.12.2022. She further categorically stated that the borrower had already paid three installment commencing from 28.06.2022. It is also not in dispute that after 28.08.2022, the defendants have not paid the EMI of Rs. 14,388/- which can be gathered from the questions put by defendant no. 1 to PW-1 which are reproduced as under:-
Question: Any payment was ever made by the borrower on 28.09.2022, 28.10.2022, 28.11.2022 and 28.12.2022?
Answer: There was draw down from account number 0307101602772 (linked account) of Rs. 3018/- on 28.09.2022 (auto deducted), thereafter draw down was on 21.10.2022. No payment was made on 28.10.2022. Question: EMI due as on 28.09.2022 stands at Rs. 14,388/- however there was still overdue of Rs. 11,000/- (approx) as on 28.09.2022?
Answer. Yes, but I cannot tell the exact amount right now. Question. EMI due as on 28.10.2022 stands at Rs. 14388/- however there was still an overdue of Rs. 11000/- (approx) as on 28.10.2022?
Answer: I cannot tell the exact overdue amount as on that date as it can only be checked in system as of now. However there was some overdue amount.
49. These questions put by the defendant no. 1 himself to PW-1 Ms. Jyoti Sharma that the account was irregular since 28.09.2022 and there were overdue clearly show that the defendant no. 1 had paid the installment upto 28.08.2022. Therefore, on the basis of drafting error in the replication which reflects Installment paid dates till 20.12.2022, it cannot be said that PW-1 is liable to be prosecuted for perjury for her CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 27 of 30 statement during cross-examination that payments of EMI were made upto 28.08.2022 only.
50. As regards the another contention of the defendant no. 1 that in the plaint, it has been averred that it was the bank which came to know that the defendant was gainfully employed, while in the cross-examination PW-1 Ms. Jyoti Sharma stated that it was the defendant himself who disclosed the said information again would not be sufficient to initiate the criminal proceedings against her.
51. The other contentions of the defendant no. 1 that the bank has misused the KYC documents submitted by him or made false statement regarding sending of letters and reminders or bank account has been manipulated have not been proved by him by leading any cogent and clinching evidence and in the absence thereof, no criminal proceedings can be initiated against the plaintiff bank or Ms. Jyoti Sharma.
52. So far as the judgments relied upon by the defendant no. 1 is concerned, in State Bank of India vs. Rajesh Agarwal (supra), the Master Directions on Frauds issued by Reserve Bank of India were challenged before different High Courts primarily on the ground that no opportunity of being heard is envisaged to the borrowers before classifying their account as fraudulent. The purpose of the same was elaborated and it was held by the Hon'ble Supreme Court that the principles of natural justice has to be adhered to as the classification of a borrower account as fraudulent under the Master Direction of CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 28 of 30 Fraud entails civil consequences to the borrower. However, the said judgment is not applicable to the facts of the present case as in this case, the defendants were fully aware about their account being irregular and they were also sent the SMS and notice Ex.PW1/8 and made aware for regularizing the account at the time of visit of defendant no. 1 in the bank and to make the overdue payment.
53. The judgment in SBI vs. M/s Jah Developers Pvt Ltd, (supra) is again on the issue that the borrower is entitled to be heard and to be represented by a lawyer of his choice before declaring the borrower a willful defaulter under the RBI and is distinguishable as in this case the defendant no. 1 admittedly visited the bank where he was apprised the status of the account before his account was declared NPA.
54. Similarly, the other judgments as cited supra are not applicable to the issues involved in the present case and are of no help to the defendant no. 1.
55. The judgments relied upon by the applicant in the application under Section 340 Cr.P.C. lay down the law for initiating the perjury proceedings but no case is made out to initiate the proceedings under Sectio 340 Cr.P.C. against PW-1 Ms. Jyoti Sharma or the plaintiff bank.
56. In these facts, the application moved by the defendant no. 1 under Section 340 Cr. P. C is devoid of any merit and the same is hereby dismissed.
57. The Miscellaneous case file titled as "Himanshu Seth vs. Canara Bank & Anr." bearing Misc DJ 3389/2024, CS (COMM) No. 394/2023 Canara Bank Vs. Himanshu Seth & Ors. Page 29 of 30 stands disposed of and be consigned to Record Room, after due compliance.
RELIEF
58. As a sequel to my findings under Issue No. 1 and 2, the suit of the plaintiff is decreed in its favour and against the defendants for a sum of Rs. 7,61,414.61/- along with interest @ 6% per annum from 29.03.2024 till its realization which the defendants are liable to pay jointly or severally to the plaintiff bank. The plaintiff is also awarded costs of the suit.
59. Decree sheet be prepared accordingly.
60. File be consigned to Record Room, after due compliance.
Digitally signed by BALWANT BALWANT RAI BANSAL
RAI Date:
Announced in the open Court BANSAL 2025.08.06
16:37:40
on 6th August, 2025 +0530
(Balwant Rai Bansal)
District Judge (Commercial Court)-02
Patiala House Courts, New Delhi
CS (COMM) No. 394/2023
Canara Bank Vs. Himanshu Seth & Ors. Page 30 of 30