Bangalore District Court
Canara Bank vs M/S Sree Siddappaji Papers on 17 February, 2025
1
COM.O.S.1229/2024
KABC170024422024
IN THE COURT OF LXXXII ADDL.CITY CIVIL & SESSIONS
JUDGE, AT BENGALURU (CCH.83)
THIS THE 17th DAY OF FEBRUARY 2025
PRESENT:
SMT. SUMANGALA S BASAVANNOUR.,B.COM,L.L.M.,
LXXXII ADDL.CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.O.S.No.1229/2024
BETWEEN:
Canara Bank, A Body
Corporate Established
under the Banking
Companies (Acquisition
& Transfer of
Undertakings) Act 1970
Having its Head Office at
No.112, J.C.Road,
Bengluru-560 002.
2
COM.O.S.1229/2024
Having its branch At:
Chickpet Branch-II,
Chickpet, Bengaluru -
560 053, Rep. By its
Chief Manager, Sri. Rajiv
Kumar.
: PLAINTIFF
(Represented by Smt.
Lakshmi K. Varadaraj,
Advocate)
AND
1. M/s. Sree Siddappaji
Paper, Rep. By its
Proprietor Lingaraju. P
#62, Binny Mill Main
Road, Hulchatra,
Bengaluru - 560 053.
2. Sri. Lingaraju. P, Aged
Major, S/o Sri. Puttaraju
#22, 20th Cross,
Bhuvaneshwari Nagar,
Magadi Road, Bengaluru
- 560 023.
: DEFENDANT
3
COM.O.S.1229/2024
(Defendants are placed
exparte as per order
dated 20.12.2024.)
Date of Institution of the
12.09.2024
suit
Nature of the suit (suit on
pronote, suit for declaration
Suit for recovery of money
& Possession, Suit for
injunction etc.)
Date of commencement of
10.01.2025
recording of evidence
Date on which judgment
17.02.2025
was pronounced
Total Duration Year/s Month/s Day/s
00 05 05
(SUMANGALA S BASAVANNOUR),
LXXXII Addl.City Civil & Sessions Judge,
Bengaluru..
JUDGMENT
This suit is filed by the Plaintiff Bank for recovery of money a total sum of Rs. 16,29,249.85 with respect of long 4 COM.O.S.1229/2024 term loan account No. 04351400000511 as on 31.01.2024, Rs. 1,11,949.24 in loan a/c no. 04359160000262 as on 31.01.2024 and Rs. 1,62,198.31 as on 09.01.2024 in loan A/c No. 170001712264 in total to pay 19,03,397.04 in all the three accounts with penal interest 2% To pay the present, future and pendente lite interest from the date of default calculation till filing of the suit and there after till the date of realization of the lona amount at the rate of 9.80% with respect of 1 st loan, 7.50% with Respect to 2 nd loan and 7.50% with respect to 3rd loan per annum and penal interest at 2%.
2. The Brief facts of the Plaint are as follows:-
The Plaintiff is a Banking Company and a Body Corporate established under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970 1970 1970. M/s. Sree Siddappaji Papers, represented by its Proprietor Sri.Lingaraju.P the Defendant No.1 herein above, approached plaintiff's Bank for loans on three different dates which are covered under CGTMSE i.e. I) OD/OCC Working Capital Loan of Rs.15,00,000/-, II) Working Capital Term Loan under the 5 COM.O.S.1229/2024 scheme Guaranteed Emergency Credit Line (GECL) loan of Rs.2,70,000/- and III) Working Capital Term Loan under the scheme Guaranteed Emergency Credit Line (GECL) of Rs.1,50,000/- defendant No.2 stood as guarantor for 3rd loan.
OD/OCC Working Capital Loan vide A/c No. 04351400000511 The Defendant No.1 represented by its proprietor Sri. Lingaraju P is running a business that deals with waste papers and bonds in the name and style of M/s. Sree. Siddappaji Papers with GSTIN.29AMWPL4634P1ZY and he approached plaintiff's Bank for working capital loan of Rs. 15,00,000/- for Working Capital requirement under OD/OCC Scheme and filed an application on 24.10.2019.
Pursuant to the said application above, the Plaintiff Bank had sanctioned the above said loan of Rs.15,00,000/- on 24.10.2019 with OD loan A/c No.04351400000511 with interest at the rate of EBLR plus 1.55% with monthly rests which the Plaintiff Bank may specify from time to time. The present rate of interest is 9.80% p.a. The said facility was secured by Hypothecation of stock trade. The Defendant No.1 agreed to 6 COM.O.S.1229/2024 the terms and conditions of the plaintiffs Bank and both bank and the defendants had executed necessary loan documents such as, request for renewal of SOD limit dated 24.10.2019 and Hypothecation agreement dated 25.10.2019.
The said existing Working Capital /Over Draft Cash Credit facility was renewed on 05.12.2020 with interest RLLR + 2.25% at present one year RLLR 6.90% = 9.15% P.A and with the same existing terms and condition. For the purpose of this renewal, the borrower and the bank had got executed the documents such as i) Enclosure III link letter from the barrower
ii) Request for Overdraft Facilities dated 05.12.2020, iii) Loan Application form for Loans to MSMEs dated 5.12.2020 iv) Sanction Letter vide Ref.No CR 10435-2021 dated 05.12.2020
v) the defendant no.1 executed the Pronote dated 05.12.2020
vi) Letter of Undertaking re: Loans/advances dated 05.12.2020,
vii) Cash Credit Agreement dated 05.12.2020.
The said existing Working Capital /Over Draft Cash Credit facility was renewed on 22.03.2022 with Interest RLLR + 2.25% P.A and with the same existing terms and condition. It is submitted that the security of stock trade which was hypothecated earlier continued. For the purpose of this 7 COM.O.S.1229/2024 renewal, the borrower and the bank had got executed the documents such as 1) Request letter for Overdraft facilities made by defendant, ii) Letter of renewal iii) Loan Application,
iv) Sanction Letter vide Ref No. SL/10405/2022-23/140.511, v) Acknowledgment of Debt And Security, vi) Pronote and vii) Letter of Undertaking re: Loans/advances.
Working Capital Term Loan under the scheme Guaranteed Emergency Credit Line (GECL) vide A/c No. Pursuant to the Government of India's Emergency Credit Line Guarantee Scheme (ECLGS) due to covid pandemic, the plaintiff bank offered to the Defendant No.1 unit a Guaranteed Emergency Credit Line (GECL) in the form of a working capital term loan amounting to Rs.2,70,000/- on 17.06.2022. The loan was sanctioned under loan A/c No.04359160000262 at an interest at the rate of 7.50% (RLLR: 6.90% +0.60% for MSE's repayable in 36 equal monthly installments after a moratorium of 12 months from the date of first disbursement.
The aforesaid working capital facility was secured by i) Agreement Cum Deed of Hypothecation ii) Pronote and iii) Annexure-III Undertaking Letter from Borrower iv) Letter of undertaking re:loans/advances v) Letter evidencing execution 8 COM.O.S.1229/2024 of documents vi) particulars of vehicles/machinery/equipment/live stocks etc., hypothecated
vii) Certificate of loan papers obtained all are dated 17.06.2020.
Working Capital Term Loan under the scheme Guaranteed Emergency Credit Line (GECL) vide A/c No.170001712264 The Defendant No.1 filed a Defend loan application on 09.11.2021 under MSEs and pursuant to the said application above, the Plaintiffs Bank had sanctioned the Loan under Government of India's Emergency Credit Line Guarantee Scheme (ECLGS) amounting to Rs.1,50,000/- No. 170001712264 on 09.11.2021 repayable in with loan A/c 36 equated monthly installments after a moratorium of 24 months with interest at the rate of 7.50% P.A (RLLR 6.90% + 0.60%. The aforesaid working capital facility was secured by execution of i) Agreement Cum Deed of Hypothecation il) Pronote and iii) Letter of undertaking re:loans/advances iv) Annexure-III undertaking letter from borrowers v) particulars of vehicles/machinery/equipment/live stocks etc., hypothecated
vii) Certificate of loan papers obtained all are dated 17.06.2020. By virtue of the loan documents, the borrower 9 COM.O.S.1229/2024 defendant No.1 and with the personal Guarantee of the proprietor i.e defendant No.2 agreed to abide by the condition of the loan terms for all the three loans and he has undertaken to abide and bound by the terms of the sanction letter of the loan. Thereafter, when the defendant failed and neglected to clear the loan as agreed upon, the plaintiff's bank issued letter dated 26.12.2022 to defendants requesting them to repay the loan liability. The Defendants failed and neglected to repay the Loan amount despite several requests reminders and notices and hence the loan was declared NPA on 28.06.2023. Hence, hence, the plaintiffs Bank got issued legal notice on 12.02.2024 to the defendant through their counsel through RPAD. The notice sent to the Defendants was returned unserved as " No such firm" and "un claimed".
As on 31.01.2024 the Defendants are due and liable to pay a sum of Rs. 16,29,249.85 to the Plaintiff Bank with respect to long term loan A/c No. 04351400000511 II) Rs.1,11,949.24/- in Loan A/c No. 04359160000262 as on 31.01.2024 and III) Rs.1,62,198.31 as on 09.01.2024 in Loan A/c No. 170001712264 in total to pay Rs.19,03,397.04/-. Before instituting this suit the plaintiff's bank has also instituted 10 COM.O.S.1229/2024 the Pre-Mediation before the Hon'ble District Legal Authority, Bangalore having the application PIM No. 456 of 2024 as required under sec 12 of commercial courts act. The defendants did not bother to participate in the pre-mediation and conciliation and hence the application was closed on 05.04.2024 due to the non-Co- operation of the Defendant. Hence, this plaint.
3. Inspite of service of summons through paper publication, the Defendant has not appeared before the court and hence placed exparte.
4. The Plaintiff has examined PW-1 and got marked Ex.P.1 to Ex.P.45. I have heard the arguments of the Advocate for the Plaintiff.
5. Based on the above pleadings of the Plaintiff, the following points arise for my consideration :-
1. Whether the Plaintiff is entitled for the Suit Claim from the Defendant ?
2. What Order ?11
COM.O.S.1229/2024
6. My findings on the above Points are as under:
1. Point No.1 :- In the Partly Affirmative.
2. Point No.2 :- As per the final Order for the following reasons.
REASONS
7. Point No.1 :- The Plaintiff Bank substantiate of this case examined its Manager as PW.1. PW.1 in his evidence reiterated averments of the Plaint, and got marked Ex.P.1 to Ex.P.45.
8. In the decision reported in A.I.R. - 2000 - Karnataka - 234 (Syed Ismail vs. Smt. Shamshia Begum), the Hon'ble High Court of Karnataka has held as follows :-
"3. The impugned order does not disclose the nature of pleading placed by the plaintiff and whether there is prima facie material to grant a decree in his favour. A judgement in favour of the plaintiff is not automatic. The Court has to consider the case of the plaintiff and grant a decree in his favour. The learned trial Judge has not referred to the pleadings of the plaintiff and 12 COM.O.S.1229/2024 the documents produced by him to substantiate even a prima facie case for grant of a decree in his favour. Therefore, the judgement and decree in favour of the plaintiff is not automatic on failure of the opposite party to put his defence. The Court can grant a judgement in favour of the party only upon consideration of the case of the plaintiff including appreciation of pleadings and evidence."
9. The Defendant No.1 represented by its proprietor Sri. Lingaraju P is running a business that deals with waste papers and bonds in the name and style of M/s. Sree. Siddappaji Papers with GSTIN.29AMWPL4634P1ZY and he approached plaintiff's Bank for working capital loan of Rs. 15,00,000/- for Working Capital requirement under OD/OCC scheme and filed an application on 24.10.2019 at Ex.P.2
10. The Plaintiff Bank had sanctioned the above said loan of Rs.15,00,000/- on 24.10.2019 with OD loan A/c No.04351400000511 with interest at the rate of EBLR plus 1.55% with monthly rests which the Plaintiff Bank may specify from time to time. The present rate of interest is 9.80% p.a. The Defendant No.1 agreed to the terms and conditions of the plaintiffs Bank and both bank and the defendants had executed 13 COM.O.S.1229/2024 necessary loan documents such as, request for renewal of SOD limit dated 24.10.2019 and Hypothecation agreement dated 25.10.2019 as per Ex.P.3 and Ex.P.4.
11. The said existing Working Capital /Over Draft Cash Credit facility was renewed on 05.12.2020 with interest RLLR + 2.25% at present one year RLLR 6.90% = 9.15% P.A and with the same existing terms and condition.
12. For the purpose of this renewal, the borrower and the bank had got executed the documents such as i) Enclosure III link letter from the borrower at Ex.P.5, ii) Request for Overdraft Facilities dated 05.12.2020 Ex.P.6, iii) Loan Application form for Loans to MSMEs dated 5.12.2020 Ex.P.7, iv) Sanction Letter vide Ref.No CR 10435-2021 dated 05.12.2020 Ex.P.8, v) the defendant no.1 executed the Pronote dated 05.12.2020 Ex.P.9
vi) Letter of Undertaking re: Loans/advances dated 05.12.2020, Ex.P.10 and vii) Cash Credit Agreement dated 05.12.2020 Ex.P.11. The said existing Working Capital /Over Draft Cash Credit facility was renewed on 22.03.2022 with Interest RLLR + 2.25% P.A and with the same existing terms and condition.
14COM.O.S.1229/2024
13. For the purpose of this renewal, the borrower and the bank had got executed the documents such as 1) Request letter for Overdraft facilities made by defendant Ex.P.12, ii) Letter of renewal Ex.P.13, iii) Loan Application Ex.P.14, iv) Sanction Letter vide Ref No. SL/10405/2022-23/140.511 Ex.P.15, v) Acknowledgment of Debt And Security Ex.P.16, vi) Pronote Ex.P.17 and vii) Letter of Undertaking re: Loans/advances Ex.P.18.
14. The plaintiff bank offered to the Defendant No.1 unit a Guaranteed Emergency Credit Line in the form of a working capital term loan amounting to Rs.2,70,000/- on 17.06.2022. The loan was sanctioned under loan A/c No.04359160000262 at an interest at the rate of 7.50% (RLLR: 6.90% +0.60% for MSE's repayable in 36 equal monthly installments after a moratorium of 12 months from the date of first disbursement.
15. The aforesaid working capital facility was secured by i) Agreement Cum Deed of Hypothecation at Ex.P.20, ii) Pronote at Ex.P.23, iii) Annexure-III Undertaking Letter from Borrower at Ex.P.24 iv) Letter of undertaking re:loans/advances at Ex.P.25 v) Letter evidencing execution of documents at Ex.P.26 15 COM.O.S.1229/2024
vi) particulars of vehicles/machinery/equipment/live stocks etc., hypothecated at Ex.P.27 and vii) Certificate of loan papers obtained all are dated 17.06.2020 at Ex.P.28.
16. The Defendant No.1 filed a loan application on 09.11.2021 under MSEs at Ex.P.29. The Plaintiffs Bank had sanctioned the Loan under Government of India's Emergency Credit Line Guarantee Scheme (ECLGS) amounting to Rs.1,50,000/- at Ex.P.31 in A/c No. 170001712264 on 09.11.2021 repayable in with loan A/c 36 equated monthly installments after a moratorium of 24 months with interest at the rate of 7.50% P.A (RLLR 6.90% + 0.60%).
17. The aforesaid working capital facility was secured by execution of i) Agreement Cum Deed of Hypothecation at Ex.P.32 ii) Pronote at Ex.P.33, iii) Letter of undertaking re:loans/advances at Ex.P.34 iv) Annexure-III undertaking letter from borrowers at Ex.P.35, v) particulars of vehicles/machinery/equipment/live stocks etc., hypothecated at Ex.P.36 vii) Certificate of loan papers at Ex.P.31.
16COM.O.S.1229/2024
18. The defendant failed and neglected to clear the loan as agreed upon, the plaintiff's bank issued letter dated 26.12.2022 as per Ex.P.38 to defendants requesting them to repay the loan liability. The Defendants failed and neglected to repay the Loan amount despite several requests reminders and notices and hence the loan was declared NPA on 28.06.2023. Therefore, the plaintiffs Bank got issued legal notice on 12.02.2024 at Ex.P.39 to the defendant through their counsel through RPAD. The notice sent to the Defendants was returned unserved as " No such firm" and "un claimed".
19. From Ex.P.42, the Statement of account speaks to the effect that total amount payable towards principle amount of Rs. 16,29,249.85/-. As per Ex.P.3 the plaintiff is entitled to claim the interest at the rate of 9.80% per annum from the date of the suit till the date of realization.
20. From Ex.P.43, the Statement of account speaks to the effect that total amount payable towards principle amount of Rs. 1,11,949.24/-. As per Ex.P.15 the plaintiff is entitled to claim the interest at the rate of 7.50% per annum from the date of the suit till the date of realization.
17COM.O.S.1229/2024
21. From Ex.P.44, the Statement of account speaks to the effect that total amount payable towards principle amount of Rs. 1,62,198.31/-. As per Ex.P.30 the plaintiff is entitled to claim the interest at the rate of 7.50% per annum from the date of the suit till the date of realization.
22. The above mentioned transactions commenced from 24.10.2019 and the last payment was made by the defendant on 29.09.2023 and the suit filed on 12.09.2024 is within the limitation period.
23. In this case in spite of paper publication the Defendants have not appeared and denied the claim of the Plaintiff. Hence, the evidence of PW-1 and Ex.P.1 to Ex.P.45 are remained unchallenged. Therefore, the Plaintiff is entitle for recovery of the suit claim sum of Rs. 16,29,249.85/- for long term loan account No.04351400000511 with interest @ 9.80% per annum, Rs. 1,11,949.24/- for loan account No. 04359160000262 with interest at 7.50% and Rs. 1,62,198.31 Loan account No. 170001712264 with interest at 7.50% per annum from the date of suit till realization of the amount. Hence, I answer this Point in " Partly Affirmative".
18COM.O.S.1229/2024
24. Point No.2 : -Therefore, I proceed to pass the following Order.
ORDER The Suit of the Plaintiff is decreed in part with cost.
The Defendant is hereby directed to pay total aggregate sum of Rs.19,03,397.04/- together with interest as mentioned below.
A sum of Rs. 16,29,249.85/- for Long term loan account No.04351400000511 along with interest 9.80% per annum from the date of suit till the realization.
A sum of Rs. 1,11,949.24/- for Loan account No. 04359160000262 along with interest 7.50% per annum from the date of suit till the realization.
A sum of Rs.1,62,198.31/- for Loan account No. 170001712264 along with interest 7.50% per annum from the date of suit till the realization.
Draw Decree accordingly.
19COM.O.S.1229/2024 The Office is directed to send copy of this Judgment to Plaintiff and Defendant to their email ID as required under Order XX Rule 1 of the Civil Procedure Code as amended under Section 16 of the Commercial Courts Act.
(Dictated to the Stenographer, typed by her directly on computer, verified and then pronounced by me in open Court on this the 17th day of February, 2025).
(SUMANGALA S BASAVANNOUR), LXXXII Addl.City Civil & Sessions Judge, Bengaluru.
ANNEXURE LIST OF WITNESSES EXAMINED ON BEHALF OF THE PLAINTIFF PW-1 Rajiv Kumar LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE PLAINTIFF Ex.P.1 Original hypothication Agreement dtd.24.10.2019 (pg no.33 to 44) Ex.P.2 Link letter Ex.P.3 Request of O.D. facilities dtd.05.12.2020 Ex.P.4 Original Loan application for MSME dtd.16.04.2020 20 COM.O.S.1229/2024 Ex.P.5 Sanction letter dtd.05.12.2020 Ex.P.6 Request of O.D. facilities dated 05.12.2020 Ex.P.7 Original pronote Ex.P.8 Letter of undertaking dtd.05.12.2020 Ex.P.9 Original Cash agreement dtd.05.12.2020 Ex.P.10 Request of OD facility dtd.22.03.2022 Ex.P.11 Letter of renewal dtd.22.03.2022 Ex.P.12 Loan application dtd.22.03.2022 Ex.P.13 Sanction letter dtd.22.03.2022 Ex.P.14 Acknowledgment of debt and security dtd.22.03.2022 Ex.P.15 Pronote dtd.22.03.2022 Ex.P.16 Letter of undertaking dtd.22.03.2022 Ex.P.17 Loan application dtd.17.06.2020 Ex.P.18 Appendix - 1 and Annexure - 2 dtd.17.06.2020 Ex.P.19 Sanction memorandum Ex.P.20 Original Agreement cum deed of hypothication dtd.17.06.2020 Ex.P.21 Pronote dtd.17.06.2020 Ex.P.22 Undertaking letter from borrowers Ex.P.23 Original letter of undertaking dtd.17.06.2020 Ex.P.24 Letter evidencing execution of documents dtd.17.06.2020 Ex.P.25 Particulars of vehicles machinery hypothicated dtd.17.06.2020 Ex.P.26 Certificate of loan papers obtained dtd.17.06.2020 Ex.P.27 Application for loan to MSME dtd.09.11.2021 Ex.P.28 Appendix - 1 and Annexure - 2, dtd.09.11.2021 21 COM.O.S.1229/2024 Ex.P.29 Sanction memorandum Ex.P.30 Original agreement cum deed of hypothication dtd.09.11.2021 Ex.P.31 Pronote dtd.09.11.2021 Ex.P.32 Letter of undertaking dtd.09.11.2021 Ex.P.33 Undertaking letter from borrower Ex.P.34 Particulars of vehicle/ machiner etc. Hypothicated Ex.P.35 Original particulars of guarantor /co-applicant dtd.09.11.2021 (pg no.172 & 173) Ex.P.36 Original letter dtd.26.12.2022 Ex.P.37 O/C of Legal notice dtd.12.02.2024 Ex.P.38 Unserved RPAD, opened in open Court, notice marked as Ex.P.40(a) Ex.P.39 Unserved RPAD, opened in open Court, notice marked as Ex.P.41(a) Ex.P.40 Original hypothication Agreement dtd.24.10.2019 Ex.P.41 Link letter Ex.P.42 Statement of Account (pg no.1 to 147) along with Sec.63B of Bharatiya Sakshya Adhiniyama Ex.P.43 Statement of Account (pg no.148 to 151) along with Sec.63B of Bharatiya Sakshya Adhiniyama Ex.P.44 Statement of Account (pg no.152 to 153) along with Sec.63B of Bharatiya Sakshya Adhiniyama Ex.P.45 PIM report dtd.05.04.2024 LIST OF WITNESSES EXAMINED ON BEHALF OF THE DEFENDANT 22 COM.O.S.1229/2024 NIL LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE DEFENDANT NIL (SUMANGALA S BASAVANNOUR), LXXXII Addl.City Civil & Sessions Judge, Bengaluru.