Bangalore District Court
State Bank Of India vs Devendrappa Y M on 24 January, 2024
1
Com. O.S.No.1624/2022
IN THE COURT OF LXXXVIII ADDL. CITY CIVIL &
SESSIONS JUDGE, (EXCLUSIVE DEDICATED
COMMERCIAL COURT) AT BENGALURU (CCH.89)
THIS THE 24th DAY OF JANUARY, 2024
PRESENT:
SRI. VIRUPAKSHAIAH H. M.,
B.Com., LL.M.,
LXXXVII ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU (CCH-88)
Concurrent Charge of
LXXXVIII ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU (CCH-89)
Com.O.S.No.1624/2022
PLAINTIFF State Bank of India,
Small and Medium enterprises Centre
(SMEC), #20, Badagandu Sangha
Building, Girls High School Street,
Kumarapark, Bangalore-560 020, Rep.
by its Chief Manager, Kiran S. Mathada.
(Rep. by Sri.V.P., Advocate)
AND
DEFENDANT Mr. Devendrappa Y.M., Proprietor, M/s
Megha Enterprises, No.494, 17th Cross,
Jakkur Layout, Bellary Road,
Yelahanka, Bangalore - 560 064, And
also at:
1. No.29, 2nd Cross, Benaka Enclave,
Hesaraghatta Main Road,
2
Com. O.S.No.1624/2022
Thotadaguddahalli, Bangalore - 560
073,
2. Flat No.4, Adarsha Enclave, Phase-II,
Bangalore - 560 073.
3. No.48/1,2,3, Mysore Road,
Mylasandra Village, Kengeri Hobli,
Bangalore - 560 059.
(Rep. by Sri.H.N.P., Advocate)
Date of Institution of the suit 07.11.2022
Nature of the suit (suit on Recovery of money
pronote, suit for declaration &
Possession, Suit for injunction
etc.)
Date of commencement of 06.11.2023
recording of evidence
Date on which judgment was 24.01.2024
pronounced
Total Duration Year/s Month/s Day/s
01 02 17
(VIRUPAKSHAIAH H M),
C/c LXXXVIII Addl. City Civil & Sessions Judge,
(Exclusive Commercial Court)
Bengaluru.
JUDGMENT
The Plaintiff Bank has filed this suit against the Defendant for recovery of total sum of Rs.8,65,985/- together with current and future interest @ 14.75% p.a. 3 Com. O.S.No.1624/2022 compounded at monthly rests from the date of suit till realization.
2. The Plaintiff's case in brief is that, the plaintiff is a banking institution constituted under the State Bank of India Act 1955 having its corporate center at Madam Cama Road, Mumbai and local head office for Bangalore Circle at St. Marks Road, Bangalore - 560- 001.
3. The Defendant has approached the plaintiff bank seeking credit facility of Rs.5,00,000/- for his business purpose. After considering the request of the defendant, the plaintiff bank had sanctioned credit facility of Rs.5,00,000/- to the defendant by intimating terms of sanction through letter of arrangement dated 27.06.20219 and the defendant has accepted the same. The said loan to be repaid with interest @ 2.75% above MCLR and present MCLR being 8.55% and the effective rate of interest thus is 11.30% p.a. compounded at monthly rests subject to change in the rate of interest as 4 Com. O.S.No.1624/2022 per the loan policy guidelines of the plaintiff bank. The current rate of interest is 14.75% p.a. compounded at monthly rests. The defendant has hypothecated stocks in trade and receivables in order to avail the credit facility by executing the agreement of loan cum hypothecation dated 27.06.2019.
4. After getting sanctioned the said loan, the defendant was very irregular in repayment of loan dues and has failed and neglected to honour the commitment and failed to pay the loan dues as agreed at the time of availing the said loan. In spite of requests, the defendant intentionally and deliberately committed serious default in repayment of the loan amount and failed to discharge the obligations towards the terms and conditions under the loan agreement and failed to pay the overdue interest accrued on the loan amount. Hence, without alternative, the plaintiff bank issued legal notice dated 11.05.2022 calling upon to repay the amount due towards the said loan and the defendant has received the same.
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Com. O.S.No.1624/2022
5. The outstanding amount in the loan account of the defendant is Rs.5,07,097.11/- and the interest from 27.10.20219 to till date is not applied to the account extract as per the guidelines of RBI for income recognition purpose. The applied interest is reversed. Thus the amount now due to the plaintiff bank is as under:
1. Outstanding amounts as Rs.5,07,097.11/-
per the extract including interest upto 26.10.2019
2. Interest from 27.10.2019 Rs.3,57,887.89/- to 29.05.2022
3. Legal notice charges Rs.1,000.00/-
Total Rs.8,65,985/-
Thus the defendant is liable to pay Rs.8,65,985/- and the bank has maintained statement of account. The defendant is also liable to pay present and future interest from the date of suit at the current rate of 14.75% p.a. compounded monthly rest till the date of realization.
6. The cause of action arose on 27.06.2019 when the loan was sanctioned and also when the defendant executed the agreement of loan cum hypothecation and 6 Com. O.S.No.1624/2022 letter of arrangement and also on 11.05.2022 when the legal notice was issued to the defendant and subsequent default in repayment of the loan amount and the same is within time and also within the jurisdiction of this Hon'ble Court.
7. In response of the suit summons, the defendant has appeared through his counsel and filed the written statement contending that the claim of the plaintiff is totally misconceived, and has purposefully suppressed the true facts. The claim of the plaintiff that the defendant approached the plaintiff bank and availed credit facility of Rs.5,00,000/-. But after filing of the written statement, the plaintiff got the plaint amended to get out the bar of limitation and has used the documents signed by the defendant earlier by inputting the dates subsequently i.e., Ex.P.6, P.7, P8 and P14. The plaintiff improvised case by falsely pleading that the documents for renewal were signed by the defendant. However the defendant has not signed any documents for renewal in the year 2019. 7
Com. O.S.No.1624/2022
8. It is denied by the defendant that on the terms and conditions the defendant acknowledged the letter of arrangement dated 27.06.2019 and the execution of alleged hypothecation deed dated 27.06.2019 and the outstanding balance due by the defendant is Rs.5,07,097/- and also denied that the defendant is due a sum of Rs.8,65,985/- and also denied that the defendant is liable to pay interest @ 14.75% p.a. compounded monthly. No loan was sanctioned to this defendant on 27.06.2019 and the dates in the document filed in the suit are dated subsequently to suit the convenience of the bank.
9. The defendant had the benefit of loan of cash credit from the plaintiff bank in the year 2017. He had been repaying the loan amount sincerely to the Bank of Patiala. However due to certain mishaps in his life the defendant could not repay the loan amount subsequently. The defendant has undergone knee amputation that has resulted in 80% physical disability to him and is 8 Com. O.S.No.1624/2022 physicality handicapped. The defendant has undergone eye surgery and is suffering from Kidney problems due to Kidney stones. In addition the defendant was exposed to the Covid-19 and his business was severely hit by Covid- 19 lock down for more than 2 years. He has closed his business. He is not carrying on any business activity and is a dependent both physically and financially.
10. The plaintiff bank had secured the loan with insurance coverage. The loan of the defendant is insured. In the circumstances, the defendant's case is entitled for the benefit of insurance coverage. The defendant has corresponded on several occasions and requested the plaintiff bank on several times to waive of the loan. He could not meet the concerned officers of the plaintiff bank due to his disability and health issues and he has not received any notice pertaining to PIM No.1383/2022. He was not aware of the said proceedings. It is denied that the defendant has executed the agreement dated 9 Com. O.S.No.1624/2022 06.04.2016 accepting the terms he executed the agreement.
11. It is denied that the defendant has executed any renewal/revival document as contended by the plaintiff. The bank has obtained signatures of this defendant on several blank forms at the time when he approached the bank for loan. The plaintiff might used such form to allege renewal or revival of loan as per their convenience. There is no due/ valid and conscious execution of the renewal/ revival document. The amendment pleading is intended to validate a time barred suit and it will cause great hardship and prejudice to the defendant.
12. The defendant has filed additional written statement contending that the claim of the plaintiff is totally misconceived and the plaintiff has purposely suppressed the true facts and is misleading the court to make false claim. It is true that the allegations in para 3A of the plaint that the defendant approached the Bank of Patiala 10 Com. O.S.No.1624/2022 in 2016, however denies that the defendant has executed agreement on 06.04.2016 accepting the terms he executed the agreement is incorrect and the signatures of the defendant obtained on documents No.1 to 3 are obtained as a pre-condition for loan.
13. It is denied that the allegations in para 3B of the plaint that the amount is to be repaid on demand with interest at 12% p.a. compounded at monthly rests, that the current interest rate is 14.75% p.a. compounded at monthly rest. It is also denied that the allegations in Para 3C that on merger of State Bank of Patiala the loan account is maintained by the plaintiff bank with effect from 01.04.2017 and also denied that the defendant in 2019 approached the plaintiff bank for renewal sanction on 26.02.2019 and has executed letter of revival on 26.02.2019. Hence prays to dismiss the suit.
14. On the basis of the pleadings of the parties, my predecessor has framed the following; 11
Com. O.S.No.1624/2022 ISSUES
1. Whether the plaintiff proves that the defendant is due a sum of Rs.8,65,985/- in respect of the cash credit facility?
2. Whether the plaintiff proves that the defendant sought for renewal of sanction and executed letter of revival on 26.02.2019?
3. Whether the plaintiff is entitled for recovery of Rs.8,65,985/- from the defendant with interest at 14.75% p.a. compounded at monthly rest, as prayed?
4. What order or decree?
15. The plaintiff in order to prove the plaint averments has examined its Manager as P.W.1 and Chief Manager as P.W.2 and got marked the documents as Ex.P.1 to P.16. The defendant got himself examined as D.W.1 and got marked the document as Ex.D.1 to D.5 and closed its side.
12
Com. O.S.No.1624/2022
16. Heard the arguments on the both side and perused the records.
17. My findings to the above issues are as under:
Issue No.1 :- In the affirmative;
Issue No.2 :- In the affirmative;
Issue No.3 :- Partly in affirmative;
Issue No.4:- As per the final Order
for the following reasons.
REASONS
18. Issue No.1 to 4 :- These issues are interrelated to each other, hence, in order to avoid the repetition of facts and materials on record, these issues are discussed together. In order to prove the case, the plaintiff mainly relies upon the oral evidence of PW-1 and 2 and documents at Ex.P1 to P.16. The Learned counsel for the plaintiff would argue to support the pleadings, oral and documentary evidence of the plaintiff and lastly prays to decree the suit.13
Com. O.S.No.1624/2022
19. The defendant has appeared through his counsel and filed the written statement by denying the sanctioned cash credit facility of Rs.5,00,000/- and the terms are intimated to the defendant, defendant accepting the same, rate of interest, defendant was very irregular in payment of loan, willfully failed to repay the installments, outstanding balance of Rs.8,65,985/- with interest @ 14.75% p.a., cause of action, execution of hypothecation deed. He contending that he had benefit of the loan cash credit facility from the plaintiff bank in the year 2016, he had been repaying sincerely, due to certain mishaps he could not repay the loan, subsequently, he had disabled and physically handicapped and suffered from Covid 19 and closed his business, loan covered by insurance and suit is barred by limitation and lastly prays to dismiss the suit with cost.
20. In order to prove the said contention D.W.1 reiterated the facts in his affidavit in chief examination once again on oath and and marked the documents as 14 Com. O.S.No.1624/2022 Ex.D.1 to D.5. These are all medical documents of the defendant to show that the defendant is physically handicapped and getting monthly pension of Rs.1,400/- from the government on account of his physical disability. These documents are not helpful to the defendant to waive off the loan availed by him and escaping from his liability. During the cross examination the D.W.1 admits that the State Bank of Patiala was amalgamated in the State Bank of India on 01.04.2017, his loan account was transferred to the plaintiff bank, he sought time to the plaintiff bank to repay the loan amount to the plaintiff bank. It appears that when the defendant sought time to repay the loan amount, it shows that he has admitted that he had availed the loan and liable to pay the same to the plaintiff bank. In this regard, the plaintiff produced document at Ex.P.14 letter dated 26.06.2019 written by the defendant to the A.G.M. of the State Bank of India, SME, CC 5012, Bengaluru seeking 4 to 5 months time to pay EMI. But in the cross-examination D.W.1 denies 15 Com. O.S.No.1624/2022 Ex.P.14 and deposed that he never went to the bank. He admits that the phone number appeared in Ex.P.14 is belongs to him and deny the handwritten letter belongs to himself and he never wrote letter as well as sent e-mail to the bank. As against P.W.1 marked Ex.P.14 and the signature of defendant and Ex.P.14(a). Though the defendant counsel deny the Ex.P.14 and Ex.P.14(a) belongs to the defendant and it is concocted, but the said suggestion is denied by the P.W.2. On scrutinize the said oral evidence of the parties and perused Ex.P.14, it is found that when the defendant admits the phone number appeared in Ex.P.2 is belongs to him and bald denial of Ex.P14 and P.14(a) without any supporting cogent evidence for such denial, the bald denial is not helpful to the defendant to hold that Ex.P.14 is concocted one. Moreover, P.W.2 is a Chief Manager of the plaintiff bank, he never got personal interest to depose against the defendant. When D.W.1 admits that he sought time to the plaintiff bank to repay the loan amount itself is sufficient 16 Com. O.S.No.1624/2022 to hold that he had wrote a letter to the plaintiff bank as per Ex.P.14. No any reason to discard the Ex.P.14 and P.14(a) and which was not belongs to him. Therefore, from Ex.P.14 itself sufficient to hold that the defendant had availed the cash credit loan as alleged by the plaintiff bank and he was irregular in payment of loan amount to the plaintiff bank.
21. D.W.1 further admits that his counsel sent email to the plaintiff bank for supply of statement of account pertaining to the alleged loan transaction. Accordingly,the plaintiff bank supplied the same to his counsel as per Ex.P.15 and P.16. i.e. email and statement of current account, which are support and corroborate to the admission of D.W.1. When the counsel for defendant request through email and get the account extract of alleged loan account of the defendant are all clearly goes to show that the defendant had availed the loan and was irregular in repayment of loan to the plaintiff bank. 17
Com. O.S.No.1624/2022
22. D.W.1 further admits that the bank had given notice to him as per Ex.P.9, in spite of notice, he had not replied. When the defendant failed to reply the demand notice issued by the plaintiff bank as per Ex.P.9 and the plaintiff bank called upon the defendant to repay the loan amount of Rs.8,57,137/- along with interest within 7 days, if failed the plaintiff bank will constraint to proceed against the defendant according to law for recovery of alleged loan amount, it deems that the defendant admits the outstanding dues and he was irregular in repayment of loan dues and have not adhered to the terms and conditions of the agreement and has committed defaults in repayment of loan dues. Accordingly the plaintiff has right to recover the loan amount from the defendant.
23. D.W.1 denies Ex.P.6 and his signature at Ex.P.6(a). He deposed that he never went to the plaintiff bank and the plaintiff bank obtained his signature on blank paper in the year 2017. Ex.P.6 is the revival letter executed by the defendant to the plaintiff bank stating that he has 18 Com. O.S.No.1624/2022 acknowledged the loan amount on 26.02.2019 for the purpose of Sec.89 of Limitation Act and also admits that liable to repay the outstanding with interest and charges to the plaintiff bank. Except bald denial of Ex.P.6 nothing placed by him to show that Ex.P.6 is concocted and he had put his signature on blank paper. D.W.1 further admits that he had put his signature on Ex.P.7 and 8 i.e. letter of agreement and agreement of loan cum hypothecation dated 27.06.2019. So Ex.P.7 and P.8 are undisputed documents. Based on these documents, the defendant had agreed to terms and conditions in Ex.P.7 and P.8. Though D.W.1 deny the suggestion that he had deposed falsely only in order to escape the liability. But no any supporting documentary or oral evidence to accept his evidence.
24. The remaining oral evidence of P.W.1 and documents at Ex.P.1 to 16 are not denied by the defendant either in his oral evidence nor in the cross examination of P.W.1 and P.W.2. These documents and 19 Com. O.S.No.1624/2022 the oral evidence of P.W.1 and 2 are all sufficient to hold that the defendant had availed the alleged loan, he failed to repay the same as agreed by him along with interest in spite of notice vide Ex.P.9 received by him, hence the defendant is liable to pay the outstanding due along with interest to the plaintiff bank. Though the defendant cross-examined P.W.2, but nothing has been elicited from his mouth to discard the same. In the cross-examination of P.W.1 the only suggestion made by the counsel for defendant to depose on the basis of the documents, the P.W.1 admits the same. P.W.1 in his chief examination marked the document at Ex.P.1 to 6. Which are not denied by the defendant. There are no any reason to discard the oral evidence of P.W.1 and 2 and the documents vide at Ex.P.1 to P.16. Therefore, this court opined that the suit of the plaintiff is deserved to be decreed.
25. The transaction involved in the suit is a commercial one, the defendant agreed to pay rate of interest on the 20 Com. O.S.No.1624/2022 loan specified in the loan documents executed by him in favour of plaintiff Bank. However, the plaintiff bank claimed the future interest @ 14.75 p.a. compounded a monthly rest from the date of suit till realization. Upon considering the facts and circumstances of the case, status of the defendant and his disability, this court comes to the conclusion that the defendant is held liable to pay the future interest at the rate of 10% per annum on the total award amount to the plaintiff Bank from the date of suit till realization. Hence, I am of the view that the suit of the plaintiff bank is deserves to be decreed in part. Hence, I answer Issue No.1 and 2 in the Affirmative and Issue No.3 partly affirmative.
26. Issue No.4 :- For the aforesaid reasons, I proceed to pass the following:
ORDER The suit of the Plaintiff Bank is hereby partly decreed with costs.
The Defendant is held liable to pay a sum 21 Com. O.S.No.1624/2022 of Rs.8,65,985/- (Rupees Eight Lakhs Sixty Five Thousand Nine Hundred and Eighty Five only) together with future interest at the rate of 10.00% per annum to the plaintiff bank from the date of suit till the date of realization.
The advocate for the plaintiff is directed to file Memorandum of cost before the Office within 5 days from today.
Draw decree accordingly.
(Dictated to the Stenographer directly on computer, typed by him, corrected and then pronounced by me in open Court on this the 24th day of January, 2024).
(VIRUPAKSHAIAH H M), C/c LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive dedicated Commercial Court) Bengaluru.
ANNEXURE LIST OF WITNESSES EXAMINED ON BEHALF OF THE PLAINTIFF PW-1 Smt. R. Dayakeshwari PW-2 Kiran S. Mathada LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE PLAINTIFF Ex.P.1 Certified copy of order sheet in O.S.No.755/2022 Ex.P.2 Loan arrangement dated 06.04.2016 Ex.P.3 Agreement of loan cum hypothecation 22 Com. O.S.No.1624/2022 Ex.P.4 Letter by defendant to Bank Manager Ex.P.5 State of accounts Ex.P.6 Revival letter dated 26.02.2019 Ex.P.7 Letter of arrangement dated 27.06.2019 Ex.P.8 Agreement of loan cum hypothecation Ex.P.9 Legal notice Ex.P.10 Postal acknowledgments &11 Ex.P.12 & Unserved postal envelopes 13 Ex.P.14 `Letter by defendant to the AGM Ex.P.15 E-mail Ex.P.16 Statement of account of current account. LIST OF WITNESSES EXAMINED ON BEHALF OF THE DEFENDANT D.W.1 Devendrappa LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE DEFENDANT Ex.D.1 Notarized copy of sanction order Ex.D.2 Notarized copy of disabled letter issued by medical authority Ex.D.3 Out patient summary issued by Sri. Satya Sai Institute of Higher Medical Science Ex.D.4 Final report issued by diagnostic center Ex.D.5 Discharge summary (VIRUPAKSHAIAH H M), C/c LXXXVIII ACC & SJ, Bengaluru.