Delhi High Court
Corporation Bank vs Sushil Enterprises And Ors. on 16 May, 2003
Equivalent citations: 2003VIAD(DELHI)467, 106(2003)DLT187, 2003(71)DRJ738, (2003)135PLR45
Author: J.D. Kapoor
Bench: J.D. Kapoor
JUDGMENT J.D. Kapoor, J.
1. This is a suit for recovery of a sum of Rs. 7,59,466/- under Order 34 Code of Civil Procedure and for a decree of declaration to the effect that the defendants no. 5 and 6 have no authority to revoke the General Power of Attorney dated 7.12.87 executed by them authorising the plaintiff to realize the rent of premises no. ND-6, Pitampura, Vishakha Enclave, New Delhi taken on lease by defendant no. 7, Bank and appropriate the same against the loan amount till the liability of defendants no. 1 and 2 is liquidated. Apart from this, the plaintiff has also sought a decree of perpetual injunction for restraining defendants no. 5 and 6 from revoking the said GPA and also for a decree of mandatory injunction to direct defendant no. 7 to continue to pay the rent to the plaintiff till the liability of defendant no. 1 is liquidated.
2. The case of the plaintiff in brief is that on 29.3.84 the plaintiff Bank granted in favor of defendant no. 1 through its proprietor defendant no. 2 a term loan against execution of documents of loan/security and on the guarantee of the defendants No. 3 and 4. Defendant no. 2 deposited the title deeds of property no. 1264, 1265 and 1265A, Fiaz Ganj, New Delhi while defendants no. 3 and 4 had already deposited the title deeds relating to property no. BL-106, Hari Nagar, New Delhi with an intention to create security thereon. The defendants no. 5 and 6 executed a Power of Attorney in favor of the plaintiff to collect rent of premises No. ND-7, Vishakha Enclave, Pitampura, Delhi under the tenancy of defendant number 7.
3. The defendants no. 1 to 6 filed a joint Written Statement denying the claim of the plaintiff. They have alleged forgery done by the plaintiff in as much as that their signatures were obtained on blank loan documents which were later on filled up by the plaintiff. As regards the deposit of the title deeds of the properties, it is averred that the same were handed over to the Bank only to show their solvency and were never deposited with an intention to create mortgage. It is further averred that the loan amount was not disbursed and the statement of account is false. Apart from this they have also taken the plea that the Power of Attorney was not admissible being an unregistered document and moreover they had already revoked the same. The plaintiff denied the aforesaid allegations and reiterated the averments made by them in the plaint.
4. The plaintiff examined two witnesses whereas defendants no, 2,6 and 3 appeared as their own witnesses. PW 1 V. K. Gupta has proved the Power of Attorney Ex. PW 1/1 executed in his favor by the plaintiff Bank authorising him to sign and verify the plaint and institute the suit. He has also proved acknowledgment of debt executed by defendant no. 2 to 4 from time to time as Ex. PW 1/2 to Ex. PW 1/8. This Power of Attorney was executed by defendants no. 5 and 6 in favor of the plaintiff Bank authorising the plaintiff to collect rent from defendant no. 7 as Ex. PW 1/9. He has also proved the copy of statement of Accounts certified under the Bankers Book Evidence Act as Ex. PW 1/10 and statement of Unapplied Interest as Ex. PW 1/11.
5. PW 2 Vasudev Kamath, the Manager of the plaintiff's Bank has proved the documents of loan executed by the defendants. According to him these documents were duly filled when the defendants had signed and executed them. These documents are Ex. PW 2/1 ( loan application), Ex. PW 2/2 and Ex. PW 2/3 (sanction letters), Ex. PW2/4 (demand promissory notes executed by defendant no. 2 on behalf of defendant no. 1) and Ex. PW 1/5 (the delivery letter of demand promissory notes) Ex.PW 2/6 (the letter of guarantee signed by defendants no. 3 and 4), Ex. PW 2/7 (the term loan agreement), Ex. PW 2/8 (original title deeds relating to property no. 1264, 1265 and 1265A, Faiz Ganj), Ex. PW 2/9 (the document through which the aforesaid title deeds were delivered), Ex. PW 2/10 ( the title deeds relating to property no. BL-106, Hari Nagar, New Delhi), Ex. PW 2/11 (the affidavit executed by defendants no. 3 and 4 confirming that suit property is free from mortgage and was being encumbered for the loan facilities), Ex. PW 2/12 (another letter executed by defendants no. 3 and 4 confirming that the property at Hari Nagar would stand mortgaged for credit facilities granted by the plaintiff in favor of defendant no. 1 and another concern M/S Vinod Industries).
6. As against this defendant no. 2 has appeared as DW 1. He has denied that he had any current account with plaintiff or in the name of defendant no. 1 though he has stated that once he opened an account with the plaintiff's Bank but he does not know if it was saving or current account. He has admitted sanction letters Ex. PW 2/2 and Ex. PW 2/3. According to him documents Ex. PW1/4 and Ex. PW 1/7 were not filled when he signed them as his signatures were taken by the bank on blank documents. He has also deposed that the loan was never disbursed as the money was paid by the plaintiff's Bank to the supplier for plant of machinery. According to him for one year the machinery was out of order and was lying as scrap. He further testified that the documents Ex. PW1/2, Ex. PW1/4, Ex. PW 1/5, and Ex. PW 1/7 were also blank when his signatures were obtained. So far as the deposit of the title deeds is concerned he only showed these documents to the plaintiff bank in support of the fact that he and his relatives owned immovable properties. However, he denied the suggestions that all these documents were duly filled in when he had signed them.
7. DW 2 Anil Kumar Jain is defendant no. 6 who allegedly executed the Power of Attorney authorising the plaintiff to collect the rent of the premises held on lease by defendant no. 7. According to him he had no connection with defendant no. 1 though he admitted the signatures on Power of Attorney Ex. PW 1/9 which was given to his father defendant no. 2. According to him he had instructed that no rent shall be paid to the plaintiff's Bank. He admitted that notice was sent on his behalf and on behalf of his father.
8. DW 3 Rajinder Kumar Jain is defendant no. 3. His testimony is to the effect that document Ex. PW 2/10 was given by him to defendant no. 2 who happens to be his brother-in-law and he never visited the Bank nor he ever mortgaged the property bearing no. BL-106, Hari Nagar with the plaintiff Bank. He has also taken the same stand that documents Ex. PW 2/6, Ex. PW 2/12, Ex. PW 1/3, Ex. PW 1/6 and Ex. PW 1/8 were blank when his signatures were obtained. However, he denied the suggestion that he had signed the documents when they were duly filled in. He denied that the title deed was deposited by him with the Bank.
ISSUE NO. 19. The objection taken by the defendant that the plaint has not been drafted in accordance with the requirement of Order 34 CPC is vague and unspecific, as no defect has been pointed out in the Written Statement. The issue is decided in favor of the plaintiff and against the defendant.
ISSUE NO.2
10. The very fact that PW 1 V. K. Gupta who is the Branch Manager has proved the Power of Attorney Ex. PW 1/1 which shows that the Managing Director of the plaintiff's Bank Sh. Y. S. Hedge had authorised him to demand and to sue for any sum due to the bank and to sign, verify the petition and affidavits etc. Contention that in the absence of the word 'institute' in para 7 and 8 of the Power of Attorney does not vest authority in him to institute the suit is wholly groundless as the word 'sue' includes the power to institute the suit. Accordingly, the issue is decided in favor of the plaintiff and against the defendant.
ISSUE NO. 3 & 411. These issues are being taken together as they are inter-linked and inter-dependent. The pleas set up by defendant are common pleas. Nobody is expected to sign the documents without reading it or when it is blank and if he does so he does at his own risk and the very fact that the plaintiff Bank has disbursed the loan amount and defendants had availed it also shows that the documents were valid and duly executed. The admission of the signatures of the defendant no. 1 upon the documents in question raises a presumption that the documents were duly filled in when these were signed. Had the defendants not availed the loan amount and had the payment of the machinery purchased by defendant no. 1 not been made by the plaintiff, the aforesaid plea of signing the documents when these were blank might have cut ice, not otherwise. The findings of both these issues are therefore decided in favor of the plaintiff and against the defendants.
ISSUE NO.5
12. The main emphasis of the contention of defendants is that Power of Attorney Ex. PW 1/9 is such a document which requires compulsory registration under Section 17(b) of the Registration Act as it creates the interest in the property. Section 17(b) provides as under:-
"Other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property."
13. There is no denying the fact that any document creating interest in the property is compulsorily registrable. The test to determine whether the documents create interest or not is that it should devolve upon the person right of ownership in whose favor the interest is allowed to be created. As is apparent from Power of Attorney it only creates a right of remitting the rent and does not create any interest in favor of the person who has been duly authorised to remit the rent on behalf of its guarantor. In Syed Abdul Khader Vs. Rami Reddy AIR 1979 SC 533, the Supreme Court had the occasion to deal with Power of Attorney of almost similar nature and took the view that:-
"Power of attorney is not compulsorily registrable when the relation between the donor and the donee of the power of attorney is one of principal and agent. It has also been held that relationship of agency arises whenever one person called the agent has authority to act on behalf of the another called the principal and consents to do so."
14. In more or less identical case reported as Seth Loon Karan Sethiya Vs. Ivan E Johan, , the Supreme Court subscribed to the above view like this:-
"That where the appellant, who was indebted to the bank executed a power of attorney in favor of the bank authorizing the latter to execute a decree obtained by him against a third person and credit the realization to his account, the bank as such had the right to file an execution in the name of the debtor and to sign the execution petition as an attorney of the debtor. It was held that the bank was merely authorized to act as an agent of the debtor and the latter continued to be the owner of the amount due and the bank was not an assignee of the decree in law. It was further held that such a power of attorney constituted an equitable assignment of the amount due under the decree or so much of that amount as was necessary for discharging the debt to it and that on the strength of equitable assignment in its favor, the bank could execute the decree."
15. As is apparent the law is well settled that unless a document creates an interest in the property, it is not compulsorily registrable. The power of attorney authorising a person to collect rent on behalf of landlord, by no stretch of imagination, creates an interest in such a person in respect of the property. Such a power of attorney is not subject to compulsory registration. Thus, the power of attorney in question is not only compulsorily registrable document but is legally enforceable also. Accordingly, the issue is decided in favor of the plaintiff and against the defendant.
ISSUE NO. 616. No material of any kind had been adduced by the defendant to show that the plaintiff has not come up with clean hands. Rather the boot is on the other leg. No particulars have been furnished showing the fraud or falsehood perpetrated by the plaintiff. The issue is decided against the defendant and in favor of the plaintiff.
ISSUE NO. 717. The plea of the defendant that they showed the title deeds of the properties in question only in support of their being solvent is difficult to accept as the document Ex. PW 2/9 executed by defendant no. 2 clearly shows that the documents of the title of the said property were deposited with an intention to create a mortgage in favor of the plaintiff bank for the loan account and similarly the documents of title relating to the property bearing No. BL-106, Hari Nagar, New Delhi with the original sale deed Ex. PW 2/10 were deposited as a security for the amount due to the plaintiff Bank from defendant no.1. Apart from this defendants no. 3 and 4 have also executed the affidavit Ex. PW 2/11 confirming that the said property is free from mortgage and encumbrance. Thus, there is no doubt that the equitable mortgage was created in respect of the aforesaid properties in favor of the plaintiff bank by way of collateral security. The issue is therefore decided in favor of the plaintiff and against the defendant.
ISSUES NO. 8 & 918. As has been held above that all the documents were valid and duly executed by the defendants and their defense that the signatures were obtained on blank documents is nothing but a feeble attempt to escape the liability, the factum of availing the loan coupled with the execution of acknowledgment through letters Ex. PW 1/7 and Ex. PW 1/8 shows that the plaintiff has a valid cause of action against the defendants to institute this suit. The acknowledgment was executed as on 25.9.91 and the suit was instituted on 11.7.94. The defendants have admitted their signatures on acknowledgment of liability. The suit is, therefore, within the limitation and as such the finding of both the issues goes against the defendant and in favor of the plaintiff.
ISSUE NO.10
19. Though the plaintiff has claimed the interest at the rate of 21% per annum but the fact remains that at the relevant time the loan for small scale industries carried an interest at the rate of 13.5% per annum compounded quarterly. Since, the rate of interest keeps on changing, the ends of justice demand that the plaintiff should be made entitled to the interest at the rate of 18% per annum on the suit amount.
ISSUE NO. 1120. In view of the findings on issue no. 3, this issue is also decided against the defendant and in favor of the plaintiff as the plaintiff has successfully proved that defendants no. 3 and 4 stood as guarantors for any liability that may be outstanding against defendant no. 1 in respect of the term loan granted on 29.3.84.
ISSUE NO.12
21. The plaintiff has proved the statement of account showing that it was duly maintained in the books of accounts of the plaintiff Bank in usual and ordinary course of business and is admissible documents under Bankers Books Evidence Act. Ex. PW 1/11 is another statement of account of unapplied interest. As per Ex. PW 1/10 a sum of Rs. 4,19,005.38 was due as on 31.3.92. By adding interest on the said amount for the period 1.4.92 up to the date of filing of the suit i.e. 11.7.94 which interest was unapplied in the books of account, a sum of Rs. 7,58,006 became due to the plaintiff as on the date of filing of the suit. As per Ex. PW 1/11. the plaintiff received a sum of Rs. 3,87,850/- towards rent from Defendant no. 7 between the period 11.7.97 to 7.11.2002. The amount received by way of rent was appropriated towards the book liability of defendant no. 1 as on 31.3.92. After adjusting the amount received towards rent of Rs. 3,87,850/- from the suit amount of Rs. 7,5 8,006/- a sum of Rs. 3,70,156/- would be due and payable to the plaintiff. Issue is decided accordingly.
RELIEF
22. In view of the findings on the aforesaid issues, the plaintiff's suit is decreed for the sum of Rs. 3,70,156/- together with pendentelite and future interest at the rate of 18% from the date of the filing of the suit till its realization. Decree Sheet be drawn accordingly.