Delhi District Court
Canara Bank vs Shashi Kant Kumar on 24 January, 2025
IN THE COURT OF SH. AJAY KUMAR JAIN:
DISTRICT JUDGE COMMERCIAL COURT 03 - SOUTH EAST
DISTRICT, SAKET COURTS, NEW DELHI.
CS (COMM) No. 301/2024
Canara Bank
(A Corporate Body, Constituted
under the Banking Companies
(Acquisition and Transfer of
Undertaking) Act of 1970.
Having its Head Office at:
No. 112, JC Road, Bangalore -
560002, Karnataka.
And its Branch Office at:
Sector-19, R.K. Puram,
New Delhi.
........ Plaintiff
VERSUS
1. SH. SHASHI KANT KUMAR
Prop. of M/s Nirmala Agencies
S/o Sh. Navin Kishore
Office AT: RZ-273 A, Basment Gali No. 18/T,
Tuglakabad Extension, Kalkaji, New Delhi-19
Also At:
R/o F-1759, JJ Colony,
Tigri near Mother Dairy, TIGRI,
South Delhi, New Delhi-110062
CS (COMM) 301/2024 Dt. 24.01.2025 Page No. 1 of 11
Canara Bank Vs. Shashi Kant Kumar
Also At :
R/o Property No. B-46, Flot No. 106,
Vishwarkarma Colony, M.B. Road, New Delhi-110044
Also at:
R/o Flat No. C-27/3, Pilli Kothi,
Near PNB, Khanpur, South Delhi, New Delhi-110062
....Defendant
Date of Institution : 23.04.2024
Date when final arguments heard : 15.01.2025
Date of Judgment : 24.01.2025
JUDGMENT
1. Vide this judgment, I shall dispose of the suit for recovery of Rs 10,01,707/- filed by the plaintiff against the defendant.
2. Brief facts of the case as per plaint are that defendant is sole proprietor of firm i.e. M/s Nirmala Agencies dealing in re-distributor stockiest of catch salt & spees, Mix N Drink products, approached the plaintiff bank for the financial assistance under the facility know as Pradhan Mantri Mudra Yojana (PMMY) Scheme for his business and applied for the same vide application dated 02.08.2020 requesting the loan amount for a sum of Rs. 10,00,000/- for cash credit facility against Hypothecation of Stock and Goods. Upon due consideration of the application of the defendant, the loan was duly sanctioned on 07.08.2020 for 10,00,000/- for OD/Cash Credit Facility for the purpose of working capital requirement at the rate of RLLT + 1.65= 8.55% per annum with CS (COMM) 301/2024 Dt. 24.01.2025 Page No. 2 of 11 Canara Bank Vs. Shashi Kant Kumar month rests. The defendant on 07.08.2020 executed necessary documents i.e. letter of evidencing execution of documents, cash credit agreement, pronote, letter of undertaking re: Loans/advances, request for over draft facilities etc. The defendant also agreed to the interest at 1.10% above the marginal cost of funds based lending rate compounded monthly/quarterly/half early. The actual lending rate which is linked to the MCLR shall be subject to review and verification at the time of interval specified by the bank. Defendant also agreed that in he commits any default in payments or failed to pay agreed installments, the entire amount shall become due and payable and further agreed to pay penal interest at 2% p.a. or at such other enhanced or revised rate which the bank may specify from time to time. The loan was sanctioned on 07.08.2020 and it was disbursed on 12.08.2023 in the account no. 0347261050716 of the defendant. The plaintiff bank got inspection of the defendant's firm on 01.10.2020, defendant duly availed the financial loan sanctioned, however failed to comply with the terms and conditions of the agreement and other documents and committed consecutive defaults in repayments of the loan.
3. In the month of August 2020, the defendant had approached the plaintiff bank and expressed willingness to avail credit card facility from the plaintiff bank. Plaintiff bank informed the defendant about all the terms and conditions, therefore defendant had inter alia agreed to abide by the same and on representations and assurance made by the defendant CS (COMM) 301/2024 Dt. 24.01.2025 Page No. 3 of 11 Canara Bank Vs. Shashi Kant Kumar a credit card bearing no. 200824214146 in the name of defendant was issued which was duly accepted by the defendant, however defendant failed to make the outstanding payments as per the statements sent to the defendant. Plaintiff bank repeatedly requested defendant to clear the installment, however defendant neglected and willfully avoided to make the payment on time. Ultimately the account of the defendant was classified as Non-performing Assets on 23.02.2023. Therefore, legal notice dated 09.03.2023 was also sent to the defendant, however defendant not discharged his liabilities. Defendant is liable to pay the following outstanding amounts :
Amount outstanding as per statement of account under the Rs. 9,33,806/-
head of Cash Credit (As on 31.03.2024) Amount outstanding as per Statement of account under the Rs. 67,901/-
head of credit card (As on
31.12.2023)
Total Rs. 10,01,707/-
4. The defendant did not appear before pre mediation proceedings before the DLSA, therefore, non starter report dated 29.08.2023 was issued, consequently, the present suit was filed with following relief :
a. Pass a decree for sum of Rs. 10,01,707/- (Rupees Ten Lac One Thousand Seven Hundred and Seven Only) as on 31.03.2024 with the pendent lite and future interest @ 11.90% (9.90% per annum with monthly rest plus 2% p.a. penal CS (COMM) 301/2024 Dt. 24.01.2025 Page No. 4 of 11 Canara Bank Vs. Shashi Kant Kumar interest) in favour of the plaintiff bank and as against the defendant in accordance with the provision of law applicable in the present case;
b. Cost of the suit and litigation expanses may also be awarded in favor of the plaintiff and against the defendant; c. Pass such other or further order(s) as deemed fit in the fact and circumstance of the case and in the interest of justice.
Written Statement
5. It is stated by the defendant that defendant has availed the loan under Mudra Scheme i.e. sub title 'Tarun'. It is stated that defendant applied for the said loan in the prescribed format of scheme Tarun, however plaintiff bank has not filled up the name of the enterprise, application serial number, category of the same. There are defects in annexure D of the plaintiff. It is stated that bank has not convyed the defendant about the requirement of working capital @ RLLT+ 1.65=8.55 % p.a. with monthly rests and the bank is concealing truth from the court. The bank has also taken unnecessary and unrequired documents from the defendant. The rate of interest as claimed is also not matching. It is stated that it is not clarified under which scheme the said loan was granted. The plaintiff bank also failed to comply the protocols of Covid-19 and plaintiff bank failed to file written rqeuest for payment of the credit cards amount. Defendant had also deposited its payment, therefore the present suit is liable to be dismissed.
6. Plaintiff in replication reiterated its stand.
CS (COMM) 301/2024 Dt. 24.01.2025 Page No. 5 of 11 Canara Bank Vs. Shashi Kant Kumar
7. On completion of proceedings vide order dated 10.09.2024 following issues were framed:
(1) Whether the plaintiff is entitled to decree for a sum of Rs. 10,01,707/- against the defendant, as prayed for? (OPP) (2) Whether the plaintiff is entitled to interest. If yes, at what rate and for which period? (OPP) (3) Relief.
8. Thereafter, for recording of evidence Ld. Local Commissioner was appointed. Plaintiff examined PW-1 Sh. Gaurav Chand Ashish, Senior Manager of the plaintiff bank. Defendant examined himself as DW-1.
9. PW-1 Sh. Gaurav Chand Ashish, tendered his affidavit of evidence as Ex.PW1/A and in cross-examination stated that defendant was sanctioned the loan under Tarun Scheme, however it is correct that in application, no such scheme was mentioned but as per scheme of Govt. of India all the loans from Rs. 2 Lac up to Rs. 10 Lacs are sanctioned under scheme 'Tarun'. Defendant was granted loan under Cash Credit Facility and the plaintiff bank has taken all the documents except guarantors. He further stated that defendant had come to bank for discussions, however no settlement arrived as per plaintiff bank policy, and it is correct that no record of meeting is available regarding settlement.
10. DW-1 Shashi Kant Kumar tendered his affidavit of evidence as Ex.DW1/A and in cross-examination stated that he had done BBA but not CS (COMM) 301/2024 Dt. 24.01.2025 Page No. 6 of 11 Canara Bank Vs. Shashi Kant Kumar doing work presently and previously, he was self employed. He further stated that he singed the documents but not filled the same. He cannot recall when the last payment was made. He denied suggestion that he was paying regularly.
Material exhibits.
11. Mark C authority letter, Ex.PW1/B is loan application, Mark A, photocopies of all the documents mentioned in para 4 of affidavit of evidence, Mark B copy of confidential credit information of defendant dated 23.07.2020, Ex.PW1/C (inadvertently mentioned by Ex.PW1/B again) Sanction advise dated 07.08.2020 alongwith terms and conditions, Ex.PW1/D (colly) letter of evidencing execution of documents, cash credit agreement, pronote, letter of undertaking re:Loans/Advances and request for over draft facilities, Ex.PW1/E specimen signature and letter of proprietorship, Ex.PW1/F undertaking, Ex.PW1/G stock statement, Ex.PW1/H link letter to be obtained when disbursement is done on a subsequent day, Ex.PW1/I post sanction visit report, Ex.PW1/J Credit card details, Ex.PW1/K (colly) legal notice alongwith postal receipts, Ex.PW1/L statement of account of account no. 0347261050716 duly certified, Ex.PW1/M statement of account bearing no. 0347201004110 of credit card, Ex.PW1/N is Non-Starter Report dated 29.08.2023.
Submissions of counsels CS (COMM) 301/2024 Dt. 24.01.2025 Page No. 7 of 11 Canara Bank Vs. Shashi Kant Kumar
12. Ld. counsel for plaintiff submitted that plaintiff bank has accepted the relevant documents i.e. loan application, letter of evidencing execution of documents, cash credit agreement, pronote, letter of undertaking re: Loans/advances, request for over draft facilities etc., however there is nothing material in cross-examination to discredit the case of plaintiff bank. The plaintiff bank exhibited the relevant statement of account showing the payment received and dues. The defendant could not discredit the case of the plaintiff by proving he made the payments. The objections raised by the defendant are not material. Ld. Counsel further submitted that in cross-examination of DW-1 defendant submitted that he made payment of installment but unable to show them. Ld. Counsel for plaintiff submitted that defendant arrived for one time settlement but no settlement took place, and further submitted that plaintiff is able to prove its case, hence entitled for relief prayed.
13. Ld. Counsel for defendant submitted that plaintiff nowhere mentioned that the loan was granted under scheme 'Tarun', however PW-1 stated that it was granted under scheme 'Tarun'. Furthermore, PW-1 is not authorized by the bank to depose. The defendant suffered by Covid-19 and T.B due to which he suffered heavy loss and also visited branch for OTS, however one time settlement was not done by the plaintiff bank. Plaintiff not placed any evidence that legal notice was sent through speed post was served to defendant. The intention of plaintiff CS (COMM) 301/2024 Dt. 24.01.2025 Page No. 8 of 11 Canara Bank Vs. Shashi Kant Kumar bank is to exploit the defendant who lost his business due to Covid-19. The suit is liable to be dismissed.
Defendant also filed written submissions.
Arguments heard. Record perused.
14. My issues wise findings as under :
(1) Whether the plaintiff is entitled to decree for a sum of Rs. 10,01,707/- against the defendant, as prayed for? (OPP) (2) Whether the plaintiff is entitled to interest. If yes, at what rate and for which period? (OPP)
15. It is evident that defendant applied for a loan under the Pradhan Mantri Mudra Yojana (PMMY), specifically under the "Tarun" scheme, which is designed for loans ranging from Rs. 2 lakh to Rs. 10 lakh. Although the defendant's application does not explicitly mention the "Tarun" scheme, however PW-1 confirmed that the loan falls under this scheme, as all loans within the range of Rs. 2 lakh to Rs. 10 lakh are sanctioned under it by the Government of India. The loan amount of Rs. 10,00,000/- was sanctioned under the Cash Credit Facility to the defendant, and the necessary loan documents were duly executed, except for the guarantor documents. The plaintiff bank's evidence shows that the defendant signed all the required agreements, including the loan agreement and the promissory note, which clearly outlined the terms of the loan, including repayment schedules and interest rates. The plaintiff CS (COMM) 301/2024 Dt. 24.01.2025 Page No. 9 of 11 Canara Bank Vs. Shashi Kant Kumar also tendered documentation evidencing the disbursement of the loan into the defendant's account on 12.08.2020.
16. Furthermore, the defendant has failed to adhere to the terms of the loan agreement. As per the plaintiff's evidence, including the statement of accounts, the defendant has defaulted on the repayment, and the account was subsequently classified as a Non-Performing Asset (NPA) on 23.02.2023. The outstanding dues, comprising Rs. 9,33,806/- under the Cash Credit Facility and Rs. 67,901/- under the credit card, total Rs. 10,01,707/-. the defendant could not discredit the statement of accounts (Ex.PW1/L, Ex.PW1/M) in cross-examination. The defendant has not provided any credible evidence to dispute these amounts or to show that payments were made regularly or in accordance with the loan terms. While the defendant disputes the clarity of the loan terms and the loan scheme under which the loan was granted, the plaintiff has demonstrated that the defendant received the loan, was bound by the terms of the agreement, and failed to make the necessary payments. The defendant's general denials and failure to provide substantial evidence to refute the plaintiff's claims does not suffice to challenge the validity of the outstanding sum. Based on the evidence provided by the plaintiff, the failure of the defendant to make repayments, and the clear documentation of the loan agreement, the plaintiff is entitled for the total sum of Rs. 10,01,707/- .
CS (COMM) 301/2024 Dt. 24.01.2025 Page No. 10 of 11 Canara Bank Vs. Shashi Kant Kumar
17. Ld. counsel for the plaintiff bank submitted that as per terms and conditions of the loan agreement the plaintiff is entitled for a total interest rate 11.90% per annum (comprising 9.90% per annum with monthly rests and 2% penal interest), however the fiscal condition of the defendant got deteriorated during Covid-19 period, therefore he could not be burdened for such a heavy rate of interest during the pendency of the suit and the rate of interest 6 % per annum is sufficient. Hence, the plaintiff is entitled for interest @ 6% per annum from the date of filing the suit till its realization.
RELIEF :
18. In view of the aforesaid discussion, the suit of the plaintiff is decreed for a sum of Rs. 10,01,707/- (Rupees Ten Lakh One Thousand Seven Hundred Seven Only) along with interest @ 6 % from the date of filing of the suit till the date of realization. Cost be also awarded. Decree sheet be prepared accordingly.
File be consigned to record room after due compliance.
Announced in the open court on 24th January 2025 (Ajay Kumar Jain) District Judge(Commercial Courts- 03), SE/Saket Courts/Delhi Digitally signed by AJAY AJAY KUMAR JAIN KUMAR Date:
JAIN 2025.01.24
16:19:17
+0530
CS (COMM) 301/2024 Dt. 24.01.2025 Page No. 11 of 11
Canara Bank Vs. Shashi Kant Kumar