Delhi District Court
Rashtriya Mahila Kosh vs Avadh Lok Sewa Ashram on 24 October, 2017
1
IN THE COURT OF MS.VEENA RANI :ADDL. DISTRICT JUDGE, PATIALA
HOUSE COURTS,NEW DELHI
Civil Suit No.59476/2016
Rashtriya Mahila Kosh
having its Office at 1, Abdul Fazal Road,
Bengali Market, New Delhi110001,
through Mr. A.K. Sobti, Deputy Director .....Plaintiff
Versus
1. Avadh Lok Sewa Ashram
Jawahar Marg Crossing,
Main Road, Lal Ganj,
Raebareli229206
Uttar Pradesh, through its Secretary/Director
2. Mr. Bhujang Bhushan Sharma
@ B.B. Sharma, Secretary
Avadh Lok Sewa Ashram
Jawahar Marg Crossing,
Main Road, Lal Ganj,
Raebareli229206
Uttar Pradesh.
SUIT FOR THE RECOVERY Rs.32,93,779/ UNDER ORDER 37 CPC.
DATE OF FILING OF THE SUIT
:04052004
DATE OF FINAL HEARING
:09102017
DATE OF FINAL ORDER/JUDGMENT :2410
2017
CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram &
Anrs.
2
JUDGMENT
1. The present suit has been filed by the plaintiff, under order 37 CPC against the defendants for passing of a decree for the recovery of outstanding amount of Rs.32,93,779/ along with interest @16% per annum till the realization of the amount and the cost of the suit.
1. Vide order dated 15092004 the present suit was treated as regular suit instead of suit under order 37 CPC. Further the present suit was directed to be continued as a regular suit vide order dated 07042005. PLAINIFF'S VERSION:
2. Briefly the case of the plaintiff, as stated in the plaint, is that plaintiff is a registered Society and carrying on its activities under the directions of the department of women and Child Development, Ministry of Human Resources Development, Government of India, having its office at 1, Abul Fazal Road, Bengali Market, New Delhi110001. One of the activities of the plaintiff is to advance loan to the poor women through NonGovernmental Organization (NGOs). Sh. A.K. Sobti is one of the Deputy Director of the plaintiff society and is well conversant with the facts of the case, who is authorized by board resolution of the plaintiff dated 10022003 to file and prosecute the present case.
3. The defendant no:1, a registered society/Cooperative Society, through its Executive Secretary i.e. defendant no:2, in the year 1995 approached the plaintiff at Delhi and applied for the loan under the Revolving Fund Scheme and on request and persuasion of defendants, the plaintiff vide its Sanction letter bearing No:RMK10(UP)/96/RPT/11/20770 dated 1712 1996 and sanctioned a loan of Rs.20,00,000/, being Rs.15,00,000/ as Short Term Loan and Rs.5,00,000/ as Medium Term Loan in favour of the defendant no:1 on the conditions of execution of loan documents by the CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
3defendants. The defendant no:1 executed a memorandum of agreement dated 26121996 and two demand pronotes for Rs.10,00,000/ each dated 26121996 and 17041997 in favour of the plaintiff. The defendant no:2 also stood guarantor for the abovesaid loan granted to defendant no:1 and also signed the arrangement cum guarantee bond as a guarantor and accordingly the sanctioned loan was disbursed to the defendants.
4. The defendants during the same period, again approached the plaintiff for sanction of further loan amount and the plaintiff vide sanction letter No:RMK10(UP)/RPT/97/07/7315 dated 30121997 sanctioned a further sum of Rs.25,00,000/ ( Rs.20 lacs as Short Term Loan and Rs.5 lacs as Medium Term Loan) in favour of the defendant No:1.
5. The defendants again executed a memorandum of agreement dated 141 1998 and demand pronote for Rs.25 lacs in favour of the plaintiff. The defendant no:2 also executed a Guarantee letter/Deed dated 1411998 in favour of the plaintiff and promised to pay the loan amount in case the defendant no:1 failed to repay the same. The defendants also agreed to repay the loan amount with interest @8% per annum. The abovesaid loan was also disbursed to the defendants.
6. It is further averred that the defendants again approached the plaintiff for sanction of further loan amount and the plaintiff vide sanction letter No:RMKRF(UP)/97/02/213 dated 27031998 sanctioned a further sum of Rs.20,00,000/ in the revolving fund scheme in favour of the defendant No:1. The defendants again executed an Articles of Agreement for Revolving Fund loan dated 21041998 and demand pronote for Rs.20 lacs in favour of the plaintiff. The defendant no:2 also executed a Guarantee letter/Deed dated 21041998 in favour of he plaintiff and promised to pay the loan amount in case the defendant no:1 failed to repay the same. The defendants also agreed to repay the loan amount with CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
4interest @ 8% per annum. The abovesaid loan was also disbursed to the defendants.
7. That the above said loan was granted to the defendants with the conditions that the loan received by the defendant no:1 will disbursed by it to the Members/Self Help Groups ( SHGs) for whom it was sanctioned by the plaintiff to the defendants within the period of stipulated in the loan documents. It is stated that it was also agreed that any amount which was not disbursed within the stipulated period by the defendant no:1 in favour of the members/SHGs, the same was to be refunded to the plaintiff by the defendants forthwith failing which penal interest @ 8% per annum was to be charged besides the interest of 8% per annum agreed to be paid by the defendants as per the loan agreement/documents. It was further agreed that if the defendant no:1 failed to pay the principal amount along with interest @8% per annum, then the same would be repaid by the defendant no:2 as per the terms and conditions mentioned in the documents executed between the plaintiff and the defendants for the said loan. The defendants further agreed to pay penal interest @8% p.a. In case the un utilized amount was not returned by them of the plaintiff within the stipulated period.
8. It is averred that the defendants kept on making part payments towards the loan amounts from time to time to the plaintiff and all the loan accounts were merged in one statement of account but after some time they became irregular in repaying the loan and failed to adhere to the financial discipline of the plaintiff despite reminders dated 2772001, 832003 and 1282003 and reply dated 282003 and as such legal notice dated 1209 2003 was issued to the defendants. The defendant sent reply to the said notice dated 28092003 in which they acknowledged the loan granted to them but they failed to repay the same.
CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
59. The claim of the plaintiff as per statement of account maintained by the plaintiff is :
i. Rs.5,58,948/ as principal amount and Rs.1,98,063/ as interest @8% p.a. and a sum of Rs.26,217/ as penal interest on different amounts sanctioned under the main loan scheme thus totaling to Rs.7,83,228/ as on 30102003. ii. Rs.17,50,000/ as principal, a sum of Rs.6,78469/ as interest @8% per annum and a sum of Rs.82082/ as penal interest on the loan sanctioned under the revolving fund loan scheme totaling to Rs.25,10,551/ as on 30102003, iii. Rs.32,93,779/ is outstanding against the defendants which they have failed to repay the same to the plaintiff. THE WRITTEN STATEMENT OF THE DEFENDANTS:
10. In their written statement, the defendants no:1&2 have raised preliminary objections that this court does not have the territorial jurisdiction to decide the present suit as the documents relied upon by the plaintiff itself discloses that the pronote and arrangement cumguarantee bond in question were executed at Rae Bareili which does not fall within the jurisdiction of this court. It is stated that the aims and objectives of the plaintiff is to promote economic and developmental activities for the benefits of womenfolk, and to assist such women or groups of women by way of loans and advances for economically and financially viable schemes and projects and to promote self employment and other ventures for the benefits of womenfolk and the target groups of the plaintiff are mainly womenfolk living below the poverty line.
REPLICATION OF THE PLAINTIFF
11. In his replication the plaintiff has reiterated and reaffirmed the contentions made in the plaint and denied the allegations of the defendants. It is denied CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
6by plaintiff that this court has no territorial jurisdiction to try the present suit. Plaintiff further denied that the money has to be recovered from the rural women and not from the defendant. Plaintiff also denied that suit is bad for misjoinder of parties. Plaintiff denied that defendants are not the actual beneficiaries of the loan or that the loan advanced by the defendants to other people has not been returned back to the defendants. The plaintiff has denied all other allegations and averments of the defendants and prayed for decree of the present suit as prayed.
12. From the pleadings of the parties the following issues were framed for the trial of the case: (I)Whether this Court has territorial jurisdiction to try and entertain the present suit ? OPP (II) Whether the suit is bad for misjoinder of parties or for non joinder of necessary parties? OPD (III) Whether the plaintiff is entitled to recovery a sum of Rs.32,93,779/ as prayed for in the plaint ? OPP (IV) Whether the defendants are liable to pay penal interest in addition to the admitted rate of interest at t he rate of 8% per annum on the principal amount ? OPP CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
7(V) Relief.
Issue No. 1 --Whether this Court has territorial jurisdiction to try and entertain the present suit ? OPP As per the plaintiff is a registered Society and carrying on its activities under the directions of the department of women and Child Development, Ministry of Human Resources Development, Government of India, having its office at 1, Abul Fazal Road, Bengali Market, New Delhi-110001. One of the activities of the plaintiff is to advance loan to the poor women through Non- Governmental Organization (NGOs).
In his cross examination DW1 stated that the sanctioned was awaited at Rae Bareli and after the sanction was received and the agreement etc. was executed at Rae Bareli and were sent to the Delhi by post. DW1 further stated that he has seen agreement Ex.P3 and he has signed the same. Mr. Indra Mishra also signed the said agreement. He Voluntarily deposed that Mr. Indra Mishra signed the agreement at her office of RMK. DW1 further stated that he had met Indra Mishra at her office in Delhi.
In his further cross examination DW1 stated that he did not come to Delhi but he has sent his application through his office at Lalganj, Rai Bareily. He further stated that he did not come to Delhi, however, the sanction letter of RMK was received in his office. DW1 stated that he did not come to Delhi before receipt of cheque, however, the draft was received at their office at Lalganj Bareily through post. It is stated by DW1 that he had not presented any documents to Mrs. Indira Mishra of RMK at Delhi and that whatever classificatory document was required or was asked, the same was sent through post to the RMK Delhi. DW1 denied that he has came to Delhi to collect the draft of Rs.5 lakh from the office of RMK CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
8and stated that they have received draft at their office at Lalganj Rai Bareily. DW1 further denied that he has received two draft of Rs.5 lacs each of different dates one of the year 1995 and second of 1996 at the office of RMK at Delhi. Same is his answer regarding disbursement advises of 1995 & 1996. DW1 stated that they have sent their bank draft for repayment to RMK, Delhi. DW1 admitted that they have never made any payment to RMK Delhi except bank drafts.
It is stated by DW1 that he had come to Delhi in connection with annual meeting and interaction with workshop and training programmes of RMK Delhi. DW1 further stated that the record regarding the arrangement made for his journey for tickets etc is with their organization and he can produce the same. It is admitted by DW1 that document Ex.P8 bears his endorsement at point encircled A. DW1 also admitted that Ex.P13 also bears his endorsement at point encircled A. It is further admitted by DW1 that in every agreement between him and the plaintiff there were only two parties i.e. Avadh Lok Sewa Ashram and Rashtriya Mahila Kosh. DW1 admitted that above said agreement was firstly signed by him. DW1 voluntarily deposed that the said document/agreement then was sent to Delhi office of plaintiff by post. DW1 also admitted that the Executive Director of the plaintiff then used to sign on the document so received. DW1 denied that he personally used to bring the documents at Delhi in person and used to sign them and collect the drafts and cheques on account of the loan from the plaintiff. DW1 stated in his cross examination that as per the RMK scheme when he had signed understanding that the delivery of the loan was to be paid by the RMK/plaintiff for the disbursement of the micro credit loan for benefit of the poor women, member of Self Help Groups (SHG), formed by the plaintiff ( Voluntarily stated - approximate Rs.52 lacs as principle and Rs.7.50 lacs as interest had already been CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
9returned to the RMK, at our Avadh Lok Sewa Ashram, no amount is due to the RMK. It is stated by DW1 that the beneficiaries the poor women, members of SHGs are yet to pay an amount of Rs.24 lacs to RMK and the Micro credit flow was suddenly interrupted by RMK in the year 2000.) DW1 admitted that the poor women were found out by him as per the RMK scheme. DW1 also admitted that he has formed the SHGs and then communicated to the RMK that the SHGs were formed. It is admitted by DW1 that documents were got executed from the SHGs by him to whom the loan was given by the plaintiff. DW1 further admitted that as per the documents so executed from the SHGs, the defendant no:1 was to make recovery from the SHGs. DW1 further stated that an organization they had to make the recovery from the SHGs. It is stated by DW1 that as per norms of RMK, 4% per annum margin interest to meet out the marginal cost was charged from SHGs and as per the RMK procedure, 12% per annum in total the interest was charged from SHGs on the amount disbursed to them. In a question that how much interest the DW1 pay to RMK, DW1 stated that as per the RMK scheme, only 8% pa. Interest was to be paid to RMK. DW1 admitted that they have got timely incentive from the year 1996 to 2000 against timely reimbursement of micro credit loan and timely repayment thereof. DW1 also admitted that it was his responsibility to make recovery from SHGs. To the last question put to DW1 that he is liable to pay the suit amount on the day on which the present suit was instituted, DW1 given answer that it is correct. DW1 voluntarily deposed that the organization was to repay the said amount after recovering the same from poor women/SHGs.
The loan amount was sanctioned in Delhi and the cheque was also issued from the account in Delhi. Therefore a part of cause of action has arisen in Delhi. 'Cause of action' means bundle of facts which are necessary to be proved by the CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
10plaintiff, if traversed, in order to invoke the jurisdiction of a Court to get the judgment of that Court. Generally, the expression 'cause of action' is understood to mean a situation or state of facts that entitles a party to maintain an action in a Court. 15. In contracts regarding purchase of goods cause of action arises at a place where the contract is executed or a place where contract was to be performed or place where performance thereof was completed. Cause of action also arises in such like circumstances where money was expressly or impliedly payable. A suit can be filed where goods were delivered or price payable.
A cause of action means every fact, which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff.
In order to appreciate this aspect of the matter, one needs to understand what would constitute a cause of action. Cause of action, as commonly understood, is a bundle of facts which the plaintiff must prove, if traversed, to entitle him to a judgement, in his favour, by the concerned court. Cause of action has no relation whatsoever with the defence set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff. In ascertaining as to whether or not the concerned court has territorial jurisdiction, the court should take the facts pleaded in support of the cause of action into consideration CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
11without embarking upon an enquiry, at that stage, as to the correctness or otherwise of the facts so stated.
In this context, the following observations of the Supreme Court made in Oil and Natural Gas Commission vs Utpal Kumar Basu & Ors. (1994) 4 SCC 711 at page 717, in paragraph 6 being apposite, are extracted hereinafter:
"....6. It is well settled that the expression "cause of action" means that bundle of facts which the petitioner must prove, if traversed, to entitle him to a judgment in his favour by the Court. In Chand Kour v. Partab Singh Lord Watson said: "... the cause of action has no relation whatever to the defence which may be set up by the defendant, nor does it depend upon the character of the relief prayed for by the plaintiff. It refers entirely to the ground set forth in the plaint as the cause of action, or, in other words, to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour."
A more elaborate exposition of the expression cause of action is given in Rajasthan High Court Advocates' Association vs Union of India & Ors. (2001) 2 SCC 294. The relevant observations made in paragraph 17 at page 304, is extracted hereafter:
".....17. The expression "cause of action" has acquired a judicially settled meaning. In the restricted sense cause of action means the circumstances forming the infraction of the right or the immediate occasion for the action. In the wider sense it means the necessary conditions for the maintenance of the suit, including not only the infraction of the right, but the infraction coupled with the right itself. Compendiously the expression means every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. Every fact which is necessary to be proved, as distinguished from every piece of evidence which is necessary to prove each fact, comprises in "cause of action". It has to be left to be determined in each individual case as to where the cause of action CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.12
arises. The Chief Justice of the High court has not been conferred with the legislative competence to define cause of action or to declare where it would be deemed to have arisen so as to lay down artificial or deeming test for determining territorial jurisdiction over an individual case or class of cases...."
As to how a court exercising civil jurisdiction is to proceed in the matter, the observations of Karnataka High Court in D. Munirangappa vs Amidayala Venkatappa & Anr. AIR 1965 Kant 316, being relevant are extracted hereinafter:
"Even a fraction of a cause of action is a part of the cause of action and therefore, if a part of the cause of action accrues within the local limits of the jurisdiction of Tumkur Court then it must be held that that Court has the jurisdiction to entertain the suit. The provisions of clause (c) of Section 20 of the Code of Civil Procedure are based on broad principle to avoid the multiplicity of the proceedings and inconvenience to the parties. If the reasoning adopted by the Courts below is accepted as correct, it would lead to many inconvenient results which the legislature sought to avoid by enacting the provisions of clause (c) of Section 20 of the Code of Civil Procedure. For these reasons I hold that the Courts below were wrong in taking the view they took and thus declining to exercise the jurisdiction vested in them by law...."
As indicated in FAO No. 214/2015 entitled ICICI BANK LTD. Vs ASTHA KUMAR :
"In any event, in an action, such as a suit, a court cannot refuse to exercise jurisdiction on the ground that a substantial part of the cause of action does not arise within its jurisdiction. That is the preserve of the court exercising writ jurisdiction. The writ court invokes this principle, which is often referred to as doctrine of forum conveniens, not for the reason that it does not have jurisdiction but for the reason that it takes upon itself not to exercise jurisdiction, in a given fact situation; writ being an extra ordinary CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.13
remedy the grant of relief by the court being in the realm of its discretionary jurisdiction."
PW1 stated that they received the documents in Delhi and the agreement was signed at Delhi. PW1 denied the suggestion that the sanctioned amount was disbursed at Raibareli. PW1 further stated that according to his knowledge defendant no:1 has no office at Delhi. In view of the facts and circumstances of the present case the courts in Delhi do have territorial jurisdiction to try the present suit.
Accordingly ISSUE No.1 is decided in favour of Plaintiff and against the defendants.
13. ISSUE No.2 -- Whether the suit is bad for misjoinder of parties or for non-joinder of necessary parties ? OPD "Joinder of Parties" means joining several parties as plaintiffs or defendants in the same suit. All or any of those persons can be joined to a suit as plaintiffs or defendants in whom the right to any relief is alleged to exist, or who is alleged to possess any interest in the subject-matter of litigation, or in the opinion of the court is a proper or a necessary party.
Joinder of Plaintiffs: All persons may be joined in one suit as plaintiffs according the conditions required under Rule 1 of Order 1. The conditions which are required to be fulfilled are that the right to relief alleged to exist in each plaintiff arises out of the same act of transaction; and the case is such of a character that, if such person brought separate suits, any common question of law or fact would arise.
Joinder of Defendants: On the other hand, a person can be joined as a defendant according to the provisions of Rule 3 of Order 1. The conditions to be required to be satisfied in the case of defendant are that the right to relief alleged to exist against them arises out of the same act of transaction; and the case is of such a character that, if separate suits were brought against such person, any CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
14common question of law or fact would arise.
The joinder or inclusion of any person as a party to a suit contrary to the provisions of the code is called misjoinder. Reasons for a court ruling that there is misjoinder include:
the parties do not have the same rights to a judgment; they have conflicting interests;
the situations in each claim (cause of action) are different or contradictory; or the defendants are not involved (even slightly) in the same transaction. In a criminal prosecution the most common cause for misjoinder is that the defendants were involved in different alleged crimes, or the charges are based on different transactions. Non-joinder of parties is not fatal to a suit. However, a distinction between non-joinder of someone who ought to have been joined and someone whose joinder is only necessary for convenience is necessary. The former are necessary parties, while the latter are only proper parties. Order 1, Rule 9 of the Code deals with nonjoinder of parties, but is only a procedural provision, which does not affect the substantive rights and duties of parties.
In the present case the defendants are :
i. Avadh Lok Sewa Ashram, Jawahar Marg Crossing, Main Road, Lal Ganj, Raebareli-229206 Uttar Pradesh, through its Secretary /Director ii. Mr. Bhujang Bhushan Sharma @ B.B. Sharma, Secretary Avadh Lok Sewa Ashram Jawahar Marg Crossing, Main Road, Lal Ganj, Raebareli-229206 Uttar Pradesh.
According to the defendants it was the beneficiaries who were guilty for the nonpayment of the said disbursed amount and that the same should have been joined as necessary parties. It was further pleaded and argued by the CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.15
defendants that the defendants do not keep a single rupee of the disbursed amount and therefore the claim of the plaintiffs should be against the constituents and not against the instant defendants. The said arguments on behalf of the defendants is a flawed argument as the loan agreement and all the other transactions were between the plaintiff-herein and the defendants-herein. Any other beneficiary or purported beneficiary are not a necessary party in this suit.
All the correspondences have been through the defendant no.2 in the capacity of Secretary / Director etc. Rule 9 of Order 1 of the CPC lays down that no suit shall be defeated by reason of misjoinder or nonjoinder of parties. In such cases, the court may deal with the matter in controversy as regards the rights and interests of the parties actually before it. Holding that joinder or non-joinder of parties is too technical, it was held that this shall not operate to deny a person any benefit under any enactment. In Narendra Singh v. Oriental Fire and General Insurance Co. Ltd. 25, Delhi, the benefit of Section 39 of the Motor Vehicles Act was extended to the plaintiff even though the suit suffered from a non-joinder of parties.
In the present case the two defendants have been the direct parries in the entire loan transaction and any decree passed against the said defendants would not be an 'ineffective' decree.
Thus the Issue no.2 is also decided in favour of the plaintiff and against the defendants no.1 & 2.
14. ISSUE No.3 Whether the plaintiff is entitled to recovery a sum of Rs.32,93,779/ as prayed for in the plaint ? OPP Rashtriya Mahila Kosh (RMK) was setup on 30.03.1993 as an autonomous body under the aegis of Ministry of Women and Child Development, New Delhi. It was registered under Society Registration Act, 1860. The area of operation of the Kosh covers whole of India. It was CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
16established for socio-economic empowerment of women. The operating model currently followed by RMK is that of a facilitating agency wherein RMK provides loans to NGO-MFIs termed as Intermediary Organizations (IMO) which on-lend to Self Help Groups (SHGs) of women. In addition, RMK also has appointed nodal agencies and franchisees for furthering of its objectives of reaching out to the women beneficiaries with easy access of micro credit for income generating activities. RMK extends micro-credit to the women in the informal sector through a client friendly, without collateral and in a hassle-free manner for income generation activities. RMK has taken a number of promotional measures to popularize the concept of micro financing, enterprise development, thrift and credit, formation and strengthening of Women-SHGs through intermediary organizations. Its Vision is To be a financial service and capacity enhancement institution for social and economic empowerment of poor and marginalized women.
The activities of the plaintiff pertains to the provision of micro-finance involving initiatives on the part of state and non-state organizations, in making available very small amounts of credit to poor women. This need for credit is both for consumption as well as for production. In other words, credit is sought for basic requirements such as food, as well as for income generation activities. The rationale of micro-finance is based on the hypothesis that the poor can be relied upon to return the money that they borrow. Moreover, the repayment will also be on time. It has been proved that the poor are capable of thrift and savings. It is these existing requirements and conditions that are tapped by micro-finance initiatives. Micro-finance as a development initiative has been justified on the grounds that it is beneficial to both micro-finance institutions as well as clients.
The Government of India established the Rashtriya Mahila Kosh (National CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
17Credit Fund for Women), in 1993, with a corpus fund of Rs. 310 million. This initiative was taken since there was a need for a quasi-formal credit delivery mechanism which was client friendly, had simple and minimal procedures, disbursed credit quickly and repeatedly, had flexible repayment schedules, linked credit to thrift and savings, and had low transaction costs. The Main Loan Scheme of the Kosh aims to provide credit to poor women both in the urban and rural areas for income generation activities (unless specifically sanctioned for other purposes). Specifically, women below the poverty line are eligible for support. The credit facility is channeled through eligible organizations to needy women without the insistence of collateral. During the year 2000-2001, totally in the country, RMK attended to 46,559 borrowers. Rashtriya Mahila Kosh disburses credit through non- governmental organizations, women development organizations, co-operative societies, Indira Mahila Block Samitis registered under Indira Mahila Yojana, suitable state government agencies, and refinance to mahila/urban co-operative banks. The loans are given for income generation purposes unless specifically sanctioned for other purposes. In order to prove his case the plaintiff has examined Sh.Y.K. Gautam, Deputy Director of Rashtriya Mahila Kosh, as PW1, who filed his evidence by way of evidentiary affidavit Ex.PW1/A. PW1 in his evidentiary affidavit Ex.PW1/A has reiterated the contents of entire plaint and replication. The plaintiff has relied upon the following documents in order to prove its case:
i. Certificate of registration of plaintiff is Ex.Pw1/1. ii. Copy of the minutes of meeting of Governing Board of plaintiff held on 10022003 is Ex.PW1/2.
iii. A copy of the office order dated 28022003 is Ex.Pw1/3. iv. Copy of the office order dated 28102005 in favour of Mr. Y.K. Gautam is Ex.Pw1/4.
v. A copy of the office order dated 26112007 in favour of PW1 CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.18
is Ex.PW1/4.
vi. Loan application of the defendant dated 631995 is Ex.P1. vii. Loan of Rs.10 lacs sanctioned letter dated 2661995 is Ex.P 2. viii. Memorandum of agreement dated 581995 executed by the defendant in favour of the plaintiff is Ex.P3. ix. Guarantee letter/deed dt. 581995 executed by defendant no:2 is Ex.P4.
x. Demand pronote dated 581995 executed by the defendant in favour of the plaintiff is Ex.P5.
xi. The defendant no:1 for availing the loan passed a resolution dated 2671995 authorizing defendant no:2 to execute the documents for awarding the loan from the plaintiff, is Ex.P 6. xii. Application for drawl dated 1681995 filed by defendant is Ex.P7.
xiii. The first loan disbursement advice of Rs.5 lacs is Ex.P8. xiv. Loan receipt and covering dated 10121995 sent by defendant to the plaintiff is Ex.P9 and Ex.P10. xv. The application for drawl dated 541996 is Ex.P11. xvi. Demand pronote sent by defendant to the plaintiff for a sum of Rs.5 lakhs is Ex.P12.
xvii. The disbursement advise for Rs.5 lakh dt. 2851996 is Ex.P 13 and the covering letter and receipt of the same are Ex.P14 and Ex.P15 respectively.
xviii. Sanction letter dated 17121996 for Rs.20 lacs ( Rs.15 lacs as Short Term Loan and Rs.5 lacs as Medium Term Loan) and defendant executed a memorandum of Agreement dated 26 CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.19
121996 which is Ex.P16.
xix. The guarantee letter/deed dated 26121996 is Ex.P17. xx. The defendant no:1 for availing the loan again passed a resolution dt. 25121996 authorizing defendant no:2 to execute t he documents for availing the loan from the plaintiff which resolution is Ex.P18.
xxi. Two demand pronotes for Rs.10 lacs each dated 26121996 and dated 1741997 executed by the defendant in favour of the plaintiff are Ex.P19 and P20.
xxii. Sanction letter dated 30121999 for the further sum of Rs.25 lacs ( Rs.20 lacs as Short Term Loan and Rs.5 lacs as Medium Term Loan) in favour of t he defendant no:1 is Ex.P 21. xxiii. Memorandum of Agreement dated 1411998 is Ex.P22. xxiv. Guarantee letter dt. 1411998 is Ex.P23. xxv. Demand Pronote for Rs.25 lacs dt. 1411998 is Ex.P24. xxvi. Resolution passed by defendant no:1 in favour of the defendant no:2 is Ex.P25.
xxvii. Application for drawl filed by the plaintiff is Ex.P26. xxviii. The loan disbursement advise is Ex.P27. xxix. Receipt of loan along with covering sent by the defendant to the plaintiff are Ex.P28 and ExP29.
xxx. The disbursement advise dt. 24121998 for Rs.12,50,000/ is Ex.P30. Covering letter dt. 2911999 along with receipt are Ex.P31 and Ex.P32.
xxxi. Defendant no:1 again approached the plaintiff for loan of Rs.20 lacs vide application dt. 1311998 which is Ex.P33. xxxii. Sanctioned letter for Rs.20 lacs dt. 2731998 is Ex.P34.
CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.20
xxxiii. Agreement for Revolving Fund Loan dt. 2141998 is Ex.P35. xxxiv. Guarantee letter/deed dt.2141998 executed by the defendant no:2 is Ex.P36.
xxxv. Demand pronote for Rs.20 lacsd dt. 2141998 is Ex.P37. xxxvi. Resolution passed by defendant no:1 in favour of the defendant no:2 dt. 1641998 is Ex.P38.
xxxvii. Defendant also confirmed the terms and conditions of the loan sanction letter, vide his letter dt. 2141998 Ex.P39. xxxviii. Application for drawal and its covering letter dated 2141998 are Ex.P40 and Ex.P41.
xxxix. Demand draft of Rs.10 lacs dt. 461998 is Ex.P42. xl. Defendant again filed application for drawl dt. 2861998, which along with covering letter are Ex.P43 and P44. xli. Disbursement advice is Ex.P45.
xlii. Demand draft is Ex.P46. Receipt along with covering letter dt. 12111999 are Ex.P47 and Ex.P48.
xliii. Reminders sent by the plaintiff to the defendants for the payment of loan amount, dated 852003 are ExPw1/5 and Ex.Pw1/6.
xliv. Two reminders dt. 1282003 are Ex.Pw1/7 and Ex.Pw1/8, AD card of these reminders are Ex.PW1/9.
xlv. Notice dt. 162006 is Ex.PW1/10, its postal receipts are Ex.PW1/11 to Ex.PW1/13, AD card is Ex.Pw1/4.
xlvi. The defendants also stated to have sent a letter dt. 282001 thereby acknowledging their loan amount which is Ex.P54 and demand drafts sent by defendant along with the letter are Ex.P55.
xlvii. Legal notice dated 1292003 sent to the defendant for CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.21
recalling of the entire loan amount is Ex.P50, its postal receipt is Ex.P52, AD card is Ex.P52 and Ex.P53. xlviii. Reply to the notice by defendant dated 2892003 is Ex.P49. During his cross examination PW1 has stated that he is working with the plaintiff as Deputy Director and looking after the portfolio of loan sanction and other accounts in which the loan were already sanctioned and are disbursed. Pw1 further stated that the main object of the plaintiff while lending the money is to give financial assistance to the NGOs for on lending the same to the women and the assistance is in the form of loan. PW1 further stated that they ensure before lending to the NGO that the money would be given to women only as per terms and conditions and eligibility criteria. PW1 submitted that defendant no:1 has repaid some money and same is as per the account which is on record.
It is further stated by the defendants that agreement entered into by them with the plaintiff relates to granting financial assistance to rural women in order to enable them to pursue various activities. It is stated that it is implicit in the terms of the agreements that the money disbursed from the plaintiff to that defendants is to be disbursed in turn to the individual rural womenfolk, it is, therefore, an implicit term in the agreement hat the money has to be recovered from the rural women and not from the defendants herein. As per the Written Statement itself the amount sanctioned was given to women who were sometimes double below the poverty line and to recover the amount from the said constituents was impossible and that it was extremely difficult for the instant defendant to repay the loan according to the repayment schedule.
The perusal of the pleadings would itself reflect that the defendants have not denied the loan transaction. The defendants have argued that the sanctioned amount was for the ultimate benefit of the constituents and that the CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.22
answering defendants are just a via media to get the funds to the 'constituents'.
The only defense taken by the defendants and that reflects in the pleadings, testimony and the crossexamination of and by the defendants is that the defendant was only a 'via media'. PW1 admitted the question of the counsel for the defendant that defendant no:1 organization is merely a via media for loans sanctioned by organizations to further plaintiff's goal for achieving the upliftment and financial assistance for women. After seeing the para 8 of Ex.P3, which is agreement PW1 deposed that defendant no:1 has adhere to the provisions of clause 8 of agreement. It is stated by PW1 that the plaintiff has not proceeded against any of the beneficiaries who have ultimately received the sanctioned amount via defendant no:1. PW1 voluntarily deposed that they are not their borrowers. After seeing Ex.P35 at page 112, paragraph 4, PW1 deposed that as per their last monitoring the defendant no:1 has complied the provisions of said paragraph.
The defendants have examined Sh. Bhujang Bhushan Sharma as DW1, who filed his evidence by way of affidavit Ex.DW1/A and in his evidentiary affidavit DW1 has reiterated the contents of the written statement.
The defendant have argued that in contravention of terms and conditions of memorandum of Agreements, plaintiffs have indiscriminately, picked upon the defendants knowing fully well that out of a total sanctioned amount of Rs.75 lakhs spread over 4 different MOU' the instant defendant has already paid back 51,91,052/ and only the amount of Rs.23,08,948/ remains to be paid as per the accounts statement submitted by the plaintiffs. Defendant further argued that out CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.23
of four agreements entered into in total vide four sanction letters, sanction letters dated 26th June, 1995, 17th December, 1996 and 30th December, 1997 pertain to a total of Rs.55 lakhs out of which Rs.49,41,052/ have already been paid back well within the time limit prescribed in the relevant repayment schedules which only establishes the bone fide of the defendants herein.
One of the defence of defendants is that they are doing their level best to repay the said sanction amount even though the ultimate and implied responsibility to repay the said amount is in the hands of the Constituents, as the same has been disbursed to them, and they have not been joined as parties to the present suit by the plaintiff. It is denied by defendants that they are liable to pay interest, penal interest or any sum whatsoever or penal interest as demanded by the plaintiff in the present suit.
The abovesaid argument of the defendant is not a tenable defense in order to avoid a liability under the loan agreement.
The plaintiff has been able to prove its case and the defendants have not been able to put up a substantial defense. Therefore the plaintiff is held entitled to the recovery of the loan amount of Rs.32,93,779/- which is outstanding against the defendants and which they have failed to repay to the plaintiff.
The ISSUE No.3 is accordingly decided in favour of the plaintiff and against the defendants no.1 & 2 who are jointly and severely liable to pay the said amount.
15.Whether the defendants are liable to pay penal interest in addition to the admitted rate of interest at the rate of 8% per annum on the principal amount ? OPP The perusal of the documents and a bare perusal of the terms and conditions annexed to the various Sanction Letters clearly state that the CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
24Sanctioned Amount is to be disbursed to the various Self Help Groups within 20 days from the date of remittance and in the event of any delay penal interest at the rate of 8% is charged to the defendant thereby making it clear that the defendants are merely a via media for the plaintiffs to get the financial aid across to the beneficiaries or constituents and are not directly liable to the plaintiffs. The plaintiff has been able to prove all the documents executed during the loan transaction. The rate of interest was agreed of be rate of 8%. Therefore the plaintiff is entitled to the said rate of interest i.e. 8% per annum on the principle amount.
Accordingly the ISSUE No.4 is also decided in favour of the plaintiff and against the defendants.
Relief.
The suit of the plaintiff is decreed in favour of the plaintiff and against the defendants no.1 & 2 who are jointly and severely liable to pay the said amount. The plaintiff is entitled to recover an amount of Rs.32,93,779/ along with interest @8% per annum, from the defendants, from the date of the sanction of the loan till the realization of the amount and the cost of the suit. Decree sheet be drawn. Filed consigned to the record room.
Announced in the open court on this 24-10-2017.
(VEENA RANI) Additional District Judge-IV, New Delhi District, Patiala House Courts, New Delhi/Judge Code -DL-271 CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.
25IN THE COURT OF MS.VEENA RANI :ADDL. DISTRICT JUDGE, PATIALA HOUSE COURTS,NEW DELHI Civil Suit No.59476/2016 Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram 24102017 Present : Ld. counsel for the parties.
Vide my separate judgment, the suit of the plaintiff is decreed against the defendants. Decree sheet be drawn accordingly. Filed consigned to the record room.
Announced in the open court on this 24-10-2017.
(VEENA RANI) Additional District JudgeIV, New Delhi District, Patiala House Courts, New Delhi/Judge Code DL0271 CS No.59476/16, Rashtriya Mahila Kosh Vs. Avadh Lok Sewa Ashram & Anrs.