Delhi District Court
Canara Bank vs Babu Khan on 27 February, 2024
DLST010023422023
Presented on : 21.03.2023
Registered on : 24.03.2023
Decided on : 27.02.2024
Duration : 11 months, 6 days
IN THE COURT OF DISTRICT JUDGE
(COMMERCIAL COURT) (DIGITAL-04),
SOUTH, SAKET COURTS, NEW DELHI
Presiding Officer: Sh. RAJEEV BANSAL
CS (Comm) No. 181/23
In the matter of:
CANARA BANK
A Body Corporate Instituted under
the Banking Companies (Acquisition
and Transfer of Undertaking) Act, 1970
HAVING ITS HEAD OFFICE AT :-
112, JC Road, Bangalore-560002, Karnataka
And
ITS BRANCH OFFICE
Main Road, Chattarpur
New Delhi-110074. ............Plaintiff
vs.
1.BABU KHAN S/o Mr. Chand Khaan Proprietor of M/s Wood Workers (A Proprietorship Firm), G-76, Khasra No. 574, Chhattarpur Extension, New Delhi-10074.
CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 1 of 14 Digitally signed by RAJEEV RAJEEV BANSAL
BANSAL Date:
2024.02.27
15:58:04 +0530
ALSO AT:-
H. No. 49, Ground Floor,
Fatehpur Beri, New Delhi-110074.
ALSO AT:-
A-6/2, Khasra N. 1871/36,
Ground Floor, Asola Village,
Fatehpur Beri, New Delhi-110074.
ALSO AT:-
Khasra No. 326, Sani Asola Village,
Fatehpur Beri, New Delhi-110074.
2. MOHD. SALEEM
S/o Sh. Chand Khan,
G-45, Ground Floor,
Chhattarpur Extension,
New Delhi-110074.
ALSO AT:-
304, Chhattarpur VIllage
New Delhi-110074. .........Defendants Date of institution : 24.03.2022 Date on which argument was concluded : 21.02.2024 Date of pronouncement of the order : 27.02.2024 EX-PARTE JUDGMENT
1. This suit has been filed for recovery of an amount of Rs. 3,32,844/- along with pendente lite & future interest @ 11.25% per annum and Additional Penal Interest @ 2% p.a. alongwith cost.
2. It is stated that the Plaintiff Bank (erstwhile Syndicate Bank) is a Body incorporated with perpetual succession and a common seal with powers subject to the Provisions of Banking Companies (Acquisition & Transfer of Undertakings) Act 5, 1970 and CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 2 of 14 Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.02.27 15:58:19 +0530 is having its Corporate Office at 117, JC Road, Bangaluru, Karnataka and its Branch at Main Road, Chhattarpur, New Delhi-110074. The present suit has been filed through Sh. Om Prakash, Senior Manager, of the Plaintiff Bank, who has been authorized by the Bank. During course of trial, in place of Sh. Om Prakash, Ms. Preeti Bisht, was substituted as AR for the Plaintiff Bank vide order dated 12.02.2024.
3. It is further stated that pursuant to Government of India Notification dated 04.03.2020, Syndicate Bank was amalgamated with Canara Bank u/s 9 of the Banking Companies Act and in terms of the said Notification, the aforesaid Bank merged with Canara Bank with effect from 01.04.2020.
4. It is stated that the Defendant No. 1 is the Sole Proprietor of M/s Woodworkers (a Proprietorship Firm), who is engaged in the business of Manufacturing of furnitures etc. It is stated that Defendant No. 1 had approached the erstwhile Syndicate Bank, Chhattarpur Branch on 18.02.2009 for availing SOD Limit for a sum of Rs. 5,00,000/- against hypothecation of stocks and Defendant No. 2 agreed to become the Guarantor for SOD Limit of Defendant No. 1. It is further stated that on the request of Defendant No. 1, Plaintiff Bank sanctioned the SOD Limit of Rs. 5,00,000/- to Defendant No. 1 on 27.04.2009 vide Loan Account No. 9013 125 0000 421 and the Defendant No. 1 executed various documents (like ASD-4, Composite Hypothecation Agreement dated 27.04.2009) and the Defendant No. 2 also executed various documents (like ASD 6, Agreement of Guarantee) in favour of the Plaintiff Bank with regard to the loan facility. It is further stated that the SOD Limit of Rs. 5 Lakhs was fully CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 3 of 14 Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.02.27 15:58:27 +0530 utilized by Defendant No. 1. It is further stated that on 07.01.2011, Defendant No. 1 visited the Branch of the Plaintiff Bank and acknowledged the balance amount of Rs. 4,88,795/- as on 31.10.2010 in the Loan Account. It is also stated that Defendant No. 1 also executed ASD-16, Renewal Letter on 07.01.2011 for the SOD Limit.
5. It is further stated that the Defendant No. 1 once again approached the Plaintiff Bank on 27.12.2011 for renewal of SOD Limit for a sum of Rs. 5,00,000/- against hypothecation of stocks. It is further stated that on the request of Defendant No. 1, Plaintiff Bank sanctioned the SOD Limit of Rs. 5,00,000/- to Defendant No. 1 on 27.11.2011 and the Defendant No. 1 executed various documents (like ASD-4, Composite Hypothecation Agreement dated 29.12.2011 and OG 28&B, Acknowledgment Letter dated 29.12.2011 for Rs. 5 Lakhs) and the Defendant No. 2 also executed various documents (like ASD 6, Agreement of Guarantee) all on 29.12.2011 in favour of the Plaintiff Bank with regard to the loan facility. It is further stated that the SOD Limit of Rs. 5 Lakhs was fully utilized by Defendant No. 1.
6. It is further stated that the Defendant No. 1 once again approached the Plaintiff Bank on 01.05.2014 for renewal of SOD Limit for a sum of Rs. 5,00,000/- against hypothecation of stocks. It is further stated that on the request of Defendant No. 1, Plaintiff Bank sanctioned the SOD Limit of Rs. 5,00,000/- to Defendant No. 1 on 13.05.2014 and the Defendant No. 1 executed various documents (like ASD-4, Composite Hypothecation Agreement dated 13.05.2014 for Rs. 5 Lakhs) and the Defendant No. 2 also executed various documents (like ASD 6, Agreement of Guarantee) all on 13.05.2014 in CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 4 of 14 Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.02.27 15:58:32 +0530 favour of the Plaintiff Bank with regard to the loan facility. It is further stated that the SOD Limit of Rs. 5 Lakhs was fully utilized by Defendant No. 1.
7. It is further stated that the Defendant No. 1 once again approached the Plaintiff Bank on 02.07.2016 for renewal of SOD Limit for a sum of Rs. 5,00,000/- against hypothecation of stocks. It is further stated that on the request of Defendant No. 1, Plaintiff Bank sanctioned the SOD Limit of Rs. 5,00,000/- to Defendant No. 1 on 02.07.2016 and the Defendant No. 1 executed various documents (like ASD-16, Letter of Renewal dated 27.07.2016, ASD-4 Composite Hypothecation Agreement dated 27.07.2016) and the Defendant No. 2 also executed various documents (like ASD 6, Agreement of Guarantee dated 27.07.2016) all on 27.07.2016 in favour of the Plaintiff Bank with regard to the loan facility. It is further stated that the SOD Limit of Rs. 5 Lakhs was fully utilized by Defendant No. 1.
8. It is further stated that the Defendant No. 1 once again approached the Plaintiff Bank on 05.11.2018 for renewal of SOD Limit for a sum of Rs. 5,00,000/- against hypothecation of stocks. It is further stated that on the request of Defendant No. 1, Plaintiff Bank sanctioned the SOD Limit of Rs. 5,00,000/- to Defendant No. 1 on 01.12.2018 and the Defendant No. 1 executed various documents (like ASD-4 Composite Hypothecation Agreement dated 11.12.2018) and the Defendant No. 2 also executed various documents (like ASD 6, Agreement of Guarantee dated 11.12.2018) all on 11.12.2018 in favour of the Plaintiff Bank with regard to the loan facility. It is further stated that the SOD Limit of Rs. 5 Lakhs was fully utilized by CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 5 of 14 Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.02.27 15:58:40 +0530 Defendant No. 1.
9. It is further stated that the Defendant No. 1 once again approached the Plaintiff Bank on 09.03.2020 for converting the SOD Limit into Term Loan Facility against hypothecation of stocks. It is further stated that Defendants No. 1 and 2 provided details of their assets and liabilities to the Plaintiff Bank on 09.03.2020 vide document ADV-80A with KYC norms documents. It is further stated that on the request of Defendants, Plaintiff Bank sanctioned Term Loan Facility of Rs. 2.75 Lakhs to Defendant No. 1 on 11.03.2020 vide Loan Account No. 9013 945 0000 039, which was repayable in 60 EMIs of Rs. 6,054/- each with interest @ 11.25% p.a. and compounded was applicable at floating rate. It is further stated that Defendants executed various documents (like ADV 28A Agreement dated 11.03.2020 and OG 28A&B Acknowledgement Letter dated 11.03.2020) on 11.03.2020 in favour of the Plaintiff Bank with regard to the loan facility.
10. It is further stated that due to financial indiscipline, the Term Loan Account was classified as NPA on 01.03.2021. It is stated that the Plaintiff Bank redeemed the Fixed Deposit kept in the name of Defendant No. 1 and proceeds of the same to the tune of Rs. 33,679/-
were credited on 28.12.2021 in the Loan Account of Defendant No. 1.
11. It is further stated that the amount was not paid by the defendant despite issuance of Notices and hence, the plaintiff bank invoked Section 12-A of the Commercial Courts Act by approaching South District Legal Services Authority on 03.09.2022, but the CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 6 of 14 Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.02.27 15:58:47 +0530 defendant did not appear in Pre Institution Mediation proceedings and hence, a Non-Starter Report was issued by South District Legal Services Authority on 09.11.2022, where-after, the present Suit was filed by the plaintiff on 24.03.2023 for recovery of Rs. 3,32,844/- along with pendente lite & future interest @ 11.25% per annum and Additional Penal Interest @ 2% p.a. till the date of realization.
12. Both the Defendants were served on 15.05.2023. Defendant No. 1 appeared in person on 18.09.2023. However, no Written Statement was filed within the statutory period of 120 days from the date of service and hence, right of the Defendants to file the Written Statement was closed vide order dated 18.09.2023. The Defendant also stated that he has already made part-payment to the Plaintiff. However, the Defendant did not appear thereafter.
13. The following issues were framed :-
1. Whether this Court has territorial jurisdiction to entertain and try the present suit?
OPP
2. Whether the suit is within limitation ? OPP
3. Whether the suit has been properly valued? OPP
4. Whether the plaintiff is entitled to the relief prayed? OPP CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 7 of 14 Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.02.27 16:01:34 +0530
5. Relief, if any.
14. In order to prove the case, the plaintiff bank has led its evidence wherein Ms. Preeti Bisht, AR of the Plaintiff Bank was examined and she reiterated the contents of plaint in her affidavit in evidence Ex. PW1/A and has relied upon the following documents:-
S. No. Documents Exhibits
1. Loan Application Dated 18.02.2009 Ex.PW1/1
2. Sanction Letter Dated 27.04.2009 Ex.PW1/2
3. ASD-4, Composite Hypothecation Agreement Ex.PW1/3
dated 27.04.2009
4. ASD 6, Guarantee Agreement dated 27.04.2009 Ex.PW1/4
5. Acknowledgement of Debt dated 07.01.2011 Ex.PW1/5
6. ASD- 16, Renewal Letter dated 07.01.2011 Ex.PW1/6
7. Loan Application dated 27.12.2011 Ex.PW1/7
8. ADV- 80A, Details of particulars of Assets & Liabilities of the individual dated 27.12.2011 Ex.PW1/8
9. ADV-80A, Details of particulars of Assets & Ex. PW1/9 Liabilities of the individual dated 27.12.2011
10. ASD- 04, Composite Hypothecation agreement Ex. PW1/10 dated 29.12.2011
11. OG 28A&B Acknowledgement Letter dated Ex. PW1/11 29.12.2011
12. ASD 6, Guarantee Agreement dated 29.12.2011 Ex. PW1/12
13. Loan Application dated 01.05.2014 Ex. PW1/13
14. Sanction Letter dated 13.05.2014 Ex. PW1/14
15. ASD-4, Composite Hypothecation Agreement Ex. PW1/15 dated 13.05.2014
16. ASD-6, Guarantee Agreement dated 13.05.2014 Ex. PW1/16
17. Loan Application dated 02.07.2016 Ex. PW1/17
18. ASD-16, Renewal Letter dated 27.07.2016 Ex. PW1/18
19. ASD-4, Composite Hypothecation Agreement Ex. PW1/19 dated 27.07.2016 CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 8 of 14 Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.02.27 16:01:40 +0530
20. ASD- 6, Gurantee Agreement Dated 27.07.2018 Ex. PW1/20
21. Loan Application dated 05.11.2018 Ex. PW1/21
22. Sanction Letter Dated 01.12.2018 Ex. PW1/22
23. ASD-4, Composite Hypothecation Agreement Ex. PW1/23 dated 11.12.2018
24. ASD-6, Guarantee Agreement dated 11.12.2018 Ex. PW1/24
25. Loan Application Dated 09.03.2020 Ex. PW1/25
26. ADV-80A, Details of Particulars of Assets and Ex. PW1/26 Liabilities of the individual dated 09.03.2020
27. ADV-80A, details of particulars of Assets and Ex. PW1/27 Liabilities of the individual dated 09.03.2020
28. Sanction Letter dated 09.03.2020 Ex. PW1/28
29. ADV 28A, Agreement dated 11.03.2020 Ex. PW1/29
30. OG 28AB Acknowledgement Letter dated Ex. PW1/30 11.03.2020
31. Acknowledgement of Debt dated 11.03.2020 Ex. PW1/31
32. Letter dated 31.05.2021 Ex. PW1/32
33. Statement of account - SOD Limit no. 9013- Ex. PW1/33 125-0000-421 from 27.04.2009 to 11.03.2020
34. Statement of account - Term Loan No. 9013- Ex. PW1/34 945-0000-039 from 11.03.2020 to 31.12.2022
35. Certificate as per Banker's Books Evidence Act Ex. PW1/35 by the Plaintiff
36. Copy of Power of Attorney executed by the Mark A Bank in favour of Mr. Om Prakash dated 08.11.2006
37. Copy of Authority Letter in favour of Ms. Preeti Ex. PW1/36 Bhist dated 08.02.2024 (OSR)
38. Non-starter Report dated 09.11.2022 issued by Ex. PW1/37 DLSA South
39. Certificate u/s 65-B of the Indian Evidence Act Ex. PW1/38
40. Bank Account Statement from 01.01.2023 to Ex. PW1/39 16.02.2024
15. Ld. counsel appearing for the plaintiff has stated that due to the defaults committed by the defendant, the present suit has been filed for recovery of the unpaid amounts of Rs. 3,32,844/-, with CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 9 of 14 Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.02.27 16:01:47 +0530 interest and cost. Learned counsel also stated that during course of pendency of the present suit, the Defendant has deposited Rs. 1,70,000/- with the Plaintiff Bank on different dates. Learned counsel also stated that at present the rate of interest is 11.25% p.a.
16. I have heard learned counsel for the plaintiff bank and have perused the records of the case.
17. The issues are accordingly decided as under:-
18. Issue No. 1Whether this Court has territorial jurisdiction to entertain and try the present suit? OPP
18.1 The loans were disbursed from Chhattarpur, Branch of the Plaintiff Bank as per Ex. PW1/2, Ex. PW1/7, Ex. PW1/14, Ex. PW1/18 and Ex. PW1/28. As such, this Court has the territorial jurisdiction to entertain this plaint.
18.2 The issue is thus accordingly decided in favour of the Plaintiff.
19. Issue No. 2Whether the suit is within limitation ? OPP 19.1 The present suit is within limitation as the Loan Account was categorized as NPA on 01.03.2021. The present suit was filed on 24.03.2023 and hence, the Suit is within the limitation period of 03 years from the date of categorization of the Loan Account as NPA.
CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 10 of 14 Digitally signed by RAJEEV RAJEEV BANSAL
BANSAL Date:
2024.02.27
16:01:54 +0530
19.2 The issue is thus accordingly decided in favour of the
Plaintiff.
20. Issue No. 3
Whether the suit has been properly valued? OPP 20.1 The Suit has been valued at Rs. 3,32,844/-, which is also the amount claimed by the Plaintiff in 'Prayer Clause' in this case. The ad valorem Court Fees of Rs. 5,600/- has been paid on this amount. The Suit has thus been properly valued.
20.2 The issue is thus accordingly decided in favour of the Plaintiff.
21. Issue No. 4Whether the plaintiff is entitled to the relief prayed? OPP 21.1 Ex. PW1/1 is the First Loan Application dated 18.02.2009; Ex. PW1/2 is the Sanction Letter by which SOD Facility of Rs. 5 Lakhs was sanctioned by the Plaintiff Bank to the Defendant; Ex. PW1/3 to Ex. PW1/6 are various documents executed / submitted by the defendants to the plaintiff bank for the purpose of taking the SOD Facility from the Plaintiff Bank.
21.2 Ex. PW1/7 is the Second Application dated 27.12.2011 for renewal of the SOD Facility; Ex. PW1/8 to Ex. PW1/12 are various documents executed / submitted by the defendants to the plaintiff bank for the purpose of taking the Renewal from the Plaintiff Bank.
21.3 Ex. PW1/13 is the Third Application dated 01.05.2014 for renewal of the SOD Facility; Ex. PW1/14 is the Sanction Letter dated CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 11 of 14 Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.02.27 16:02:03 +0530 13.05.2014 of the Loan; Ex. PW1/15 and Ex. PW1/16 are documents executed / submitted by the defendants to the plaintiff bank for the purpose of taking the Loan Facility from the Plaintiff Bank.
21.4 Ex. PW1/17 is the Fourth Application dated 02.07.2016 for renewal of the SOD Facility; Ex. PW1/18 to Ex. PW1/20 are various documents executed / submitted by the defendants to the plaintiff bank for the purpose of taking the Loan Facility from the Plaintiff Bank.
21.5 Ex. PW1/21 is the Fifth Loan Application dated 05.11.2018 for renewal of the SOD Facility; Ex. PW1/22 is the Sanction Letter dated 01.12.2018 of the Loan; Ex. PW1/23 and Ex. PW1/24 are documents executed / submitted by the defendants to the plaintiff bank for the purpose of taking the Loan Facility from the Plaintiff Bank.
21.6 Ex. PW1/25 is the Sixth and Final Loan Application dated 09.03.2020; Ex. PW1/28 is the Sanction Letter dated 09.03.2020 by which an amount of Rs. 2.75 Lakhs was sanctioned to be repaid in 60 installments of Rs. 6,054/- each alongwith interest @ 11.25 % p.a.; Ex. PW1/27, Ex. PW1/29 to Ex. PW1/31 are various documents executed / submitted by the defendants to the plaintiff bank for the purpose of taking the Loan Facility from the Plaintiff Bank.
21.7 Ex. PW1/32 is the Letter dated 31.05.2021 by which the Defendant was informed about the liability of Rs. 2,96,003/- in Loan Account No. 9013 945 0000 039. The Account Statement of this Account from 11.03.2020 to 31.12.2022 has been proved as Ex. PW1/34, according to which an amount of Rs. 3,32,844/- was payable CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 12 of 14 Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.02.27 16:02:14 +0530 by the Defendants to the Plaintiff Bank as on 01.01.2023. Ex. PW1/35 is the Certificate as per Banker's Books Evidence Act and Ex. PW1/37 is the Non-Starter Report dated 09.11.2022.
21.8 From the Account Statement Ex. PW1/34, it can be seen that the defendants were under a liability to pay Rs. 3,32,844/- as on 01.01.2023 towards Loan Account No. 9013 945 0000 039.
21.9 Learned counsel for the Plaintiff had informed during the course of arguments that an amount of Rs. 1,70,000/- has already been paid by the Defendants to the Plaintiff Bank in scattered manner during the pendency of the present suit. The Defendants shall thus be entitled to the benefit of the said payment. After adjusting the said amount of Rs. 1,70,000/- from the amount recoverable as on 01.01.2023, the Plaintiff shall be entitled to recover the balance amount of Rs. 1,62,844/- from the Defendants.
21.10 According to the Agreement between the parties and as per the Prayer in the Suit, the above amount is payable with interest @ 11.25% per annum. The Prayer for Compound Interest and Penal Interest is rejected and the Plaintiff shall be entitled only to Simple Interest @ 11.25% p.a. 21.11 The plaintiff is thus, entitled to recover an amount of Rs. 1,62,844/- from the defendants with interest @ 11.25% per annum w.e.f. 24.03.2023. The plaintiff shall also be entitled to cost of Rs. 30,000/- towards the cost of litigation, which includes the Court Fees and other legal expenses.
CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 13 of 14 Digitally signedRAJEEV by RAJEEV BANSAL BANSAL Date: 2024.02.27 16:02:20 +0530 21.12 The issue is thus accordingly decided in favour of the Plaintiff. 22. Issue No. 9 Relief 22.1 Defendants are therefore directed to pay jointly and
severally, an amount of Rs. 1,62,844/- to the plaintiff bank with interest @ 11.25% per annum w.e.f. 24.03.2023 till the date of realization and an amount of Rs. 30,000/- towards cost of litigation, within a period of 06 (six) months from today.
22.2 As a result, the present suit is decreed in favour of the plaintiff bank and against the defendants in the above terms.
23. Decree Sheet be drawn accordingly.
File be consigned to be Record Room.
Digitally signedRAJEEV by RAJEEV BANSAL Announced in open Court BANSAL Date: 2024.02.27 16:02:26 +0530 on 27.02.2024 (RAJEEV BANSAL) District Judge (Commercial Court) (Digital-04) South, Saket, ND/27.02.2024 CS (Comm) No. 181/2023 Canara Bank vs. Babu Khan & Anr. Page 14 of 14