Bangalore District Court
Axis Bank Limited vs Nandi Enterprises on 15 March, 2024
KABC170031772023
IN THE COURT OF LXXXIV ADDL. CITY CIVIL AND
SESSIONS JUDGE (CCH-85) (COMMERCIAL COURT),
BENGALURU
DATED THIS THE 15th DAY OF MARCH 2024
PRESENT
SRI.RAMAKANT CHAVAN,
B.Com., LL.B.(Spl)
LXXXIV ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.O.S.No.1497/2023
PLAINTIFF:
AXIS BANK LIMITED,
having its Regd. Office at
Trishul, 3rd floor,
Opp. Samaratheshwar Temple,
Near Law Garden, Ellis Bridge,
Ahmedabad - 380 006,
Branch office at
Plot No.41, Sheshadri Road,
Anand Rao Circle,
Bengaluru - 560 009,
rep. by its Senior Manager &
Authorized representative
Mr.B.Y.Arjun Dev
(By Sri.Suresh V., Adv.)
AND
DEFENDANT:
Nandi Enterprises,
Rep. by its Proprietor
Sri.Barun Nandi,
S/o Sri.Nirmal Nandi,
2 Com.O.S.No.1497/2023
Aged about 35years,
No.4, Near S.S.Kalyana Mantappa,
Mallasandra, Bengaluru - 560067
Also at:
Nandi Enterprises,
Rep. by its Proprietor
Sri.Barun Nandi,
S/o Sri.Nirmal Nandi,
Aged about 35 years,
Manjunath Complex,
2nd Floor, Koralu Mallasandra,
Near S.S.Kalyana Mantappa,
Bengaluru - 560067
(By Sri.K.P.Raghavendra, Adv.)
Date of Institution 20.12.2023
Nature of suit For recovery of money
Date of First Case Management 26.02.2024
Hearing
Date of commencement of 02.03.2024
recording of evidence
Date on which judgment 15.03.2024
pronounced
Time taken for disposal Years Months Days
1) From the date of First Case 00 00 18
Management Hearing
2) Total duration 00 02 24
LXXXIV Addl. City Civil & Sessions Judge
(CCH-85) Commercial Court, Bengaluru
3 Com.O.S.No.1497/2023
JUDGMENT
This is a suit filed by the plaintiff for recovery of Rs.7,54,319/- together with interest at 24% p.a. from the date of filing of the suit till the date of realization.
2. Brief facts of the plaintiff's case are that the plaintiff Bank is engaged in the banking activities and services lending credit facilities to its customers under varied categories. The defendant approached the plaintiff Bank for sanction of SBB Cash Credit facility for the purpose of working capital. The plaintiff Bank sanctioned a loan of Rs.8.00 lakhs on 05.10.2021 and the defendant executed the Facility Agreement dated 04.03.2021 agreeing to repay the loan with interest at 11% p.a. at tenure of 12 months. As averred SBB Cash Credit facility of Rs.7.00 was released in A/c No.92130007762982 and the charge on hypothecation, the defendant entered into Deed of Hypothecation dated 23.02.2021.
It is further stated that the defendant after availing the said financial assistance have been irregular in the operation of the account with the plaintiff bank and blatantly violated the terms and conditions of the Agreement. For having committed default, the plaintiff bank classified the loan account of the defendant as a NPA on 29.05.2022. The plaintiff bank has also issued notice on 04.03.2023 calling upon the defendant to pay a sum of Rs.7,54,319/- with interest, but there is no response from the defendant's side. The plaintiff Bank instituted the case before 4 Com.O.S.No.1497/2023 DLSA, Bengaluru in PIM No.1794/2013 but the defendant did not appear there also.Hence, the plaintiff is constrained to file this suit and prays for decree the suit.
3. On service of summons, the defendant has appeared through its counsel. The defendant has filed its written statement. It has denied most of the contents of the plaint averments. It has contended that the suit is not maintainable. The CGTMSE is set up under the Ministry of MSMED Bank of India and the said scheme was launched in 2000 and it offers credit guarantees ranging from 75% to 85% to MSEs across the country. Thus, under the scheme, the applicant's loan is backed by a party without the provision of any external collateral or third party guarantee. The defendant is into trading falling under MSME Enterprises availed credit facility of Rs.7.00 lakhs under CGTMSE for a period of 12 months with interest at 11% p.a. from the plaintiff bank. The defendant is guaranteed with coverage of 75%-85% repayment in case of default on the principal loan amount and the defendant facility is applicable as the loan amount is less than Rs.50 lakhs.
It is further stated that the defendant has paid the interest as per the terms of sanction letter but the plaintiff bank has failed to renew the facility even on deducting annual service fee of Rs.16,972/-. The interest charged is exorbitant. The CTGMSE loan is classified as NPA on 29.05.2022 and the plaintiff bank got issued notice on 14.12.2022. The account statement produced by 5 Com.O.S.No.1497/2023 the plaintiff Bank is not adequate. Even on paying the interest amount, the plaintiff bank is again claiming interest with principal of Rs.7.00 lakhs which is absolutely unfair and not liable. Without applying General Clauses Act, the DLSA in blind issued endorsement as non starter report. No notice has been served on the defendant. The defendant was kept under dark without any intimation or notice about the recovering proceedings. The plaintiff bank should raise the claim before the Govt. of India as per invocation of guarantees but without following the proper procedure, unnecessarily filed this suit for recovery against the defendant. Hence, on these grounds prays for dismissal of the suit.
4. Based on the above, this court has framed the following:
ISSUES
1. Whether the plaintiff bank proves that the defendant had approached for Cash Credit Facility of Rs.8.00 Lakhs and executed necessary documents by availing Rs.7.00 Lakhs as Cash Credit facility?
2. Whether the plaintiff bank proves that the defendant had agreed to pay interest at the rate of 11% p.a.?
3. Whether the plaintiff bank is entitled for the relief sought?
4. What order or decree?6 Com.O.S.No.1497/2023
5. To prove the case, the Senior Manager of the plaintiff is examined as PW1 and got marked some documents at Ex.P1 to P13. The Proprietor of the defendant is examined as DW1 and got marked some documents at Ex.D1 and D2.
6. Heard arguments on behalf of the plaintiff. The learned counsel for the defendant has submitted his written arguments.
7. My findings on the above issues are:
Issue No.1: In the affirmative Issue No.2: In the affirmative Issue No.3: Partly in the affirmative Issue No.4: As per the final order for the following REASONS
8. Issue Nos.1 and 2: The Senior Manager of the plaintiff has filed his affidavit. He has examined as PW1. He has narrated the plaint averments. The documents produced by PW1 are Facility Agreement, loan application, sanction letter, Deed of Hypothecation, copy of account statement, office copy of notice, postal receipts, non starter report, special power of attorney and certificate U/Sec.65B of the Evidence Act at Ex.P1 to P13.
9. In the cross examination, it is forthcoming that "ನಿಪಿ2 ರಲ್ಲಿ SBBCGTMSE ಅಂದರೆ Credit Guarantee Scheme for the Medium and Small Enterprises by the Authority. Credit Guarantee ಅಂದರೆ ಒಂದು ವೇಳೆ 7 Com.O.S.No.1497/2023 ಸಾಲಗಾರ ಸಾಲವನ್ನು ಮರುಪಾವತಿ ಮಾಡದೇ ಇದ್ದ ರೆ ಆತನ ಪರವಾಗಿ ಸರ್ಕಾರ ಸಾಲವನ್ನು ಮರುಪಾವತಿ ಮಾಡಲಾಗುತ್ತದೆ. ಆ ಬಗ್ಗೆ ವಾಣಿಜ್ಯ ನ್ಯಾಯಾಲಯದಲ್ಲಿ ಸಲ್ಲಿಸಿದ್ದ ಪ್ರತಿಯನ್ನು ಕೊಡಬೇಕಾಗುತ್ತದೆ."
He has further admitted that it is mentioned in Ex.P2 that, the borrower has to pay only interest on the loan availed. There is no guarantor for the said loan. The bank has to report the financial condition of the borrower to the Govt. He has also admitted that if there is no progress in repayment of the loan amount, the bank has to issue a notice to the borrower and also admitted that it has to be intimated to the Govt. and then file a suit against the borrower. He does not know whether such notice has been issued to the defendant or not. He has not produced any documents to show that the notice was served on the defendant. The defendant had availed a loan of Rs.7.00 lakhs and it was sanctioned in the year 2021. He has also admitted that there is no mention either in the plaint or anywhere regarding the liability of the Govt. if the borrower failed to repay the loan amount. He has denied the other suggestions.
10. The defendant's proprietor is examined as DW1, he has filed his affidavit. The documents produced by DW1 are Credit Guarantee Fund scheme and certificate U/Sec.65B of the Evidence Act at Ex.D1 and D2.
11. In the cross examination, it is forthcoming and admitted that after going through all the terms and conditions of the bank at the time of availing loan, he availed the loan. He has 8 Com.O.S.No.1497/2023 admitted Ex.P5 i.e. the copy of the loan ledger extract of his loan. He has denied that he has not paid the EMI and interest. He has admitted that the contents of his affidavit at para Nos.4 and 8 are true. He has also admitted the Ex.P2 i.e. the loan extract copy of 04.03.2021. He has denied the other suggestions.
12. The learned counsel for the plaintiff has submitted his arguments based on the plaint averments and evidence of PW1 as well as Ex.P1 to P13. He has pointed out towards the evidence of DW1 and his admissions during cross examination. The defendant had availed loan after knowing the terms and conditions of the bank at the time of sanctioning the loan. Only to defeat the claim made by the plaintiff, the defendant has raised false defence. The scheme of SBBCGTMSE is applicable only from January 2023 and not prior to that. Hence, the defendant is liable to pay the dues as claimed by the plaintiff.
13. Per contra, the learned counsel for the defendant submitted his written arguments basing on the defence made out in his written statement. He has pointed out towards the plaint averments also. The loan availed by the defendant under CGTSME scheme and it is a Trust which has been established by the Govt. of India. The said scheme was launched in the year 2000 and offers credit guarantees to Financial Institutions, that offer loans to Micro and Small Enterprises. It is a scheme that offers credit guarantees ranging from 75% to 85% to MSEs across the country. The applicant's loan is backed by a party without the 9 Com.O.S.No.1497/2023 provision of any external, collateral or third party guarantee. When on applying for loan under CGTMSE, the lending Institution is supported by the scheme which provides the guarantee for a substantial portion of the loan. It is further stated that the defendant is a businessman. The plaintiff Bank sanctioned CGTMSE facility for a period of One year with interest at the rate of 11% p.a. The defendant as a borrower paid the interest as per the terms of sanction letter. The plaintiff bank failed to renew the facility even on deducting annual service fee of Rs.16,972/-. The CTGMSE loan is classified as NPA on 29.05.2022 and the plaintiff bank issued notice on 14.12.2022. The scheme is under CTGMSE, the plaintiff bank as per Govt. of India has to claim the outstanding amount on invocation of guarantee.
14. It is further stated that as per the statement of account produced on behalf of the plaintiff, it is only for the period from 21.02.2022 to 05.12.2022. The plaintiff bank has to raise claim before the Govt. of India under guarantee scheme and recover the outstanding dues from the defendant. The plaintiff bank without following the proper procedure of law as prescribed under the CGTMSE scheme, unnecessarily filed this suit against the defendant. He has pointed out towards the cross examination of PW1 also, wherein he has admitted regarding guarantee means and if borrower fails to pay back the loan amount, in such circumstances, the present Govt. scheme will be paid back the Govt. authorities for the benefit of borrowers as per the said 10 Com.O.S.No.1497/2023 scheme. The defendant has made regular payments. Hence, prays for dismissal of the suit.
15. After hearing the learned counsel for the plaintiff and after going through the written arguments submitted on behalf of the defendant, I have gone through the pleadings of the parties. The admitted facts, the defendant has availed loan from the plaintiff bank. It is cash credit loan. The amount was transferred in his account. As and when the defendant required he has drawn the amount. The say of the defendant is that he has paid some EMIs and interest on the loan. But, the defendant has not produced any cogent evidence. Even after going through the evidence of PW1, he said that some petty amounts have been credited to the loan account of the defendant. The defendant raised another defence that he availed loan under SBB-CGTMSE, it is covered by the Govt., he needs to pay only interest.
16. I have also gone through the Ex.D1 regarding norms of the CGTMSE scheme. It commenced for the year June 2000. In regard to Invocation of Guarantee - NPA marking -
"(d) The credit facility has been recalled and the recovery proceedings have been initiated under the process of law. Mere issuance of recall notice under SARFAESI Act 2002 cannot be construed as initiation of legal proceedings for purpose of preferment of claim under CGS. MLIs are advised to take further action as contained in Sec.13(4) of the SARFAESI Act, 2002 wherein a secured creditor can take recourse to anyone or more of the recovery measures out of Four 11 Com.O.S.No.1497/2023 measures initiated therein before submitting claims or first installment of guaranteed amount. In case of MLIs is not in a position to take an of the action indicated in Sec.13(4) of the aforesaid Act, they may initiate fresh recovery proceedings under any other applicable law and seek the claim for first installment from the Trust."
"(e) (iv) In the event of default, the lending institution shall exercise its rights, if any, to take over the assets of the borrowers and the amount realized if any, from the sale of such assets or otherwise shall first be credited in full by the lending institutions to the Trust before it claims the remaining 25% of the guaranteed amount."
"As per CGTMSE circular No.62 and 135 for loan sanctioned on or after 01.01.2013, the balance 25% of the guaranteed amount will be paid on conclusion of recovery proceedings by the lending institution or after three years of obtention of decree of recovery whichever is earlier. However, in cases were the legal action has been initiated under SARFAESI Act or RRA, the MLIs, may be allowed to lodge second claim after the lapse of Three years from the date of action under Sec.13(4) of SARFAESI Act and the date of Recovery Certificate issued by the Tahshildar respectively subject to following confirmation from the MLIs - (a) Personal Guarantees have been invoked and no further recovery is possible. (b) No tangible, secured assets have been left or disposal and no further recovery is possible. (c) the entire recoveries made int eh account have been duly initiated in the second claim application / have been passed on the CGTMSE."
Therefore, after considering the norms of Ex.D1 and evidence of PW1 as well as the documents produced on behalf of the plaintiff bank, already stated, there is no dispute regarding 12 Com.O.S.No.1497/2023 availment of cash credit facility by the defendant. He has made some payments they are meager amounts. Even after perusing the loan statement, some payments have been made by the defendant. After deducting those payments, the plaintiff bank has filed this suit for recovery of the dues from the defendant. Merely because the loan availed / sanctioned under CGTMSE, it doesn't mean that the bank cannot iniitate proceedings for recovery of the dues. No doubt, for such loans Govt. is security. But, there is no hurdle for recovery of the dues. Therefore, in the light of discussions made supra, I am of the opinion that the plaintiff bank has succeeded in proving the Issue Nos.1 and 2 by placing cogent evidence. Therefore, I answer Issue Nos.1 and 2 in the affirmative.
17. Issue No.3: The plaintiff sought the aforesaid relief. The plaintiff claims an amount of Rs.7,54,319/- including interest and future interest at the rate of 24% p.a. It is higher side. Hence, the plaintiff is entitled for Rs.7,54,319/-. Accordingly, I answer the Issue No.3 Partly in the affirmative.
18. Issue No.4: In the result, I pass the following :
ORDER Suit of the plaintiff is decreed in part with cost.
The plaintiff is entitled for Rs.7,54,319/- from the defendant.13 Com.O.S.No.1497/2023
The plaintiff is also entitled for future interest at the rate of 6% p.a. till realization of the decreetal amount.
Draw decree accordingly.
Issue copy of the judgment to the parties through email as provided U/Or. XX Rule 1 of CPC if email ID is furnished.
(Dictated to the Stenographer directly on the computer, typed by her, corrected and then pronounced by me in the open court on this the 15th day of March 2024) (RAMAKANT CHAVAN) LXXXIV Addl. City Civil & Sessions Judge, (CCH-85) Commercial Court, Bengaluru.
ANNEXURE List of witnesses examined for the plaintiff:
PW1 B.Y. Arjun Dev List of documents marked for the plaintiff:
Ex.P1 Facility application Form dated 30.12.2020 Ex.P2 Sanction letter dated 12.02.2021 Ex.P3 Facility Agreement dated 04.03.2021 Ex.P4 Deed of hypothecation dated 23.02.2021 Ex.P5 True copy of the account statement Ex.P6 Office copy of legal notice dated 14.12.2022 Ex.P7 to P9 Postal receipts 14 Com.O.S.No.1497/2023 Ex.P10 Non starter report dated 04.10.2023 Ex.P11 Certificate U/Sec.65B of the Evidence Act Ex.P12 Statement of accounts Ex.P13 Special Power of Attorney List of witnesses examined for the defendant:
DW1 Barun Nandi List of documents marked for the defendant:
Ex.D1 Credit Guarantee Fund Scheme Ex.D2 Certificate U/Sec.65B of the Evidence Act (RAMAKANT CHAVAN) LXXXIV Addl. City Civil & Sessions Judge, (CCH-85) Commercial Court, Bengaluru.