Delhi District Court
Canara Bank vs Ms. Fidelity Infrastructure ... on 29 April, 2023
IN THE COURT OF SH GURVINDER PAL SINGH,
DISTRICT JUDGE (COMMERCIAL COURT)-02,
PATIALA HOUSE COURT, NEW DELHI
CS (Comm.) No. 374/2022
Canara Bank
Paschim Marg, Vasant Vihar,
New Delhi-110057 .... Plaintiff
versus
1. Ms. Fidelity Infrastructure Development Pvt. Ltd.,
B-1, L S Complex, DDA Plot No. 2,
Ground/Basement, Vasant Kunj,
near Jal Board/MTNL Office,
New Delhi-110070
And Also At:
H-2, Pushpanjali, Dwarka Highway
next to Bharat Petroleum, New Delhi-110062.
30A, Hauz Khas Village, Delhi-110016.
D-4, Vasant Vihar, New Delhi-110057.
Plot No. 146-P, Sector-44, Industrial Area, Gurgaon,
Haryana
[email protected]
[email protected]
2. Mr. Geeta Singh, Director,
M/s Fidelity Infrastructure Development Pvt. Ltd.,
B-1, L S Complex, DDA Plot No. 2, Ground/Basement,
Vasant Kunj, near Jal Board/MTNL Office,
New Delhi-110070.
Also At:
H-2, Pushpanjali, Dwarka Highway
next to Bharat Petroleum, New Delhi-110062.
CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 1 of 23
30A, Hauz Khas Village, Delhi-110016.
6281, B-9, Vasant Kunj, New Delhi-110070
Mobile-9999005322.
D-4, Vasant Vihar, New Delhi-110057.
Plot No. 146-P, Sector-44, Industrial Area, Gurgaon,
Haryana
BC/5, WEA, Karol Bagh, New Delhi-110005.
3. Mr. Rishabh Singh,
Director of M/s Fidelity Infrastructure Development Pvt. Ltd.,
B-1, L S Complex, DDA Plot No. 2, Ground/Basement,
Vasant Kunj, near Jal Board/MTNL Office,
New Delhi-110070
Also At:
H-2, Pushpanjali, Dwarka Highway
next to Bharat Petroleum, New Delhi-110062.
30A, Hauz Khas Village, Delhi-110016.
5-C/2, Western Avenue Lane, W S C, Sainik Farm,
Khanpur, New Delhi-110062
Plot No. 146-P, Sector-44, Industrial Area, Gurgaon,
Haryana .... Defendants
Date of Institution : 21/04/2022
Arguments concluded on : 25/03/2023
Decided on : 29/04/2023
Appearances : Sh. Yudhister Sharma, Ld. Counsel for plaintiff.
Sh. C.S. Chauhan, Ld. Counsel for defendant no. 1.
JUDGMENT
1. Plaintiff bank has filed the present Civil Suit (Commercial) against defendant no. 1 company and its Directors defendant nos. 2 and 3 for recovery of Rs.6,31,338/- with interest and cost with CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 2 of 23 respect to term loan facility sanctioned by Syndicate Bank in favour of borrower/defendant no. 1 company whereby defendant nos. 2 and 3 stood guarantors but despite demand defendants failed to pay outstanding payable sums. Syndicated Bank amalgamated with plaintiff bank with effect from 01/04/2020.
2. Shorn of unnecessary details, following are the brief relevant material facts of the case of plaintiff. Loan application Ex PW1/3 for term loan of Rs. 60,00,000/- and SOD for Rs. 5,00,000/- was signed and submitted by Directors defendant nos. 2 and 3 with their photos for defendant no. 1 company. Letter of sanction Ex PW1/4 bearing no. 4912/9031/VV/12 dated 11/07/2012 was issued by Vasant Vihar Branch of Syndicate Bank. Defendant nos. 2 and 3 executed (i) Composite Hypothecation Agreement Ex PW1/5 dated 16/07/2012; (ii) personal guarantee agreements dated 16/07/2012 Ex PW1/6 and Ex PW1/6A; (iii) personal guarantee agreement dated 18/08/2012 Ex PW1/11; (iv) Letter of Indemnity Ex PW1/7 and Power of Attorney Ex PW1/7A dated 16/07/2012; (v) Special Board Resolution Ex PW1/9 dated 21/07/2012 (signed by defendant no. 2 to raise loan); (vi) Composite Hypothecation Agreement Ex PW1/10 dated 18/08/2012. Request letter Ex PW1/12 dated 18/08/2012 for second installment; request letter Ex PW1/13 dated 31/08/2012 for 3rd installment and request letter Ex PW1/14 dated 22/09/2012 for final installment were submitted by defendants. Defendant no. 1 was in the business for setting up unit of Spa/Skin wellness and loan facility, aforesaid, was required to purchase some of the machineries like slimming machine and other Spa material and for renovation of their new CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 3 of 23 showroom and purchase of furniture and fixtures. Syndicate Bank sanctioned loan facility under OSL SYNDMSE of Rs.60,00,000/- and SOD of Rs. 5,00,000/- only. Loan amount was utilized by the defendants but defendants did not repay the loan amount as promised and operation in the account was stopped after 30/01/2018 by defendants. Loan account of the defendants became irregular, sticky and overdue, for which defendants were reminded time and again. Credit limits availed by defendant no. 1 were repayable with interest at the applicable rate chargeable and compoundable at monthly rests and variable from time to time as per the guidelines issued by RBI, from time to time, along with penal interest for overdrawn, inoperative, sticky account and same was accordingly on the outstanding charges in the account of defendant no. 1 company maintained in the books of account by plaintiff bank in ordinary and regular course of business, for which defendants were jointly and severally liable. Plaintiff bank maintained the OSL SYNDMSE account no. 90317910000018, in its account books as per banking norms and practice, in its ordinary and regular coarse of business and there stands an outstanding liability of Rs.6,31,338/- in OSL including interest up to 31/03/2022 was reflected in said account whereas further interest was payable with effect from 01/04/2022 at the prevalent rate of 9.5% per annum for SOD SYNDMSE at present and compoundable at monthly rests along with further penal interest @ 2% over and above the normal rate applicable. Despite service of legal notice dated 09/11/2021 sent by plaintiff through Counsel defendants failed to pay the outstanding payable sums towards the aforesaid loan facility. Resultant was this suit.
CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 4 of 233. Summons were issued to defendants, as per order dated 22/04/2022 with paper book of plaintiff. Defendants were served on 28/04/2022. Defendant no. 1 filed written statement on 10/06/2022 with application for condonation of delay in filing written statement of defendant nos. 1 and 2 but in title of said application therein was incorrect mention of delay in filing written statement of defendant nos. 1 and 2 without there being any signatures of defendant nos. 2 on said application for condonation of delay as well as on written statement nor was any affidavit or statement of truth of defendant no. 2 annexed with said written statement. Vide order dated 07/09/2022, aforesaid written statement was considered only for defendant no. 1 and delay in filing of written statement of defendant no. 1 was condoned. Since defendant nos. 2 and 3 had neither filed their written statement within statutory period of 30 days from the date of service of summons nor within extendable total period of 120 days from date of service of summons; the defence of defendant nos. 2 and 3 was struck off vide order dated 07/09/2022.
4. Defendant no. 1 in filed written statement termed the suit to be not maintainable in view of Section 18 of The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (in short RDDBFI Act). Following are the brief relevant material facts averred in written statement of defendant no. 1. Plaintiff has not come before this Court with clean hands and suppressed material facts and suit deserves to be dismissed. Plaintiff has concealed various letters and facts of meetings held between plaintiff and officials of plaintiff bank. Defendants have earnestly requested CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 5 of 23 the plaintiff bank for waiver of exorbitant interest/ penalty/ additional/inspection charges etc, which plaintiff bank levied upon defendants inspite of defendants having paid off the entire loan amount in time. Plaintiff bank has arbitrarily charged interest/penalty charges and other additional charges against RBI guidelines and claim of plaintiff towards the same is not maintainable. Defendants denied of having not adhered to the financial discipline. Defendants have paid entire loan amount including interest. Plaintiff had charged exorbitant amount of penalty/interest and other additional charges inspite of various emails sent by defendants to waive of the same. Vide letter dated 30/12/2017 defendants requested plaintiff to waive off all the additional charges viz. loan additional interest charges, loan penalty interest charges, outgoing bill notice charges, loan penalty interest charges, outgoing bill notice charges, outgoing bill charges, inspection charges. Defendants had paid total interest of Rs.21,68,163.87p whereas defendants were to pay Rs.21,26,145/-; so defendants have paid an excess interest/ additional amount of Rs.42,018.87p which plaintiff has to refund to defendants. Defendant no. 1 prayed for dismissal of the suit.
5. In replication to written statement of defendant no. 1; plaintiff reiterated the averments of the plaint and denied the contentions put forth by defendant no. 1 in written statement. Following are the relevant brief material averments in filed replication. Interest was charged as per contracted rate as per guidelines of RBI. Plaintiff denied of emails dated 18/11/2021 and 16/12/2021 terming them having been sent from Creative Loom, which is a separate case and pending before Debt CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 6 of 23 Recovery Tribunal for recovery of more than Rs.6 Crores, though defendant nos. 2 and 3 are also impleaded there. Plaintiff prayed for decree of the suit.
6. Case management hearing was done on 31/10/2022. After hearing AR of plaintiff and Ld. Counsel for plaintiff and defendant no. 1; and on the basis of pleadings of the parties; following issues were framed:-
"ISSUES
1. Whether plaintiff is entitled for recovery of Rs.
6,31,338/- from defendants? If so, from which of the defendants? OPP.
2. Whether plaintiff is entitled for any interest from defendants? If so, at what rate, for which period and from which of the defendants? OPP
3. Whether plaintiff has arbitrarily charged interest/penalty charges and other additional charges, per contra to RBI guidelines, as alleged? OPD 1
4. Relief."
7. Finding elements of settlement, matter was referred for mediation. For non-appearance of defendants in mediation, the matter was sent back to this Court from Delhi Mediation Centre, Patiala House Courts with copy of proceeding dated 04/01/2023 as matter not settled.
8. Plaintiff examined sole witness Sh. Ramesh Chandra Saini, Chief Manager of plaintiff bank as PW1. PW1 tendered his affidavit Ex PW1/A in evidence and relied upon above elicited documents Ex PW1/3 to Ex PW1/7; Ex PW1/9 to Ex PW1/13 as CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 7 of 23 well as (i) Power of Attorney Ex PW1/1 in his favour; (ii) Notifications G.S.R 153(E), G.S.R 154(E), G.S.R 155(E), G.S.R 156(E) dated 04/03/2020, published in Gazette of India Ex PW1/2 in terms of which Syndicate Bank amalgamated with Canara Bank with effect from 01/04/2020; (iii) letter of authority Ex PW1/8 ADV-29 dated 16/07/2012 issued by defendant no. 2 on behalf of defendant no. 1 to Syndicate Bank; (iv) Request Letter Ex PW1/15 dated 25/09/2012 for working capital along with Visit Report and Receipt dated 25/09/2012; (v) letters Ex PW1/16 (Colly) dated 16/10/2012, 17/01/2013 and 01/07/2020;
(vi) profile of defendant no. 1 in records of ROC Ex PW1/17;
(vii) Statement of Account of defendant no. 1 company in books of plaintiff, copy of Legal notice and Non Starter Report of Mediation, all collectively Ex PW1/18.
9. Ld. Counsel for plaintiff closed the plaintiff evidence vide separate statement on 12/12/2022.
10. Defendant no. 1 examined its AR Sh. Shyam Singh as sole witness in defendant evidence as DW1. Sh. Shyam Singh, AR of defendant no. 1 company tendered his affidavit Ex DW1/A in evidence. Various emails were referred as Ex DW1/1 and Ex DW1/2 (Colly) in Ex DW1/A. On 31/01/2023 during evidence of DW1; Sh. Ajay Kumar, Ld. Counsel for defendant no. 1 submitted that letter dated 30/12/2017 (at page 20 of paper book of defendant no. 1) should have been marked as Ex DW1/1 in Ex DW1/A and in Ex DW1/A inadvertently it was mentioned that copy of email dated 30/12/2017 is Ex DW1/1. At above said page 20 of paper book of defendant no. 1; is the photocopy of letter CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 8 of 23 dated 30/12/2017; whose original was neither filed nor was shown; so, said photocopy was marked as Mark DW1/1. Also was submitted by Sh. Ajay Kumar, Ld. Counsel for defendant no. 1 that the emails, referred in para 10 of Ex DW1/A as part of referred Ex DW1/2 (Colly) are at pages 16 to 19 of paper book of defendant no. 1 whereas the letters referred in para 10 of Ex DW1/A as part of referred Ex DW1/2 (Colly) are at pages 21 to 29; 31 and 32 of paper book of defendant no. 1. The above referred documents Ex DW1/2 (Colly) at pages 21 to 29; 31 and 32 of paper book of defendant no. 1 are photocopies whose originals were neither filed nor shown.
11. Order XI Rule 6 (3) of the Code of Civil Procedure, 1908 (in short CPC) mandates providing of specified information for electronic record documents i.e., (a) the parties to such Electronic Record; (b) the manner in which such electronic record was produced and by whom; (c) the dates and time of preparation or storage or issuance or receipt of each such electronic record; (d) the source of such electronic record and date and time when the electronic record was printed; (e) in case of e-mail ids, details of ownership, custody and access to such e-mail ids; (f) in case of documents stored on a computer or computer resource (including on external servers or cloud), details of ownership, custody and access to such data on the computer or computer resource; (g) deponent's knowledge of contents and correctness of contents;
(h) whether the computer or computer resource used for preparing or receiving or storing such document or data was functioning properly or in case of malfunction that such malfunction did not affect the contents of the document stored;
CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 9 of 23(i) that the printout or copy furnished was taken from the original computer or computer resource.
12. Majority of above said information required to be specified in terms of Order XI Rule 6 (3) of CPC elicited above, is not even contained in the affidavit (certificate) of AR of defendant no. 1 which only in vague terms is containing an endeavor to put forth of compliance of conditions of Section 65 B of the Indian Evidence Act. For want of production of original documents and in absence of specified information for electronic record documents compliant of Order XI Rule 6 (3) (a) to (i) of CPC; above said documents referred as Ex DW1/2 (Colly) in Ex DW1/A were marked in evidence of DW1 as Mark DW1/2 (Colly). Accordingly, documents Mark DW1/1, Mark DW1/2 (Colly) stand not proved.
13. DW1 also brought on record calculation sheet/chart Ex DW1/3 which reads as under:-
PARTICULARS AMOUNT
LOAN ADDITIONAL INTEREST CHARGED 2,318,754.14
LOAN PENALTY INTEREST CHARGED 67,172.50
INSPECTION CHARGES 7,390.00
CGTMSE AGF/ASF 58,576.50
MISC. LOANS 129,447.00
OUTGOING BILLS CHARGES 3,150.00
AMOUNT CHARGED BY BANK 2,584,490.14
AMOUNT TO BE CHARGE BY BANK 2,126,145.00
AMOUNT TO BE REFUNDED 458,354.14
14. No other witness of defendant no. 1 was cited in list of witnesses of defendant no. 1. Defendant no. 1 also did not file CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 10 of 23 any other affidavit of defendant witness. Evidence of defendant no. 1 was closed on 31/01/2023.
15. Written arguments were filed on behalf of plaintiff and defendant no. 1. Oral arguments were also address by Ld. Counsel for plaintiff and Ld. Counsel for defendant no. 1. I have perused the record including the pleadings of the parties; documents filed and proved on record; written arguments on behalf of parties, relied upon precedents and have considered the rival contentions put forth by Ld. Counsel for the parties.
16. Ld. Counsel for plaintiff argued that in terms of pleadings and evidence led, plaintiff is entitled for recovery of claimed amount from defendants jointly and severally since the interest claimed is as per RBI guidelines and as per contractual terms whereas no interest/penalty charges have been claimed arbitrarily by plaintiff, per contra to RBI guidelines, as alleged by defendant no. 1. Ld. Counsel for plaintiff prayed for decree of the suit.
17. Ld. Counsel for defendant no. 1 argued that plaintiff filed the false case and no amount is due against defendants whereas as per case of plaintiff, account of borrower was declared NPA on 30/01/2018 but plaintiff has claimed Rs.6,31,338/- from defendant no. 1 whereas in plaint it is not disclosed what is the balance amount and what is the interest calculated. Ld. Counsel for defendant no. 1 also argued that suit of plaintiff is barred by Section 11 of The Commercial Courts Act, 2015 as jurisdiction of this Court is barred under Section 18 of RDDBFI Act and also CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 11 of 23 by Section 34 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short SARFAESI Act). Ld. Counsel for defendant no. 1 also argued that plaint finds no mention as to how plaintiff was entitled to charge interest after account of defendant no. 1 became/was declared NPA. It was also argued by Ld. Counsel for defendant no. 1 that plaintiff should have filed an application for recovery of debt against borrower before concerned Debt Recovery Tribunal instead of filing the present suit; so plaint is liable for rejection under Order VII Rule 11 of The Code of Civil Procedure, 1908 (in short CPC). It was argued by Ld. Counsel for defendant no. 1 that defendant no. 1 had paid extra amount of Rs.4,58,545.14p to plaintiff and also sent letter dated 16/12/2021 to the Branch Manager, Canara Bank, Vasant Kunj, Delhi but these material facts were concealed by plaintiff from this Court. Ld. Counsel for defendant no. 1 argued that as per the calculation of defendant no. 1, the total interest was Rs.21,26,145/- but plaintiff charged interest as Rs.21,68,163.87p from defendant no. 1 and same was stated by defendant no. 1, which fact was concealed by plaintiff from the Court and in fact defendant no. 1 has paid Rs.42,018.87p extra for which defendant no. 1 is entitled for refund. Ld. Counsel for defendant no. 1 prayed for dismissal/rejection of the suit.
18. My issue-wise findings are as under:-
Findings on issue no. 1
1. Whether plaintiff is entitled for recovery of Rs.
6,31,338/- from defendants? If so, from which of CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 12 of 23 the defendants? OPP.
19. PW1 has proved by Ex PW1/1 the Power of Attorney that as per clause 10 therein he had authority to sign, verify and institute this suit and also to testify on behalf of plaintiff. Vide notification Ex PW1/2 dated 04/03/2020 it is proved on record that Syndicate Bank was amalgamated with plaintiff bank with effect from 01/04/2020. Loan application Ex PW1/3 with photos were submitted by defendant nos. 2 and 3 for availing term loan of Rs.60,00,000/- and SOD for Rs.5,00,000/- for defendant no. 1 company. Sanction letter Ex PW1/4 was issued by Syndicate Bank on 11/07/2012. On 16/07/2012 defendant nos. 2 and 3 executed above elicited documents Ex PW1/5, Ex PW1/6, Ex PW1/7 for aforesaid loan facility for defendant no. 1 company. To raise the loan on behalf of defendant no. 1, Special Board Resolution Ex PW1/9 dated 21/07/2012 was signed by defendant no. 2 on behalf of defendant no. 1. Defendant nos. 2 and 3 also executed above elicited documents Ex PW1/10, Ex PW1/11, Ex PW1/12 on 18/08/2012. Request Ex PW1/13 dated 31/08/2012 for 3rd installment was submitted by defendants. With the filed written statement of defendant no. 1, there was an affidavit of admission/denial of documents of plaintiff filed by Sh. Sunil Kumar, the then Authorized signatory for defendant no. 1 and therein all documents of plaintiff; excepting Power of Attorney Ex PW1/1, were admitted. It is pertinent to mention that in said affidavit of admission/denial of documents compliant of Order XI Rule 4 CPC, the statement of account of defendant no. 1 in books of plaintiff, part of Ex PW1/18 (Colly) was admitted with CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 13 of 23 respect to (i) correctness of contents; (ii) existence; (iii) execution; (iv) issuance or receipt and (v) custody.
20. On 31/10/2022 substitution of Sh. Shyam Singh as AR of defendant no. 1 was allowed on application of defendant no. 1 on the premise that previous AR Sh. Sunil Kumar had left services of defendant no. 1 company. Fact of the matter remains that admission of documents of plaintiff, above said, in affidavit of admission/denial of defendant no. 1 by its the then AR; neither can be retracted nor can be withdrawn. In fact defendant no. 1 is trying to approbate and reprobate. On one hand statement of account of defendant no. 1 in books of plaintiff bank is admitted in affidavit of admission/denial of documents, whereas on the other hand defendant no. 1 in pleadings in written statement as well as in affidavit Ex DW1/A of DW1 and written arguments is crying hoarse of charge of exorbitant rate of interest and having over paid plaintiff much more than what was payable towards loan in question.
21. In cross examination DW1, AR of defendant no. 1 categorically admits that defendant no. 2 is his wife and defendant no. 3 is his son whereas both defendants reside with him. In cross examination DW1 also elicits that as per him, the averments of extra payment of Rs.4,58,345/14p mentioned in para no. 11 of Ex DW1/A was correct as per the record given to him by his Accountant; whereas the averment of excess interest/additional amount of Rs.4,20,187/- having been paid by defendants to plaintiff stated in para no. 9 of Ex DW1/A was not correct. In backdrop of afore elicited facts borne out in cross CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 14 of 23 examination of plaintiff Counsel in deposition of DW1, the defence of defendant no. 1 of excess interest/additional amount paid by defendant no. 1 to plaintiff in fact falls flat on the ground. Edifice raised by defendant no. 1 has crumbled to ground on this facet.
22. DW1 in cross examination of plaintiff Counsel submits that he has no knowledge about the RDDBFI Act nor about its Section 18. The question took birth because of averment of DW1 in affidavit Ex DW1/A in para 3 wherein it was mentioned that suit of plaintiff is barred by Section 18 of RDDBFI Act.
23. Defendant no. 1 company is governed by the Companies Act and is supposed to maintain statement of accounts inter alia of loan availed. Defendant no. 1 company has failed to file and prove on record statement of loan availed from plaintiff bank or from Syndicate Bank later amalgamated with plaintiff bank; so as to prove amounts of loan availed or interest charged/payable by defendant no. 1 company or Directors defendant nos. 2 and 3 being guarantors to plaintiff bank or the detailed calculation of interest payable in terms of documents executed by defendant nos. 2 and 3, for and on behalf of defendant no. 1 company in favour of plaintiff bank for availed loan facility. In this fact of the matter, simple mathematical tabular calculation in the form of Ex DW1/3, elicited above, is of no help to defendant no. 1 company to prove on record of any excess amount paid by defendant no. 1 company to plaintiff bank, as claimed by defendant no. 1, AR of defendant no. 1 company.
CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 15 of 2324. In terms of Notification dated 06/09/2018 bearing no. S.O. 4312 (E) of Ministry of Finance, (Department of Financial Services) published in the Gazette of India; the provisions of RDDBFI Act shall not apply where the amount of debt due to any bank or financial institution or to a consortium of bank or financial institutions is less than twenty lakh rupees.
25. DRAT in the case of Cee Pee Traders & Ors. vs Punjab and Sind Bank & Ors., 2008 SCC OnLine DRAT 16 inter alia held that an application under Section 19 of The RDDBFI Act has to be made within the period of limitation and the remedy under The SARFAESI Act is an additional remedy to remedy under The RDDBFI Act. Together they constitute one remedy. Thus, the doctrine of election does not apply. These two enactments provide cumulative remedies for secured creditors. The secured creditor is given a right to choose one or both the remedies. The object of The RDDBFI Act as well as The SARFAESI Act is to ensure quick recovery of debts due to the Banks or financial institutions. If after filing of any O.A. and before its final decision, some amount is recovered under The SARFAESI Act then in that eventuality, if said O.A. is filed within the period of limitation, then such O.A. would be decreed for a lesser amount and adjustment would be allowed for the amount recovered under The SARFAESI Act during the pendency of the O.A. However, no such remedial redressal can be there if the Bank or financial institution omits to file O.A. waiting for the conclusion of the proceedings under The SARFAESI Act and ultimately there is a shortfall in the recovery of the secured debt, but the filing of the O.A. has become time CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 16 of 23 barred.
26. Delhi High Court in the case of Mayur Coirs P. Ltd. & Ors. vs Development Credit Bank Ltd., 2008 SCC OnLine Del 482 inter alia held that both the enactments i.e., SARFAESI Act and RDDBFI Act are intended to secure speedy recovery of the outstanding debts due to the banks and financial institutions. There is nothing in either the provisions of The Securitisation Act or in The RDDBFI Act to suggest that invocation of one would forbid the invocation of the provisions contained in the other. His Lordship relied upon the case of Transcore vs Union of India, AIR 2007 SC 712 opining that therein also was held by Supreme Court that where the issue was whether the bank could, without withdrawing the proceedings instituted before the DRT, take resort to The Securitisation Act and it was held that withdrawal of the O.A before the DRT was not a condition precedent for invoking The Securitisation Act. If securitisation proceedings are permissible during the pendency of the recovery proceedings under The RDDBFI Act, there is no reason why the recovery proceedings would become legally bad just because the bank had taken resort to Securitisation Act. What is important is that both the proceedings can be instituted and maintained simultaneously. If that be so, just because the proceedings under The Securitisation Act had been instituted earlier would not render the proceedings before the DRT bad. It was also held that the scheme of the two enactments did not debar simultaneous resort to the provisions thereof. Fact remains that there is a period of limitation prescribed for filing of the suits before the DRT and it CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 17 of 23 also makes it necessary for the banks and financial institutions to institute such suits within the period of limitation stipulated for the same. Any delay in doing so would jeopardize the maintainability of such suits which no banking institution can afford to risk especially where the amounts outstanding against the borrowers are huge.
27. In the case of Mr. Jaison Varghese vs Chairman & Managing Director, Syndicate Bank & Anr., 2017 SCC OnLine DRT 3, it was inter alia held that it is no more res intega that the secured creditor bank can seek to recover its dues by invoking the provisions of more than one enactment as far as they are complementary to each other and there is no statutory bar for invocation as such.
28. Punjab and Haryana High Court in the case of Class India Limited & Anr. vs A.K. Chopra & Ors., AIR 2008 P&H 116 inter alia held that Order VII Rule 11 of CPC confers powers upon a Court to reject a plaint provided it discloses any of the disabilities/jurisdictional impediments, detailed therein. A cause, barred for lack of jurisdiction, may, circumstances permitting, be validh tested by filing an application under Order VII Rule 11 of CPC at any stage of suit. In said case an application under Order VII Rule 11 CPC was filed praying for dismissal of the suit (a) for failure to affix ad valorem Court-fee on the relief of damages, and (b) as a suit for declaration to enforce a contract of personal service is not maintainable. Facts and circumstances of the case above said, relied upon by Ld. Counsel for defendant no. 1, are entirely different and distinguishable to facts and circumstances CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 18 of 23 of the case in hand; so the pronouncements in case of Class India Limited & Anr. vs A.K. Chopra & Ors. (supra) are of no help to defendant no. 1 for getting suit of plaintiff dismissed.
29. Chhattisgarh High Court in the case of Radha Singh vs Madhusudan Tulsyan, First Appeal No. 492 of 2018 decided on 15/07/2019 adjudicated the appeal arising out of the judgment from the Court holding that suit is barred by Section 34 of the SARFAESI Act and had interpreted Section 34 of the SARFAESI Act therein with respect to suit for specific performance of contract and permanent injunction with regard to immovable suit property therein. Facts and circumstances of the case above said, relied upon by Ld. Counsel for defendant no. 1, are entirely different and distinguishable to facts and circumstances of the case in hand; so the pronouncements in case of Radha Singh vs Madhusudan Tulsyan (supra) are of no help to defendant no. 1 for getting suit of plaintiff dismissed.
30. In this fact of the matter and in view of precedents elicited above, i.e.,(i) Cee Pee Traders & Ors. vs Punjab and Sind Bank & Ors. (supra); (ii) Mayur Coirs P. Ltd. & Ors. vs Development Credit Bank Ltd.(supra); (iii) Transcore vs Union of India (supra); (iv) Mr. Jaison Varghese vs Chairman & Managing Director, Syndicate Bank & Anr. (supra); the argument of Ld. Counsel for defendant no. 1 that this Court is not having jurisdiction in view of provisions of RDDBFI Act and/or in view of provisions of SARFAESI Act; does not hold water; when the claim of plaintiff bank is well below Rs.20,00,000/-.
CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 19 of 2331. Statement of account, part of Ex PW1/18 (Colly) of defendant no. 1 in books of plaintiff bank; admitted, as above said, in affidavit of admission/denial of documents of plaintiff by AR of defendant no.1; bears that Rs.6,31,338.86p was sum payable by defendant no. 1 on 31/03/2022 to plaintiff bank with respect to loan in question. From the documents Ex PW1/1 to Ex PW1/18 (Colly) proved on record by plaintiff through PW1; accordingly, plaintiff is held entitled for recovery of Rs.6,31,338/- claimed in the suit for the loan facility availed by borrower/defendant no. 1 company under guarantee of defendant nos. 2 and 3, Directors of defendant no. 1 company. So all defendants jointly and severally are liable to pay said sum to plaintiff bank. Issue no. 1 is decided accordingly.
Findings on issue no. 2
2. Whether plaintiff is entitled for any interest from defendants? If so, at what rate, for which period and from which of the defendants? OPP
32. Plaintiff bank has prayed for decree of pendente lite and future interest @ 11.50% per annum compounding with monthly rests till realization on contractual terms and RBI guidelines.
33. The claim of interest of plaintiff bank from defendants is in terms of sanction letter Ex PW1/4, Composite Hypothecation Agreements Ex PW1/5, Ex PW1/10.
34. Order VII Rule 2A of CPC in respect of a commercial dispute of a specified value was brought in by way of amendment in respect of the requirements of pleadings where interest has to CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 20 of 23 be claimed by the plaintiff accordingly.
35. Under Section 34 of CPC it is provided that where the liability in relation to the sum so adjudged had arisen out of commercial transaction, the rate of such further interest may exceed 6% per annum but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to the commercial transactions.
36. Keeping in view the above discussions, in my opinion, plaintiff has been able to justify the claim of pendente lite and future interest @ 11.50% per annum, compounding with monthly rests on sum of Rs. 6,31,338/- against defendants, jointly and severally, till realization. Issue no. 2 is decided accordingly.
Findings on issue no. 3
3. Whether plaintiff has arbitrarily charged interest/penalty charges and other additional charges, per contra to RBI guidelines, as alleged? OPD 1
37. Onus to prove this issue was on defendant no. 1. Evidence of DW1 is shorn of any fact proved by defendant no. 1 that plaintiff had arbitrarily charged interest/penalty charges and/or other additional charges, per contra to RBI guidelines, as alleged.
38. As elicited above, DW1 in cross examination of plaintiff Counsel, elicited that the averments of extra payment of Rs.4,58,345/14p mentioned in para no. 11 of Ex DW1/A is CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 21 of 23 correct as per the record given to him by his Accountant; whereas the averments of excess interest/additional amount of Rs.4,20,187/- having been paid by defendants to plaintiff stated in para no. 9 of Ex DW1/A are not correct. As stated earlier in this judgment, statement of account of defendant no. 1 in books of plaintiff, which is part of Ex PW1/18 (Colly), has been admitted in the affidavit of AR of defendant no. 1 in admission/denial of documents of plaintiff. Defendant no. 1 company has failed to file and prove on record statement of loan availed from plaintiff bank or from Syndicate Bank later amalgamated with plaintiff bank; so as to prove amounts of loan availed or interest charged/payable by defendant no. 1 company or Directors defendant nos. 2 and 3 being guarantors to plaintiff bank or the detailed calculation of interest payable in terms of documents executed by defendant nos. 2 and 3, for and on behalf of defendant no. 1 company in favour of plaintiff bank for availed loan facility. In this fact of the matter, simple mathematical tabular calculation in the form of Ex DW1/3, elicited above, is of no help to defendant no. 1 company to prove on record that plaintiff had arbitrarily charged interest and other additional charges, per contra to RBI guidelines, as alleged. Issue no. 3 is decided against defendant no. 1 and in favour of plaintiff accordingly.
39. Plaintiff has also claimed the cost of the suit. Keeping in view Sections 35 and 35A of CPC, it has been established that defendants failed to pay the amount despite service of summons. In my view plaintiff is accordingly entitled for the cost of litigation against the defendants to the extent of court fees and CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 22 of 23 advocate's fee as per rules.
Relief.
40. In view of the above discussions, suit for recovery of money is decreed in favour of the plaintiff and against the defendant nos. 1 to 3, jointly and severally, for Rs.6,31,338/- along with interest @ 11.50% per annum, compounding with monthly rests, from the date of filing of suit till the date of decree and from the date of decree till realization of the decretal amount. Cost is also awarded in favour of the plaintiff and against the defendant nos. 1 to 3, jointly and severally, to the extent of court fee and advocate's fee as per rules.
Decree sheet be prepared accordingly.
File be consigned to the record room.
Digitally signed by GURVINDER GURVINDER PAL
SINGH
PAL SINGH Date: 2023.04.29
11:05:50 +0530
ANNOUNCED IN (GURVINDER PAL SINGH)
OPEN COURT District Judge (Commercial Court)-02
On 29th April, 2023. Patiala House Court, New Delhi.
(DK) CS (Comm.) No. 374/2022 Canara Bank vs. Ms. Fidelity Infrastructure Development Pvt. Ltd. & Ors. Page 23 of 23