Bangalore District Court
Bank Of Baroda (Formerly Vijaya Bank) vs Puttaraju S/O. Honnappa on 17 March, 2021
/1/ O.S.No.3466/2016
THE COURT OF XXXIX ADDITIONAL CITY CIVIL JUDGE,
[CCH-40], BANGALORE CITY.
Dated on this the 17th day of March, 2021
-: PRESENT :-
Sri. Khadarsab, B.A., LL.M.,
XXXIX Additional City Civil & Sessions Judge,
Bangalore City.
ORIGINAL SUIT NO. 3466/2016
Plaintiff:-
Bank of Baroda (Formerly Vijaya Bank),
Dasarahalli Branch, Bangalore - 57. By
its Principal ofdficer & Assistant
General manager, Sri.Dharmaraj Iyer,
S/o. Late N.Venkateshwara Iyer, 56
Years.
[By Sri.K.N.Mahabaleshwara Rao,
Advocate]
/ VERSUS /
Defendants:-
1. Puttaraju S/o. Honnappa, R/o.No.902,
2nd Main, Kempegowda Nagara,
T.Dasarahalli, Bangalore -57.
2. Kumar B.K. S/o.Krishnappa, R/o.No.846,
Maheshwaramma Temple Road,
T.Dasarahalli, Bangalore - 57.
(Sri.G.T.P., Advocate for defendant No.2.
Defendant No.1 - ex-parte)
¯¯¯¯¯
/2/ O.S.No.3466/2016
Date of Institution of the
: 29.04.2016
suit
Nature of suit : Money suit
Date of commencement
of evidence : 13.12.2017
Date on which the
judgment is pronounced : 17.03.2021
Duration taken for Years Months Days
: 04 10 19
disposal
¯¯¯¯¯
JUDGMENT
This is a suit filed by the plaintiff - bank against the defendants for recovery of a sum of Rs.5,60,119.30 together with interest at the rate of 16.50% p.a. from the date of suit till the date of realization, along with costs of the suit and such other reliefs.
2. The brief facts of the plaintiff's case is that the defendant No.1 approached the plaintiff bank for financial assistance and offered defendant No.2 as guarantor. By considering the request of the defendants /3/ O.S.No.3466/2016 and on the consultation of the defendant No.2, plaintiff - bank sanctioned a loan of Rs.4,75,000/- on 19.8.2011. The defendants have agreed to repay the same with interest at the rate of 14.50% p.a. and in case of default additional interest at 2% p.a. The entire loan amount has been disbursed to the defendant No.1 on the guarantee of defendant No.2. The defendants have executed letter of repayment, article of agreement, hypothecation agreement and letter of guarantee on 19.8.2011. After availing the loan, the defendant No.1 has not paid installments regularly. Inspite of repeated requests the defendants have not cleared the outstanding amount. On 30.4.2013 the defendant No.1 has executed acknowledgement of debt agreeing to repay the entire loan amount along with interest accrued thereon. Even after the execution of acknowledgement of debt, the defendants have not paid the loan amount and interest. Therefore, plaintiff - bank got issued notice on 22.4.2016 /4/ O.S.No.3466/2016 to the defendants calling upon them to pay the loan amount along with interest. The said notices were unserved. Even after the issuance of notice, the defendants have failed to repay the loan amount along with interest. The defendants are in due of Rs.5,60,119.30. Hence, prayed for decreeing the suit.
3. After issuance of suit summons defendant No.2 appeared and filed written statement. The suit summons were not served upon defendant No.1. At the request of plaintiff, ordered for substitute service. Accordingly, suit summons were published in the news paper. Though the suit summons published in the news paper, the defendant No.1 remained absent. Hence, defendant No.1 placed ex-parte on 15.7.2017. The defendant No.2 denied the claim of the plaintiff - bank and specifically contended that he has not at all executed any guarantor agreement as contended by the plaintiff - bank. The suit of the plaintiff is barred by /5/ O.S.No.3466/2016 limitation and there is no cause of action to file the present suit. The plaintiff has filed the present suit only with an intention to harass defendant No.2. the plaintiff has suppressed the material facts and has filed the present suit. The plaintiff has falsely arrayed defendant No.2 in the suit. The defendant No.2 has not availed any loan from the plaintiff and even he has not at all acted as surety to defendant No.1. Hence, defendant No.2 is not liable to pay any amount as prayed by the plaintiff - bank. Hence, he prayed for dismissal of the suit.
4. On the basis of the pleadings of the parties, following issues have been framed on 13.10.2017:
ISSUES (1) Whether the plaintiff proves that 2 nd defendant stood as a guarantor for the loan availed by the 1st defendant by executing deed of agreement dated 19.8.2011 ?
/6/ O.S.No.3466/2016 (2) Whether the 2nd defendant proves that the plaintiff - bank has taken his signatures on various blank forms as contended in the para 11 of written statement ?
(3) Whether the 2nd defendant proves that suit is barred by limitation ?
(4) Whether the plaintiff - bank is entitled for suit claim ?
(5) What order or decree ?
5. In order to substantiate the claim of the plaintiff - bank the Assistant Manager of the plaintiff - bank has been examined as P.W.1 and got marked documents - Exs.P.1 to P.9. Though this Court granted sufficient opportunities to defendant No.2 to cross- examine P.W.1, but has failed to cross-examine P.W.1 and has not adduced evidence on his behalf.
6. Heard advocate for the plaintiff. The defendant No.2 did not address arguments.
/7/ O.S.No.3466/2016
7. My findings on the above issues are as follows:
Issue No.1 : In the affirmative.
Issue No.2 : In the negative.
Issue No.3 : In the negative.
Issue No.4 : In the affirmative.
Issue No.5 : As per final order, for the
following:
REASONS
8. Issues No.1 and 2 :- These issues are interlinked with each other. Hence, in order to avoid repetition of facts and evidence, they are taken up together for discussion.
9. It is the case of the plaintiff - bank that defendant No.1 borrowed loan of Rs.4,75,000/- on 19.8.2011 by executing necessary documents and second defendant stood as guarantor. While receiving the loan amount, the defendant No.1 agreed to pay interest at the rate of 14.50% p.a. and penal interest at the rate of 2% p.a. and second defendant stood as /8/ O.S.No.3466/2016 guarantor and agreed for the terms and conditions of loan by executing letter of guarantee.
10. Ex.P.1 is the Loan application, Ex.P.2 is the letter or repayment, Ex.P.3 is the Articles of Agreement. Ex.P.4 is the Hypothecation Deed. Ex.P.5 is the Letter of guarantee executed by 2nd defendant. Ex.P.6 is the Acknowledgement of Liability dated 30.4.2013. Ex.P.7 is the legal notice. Ex.P.8 is the underserved postal cover. Ex.P.8(a) is the contents of Ex.P.8 and Ex.P.9 is the Statement of Account.
11. P.W.1 clearly deposed that, defendant No.1 filed a loan application on 1.8.2011 as per Ex.P.1 for loan of Rs.4,75,000/-, defendant No.2 stood as a guarantor, by considering the request made by the defendants the plaintiff - bank sanctioned a loan of Rs.4,75,000/- on 19.8.2011 to defendant No.1. On 19.8.2011 itself the defendant No.1 executed letter of repayment, articles of /9/ O.S.No.3466/2016 agreement, hypothecation deed as per Exs.P.2 to P.4 and defendant No.2 executed letter of guarantee as per Ex.P.5. The defendants have agreed to repay the said amount along with interest at the rate of 14.50% p.a and 2% penal interest per annum in case of default of repayment of loan amount. Though the defendants availed loan, but have failed to repay the said loan amount. Plaintiff - bank made several requests for repayment of loan amount. Subsequently defendant No.1 executed an acknowledgement of debt on 30.4.2013 as per Ex.P.6. Even after execution of acknowledgement of debt, the defendants have failed to repay the said loan amount along with interest. Therefore, the plaintiff - bank got issued legal notice on 22.4.2016 as per Ex.P.7. Ex.P.8 is the postal cover. As on the date of suit the defendants are in due of Rs.5,60,119/-. Ex.P.9 is the accounts statement pertains to defendants' loan account. Defendants are liable to / 10 / O.S.No.3466/2016 pay Rs.500/- towards miscellaneous expenses. Hence, prayed for decreeing the suit.
12. The availament of loan has not been denied by the defendant No.1 by appearing by before the Court and contesting the case of plaintiff. Though defendant No.2 appeared and has filed the written statement by denying the claim of the plaintiff - bank, but has not cross-examined P.W.1 and even he has not stepped into the witness box in order to substantiate his defence.
13. Defendant No.2 in his written statement contended that the plaintiff - bank has taken his signatures on various blank forms and has created the documents. Though the defendant No.2 denied Ex.P.5 - Letter of Guarantee, but has not denied his signatures on Ex.P.5. The defendant No.2 claims that plaintiff - bank played fraud and has created Ex.P.5. In a decision reported in 2002 (3) KLJ 512 [Patel Thippeswamy Vs. Smt.Gangamma and others] in which the Hon'ble High / 11 / O.S.No.3466/2016 Court of Karnataka clearly held that, "A party pleading fraud and misrepresentation in respect of a transaction must give material particulars of allegations and in absence of such particulars, his plea is to be rejected. The defendants contended that the gift deed was got executed by misrepresentation and playing fraud on the third defendant. Defendants did not furnish the particulars of alleged misrepresentation and fraud. In the absence of particulars it cannot be held that the gift deed was obtained by misrepresentation." In another decision reported in (2011) 12 Supreme Court Cases 18 [Saradamani Kandappan Vs. S.Rajalaxmi and others] in which the Hon'ble Apex Court held that, "Head Note L : Code of Civil Procedure, 1908 - O.VI Rule 4 - Fraud - Burden of proof - Pleadings - Whenever a party wants to put forth contention of fraud, Held : Specific pleadings as to fraud are to be made and proved." The said decisions are squarely applicable to the case in hand. In this case / 12 / O.S.No.3466/2016 also the defendant No.2 made stray allegation without any proper pleadings and proof as regards to the alleged fraud. Hence, without specific pleadings and proof, the Court cannot consider the denfence of the defendant No.2.
14. Besides, as discussed supra, though this Court has granted sufficient opportunity to the defendant No.2 to adduce evidence on his behalf, the defendant No.2 did not choose to enter into witness box to substantiate his contentions raised in the written statement. As such, the contention raised in his written statement cannot be considered. The said proposition of law is supported by the Hon'ble Apex Court decision reported in AIR 1999 SC 1341 (Eshwar Bhai C.Patel Bachchu Bhai Patel Vs. Harihara Behara and another) wherein it is held that, "If a party to the proceedings does not enter into witness box to make a stand on oath in support of his pleadings, then an adverse inference is to be drawn against him to / 13 / O.S.No.3466/2016 the effect that whatever stated in written statement was not correct." In this case also, defendant No.2 has not led evidence to prove his defence. As such, an adverse inference is drawn as against the defendant No.2. The said decision is aptly applicable to the case in hand.
15. Here in the instant case, the defendant No.1 was having two opportunities to deny the alleged transaction. First one is, by giving reply to Ex.P.7 - legal notice dated 22.4.2016 issued by the plaintiff - bank and second opportunity is, by appearing before this Court and contesting the claim of the plaintiff - bank. The defendant No.1 has failed to avail his defence in both occasions. The defendant No.2 also failed to cross- examine P.W.1 and adduce his evidence. The evidence of P.W.1 remained unchallenged. There is no ground to disbelieve the claim of the plaintiff - bank and the oral and documentary evidence on record, which clearly establishes the claim of the plaintiff - bank.
/ 14 / O.S.No.3466/2016
16. Therefore, in the absence of rebuttal evidence on the part of defendants, the oral as well as documentary evidence produced by the plaintiff - bank clearly proves that defendant No.1 borrowed loan of Rs.4,75,000/- on 19.8.2011 with guarantee of second defendant agreeing to repay the same with interest at the rate of 14.50% p.a. and 2% penal interest. Hence, I answer Issues No.1 in the affirmative and Issue No.2 in the negative.
17. Issue No.3 :- This issue is framed with respect to limitation. The defendant No.2 in his written statement specifically contended that suit of the plaintiff is barred by limitation. The defendant No.2 contended that Exs.P.1 to P.5 have been issued during the year 2011 and instant suit is filed in the year 2016, which is beyond the period of 3 years, as such the suit of the plaintiff is barred by limitation. In view of said contention, this Court carefully perused the pleadings of / 15 / O.S.No.3466/2016 both the parties and documents produced by plaintiff - bank. It is an admitted fact that, Exs.P.1 to P.5 are of the year of 2011. On perusal of Ex.P.1 at page No.1 it is clearly mentioned that defendants applied for loan of Rs.4,75,000/-, total period of advance (in months) 60 months. In Ex.P.2 at page No.1, Ex.P.3 at page No.9 (schedule - 1) and Ex.P.4 at page No.11 - schedule-A, it is clearly mentioned that loan amount shall be repayable in 60 equitable monthly installments of Rs.11,220/-. As per Exs.P.1 to P.4 defendants ought to have cleared the entire loan amount on or before 18.8.2016. The present suit has been filed on 29.4.2016. Besides, defendant No.1 himself executed Ex.P.6 - Acknowledgement of Debt on 30.4.2013. Section 18 of Limitation Act , 1963 uses the term acknowledgement to mean an admission of an existing liability in lieu of which the period of limitation is extended. The principal borrower/ defendant No.1 signed the acknowledgement of debt on 30.4.2013 / 16 / O.S.No.3466/2016 and suit was filed by the plaintiff - bank within 3 years thereafter on 29.4.2016. The defendant No.2 who is a guarantor contended that suit against him is barred by limitation. As discussed supra, Ex.P.5 which has been executed by defendant No.2 contains the following clause :
"I/we declare that this guarantee shall be for the aforementioned and continuing guarantee to you for any amount from time to time not exceeding as aforesaid sum of Rs. 4,75,000/- (Rupees Four Lakh Seventy Five Thousand only) on the whole-sum due on the said accounts together with interest and charges thereon and whether or not from time to time there be nothing owing on or any or all the said accounts or the same be brought to credit from time to time."
18. On plain reading of Ex.P.5 it shows that not only the guarantee is continuing guarantee, but the payment which is to be made to the bank as to the / 17 / O.S.No.3466/2016 demand by the plaintiff - bank. In such case, the present suit against the defendant No.2 guarantor would be very much within limitation.
19. A guarantor's liability depends upon the terms of his contract. A continuing guarantee is different from ordinary guarantee. "A guarantor's liability depends upon the terms of his contract. A 'continuing guarantee' is different from an ordinary guarantee. There is also a difference between a guarantee which stipulates that the guarantor is liable to pay only on a demand by the creditor, and a guarantee which does not contain such a condition. Further, depending on the terms of guarantee, the liability of a guarantor may be limited to a partition sum, instead of the liability being to the same extent as that of the principal debtor. The liability to pay may arise, on the principal debtor and guarantor, at the same time or at different points of time. A claim may be even time-barred against the principal debtor, but still / 18 / O.S.No.3466/2016 enforceable against the guarantor. The parties may agree that the liability of a guarantor shall arise at a later point of time than that of the principal debtor. We have referred to these aspects only to underline the fact that the extent of liability under a guarantee as also the questions as to when the liability of a guarantor will arise, would depend purely on the terms of the contract. Once the suit against the principal borrower is held to be within limitation, suit against the defendant No.2/ guarantor is also within limitation."
20. The counsel for plaintiff argued that defendant No.1 availed the loan and defendant No.2 stood as a guarantor and have executed loan documents. Even the defendant No.1 has executed Ex.P.6 acknowledgement of debt on 30.4.2013. The plaintiff - bank filed the present suit on 29.4.2016 which is within limitation and also relied upon decision reported in III (2003) BC 166 [Bank of India Vs. Surendra Kumar Misra and others], in / 19 / O.S.No.3466/2016 which the Hon'ble Jharkand High Court held that, "Contract Act, 1872 - Section 128 - Suit for recovery of loan - Suit against guarantor barred by time and suit filed against principal debtor - Validity - Guarantor bound by acknowledgement by principal debtor - Suit not barred." The counsel for plaintiff relied on another decision reported in AIR 1987 KAR 2 [Smt. R.Leelavathi Vs. Bank of Baroda and others], in which the Hon'ble High Court of Karnataka held that, "Head Note C :
Limitation Act (36 of 1963) - Section 20 - Principal and surety - Acknowledgement by one when saves limitation against other - Clause in surety bond empowering principal to give consult on behalf of surety in all respects concerning debt - acknowledgement of liability by principal, in circumstances, held : binding on surety, thus, saving limitation even as against surety." The said decisions are squarely applicable to the case in hand. In this case also, the principal borrower executed / 20 / O.S.No.3466/2016 acknowledgement of debt as per Ex.P.6 within 3 years from the date of borrowing loan amount. Hence, the acknowledgement of debt executed by the princial borrower is binding upon the surety also.
21. Further this Court also perused Ex.P.6 - acknowledgement of liability dated 30.4.2013 wherein it appears that defendant No.1 acknowledged the due of Rs.3,89,939/-. The execution of Ex.P.6 is not denied by defendant No.2. The instant suit is filed on 29.4.2016 i.e., within 3 years from 30.4.2013. Thus, suit of the plaintiff is within the period of limitation, hence, the contention of defendant No.2 that suit of the plaintiff is barred by limitation does not appear to be probable. Accordingly, I answer Issue No.3 in the negative.
22. Issue No.4 : - This issue is framed with regard to the entitlement of the suit claim. As discussed on Issue No.1, plaintiff - bank has proved the due / 21 / O.S.No.3466/2016 execution of loan documents and also proved the due execution of Ex.P.6 - acknowledgement of debt. On perusal of Ex.P.9 - accounts statement pertains to defendant No.1, it reveals that as on 27.4.2016 the defendants are in due of Rs.5,60,193.30. The plaintiff - bank is entitled to recover the said amount along with agreed rate of interest i.e., 14.50 and 2% penal interest. The plaintiff - bank further claims Rs.500/- towards miscellaneous expenses. As per order 20-A C.P.C. the plaintiff bank is entitled to the said miscellaneous expenses. Accordingly, I answer Issue No.4 in the affirmative.
23. Issue No.5 :- In view of my discussion on issues No.1 to 4 as supra, proceed to pass the following :
ORDER Suit filed by the plaintiff against the defendants is hereby decreed with costs.
The defendants No.1 and 2 are jointly and severally liable to pay to the plaintiff / 22 / O.S.No.3466/2016 a sum of Rs.5,60,119/- (Rupees Five Lakh Sixty Thousand One Hundred Nineteen only) along with interest at the rate of 16.50% p.a. from the date of suit till the date of realization.
The defendants are liable to pay an
amount of Rs.500/- towards
miscellaneous expenses to the plaintiff - bank, in all defendants are liable to pay Rs.5,60,619/-.
Draw decree accordingly.
(Dictated to the Judgment Writer, transcript corrected, signed and then pronounced by me in the open court, this the 17th day of March, 2021.) (KHADARSAB) XXXIX Additional City Civil & Sessions Judge, Bangalore City.
*** ANNEXURE
1. List of witnesses examined for plaintiff:
P.W. 1 : V.Muniraju
2. List of documents exhibited for plaintiff:
Ex.P.1 : Loan Application
/ 23 / O.S.No.3466/2016
Ex.P.2 : Letter of repayment
Ex.P.3 : Articles of Agreement
Ex.P. 4 : Hypothecation deed.
Ex.P.5 : Letter of guarantee executed by second
defendant
Ex.P.6 : Acknowledgement of Liability dated
30.4.2013
Ex.P.7 : Legal notice
Ex.P. 8 : Unserved postal cover.
Ex.P.8(a) : Contents of Ex.P.8
Ex.P.9 : Statement of accounts
3. List of witness examined/documents
exhibited for defendants:
- Nil -
(KHADARSAB)
XXXIX Addl.City Civil & Sessions Judge, Bangalore City.
*** / 24 / O.S.No.3466/2016 17/03/2021 Judgment pronounced in the open Court (Vide separate Judgment) ORDER Suit filed by the plaintiff against the defendants is hereby decreed with costs.
The defendants No.1 and 2 are jointly and severally liable to pay to the plaintiff a sum of Rs.5,60,119/- (Rupees Five Lakh Sixty Thousand One Hundred Nineteen only) along with interest at the rate of 16.50% p.a. from the date of suit till the date of realization.
The defendants are liable to pay an amount of Rs.500/- towards miscellaneous expenses to the plaintiff - bank, in all defendants are liable to pay Rs.5,60,619/-.
Draw decree accordingly.
(KHADARSAB)
XXXIX A.C.C. & S.Judge,
Bangalore City.