Bangalore District Court
State Bank Of India vs M/S Karnataka Micro Electronic Systems on 17 September, 2021
1 Com.O.S.No.378/2021
IN THE COURT OF THE LXXXVIII ADDL. CITY CIVIL &
SESSIONS JUDGE (EXCLUSIVE COMMERCIAL COURT):
BENGALURU CITY. (CCH-89)
Present: Sri. P.J. SOMASHEKARA, B.A.,LL.M,
LXXXVIII Addl. City Civil & Sessions Judge
Bengaluru City.
Dated this the 17th day of September 2021
Com.O.S.No.378/2021
Plaintiff: State Bank of India,
Small and Medium Enterprises Centre,
# 20, Badaganadu Sangha Building,
Girl's High School Street, Kumarapark,
Bangalore - 20.
Rptd. By its Chief Manager,
State Bank of India,
Small and Medium Enterprises Centre,
# 20, Badaganadu Sangha Building,
Girl's High School Street, Kumarapark,
Bangalore - 20.
(By Sri. G.K.B., Advocate)
-vs-
Defendants: 1. M/s Karnataka Micro Electronic Systems,
No.17, 1st and 2nd Floor, Konanakunte
Industrial Area, Harinagar Cross,
Bangalore - 62.
2. Reptd. By its Proprietor,
Mr. Shiva Sharana, S/o Nigappa,
No.17, 1st and 2nd Floor,
Konanakunte Industrial Area,
Harinagar Cross, Anjanappa Main Road,
Bangalore - 62.
(Exparte)
2 Com.O.S.No.378/2021
Nature of the suit Money suit
Date of institution of the 21.06.2021
suit
Date of commencement of 14.09.2021
recording of the evidence
Date on which the 17.09.2021
judgment was pronounced
Total duration Year/s Month/s Day/s
00 02 27
JUDGMENT
This is a suit filed by the plaintiff bank against the defendants for recovery of Rs.7,30,466/- together with current and future interest @ 11% p.a. compounded monthly rests on Rs.7,30,466/- from the date of the suit till its realization.
2. The nutshell of the plaintiff case are as under :
The plaintiff bank in its plaint has alleged that the defendant No.2 has approached through SBI, Konanakunte Branch for cash credit facility of Rs.6,00,000/- for the purpose of electronic PCB soldering labour contract business of defendant No.1. Thus a sum of Rs.6,00,000/- has been sanctioned through letter of arrangement dated 27.07.2018 and hypothecated deed dated 27.07.2018. The defendants have received and acknowledged the loan amount and agreed to the terms and conditions mentioned in the loan documents and agreed to pay the said loan amount 3 Com.O.S.No.378/2021 along with interest at the floating rate of 11% p.a. compounded at monthly rests. The rate of interest is subject to revision as per the loan policy guidelines issued from time to time in this regard.
The defendants have hypothecated the stocks in trade and receivables in order to avail the credit facility by executing the hypothecated deed dated 27.07.2018. The defendants were very irregular in payment of the loan installments and they have failed and neglected to honour their commitment and failed to pay the loan installment as agreed at the time of availing the loan facility. The defendants have intentionally and deliberately have committed serious default in repayment of the loan amount and failed to discharge their obligations towards the terms and conditions under the loan agreement and failed to pay the over due interest agreed on the loan amount in order to make unlawful gain. The defendants despite there being no rhyme or reasons whatsoever to withhold the repayment of the loan amount which is legally payable by the defendants as per the terms and conditions of the loan documents.
3. The plaintiff Bank in its plaint has further alleged that the defendants have failed to make repayment of the loan amount with an malafide intention and oblique motive and committed 4 Com.O.S.No.378/2021 serious default in repayment of the loan amount. The loan amount was transferred from SBI, Konanakunte Branch for recovery of the due amount of Rs.7,30,466/-. The defendants have completely availed the loan sanctioned and the interest has been charged as agreed rate compounded every month there is no reasons whatsoever to withhold the amount due towards repayment of the loan. Thus the loan account was declared as NPA on 12.10.2020 pursuant to repeated request and demands, the defendants have made the last payment to the loan account on 31.10.2019. The total loan due is of Rs.7,30,466/- to be payable by the defendants exclusive of unapplied interest from 12.10.2012 till date towards outstanding amount due as per the loan ledger extract. The defendants are liable to pay present and future interest from the date of suit at the current rate of 11% p.a. compounded at monthly rests till the date of realization, but there is a willful defect on the part of the defendants. In spite of several requests and demands for repayment of the loan amount with interest, but they were willfully failed and totally neglected to pay the loan installments in spite of sufficient opportunity afforded to the defendants, thus legal notice dated 01.12.2020 has been issued to the defendants to calling upon them to pay the loan amount with interest, but they did not do so. The cause 5 Com.O.S.No.378/2021 of action for the suit which arose on 15.06.2018 when the loan has been sanctioned on 27.07.2018, when the defendants were executed the agreement of loan cum hypothecation and letter of arrangement and when the loan amount was disbursed on 31.10.2019, when the defendants were made last payment and on 01.12.2020 when the legal notice has been issued to the defendants to calling upon them to repay the loan amount with interest within the jurisdiction of this court and prays for decree the suit.
4. In response of the suit summons the defendants did not appear nor filed their written statement as they were placed exparte.
5. The plaintiff bank in order to prove its plaint averments has examined its Manager as P.W.1 and got marked the documents as Ex.P.1 to P.5. The plaintiff bank has not examined any witnesses in its favour.
6. Heard the arguments on the plaintiff side.
7. Now the points that arise for court consideration are:
1. Whether the plaintiff bank is entitled for the relief as prayed for?6 Com.O.S.No.378/2021
2. What order or decree?
8. My answer to the above points are as under:
Point No.1: In the Affirmative; Point No.2: As per final order, for the following;
REASONS
9. POINT NO.1: The plaintiff bank has approached the court on the ground that the defendant No.2 has availed loan of Rs.6,00,000/- under cash credit facility for the purpose of electronic PCB soldering labour contract business of defendant No.1 and executed the documents by agreeing to repay the loan amount with interest at monthly installments, but they did not keep up their promise as agreed in spite of repeated requests, demand and legal notice, thereby the plaintiff bank has filed the instant suit against the defendants.
10. The plaintiff bank in order to prove the plaint averments has examined its Manager as P.W.1 who filed his affidavit as his chief-examination by reiterating the contents of the plaint stating that the defendant No.2 has approached the plaintiff bank through SBI, Konanakunte Branch by filing an application for seeking loan of Rs.6,00,000/- under cash credit facility for the purpose of electronic PCB soldering labour contract business of defendant No.1. So, loan has been sanctioned and the defendants 7 Com.O.S.No.378/2021 were executed letter of agreement, agreement of loan cum hypothecation and agreed to the terms and conditions of the loan and agreed to repay the loan amount with interest @ 11% p.a. compounded at monthly rests, but the defendants have failed and neglected to honour their commitment in spite of repeated request and demand and thereby legal notice has been issued calling upon the defendants to pay the loan amount with interest, but in spite of the same did not come forward nor paid the loan amount which due thereby the plaintiff bank has filed the instant suit against the defendants.
11. It is an admitted fact the plaintiff bank has filed the instant suit against the defendants for recovery of Rs.7,30,466/- with interest @ 11.00% p.a., compounded monthly rests on the ground the defendants have availed loan of Rs.6,00,000/- for the purpose of electronic PCB soldering labour contract business of defendant No.1. Now the question is whether the suit which filed is maintainable before this court and whether this court having the pecuniary jurisdiction to consider the relief which sought by the plaintiff bank. Though no dispute either on the jurisdiction point nor maintainability of the suit before this court. However, it is necessary to consider these aspects before considering the 8 Com.O.S.No.378/2021 materials on record as the plaintiff bank has filed the instant suit against the defendants for recovery of loan amount of Rs.7,30,466/- with interest 11.00% p.a. compounded at monthly rests. Thus this court drawn its attention on Sec.2(i)(c) of Commercial Courts Act, 2015 which reads like this:
(c) "commercial dispute" means a dispute arising out of-
(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or commerce;
(viii) franchising agreements;
(ix) distribution and licensing
agreements;
9 Com.O.S.No.378/2021
(x) management and consultancy
agreements;
(xi) joint venture agreements;
(xii) shareholders agreements;
(xiii) subscription and investment
agreements pertaining to the services industry including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage;
(xv) partnership agreements;
(xvi) technology development agreements;
(xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits; (xviii) agreements for sale of goods or provision of services;
(xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;
(xx) insurance and re-insurance; (xxi) contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.10 Com.O.S.No.378/2021
The provision under Sec.2(c)(i) which referred above is very much clear the first category which referred above, includes disputes of ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents including enforcement and interpretation of such documents. The definition naturally will cover the dispute of all kinds of ordinary transactions of merchants, bankers, financiers and traders. The banks are established under Banking Regulation Act for the purpose of business and commerce, naturally all transaction of bank about giving of loans, recovery thereof, deposits in banks etc., should fall within the category of commercial dispute. If the specified value there of is more than Rs.3,00,000/-. So the facts which pleaded in the plaint comes under the commercial dispute.
12. Now the question is whether the dispute which stated supra comes under the jurisdiction of commercial court. Thus, this court drawn its attention on Sec.6 of Commercial Courts Act, 2015 which reads like this:
Section 6: Jurisdiction of Commercial Court.
6. The Commercial Court shall have jurisdiction to try all suits and applications relating to a commercial dispute of a Specified Value arising out 11 Com.O.S.No.378/2021 of the entire territory of the State over which it has been vested territorial jurisdiction.
Explanation.-For the purposes of this section, a commercial dispute shall be considered to arise out of the entire territory of the State over which a Commercial Court has been vested jurisdiction, if the suit or application relating to such commercial dispute has been instituted as per the provisions of sections 16 to 20 of the Code of Civil Procedure, 1908 (5 of 1908).
The above provision is very much clear that the commercial court shall have the jurisdiction to try all suits and applications relating to commercial dispute.
13. Now the question is whether this court having the pecuniary jurisdiction to adjudicate the matter which is in dispute. Thus, this court drawn its attention on Sec.3 of Commercial Courts Act, 2015 which reads like this:
Section 3: Constitution of Commercial Courts.
3. (1) The State Government, may after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under this Act:12 Com.O.S.No.378/2021
2[Provided that with respect to the High Courts having ordinary original civil jurisdiction, the State Government may, after consultation with the concerned High Court, by notification, constitute Commercial Courts at the District Judge level:
Provided further that with respect to a territory over which the High Courts have ordinary original civil jurisdiction, the State Government may, by notification, specify such pecuniary value which shall not be less than three lakh rupees and not more than the pecuniary jurisdiction exercisable by the District Courts, as it may consider necessary.] 3[(1A) Notwithstanding anything contained in this Act, the State Government may, after consultation with the concerned High Court, by notification, specify such pecuniary value which shall not be less than three lakh rupees or such higher value, for whole or part of the State, as it may consider necessary.] The above provision is very much clear that by virtue of the notification specified the pecuniary value of this court which shall not be less than Rs.3,00,000/- Admittedly, the plaintiff in the 13 Com.O.S.No.378/2021 plaint itself has stated that the defendants are due a sum of Rs.7,30,466/- with interest and the plaintiff bank has filed the instant suit against the defendants on 21.06.2021 i.e., after the amendment of Commercial Courts Act, 2018. The pecuniary jurisdiction of the commercial court is not less than Rs.3 Lakhs and above. So, this court having the pecuniary jurisdiction to adjudicate the matter which is in dispute by virtue of the provision which stated supra.
14. The plaintiff bank in support of the oral evidence has produced the documents which marked as Ex.P.1 to Ex.P.5. Ex.P.1 is the letter of arrangement dated 27.07.2018 reflects the defendant No.2 has approached the plaintiff bank and sought for loan of Rs.6,00,000/- for the purpose of electronic PCB soldering labour contract business of defendant No.1 and loan has been sanctioned. Ex.P.2 is the agreement of loan cum hypothecation reflects the defendant No.2 has executed agreement of loan cum hypothecation in favour of the plaintiff bank. Ex.P.3 is the legal notice copy reflects the plaintiff bank has got issued legal notice to the defendants to calling upon them to repay the loan amount with interest. Ex.P.4 and P.4(a) are the unserved enveloper covers reflects notice has been issued by the plaintiff bank to the 14 Com.O.S.No.378/2021 defendants. Ex.P.5 is the statement of account reflects the defendants were due a sum of Rs.7,30,466/- as on the date of suit. So, the documents which marked as Ex.P.1 to P.5 are coupled with the oral evidence of P.W.1.
15. If at all the defendant No.2 was not availed the loan of Rs.6,00,000/- for the purpose of electronic PCB soldering labour contract business of defendant No.1 nor executed the documents in favour of the plaintiff bank, in response to the suit summons, the defendants would have appeared and resisted the claim of the plaintiff bank, but the reasons best known to the defendants, in spite of service of summons, did not appear nor resisted the claim of the plaintiff bank. On the other hand, the plaintiff bank has proved its case through oral and documentary evidence that the defendant No.2 has availed loan of Rs.6,00,000/- for the purpose of electronic PCB soldering labour contract business of defendant No.1 by agreeing to repay the loan amount with interest on monthly installments, but the defendants failed to keep up their promise as agreed. Hence, I am of the opinion that the point No.1 is answered in the Affirmative.
16. POINT NO.2: In view of my answer to point No.1 as stated above, I proceed to pass the following; 15 Com.O.S.No.378/2021
ORDER The suit of the plaintiff bank is decreed with cost. The defendants are hereby directed to pay the decretal amount of Rs.7,30,466/- together with current and future interest @ 11% p.a. compounded monthly rests from the date of suit till its realization.
Draw decree accordingly.
(Dictated to the Typist, thereof corrected by me and then pronounced in the open court on this the 17th day of September, 2021) (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City List of witnesses examined on behalf of plaintiff:
P.W.1 Sri. Deepak Kumar Srivatsava List of witnesses examined on behalf of defendant:
Nil List of documents exhibited on behalf of plaintiff:
Ex.P.1 Letter of arrangement dt:27.07.2018 Ex.P.2 Agreement of loan cum hypothecation dt:27.07.2018 Ex.P.3 Office notice copy dt:01.12.2020 Ex.P.4 Unserved Envelope cover (opened in the open Court) Ex.P.4(a) Notice copy Ex.P.5 Statement of accounts 16 Com.O.S.No.378/2021 List of documents exhibited on behalf of defendant:
Nil (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City.