Bangalore District Court
Karnataka Bank Ltd vs Manjunath.N on 20 July, 2024
KABC020191192022
Before the VII Addl. Judge and ACMM,
Court of Small Causes at Bengaluru
(SCCH3)
DATED THIS THE 20th DAY OF JULY 2024
PRESENT: SRI.KUMARA.S (B.A., LL.B)
VII Addl. SCJ and ACJM,
Member, MACT3, Bengaluru.
S.C.No.703/2022
Plaintiff : Karnataka Bank Ltd.,
A banking company incorporated
under the Indian Companies Act,
1913, having its Registered Office at
Mahaveera Circle, Kanakanady,
Mangaluru - 575 002 and a Branch
Office, among others at
Malleshwaram at Ground Floor No.
77/20, 15th Cross, 4th Main,
Malleshwaram, Bengaluru - 560 055.
Represented by its Senior Branch
Manager Sri.Poorna Prajna.M.
(By Sri.N.D.Satishchandra,
Advocate)
V/s
(SCCH3) 2 S.C.No.703/2022
Defendant : Sri.Manjunath.N,
S/o Mr.Narasimha Murthy,
Age: 39 years,
R/at No.757, Munikondappa Layout,
Vidyanagara, Havanoor Extn.,
Bengaluru - 560 073.
(By Sri.J.D.Sujnanamurthy,
Advocate)
Date of institution of the suit: 02.07.2022
Nature of the suit: Recovery of Money
Date of commencement of
recording of the evidence: 09.02.2023
Date on which the Judgment 20.07.2024
is pronounced :
Total duration: Years Month/s Days
02 00 20
*********
JUDGMENT
This suit is filed by the plaintiff bank against the defendant for recovery of money of Rs.1,63,560/ together with interest at the rate of 13.75% p.a compounded monthly and with costs.
02. The brief facts of the case of the plaintiff bank is that the defendant had approached the (SCCH3) 3 S.C.No.703/2022 plaintiff bank for vehicle loan for the purpose of purchase of new Toyota Etios Car for Taxi and accordingly the plaintiff bank has sanctioned a vehicle loan of Rs.6,80,000/ to the defendant on14.07.2015 and defendant has executed Term loan agreement, Declaration, Consent letter, Hypothecation letter and Hypothecation agreement by hypothecating Toyota Etios Car bearing No.KA04AA2862 on 15.07.2015 and 21.07.2015 and agreed to repay the said loan amount in 84 EMI's of Rs.11,733/ with interest at BR+O.75% p.a compounded monthly and in default interest at the rate of 3% p.a. The BR at that point of time was 10.50% p.a and the rate of interest applicable to the defendant was 11.25% p.a compounded monthly and total interest is 13.75% p.a compounded monthly. Defendant after availing the loan and utilizing the same, but failed to repay the same and failed to comply with the agreed terms and conditions and he was acknowledged the debt in writing by letter dt:22.06.2018 and 16.02.2021 and has failed to pay the debt due to the plaintiff bank and the plaintiff bank has issued Recall notice to the defendant on 17.06.2021, said notice is returned as unclaimed and defendant has failed to repay the loan amount and has (SCCH3) 4 S.C.No.703/2022 due sum of Rs.1,63,560/. Hence the plaintiff bank have constrained to file the present suit for recovery of money.
03. In pursuance of service of summons, the defendant had appeared before this Court through his counsel and filed written statement.
04. In the written statement the defendant has admitted that he has availed vehicle loan of Rs.6,80,000/ from the plaintiff bank and denied that he has agreed to pay interest at 13.75% p.a and also denied that issuing of recall notice and also denied that he is liable to pay sum of Rs.1,63,560/ with interest at the rate of 13.75% p.a and denied that defendant has failed to settle the debt due to the plaintiff bank and contended that the plaintiff bank claiming that they are interest to lend loan to the persons who needs for purchase of vehicle has approached the defendant through its employees during the year 2015 and offered a loan to the defendant on the condition that the installment amount with very low interest will be paid to the plaintiff which was agreed to between the plaintiff and the defendant and in view of above understanding this defendant with an intention to own car to lead life has (SCCH3) 5 S.C.No.703/2022 agreed to avail the loan facility and accordingly some officials of the plaintiff took the blank signed cheques of the defendant and the signature of the defendant on many blank printed papers and other papers without disclosing the contents of the such papers as security purpose only to the loan and loan amount sanctioned and transferred the amount to the defendant and accordingly the defendant has purchased the car from his hard earned money with the loan amount on fond hope to lead better life. It is subsequent to the availing of loan and purchasing of the car, the defendant has been promptly paying the loan amount to the plaintiff bank. As there was complete lockdown in the country and state from time to time due to pandemic Covid19 from March end of 2020 and during the period of Covid19 it was very difficult to lead a normal life as there was no income or earnings and therefore the defendant was not in position to pay the balance loan amount as there was no job or income from any source and he look after and taking care and maintain of his family members and it is very hard time to the defendant.
05. It is further contended that the plaintiff has seized the car of the defendant which is in good (SCCH3) 6 S.C.No.703/2022 running condition without servicing of any notice and information to the defendant and the same is only a bed earned vehicle to th defendant. The market value of the car of the defendant is Rs.4,25,000/ at the time of seizing the car. The plaintiff bank has suppressed the real value of the seized car and colluded with the third parties sold the same for lower price for their convenience without any notice, information and intimation of the defendant for about auctioning the seized car of the defendant and the plaintiff never whispered about the outstanding loan amount at the time of seizing the car and sold amount of the seized car of the defendant in the plaint and falsely claiming that the lower amount which was received from the selling of the seized car is adjusted to the loan amount and therefore, the defendant is in due of loan amount. If the plaintiff bank has sold the car of the defendant in the public auction in the presence of the defendant after due notice and information to all the persons interested, it would be sold more than actual market rate for sum of Rs.4,25,000/ and the entire due loan amount could be adjusted and cleared and there are no arrears of loan amount and defendant is not defaulter in payment of loan amount. Under such (SCCH3) 7 S.C.No.703/2022 circumstances, there is no arrears of loan and the entire loan was clear and as such this defendant is not liable to pay any amount muchless the amount claimed by the plaintiff bank after seizing the vehicle of the defendant. The alleged documents are created, concocted, fabricated, misrepresented, illegal and invalid in law as the plaintiff bank has not disclosed about the contents and description of the alleged documents and also not explained to the defendant and got the signature of the defendant on all alleged documents and other papers without disclosing the pros and consent of the alleged documents by implicating falsely as a security papers only to the said loan and the same are without the complete knowledge and notice of the defendant and not at all genuine. The plaintiff bank has claimed exorbitant interest on the said loan which was not agreed or accepted by the defendant at any point of time. The defendant is not in due any amount muchless the amount of Rs.1,63,560/ as claimed by the plaintiff bank which is illegal, invalid and bad in law and suit of the plaintiff bank is barred by law of limitation and this Court has no jurisdiction to entertain the suit and grant any (SCCH3) 8 S.C.No.703/2022 relief muchless the relief sought for by the plaintiff. Hence pray for dismiss the suit of plaintiff with costs.
06. The following points that arise for my consideration are as under:
1) Whether the plaintiff proves that the defendant has borrowed sum of Rs.6,80,000/ for purchase of Toyota Etios Car by executing relevant documents on 14.07.2015 and defendant is chronic defaulter and not paid the installments as agreed and even after seizer and sale of the hypothecated car, the defendant has due a sum of Rs.1,63,560/ as alleged in the plaint?
2) Whether the plaintiff is entitled for the suit claim amount together with interest as sought in the suit?
3) What order or decree?
07. The plaintiff bank in order to prove its case, its Assistant Branch Manager is examined as PW.1 and got marked 15 documents as Ex.P.1 to 15 and closed its side. On behalf of the defendant, he himself examined as DW.1, but no documents are marked on behalf of the defendant and closed his side.
(SCCH3) 9 S.C.No.703/2022
08. Both plaintiff and defendant have submitted written arguments and perused the records.
09. My answer to the above points are as under:
Point No.1: In the Affirmative
Point No.2: Partly in the Affirmative
Point No.3: As per final order
for the following:
REASONS
10. Point No.1: The plaintiff in order to prove its case, its Assistant Branch Manager is examined as PW.1 and in his chief examination evidence he has reiterated the plaint averments. Though he has been crossexamined by the defendant counsel, nothing is brought on record to disbelieve the case of the plaintiff that the defendant has not borrowed car loan from the plaintiff bank and not executed any documents and he has not due loan amount to the plaintiff bank as alleged in the plaint. During the course of cross examination by the defendant counsel on 23.06.2023 the PW.1 has denied to the suggestion that the defendant had agreed to pay interest at 10.50 % p.a (SCCH3) 10 S.C.No.703/2022 and as the defendant agreed to pay interest at 10.50% p.a for Rs.6,80,000/ then it will come Rs.5,950/ as interest for first installment and also denied to the suggestion that as per the agreement the interest for second installment will come to Rs.5,897/ and admits that if they calculate the interest at 11.25% p.a for Rs.6,80,000/ then the interest for first installment will come at Rs.6,375/ per month and denied to the suggestion that the interest for second installment will come at Rs.6,324/ and admits that as per the bank statement they are levy interest at Rs.6,497/ instead of Rs.6,375/ and denied to the suggestion that the interest of Rs.6,497/ is higher than the 11.25% p.a and denied to the suggestion that even they are levy higher interest for second installment than the 11.25% p.a and also denied to the suggestion that they are calculated the interest more than 11.25% p.a and admits that the defendant upto certain period had paid Rs.11,800/ per month more than prescribed principle and interest amount and denied that the bank had not informed the defendant about MSME scheme and admits that the bank had to inform the borrower about the fixed price for MSME scheme on sanction loan and admits that even in the loan agreement, the bank had (SCCH3) 11 S.C.No.703/2022 to mention the fixed price of amount to be paid on sanction loan under MSME scheme and the penal interest will arise when the repayment of loan is not made on due date and admits that the defendant had made repayment of loan amount for certain period on due date only and denied to the suggestion that eventhough the defendant had made repayment of loan on due date they have levy penal interest for the month of May 2016 to December 2017 and admits that in the agreement the overdue interest of 3% p.a is mentioned but not mentioned as penal interest and denied to the suggestion that as the defendant did not agreed for CGTMSEAGF scheme and penal interest he is not liable pay the said amount and admits that if the defendant did not pay the agreed installment then they can charge only overdue interest of 3% p.a and denied to the suggestion that apart from overdue interest of 3% p.a, they cannot levy any other charges when defendant did not paid the agreed installment and also stated that the defendant stopped making payment on 13.03.2020 and admits that due to Covid19 the defendant unable to pay from April 2020 and admits that there was relaxation for payment during April 2020. They have not issued any notice to the (SCCH3) 12 S.C.No.703/2022 defendant for nonpayment during Covid19. They have issued recall notice to the defendant in the year 2021 and admits that prior to 2021 they have not issued notice and recall notice to the defendant and admits that at the time of issuance of recall notice the outstanding amount was Rs.3,91,943/ and admits that the recall notice was not served upon the defendant and defendant had not replied to recall notice. Witness volunteers that the defendant did not replied as it was unclaimed and not delivered and denied to the suggestion that in collusion with postal authority they have created Ex.P.13(a) as unclaimed. After issuance of recall notice they have seize the vehicle and auction it and they have not produced any document to show that the person who had seized the vehicle was authorized by their bank and admits that at the time of seizure of vehicle it has to be valued and report to be annexed and he do not know at the time of seizure of vehicle of defendant it was valued at Rs.4,25,000/ and they have not produced any document to show the valuation of vehicle of defendant and even in their plaint they have not stated about valuation of vehicle and when and where the vehicle was seized and admits that they have to issue notice to (SCCH3) 13 S.C.No.703/2022 owner of vehicle after seizure and before auction and denied to the suggestion that they have not issued any notice to the defendant intimating about the auction. That the vehicle of defendant was auction on 22.02.2022 and he do not know about the bidders, bid amount and auction and admits that there will be report regarding auction of vehicle of defendant in their bank and the said auction report is not produced before the Court and denied to the suggestion that as they have not auction the vehicle of defendant they have not produced such report and if the vehicle of defendant was auction then the loan due amount of defendant will be cleared and admits that the defendant was not present at the time of auction and denied to the suggestion that without knowledge of defendant in order to cheat him they have sold the vehicle for lower rate and that they have not conduct auction in accordance with law and also denied to the suggestion that they have to issue notice prior to depositing the auction amount towards the outstanding loan amount and there is no relation in between the bank and defendant when the auction amount was deposited towards loan due amount and denied to the suggestion that defendant is not due to (SCCH3) 14 S.C.No.703/2022 the plaintiff bank and they have not issued notice demanding due amount to the defendant after depositing auction amount and as there was no due from the defendant they have not issued any notice after auction and later illegal gain documents are created and filed this suit and admits that sum of Rs.2,85,000/ was obtained from the auction of vehicle. After depositing of auction amount to the outstanding loan due amount still a sum of Rs.1,65,000/ was due and denied to the suggestion that as on the date of auction the value of the vehicle of defendant was Rs.4,25,000/ and if it was sold in public auction then the amount obtained from the auction would be sufficient towards clearance of due amount and also to pay the remaining amount to the defendant.
11. On perusal of oral evidence, nothing is brought on record to disbelieve the case of the plaintiff bank and it is very clear that the defendant has borrowed loan from the plaintiff bank and has not paid the loan amount as per agreed terms and hence the plaintiff bank has sold the hypothecated car and adjusted the amount and even after adjusting the sale proceed of the car, still the defendant is due sum of (SCCH3) 15 S.C.No.703/2022 Rs.1,65,000/. But it also appears that defendant has not challenged the said auction of the car before proper forum or authority.
12. Apart from the oral evidence, the plaintiff has got marked 15 documents as Ex.P.1 to 15. Ex.P.1 is copy of Power of attorney executed by the plaintiff bank in favour of P.W.1 to depose before the Court. Ex.P.2 is Loan application submitted by the defendant to the plaintiff bank for seeking loan of Rs.6,80,000/. Ex.P.3 is Credit sanction intimation given to the defendant by the plaintiff bank after sanction of loan of Rs.6,80,000/ and as per said document the agreed rate of interest is 10.50%. Ex.P.4 is Acknowledgement of receipt of loan amount by the defendant. Ex.P.5 is Loan agreement dt:15.07.2015 executed by the defendant in favour of plaintiff bank by obtaining loan of Rs.6,80,000/ and agreed rate of interest is 11.25% p.a. Ex.P.6 is Declaration executed by the defendant in favour of plaintiff bank. Ex.P.7 is Consent letter. Ex.P.8 is hypothecation letter. Ex.P.9 is Hypothecation agreement executed by the defendant in favour of the plaintiff bank by borrowing loan and hypothecated the Toyota Etios Car bearing No.KA04AA2862 in favour of plaintiff bank. Ex.P.10 is Letter dt:22.06.2018 (SCCH3) 16 S.C.No.703/2022 addressed by the defendant to the plaintiff bank and sought time to pay the due amount. Ex.P.11 is Acknowledgement of debt executed by the defendant in favour of plaintiff bank on 16.02.2021 agreed to pay due loan amount and acknowledged the debt. Ex.P.12 and 13 are Recall notices wherein the plaintiff bank has called upon the defendant to repay the loan amount due. Ex.P.13(a) is Unserved postal cover which indicates the notice sent to defendant he has not received, the same is returned back as unclaimed. Ex.P.13(b) is Certificate U/Sec.65 B of Indian Evidence Act. Ex.P.14 is Account statement of the defendant which indicates that defendant has irregular in payment of installments and has due a sum of Rs.1,63,560/ as on the date of filing of suit and it also appears that after auction and sale proceeds of the car, the amount was adjusted to the loan account of the defendant. Ex.P.15 is Postal acknowledgement.
13. Further the defendant to prove his contention and to disprove the case of the plaintiff bank has examined himself as DW.1 and in his chief examination evidence he has reiterated the written statement averments. During the course of cross examination by the plaintiff bank counsel he deposed (SCCH3) 17 S.C.No.703/2022 that ನನ ಸಮನನ ವಗ ದಖಲಯನನ ಓದ ಸಹ ಮಡತತ ತನ.
ಅದ ರತತ ನನ ಬನ ಬಕನಬದ ಸಲ ಪಡಯವಗ ಎಲಲ ದಖಲಗಳನನ ಓದ ತಳದ ಸಹ ಮಡದದ ತನ ಎಬದರ ಸರಯಲಲ . ಸಲದ ಕರರ ಪಪ ಕರ ಸಲದ ಕತನನ ಸಮಪರಕವಗ ಪವತಸದ ಇದದ ಲಲ ದಡ ಬಡಡ ಯನನ ಪವತಸಬಕಬದ ಷರತತ ಇದ ಎಬದರ ಸರ. ಅದ ರತತ ಸಲದ ಹಣವನನ ಮರಪವತಸದ ಇದದ ಲಲ ಅಡಮನಗಳಸದ ವಹನವನನ ಜಪತ ಪಡಸ ಮರಟ ಮಡಬಹದ ಎಬದ ಇದ ಎಬದರ ಸರ. ಬನ ಬಕನವರ ವಹನವನನ ಮರಟ ಮಡ ಅದರಬದ ಬದ ಮತತ ವನನ ನನನ ಅಕಬಟಗ ಜಮ ಮಡದದ ರ ಎಬದರ ಗತತ ಲಲ . ಸದರ ವಷಯ ನ.ಪ.14 ರಲಲ ನಮದಗದ ಎಬದರ ನನಗ ಗತತ ಲಲ . ಸದರ ವಹನವನನ ಮರಟ ಮಡ ಬದ ಹಣವನನ ನನನ ಖತಗ ಜಮ ಮಡ ನತರ ಇನನ ಹಚಚ ಸಲದ ಹಣ ಪವತ ಬಕ ಉಳಸದದ ರಬದ ಬನ ಬಕನವರ ಈ ದವಯನನ ಹಕದದ ರ ಎಬದರ ಸರ. ಬನ ಬಕನವರ ಸಲ ಕಡವಗ ನನನ ಬದ ಯವದ ಖಲ ಚಕಕ ಗಳನನ ಪಡದಕಬಡಲಲ ಎಬದರ ಸರ.
14. During the course of crossexamination he admits that in default of payment of installment there should be penal interest as per agreement condition and also admits that in case of loan amount has not repaid, then the bank is liberty to sold the hypothecated vehicle and admits that the sale proceeds of the hypothecated car amount was deposited to the loan account of the defendant and adjusted to the loan account and thereafter since there (SCCH3) 18 S.C.No.703/2022 was a due even after sale proceeds of the sale of car, for recovery of remaining due amount, the plaintiff bank has filed the present suit and also admits that at the time of sanctioning of loan, bank authorities have not taken his blank cheques.
15. Therefore, on going through the entire oral and documentary evidence adduced by the plaintiff bank, it is very much clear that the defendant was borrowed car loan of Rs.6,80,000/ from the plaintiff bank as per the agreement and hypothecated the vehicle and he has became defaulter in repayment of loan amount. Hence, accordingly the plaintiff bank has auctioned the hypothecated car and deposited the sale proceedings to the loan account of the defendant as per Ex.P.14 and even after sale of the hypothecated car, some amount due to the plaintiff bank, they have filed present suit for recovery. Though the defendant has denied the entire case of the plaintiff bank, but in his written statement and in the crossexamination admits that he had borrowed loan from the plaintiff bank and though he has denied the documents produced by the plaintiff bank is created and forged, but he admits the loan transaction with the plaintiff bank. The contention taken by the defendant regarding (SCCH3) 19 S.C.No.703/2022 the illegality of sale of hypothecated car by the bank, but defendant has not questioned the legality of auction conducted by the bank and sale of the hypothecated car before any proper forum. But in this suit he cannot take the defence of illegality of auction conduct by the bank. As per Ex.P.12 the notice was given to the defendant, but he has willfully refused to receive the notice and returned unclaimed. It also appears that as per Ex.P.14 the bank statement account of defendant the sale proceeds of hypothecated car was deposited in the loan account of the defendant and as per the said document the defendant is due sum of Rs.1,63,560/ as on the date of filing of the suit. Therefore, the plaintiff bank has successfully proved Point No.1. Accordingly I answered Point No.1 in the Affirmative.
16. Point No.2: As already discussed on Point No.1, the plaintiff bank has proved that defendant has borrowed car loan from the plaintiff bank and has not repaid the loan amount and became defaulter. Hence, the plaintiff bank is entitled for suit claim amount of Rs.1,63,560/. So far as interest is concerned, the plaintiff bank is claimed interest at the rate of 13.75% (SCCH3) 20 S.C.No.703/2022 p.a compounded monthly. But as per loan agreement and hypothecation agreement the agreed rate of interest is 11.25% p.a and overdue interest is 3% p.a. However, it is a discretionary power of the Court to grant interest in money recovery suit. Admittedly it is not a loan borrowed for agricultural purpose and it is obtained for nonagricultural purpose or commercial purpose. Therefore, under the facts and circumstances of the case, this Court is of the view that, the plaintiff bank is entitled for simple interest at the rate of 11.25% p.a from the date of filing of the suit till its entire realization. Accordingly I answered Point No.2 partly in affirmative.
17. Point No.3: In view of foregoing reasons and discussion to the above points, I proceed to pass the following: ORDER The suit of the plaintiff bank is partly decreed with costs.
The defendant is hereby directed to pay suit claim amount of Rs.1,63,560/ to the plaintiff bank (SCCH3) 21 S.C.No.703/2022 together with simple interest at the rate of 11.25% p.a from the date of filing of suit till its realization.
Draw decree accordingly.
(Dictated to the Stenographer, transcript thereof is corrected and then pronounced by me in open court, on this the 20th day of July 2024) Digitally signed KUMARA by KUMARA S Date: S 2024.07.24 15:43:02 +0530 (KUMARA.S) VII Addl. Judge and ACJM, Bengaluru.
ANNEXURE List of the witnesses examined on behalf of plaintiff:
P.W.1 Kumaraswamy.K List of the documents exhibited on behalf of plaintiff:
Ex.P.1 Notarized copy of Power of attorney Ex.P.2 Loan application Ex.P.3 Credit sanction intimation Ex.P.4 Acknowledgement Ex.P.5 Loan agreement dt:15.07.2015 Ex.P.6 Declaration Ex.P.7 Consent letter Ex.P.8 hypothecation letter Ex.P.9 Hypothecation agreement Ex.P.10 Letter dt:22.06.2018 (SCCH3) 22 S.C.No.703/2022 Ex.P.11 Acknowledgement of debt Ex.P.12 Recall notice dt:17.06.2021 Ex.P.13 Copy of notice Ex.P.13(a) Unserved postal cover Ex.P.13(b) Certificate U/Sec.65 B of Indian Evidence Act Ex.P.14 Account statement Ex.P.15 Postal acknowledgement List of the witnesses examined on behalf of defendant:
D.W.1 Manjunath.N
List of the documents marked on behalf of
defendant:
Nil Digitally signed
by KUMARA S
KUMARA Date:
S 2024.07.24
15:43:13
+0530
(KUMARA.S)
VII Addl. Judge and ACJM,
Bengaluru.