Delhi District Court
Cs No.12552/2016: "Canara Bank vs Subhash Chand Jain & Anr.": Dod: ... on 7 September, 2017
CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017
IN THE COURT OF VINOD YADAV: ADDL.DISTRICT JUDGE10
(CENTRAL): TIS HAZARI COURTS: NEW DELHI
Civil Suit No.12552/2016 (224/2017)
(TWELVE YEARS OLD MATTER)
In the matter of:
CANARA BANK, A Body incorporated under the Banking
Companies (Acquisition & Transfer of Undertaking) Act, 1970
(Act No.5 of 1970) having its Head Office At 112, J.C Road,
Bangalore and Branches amongst others one at Pocket A2,
Sector5, Rohini, Delhi110 085.
.....Plaintiff
(Through Nemo)
Versus
1.Shri Subhash Chand Jain, S/o Late Shri Mohan Lal Jain, R/o 1, Ram Nagar, Opposite Kiran Garden, Main Najafgarh Road, New Delhi59.
Also At:
(i) B11, Derawal Nagar, Delhi110 009.
(ii) FashionNFabrics, F183, Mangal Bazar, Laxmi Nagar, Delhi110 092.
(ExParte vide order dated 14.05.2004)
2. Shri Mange Ram Sharma, S/o Shri Hukum Chand, R/o F377, West Karawal Nagar, Delhi110 094.
Also At:
O/o Mahanagar Telephone Nigam Limited (MTNL), Shri Mange Ram Sharma, S/o Shri Hukum Chand, Staff No.(PM69), Designation Phone Mechanic, Derawal Nagar, Delhi110 009.
.....Defendants
(D2 Through Shri Deepak Tyagi, Advocate)
Date of Institution of Suit : 22.01.2004
Date of reserving judgment : 05.09.2017
Date of pronouncement : 07.09.2017
Suit for Recovery of Rs.4,24,387/ : "Suit Decreed": Page 12 of 14
CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017
SUIT FOR RECOVERY OF Rs.4,24,387/ (RUPEES FOUR LAKHS TWENTY FOUR THOUSAND THREE HUNDRED EIGHTY SEVEN ONLY) 07.09.2017 J U D G M E N T:
1. Plaintiff Canara Bank, a nationalized bank through his authorized representative Shri N.R Parshuram filed the present suit for recovery against defendant No.1 as a principal borrower and defendant No.2 as a guarantor.
2. The facts of the case as borne out from the record are that on 24.01.2001, an application for availing loan under CAN MOBILE Scheme was filed by the defendant No.1, showing defendant No.2 to be a guarantor for the repayment of the loan. The loan was applied for the purchase of a Maruti Alto VX Car on the basis of a Proforma Invoice dated 18.01.2001, issued by Vikas Motors Limited in favour of defendant No.1 in respect of said car. After ascertaining the financial status, documents with regard to the identity of both the defendants and the proforma invoice, on 25.01.2001 both the Managers of plaintiff namely Shri N.R Parshuram and Shri V.K Saraswat sanctioned a loan of Rs.2,90,000/ (Rupees Two Lakhs Ninety Thousand Only) for the purchase of Maruti Alto VX car to defendant No.1, on the guarantee of defendant No.2, which was to be repaid in 48 equated monthly installments of Rs.8,051/ each. Both the defendants executed requisite documents like Loan Agreement, documents with regard to identity and signatures, Pronote, Undertaking, Deed of Hypothecation, Guarantee Agreement etc. At that time, defendant No.1 was already having a Saving Bank Account in the same branch,being A/c No.9349. It was Suit for Recovery of Rs.4,24,387/ : "Suit Decreed": Page 12 of 14 CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017 specifically agreed by the defendant No.1 that he would keep sufficient balance in his account till the complete loan stood liquidated, so as to facilitate the plaintiff to withdraw the amount of EMI therefrom.
3. On 25.01.2001 itself, a Demand Draft in the sum of Rs.2,90,000/ was issued by the plaintiff in the name of M/s Maruti Udyog Limited through M/s Allied Motors Limited, 5 Scindia House, with the request that after the purchase of Maruti Alto VX car, original invoice and stamped receipt for the amount, copy of R.C duly showing bank's hypothecation, copy of comprehensive insurance policy and Form34 in duplicate be furnished to the plaintiff.
4. On 26.02.2001, M/s Allied Motors Limited handed over copy of invoice showing receipt of payment of margin money of Rs.86,805/ by the defendant No.1 and payment of Rs.2,90,000/ through plaintiff as well as copy of R.C of vehicle No.DL2CL9602, bearing Chasis No.115639 and Engine Number 4028808.
5. The defendant made payment of only two installments and thereafter stopped making any further payment. From time to time, the officers of the plaintiff reminded the defendants to make payment of the balance EMIs, but to no avail, which led to the declaration of loan account of defendant No.1 a NonPerforming Asset (NPA) and a legal notice dated 09.01.2004 was sent to both the defendants, but to no avail.
6. Thereafter, on 21.01.2004, the present suit was filed, inter alia claiming decree for a sum of Rs.4,24,387/ (Rupees Four Lakhs Twenty Four Thousand Three Hundred Eighty Seven Only) alongwith interest @ 13.50% per annum.Suit for Recovery of Rs.4,24,387/ : "Suit Decreed": Page 12 of 14
CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017
7. The defendant No.1 did not appear in Court despite deemed service of summons and was accordingly proceeded "exparte" vide order dated 14.05.2004. The defendant No.2, however, filed written statement, inter alia taking the preliminary objections that the suit was not properly instituted, verified and signed by duly authorized person; the same was barred by limitation and the invocation of penal interest was against the legal principle laid down by the Hon'ble Supreme Court. On merits, this defendant completely denied his knowledge about any loan taken by defendant No.1 from plaintiff and he having stood guarantor for the same. It was stated that Shri N.R Parshuram of plaintiff and defendant No.1 had visited his house and obtained his signatures on some preprinted forms on the pretext that the said documents were with regard to the enhancement of the credit limit of defendant No.1. He completely denied his liability in the matter as also receipt of any legal notice by him from the plaintiff.
8. With the aforesaid pleadings of the parties, this court vide order dated 16.8.2004 framed the following issues:
Issues:
(i) Whether suit has been filed by duly authorized person with proper verification? OPP.
(ii) Whether suit is barred by limitation? OPD.
(iii) Whether suit is liable to be dismissed in view of Order 7 Rule 11 CPC? OPD.
(iv) Whether defendant No.2 stood personal guarantor of the said loan? OPP.Suit for Recovery of Rs.4,24,387/ : "Suit Decreed": Page 12 of 14
CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017
(v) Whether the plaintiff has served notice upon defendant?
OPP.
(vi) Whether the plaintiff is entitled for the relief claimed?
OPP.
(vii) Relief.
9. In order to discharge the onus of proving the issues, the plaintiff examined Shri V.K Saraswat as PW1, Shri N.R Parshuram as PW2 and Shri S.P Gupta as PW3, whereas defendant No.2 examined himself as DW1 and official from Motor Licensing Department Shri Pankaj Narang as DW2.
10. PW1 in his examinationinchief stated that at the relevant time he was lying posted in the concerned branch as Senior Manager. He proved on record the following documents:
(a) Ex.PW1/1 - The Loan Application Form, duly bearing the signatures of both the defendants;
(b) Ex.PW1/2 - Specimen signatures and photographs of both the defendants;
(c) Ex.PW1/3 - Pronote containing stipulation about rate of interest being 15% per annum;
(d) Ex.PW1/4 - Letter dated 25.01.2001of defendant No.1, authorizing the plaintiff to withdraw payment of EMIs from his account;
(e) Ex.PW1/5 - Letter of Undertaking
(f) Ex.PW1/6 Deed of Hypothecation
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CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017
(g) Ex.PW1/7 - Letter showing release of payment of
Rs.2,90,000/ to M/s Maruti Udyog Limited
(h) Ex.PW1/8 & Ex.PW1/9 - The Guarantee Agreement
(i) Ex.PW1/10 - Document showing purchase of Maruti Alto
VX car by defendant No.1 and the inspection thereof by the plaintiff.
11. Whereas, PW2 proved legal notice dated 09.01.2004 alongwith postal receipts as Ex.PW2/2 and produced reply thereto dated 22.01.2004 of defendant No.2 as Ex.PW2/3 (which was objected to as the same not having been filed alongwith the plaint and placed on record without obtaining permission of the Court).
12. PW3 proved on record the statement of account in respect of the loan account of defendant No.1 as Ex.PW3/1 (which was objected to as it failed to fulfill the requirement under Section 2(A) of The Bankers' Books Evidence Act, 1891, as amended in the year 2000).
13. Whereas, DW2 produced on record the relevant record with regard to vehicle DL2CL9602, maintained by the office of MLO, whereby the said vehicle was a Maruti 800 vehicle, lying registered in the name of Shri Pawan Kumar Mittal and not defendant No.1.
14. In nutshell, the case set up by the plaintiff is that the defendant No.1 was granted loan on the specific guarantee of defendant No.2. The defendant No.1 duly availed the benefit of loan, but made payment of only two installments out of the total 48 installements and as Suit for Recovery of Rs.4,24,387/ : "Suit Decreed": Page 12 of 14 CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017 such, both the defendants are jointly and severally liable to pay the suit amount. On the other hand, the case set up by defendant No.2 is that although he had signed the documents of guarantee in this case, but he is not liable to make any payment to plaintiff; firstly because his signatures were obtained on the documents by playing fraud upon him and secondly there was a variance of the terms of Loan Agreement, therefore, his liability stood extinguished in view of Section 133 of The Contract Act, 1872 and finally that the aforesaid loan was obtained by defendant No.1 under a conspiracy with PW1, PW2 and M/s Allied Motors Limited, whereby the amount of Rs.2,90,000/ was siphoned off by forging Registration Certificate in respect of vehicle No.DL2CL 9602 in favour of defendant No.1.
15. I have heard arguments advanced at Bar by Shri Deepak Tyagi, Advocate, learned counsel for defendant No.2 and with his assistance I have gone through the entire material on record, because despite repeated opportunities nobody came forward to advance arguments on behalf of plaintiff.
16. My issue wise findings in the matter are as under.
17. Issue No.(i):
Whether suit has been filed by duly authorized person with proper verification? OPP.
The onus to prove this issue was upon the plaintiff. The suit in the matter was instituted, verified and signed by Shri N.R Parshuram, who was Manager of plaintiff at the relevant time as also a Suit for Recovery of Rs.4,24,387/ : "Suit Decreed": Page 12 of 14 CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017 Power of Attorney Holder from the bank. The copy of Power of Attorney is on record as Ex.PW2/1. During the course of cross examination of Shri N.R Parshuram, the defendant No.2 did not put a single question to him questioning his authority to institute, verify and sign the present suit. Therefore, the legal requirement of proper authorization to file the present suit stood established by the plaintiff. The issue is accordingly decided in favour of plaintiff.
18. Issue No.(ii):
Whether suit is barred by limitation? OPD.
This issue was framed on the basis of a specific preliminary objection taken by defendant No.2 in his written statement. The learned counsel for defendant No.2 has very vehemently argued that the defendant No.1 had paid only two EMIs, i.e upto 25.03.2001, whereas as per the guidelines of RBI the loan account of defendant No.1 should have been declared NPA after six months from 25.03.2001 and the suit should have been filed immediately thereafter, whereas, it was filed on 21.01.2004. I do not find any force in this argument, firstly the guidelines of RBI have not been placed on record and secondly even if the account of defendant No.1 was declared NPA in September'2001, the plaintiff was well within its right to have filed the suit in next three years. On the other hand, the loan account of defendant No.1 should have enured till 24.01.2004 as the loan was to be repaid in 48 monthly installments and the time period for filing the suit would have even started thereafter. Seeing the matter from any angle, the suit is within the period of limitation. The issue is accordingly decided against the defendant.Suit for Recovery of Rs.4,24,387/ : "Suit Decreed": Page 12 of 14
CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017
19. Issue No.(v):
Whether the plaintiff has served notice upon defendant?
OPP.
The onus to prove this issue was upon the plaintiff. The plaintiff has duly proved issuance of legal notice Ex.PW2/2 upon both the defendants alongwith proof of despatch thereof in the form of postal receipts under UPC as well as speed post. The legal notice could not be served upon defendant No.1 and the report thereupon was that he had "left the address", whereas the same was duly served upon defendant No.2 at his official address of MTNL (page 631 of the file). PW2 produced on record the reply to the said legal notice filed by defendant No.2 as Ex.PW2/3. The learned counsel for defendant No.2 objected t o the mode of proof of this reply on the ground that the same was not filed alongwith the plaint and its production without obtaining the leave of the Court U/o 7 Rule 14 CPC is bad in law and the same cannot be taken into consideration. Even if the contention of defendant No.2 is upheld that does not change the fact that defendant No.2 was duly served with the legal notice. The issue is accordingly decided against the defendants.
20. Issues No.(iii), (iv) and (vi):
(iii) Whether suit is liable to be dismissed in view of Order 7 Rule 11 CPC? OPD.
And
(iv) Whether defendant No.2 stood personal guarantor of the said loan? OPP.
And
(vi) Whether the plaintiff is entitled for the relief claimed?
OPP.
Suit for Recovery of Rs.4,24,387/ : "Suit Decreed": Page 12 of 14CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017 The onus of proving issue No.(iii) was upon the defendants, whereas that of issues No.(iv) and (v) was on plaintiff. These issues are being taken up together as they are interlinked. Issue No.(iii) was framed on the basis of a specific preliminary objection taken by defendant No.2 in his written statement without substantiating as to on what basis the suit of the plaintiff was without any cause of action or barred under any law. The learned counsel for defendant No.2 has very vehemently argued that the defendant No.2 neither had knowledge that the documents on which his signatures had been obtained by the defendant No.1 and PW2 were documents of guarantee nor he was made to understand the said documents. This argument is not sustainable as admittedly defendant No.2 is a government employee and he claims himself to be a union leader as well and he is presumed to have knowledge about the documents on which he signs. It is incomprehensible that the defendant No.2 signed documents Ex.PW1/1, Ex.PW1/8 and Ex.PW1/9 without knowing and understanding the said documents. It cannot be believed that his photograph, signatures and personal information were not supplied by him to plaintiff, as depicted in Ex.PW1/2. It, therefore, stands established on record that defendant No.2 had given guarantee to the plaintiff of repayment of loan by defendant No.1.
21. The learned counsel for defendant No.2 has questioned the veracity of the present suit by arguing that the whole transaction of grant of loan to defendant No.1 and submission of documents by M/s Allied Motors to plaintiff is shrouded with suspicion. He has referred to Ex.PW1/7 and has emphasized that it was incumbent upon the plaintiff Suit for Recovery of Rs.4,24,387/ : "Suit Decreed": Page 12 of 14 CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017 to have made sure that the defendant No.1 had actually purchased Maruti Alto VX Car for which the loan was granted to him and in the process the plaintiff should have sought documents from M/s Allied Motors as well as defendant No.1, like Form P1, Receipt, Form 20 under Motor Vehicles Act (MV), Form 21 (MV), Form 22 (MV), copy of Insurance, Form 60 (MV), Form 34 (MV) as well as Hypothecation Letter, Form 35 (MV) and Pollution Control Check Certificate from Transport Department, as done in respect of vehicle bearing Registration No.DL 2CL9602 in the name of Shri Pawan Kumar Mittal, which is depicted in documents from Ex.DW2/A to Ex.DW2/M. It is further argued that Ex.PW1/7 clearly shows the connivance between the officials of plaintiff,i.e PW1 and PW2, defendant No.1 and M/s Allied Motors Limited because Proforma Invoice dated 18.01.2001 referred to in this document was not of that of M/s Allied Motors Limited, but was of M/s Vikas Motors. It is next contended that the DD in the sum of Rs.2,90,000/ in the name of M/s Allied Motors Limited should not have been handed over to defendant No.1.
22. I have duly considered the aforesaid arguments of the learned counsel for defendant No.2 and I find that the officials of plaintiff had been negligent in keeping proper follow up to ensure as to whether the defendant No.1 had actually purchased vehicle or not. From the evidence of DW2, it is clearly evident that a copy of false Registration Certificate in respect of vehicle No.DL2CL9602 was furnished to plaintiff. The officials of plaintiff clearly failed to follow up the matter with regard to purchase with M/s Allied Motors Limited as well as the Transport Department. Even the Deed of Hypothecation Suit for Recovery of Rs.4,24,387/ : "Suit Decreed": Page 12 of 14 CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017 Ex.PW1/6 does not carry the details of the vehicle actually purchased by defendant No.1 with the loan amount.
23. The learned counsel has further argued that the very fact that defendant No.1 produced copy of a fake RC to the bank goes on to show that he had not purchased the vehicle and this amounts to variance in the terms of Guarantee Agreement Ex.PW1/A, the effect whereof is discharge of the liability of defendant No.2 as guarantor in terms of the provisions of Section 133 of The Contract Act. I do not agree with this argument of the learned counsel for the reason that defendant No.2 was guarantor and to an extent he should have made sure that the defendant No.1 purchased the vehicle and regularly paid the EMIs. If it had come to his knowledge that the defendant No.1 did not purchase the vehicle and utilized the loan amount for some other purpose, then he should have informed the plaintiff about it. The defendant No.2 cannot take shelter under Section 133 of Contract Act as there had been no variance in the terms of Guarantee Agreement Ex.PW1/9. It is clearly evident from Ex.PW1/7 and accompanying invoice dated 26.02.2001 thereto that loan amount of Rs.2,90,000/ had been passed on from plaintiff to M/s Allied Motors Limited.
24. The learned counsel has next argued that the officials of plaintiff have been negligent/indifferent towards securing the possession of vehicle, allegedly purchased by defendant No.1 with the loan amount, as initially no attempt was made to ensure that such vehicle was actually purchased and secondly the application filed U/o 38 Rule 5 CPC alongwith the suit was never pressed during the course of trial by the Suit for Recovery of Rs.4,24,387/ : "Suit Decreed": Page 12 of 14 CS No.12552/2016: "Canara Bank V/s Subhash Chand Jain & Anr.": DOD: 07.09.2017 plaintiff and thirdly when the Court issued directions for the attachment of said car vide order dated 04.06.2005, again no steps were taken by the plaintiff. It is a matter of record that the officials of plaintiff have been negligent on the above argued account, but the fact remains the public money was misutilized by defendant No.1 in this matter for the repayment whereof the defendant No.2 had stood guarantor.
25. In the end, it was argued that the statement of account in the matter Ex.PW3/1 cannot be looked into because it does not accompany a proper certificate, as required U/s 2A of The Banker's Book Evidence Act, 1891. I agree with this argument of the learned counsel. The provisions of Section 2A are mandatory in nature. Therefore, it has to be held that the plaintiff has failed to prove the statement of account in respect of the loan account of defendant No.1.
26. The plaintiff through the evidence of PW1 to PW3 and the documents proved on record from Ex.PW1/1 to Ex.PW1/10 has established grant of loan of Rs.2,90,000/ to defendant No.1 and receipt of only two installments of Rs.8,051/ each towards repayment, but has miserably failed in proving the statement of account, therefore, the plaintiff is held entitled to recover a sum of Rs.2,73,898/ (Rupees Two Lakhs Seventy Three Thousand Eight Hundred Ninety Eight Only) as principal amount alongwith agreed rate of interest, i.e 15% per annum with effect from 01.04.2001 from the defendants and they are held jointly and severally liable. The aforesaid three issues stand decided accordingly.
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27. Relief:
In view of my specific findings on all the issues aforesaid, suit of the plaintiff is decreed as under:
(a) Decree in the sum of Rs.2,73,898/ (Rupees Two Lakhs Seventy Three Thousand Eight Hundred Ninety Eight Only) as principal amount alongwith interest @ 15% per annum with effect from 01.04.2001 till the date of recovery is passed in favour of plaintiff and against the defendants and the defendants are held jointly and severally liable to pay the said amount;
(b) Plaintiff is also entitled to the cost.
28. Decree Sheet be prepared accordingly.
29. File be consigned to Record Room after completion of necessary formalities.
Dictated & Announced in the (Vinod Yadav)
open Court on 07.09.2017 Addl. District Judge10 (Central)
Tis Hazari Courts: Delhi
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