Bangalore District Court
Bank Of India vs Safa Communications on 20 December, 2021
1 Com.O.S.No.245/2021
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 20th day of December 2021
Com.O.S.No.245/2021
Plaintiff: Bank of India,
A body corporate constituted
Under Banking Companies
(Acquisition & Transfer of Undertakings)
Act 1970 Having Head Office, at Star
House, Plot No.C.5.G-Block,
Bandra Kurla Complex,
Bandra (East), Mumbai-400 051
& having a branch ofice amongst
Other places at RPC Layout Branch,
No.51, 5th Main Road, Hosahalli Extension,
Vijayanagar, Bangalore-560040,
Represented its constituted attorney,
Mr. Shivarudrayya C Kolurmath,
S/o Channabasayya,
Aged about 58 years
(By G.P., Advocate)
-vs-
Defendants: 1.Safa Communications
Rep. By its proprietor
Sri.Hussain Nizamuddin S
S/o. Sri.M.S.Shamsuddin
#2048, 10th Cross,
2nd Stage, Club Road,
Vijayanagar
Bangalore-560040.
2 Com.O.S.No.245/2021
2. Sri. Hussain Nizamuddin S
S/o. Sri. M.S.Shamsuddin
#77, 6th Cross,
Ramadass Layout
K P Agrahara,
Bangalore-560023.
(Exparte)
Nature of the suit Money suit
Date of institution of the 23.03.2021
suit
Date of commencement of 13.12.2021
recording of the evidence
Date on which the 20.12.2021
judgment was pronounced
Total duration Year/s Month/s Day/s
00 08 27
JUDGMENT
This is a suit filed by the plaintiff bank against the defendants for recovery of Rs.7,96,168.57/- with interest @ 11.10% p.a. from the date of the suit, till its realization.
2. Brief facts of the plaint are as under:
The plaintiff bank in its plaint has alleged that the second defendant being the proprietor of the Safa Communications approached and made an application seeking for financial assistance under the term loan scheme for an amount of Rs.2,50,000/-. Pursuant to his application sanctioned the term 3 Com.O.S.No.245/2021 loan limit of Rs.2,50,000/- on 02.03.2018 and defendants were accepted the sanction terms of loan on 02.03.2018 and defendants were executed various loan documents in consideration of sanctioning loan and also availing the term loan limit. To secure the due payment of the term loan limit on 02.03.2018, the defendants have executed and delivered in its favour On Demand Promissory Note for Rs.2,50,000/- and agreement of hypothecation inter alia agreeing to pay interest @ 2.80% over one year BOI yearly MCLR presently at 11.10% p.a. with monthly rest for value of received and hypothecated, Sticks of PRC, Prepaid SIM, MNP, 4G upgrade and Replace cards etc., On Demand Promissory Note, installment letter, Bearer Letter and Hypothecation cum Loan Agreement, executed by defendants.
The defendants have also executed and delivered Comprehensive undertaking agreement dated 02.03.2018 in its favour agreed and undertaken that the Demand Promissory Note is to stand and be regarded as a Comprehensive undertaken agreement and be enforceable for all monies which in any time may become due. Comprehensive undertaking agreement is executed by the defendants. The defendants have also executed MCLR agreement dated 02.03.2018 in its favour agreed and confirmed 4 Com.O.S.No.245/2021 rate of interest applicable for the said facility has been stipulated by BOI as per term loan.
3. The Plaintiff Bank in its plaint has further alleged the defendants have approached second time for overdraft limit., after considering the request of the defendants sanctioned Overdraft Loan Limit of Rs.5,00,000/- and the defendants have executed and delivered in its favour On Demand Promissory Note for Rs.5,00,000/- dated 22.03.2019 and the defendants were utilized the said amount for the purpose which granted. The defendants agreeing to the terms and conditions of the sanction of loan acknowledged the sanction letter dated 22.03.2019. The rate of interest is subject to revision as per the loan policy guidelines. The rate of interest is 2.3% over the base rate BOI, MCLR presently 10.95% p.a. with monthly rest. The defendants executed the supplemental Deed of Hypothecation on 22.03.2019, the security to the loan hypothecated the plant and machinery, stocks and book debts, in particular lying in the business premises. The defendants have also executed and delivered comprehensive undertaking agreement dated 22.03.2019 in its favour agreed and undertaken that the Demand Promissory Note is to stand and be regarded as a Comprehensive undertaking agreement and be enforceable for all monies which 5 Com.O.S.No.245/2021 in any time may become due. The defendants were also executed MCLR Agreement dated 22.03.2019 in its favour, agreed and confirmed that the rate of interest applicable for the said facilities has been stipulated by BOI as per the overdraft loan, after availing the Term Loan and overdraft limit facilities, the defendants have failed to adhere to the terms and conditions of the sanction of loan and failed to repay the dues as and when it fell due and have not cleared the loan amount together with interest there on, in spite of several demands and request had not repaid the entire dues with interest.
The plaintiff bank in its plaint has further alleged that after availing the draft limit application facilities by the defendants have failed to obay terms and conditions of the sanction loan and failed to repay dues when it fail due in spite of several demands and requests. So the defendants loan account has been classified as NPA on 31.01.2020 in terms of RBI guidelines as the defendants are chronic defaulter in repayment of the loan amount with interest. Thus issued a legal notice dated 08.01.2021 calling upon defendants to repay the loan amount with interest. But the defendants in spite of the notice, they did not come forward to pay the loan amount with interest. Now the defendants are due a sum of Rs.7,96,168.57/-. The cause of action for the suit which 6 Com.O.S.No.245/2021 arose on 02.03.2018 and 22.03.2019 when the defendants borrowed term loan and overdraft loan by executing necessary documents and also on the dates on which the defendants failed to repay the outstanding balance amount together with interest and again on the date on which got issued a legal notice on 08.01.2021 within the jurisdiction of this court and prays for decree the suit.
4. In response of the suit summons, the defendants did not appeared nor filed their written statement as they were placed exparte.
5. The plaintiff bank in order to prove the plaint averments has examined its Chief-Manager as P.W.1 and got marked the documents as Ex.P.1 to Ex.P.23. The plaintiff bank has not examined any witness in its favour.
6. Heard the arguments on the plaintiff side.
7. The points that arise for court consideration are as under:
1. Whether the plaintiff bank is entitled for the relief as prayed for?
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; 7 Com.O.S.No.245/2021
REASONS
9. POINT NO.1: The plaintiff bank has approached the court on the ground that the defendant No.2 being the proprietor of the defendant No.1 approached and availed the loan of Rs.2,50,000/- under a term loan scheme and Rs.5,00,000/- under overdraft limit and executed the documents by undertaking to repay the loan amount with interest. But in spite of repeated request and demand did not come forward clear the loan amount with interest. Thereby, got issued a legal notice calling upon the defendants to pay the loan amount. But they did not do so. Thereby, the plaintiff bank has filed the instant suit against the defendants.
10. The plaintiff bank in order to prove plaint averments has examined its Chief-Manager as PW.1, who filed his affidavit as his chief-examination by reiterating the plaint averments stating that the defendant No.2 is the proprietor of the first defendant approached the bank for financial assistance under the term loan scheme for Rs.2,50,000/- and filed the application based on the said application loan of Rs.2,50,000/- has been sanctioned to the defendants and defendants were executed the documents by agreeing to repay the amount with interest @ 11.10% p.a. and they have also approached the second time for the overdraft 8 Com.O.S.No.245/2021 limit, after considering the request loan of Rs.5,00,000/- has been sanctioned and the defendants have executed the documents by agreeing to repay the loan amount with interest, but they did not keep up their promis as agreed, thereby, plaintiff bank got issued a legal notice calling upon defendants for payment of the loan with interest. But in spite of the notice they did not come forward nor paid the loan amount with interest. Now, the defendants are due a sum of Rs.7,96,168.57/- with interest @ 11.10% p.a. with monthly rest from the date of the suit till its realization.
11. It is an admitted fact the plaintiff bank has approached the court on the ground the defendants were availed the loan of Rs.2,50,000/- and Rs.5,00,000/- respectively and executed the documents. But did not keep up their promise as agreed. 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 materials on record as the plaintiff has filed the instant suit against the defendants, for recovery of the loan which availed by the defendants for business purpose. 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 9 Com.O.S.No.245/2021 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;
(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 10 Com.O.S.No.245/2021 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.
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 11 Com.O.S.No.245/2021 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 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 12 Com.O.S.No.245/2021 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:
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 13 Com.O.S.No.245/2021 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 plaint itself has stated that the defendants are due a sum of Rs.7,96,168.57/- with interest and the plaintiff bank has filed the instant suit against the defendants on 23.03.2021 i.e. after the amendment of Commercial Courts Act, 2018. Prior to the amendment, the pecuniary jurisdiction of the commercial court is of Rs.1 Crore and above, but by virtue of the amendment of 14 Com.O.S.No.245/2021 Commercial Courts Act, the pecuniary jurisdiction of the commercial court shall not be less than Rs.3,00,000/-. 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.23. Ex.P.1 is the term loan application reflects the defendant No.2 being the proprietor of the defendant No.1 has approached the bank and sought for loan of Rs.2,50,000/- for business purpose. Ex.P.2 is the borrowers profile reflects the defendant No.2 has availed the loan of Rs.2,50,000/- for his business purpose. Ex.P.3 is the sanction letter reflects about the sanction of the loan. Ex.P.4 is the On Demand Promissory Note which executed by the defendant No.2 in favour of the plaintiff bank after availment of the loan of Rs.2,50,000/-. Ex.P.5 is the barer letter reflects the loan of Rs.2,50,000/- has been sanctioned to the defendants. Ex.P.6 is the installment letter reflects the defendants have agreed to repay the loan amount with interest on installment. Ex.P.7 hypothecation cum loan agreement reflects the plaintiff bank has sanctioned loan of Rs.2,50,000/- to the defendants and the defendants have mortgaged the items as shown in the schedule. Ex.P.8 is the comprehensive undertaking agreement 15 Com.O.S.No.245/2021 which executed by the defendant No.2 in favour of the plaintiff bank after availment of the loan of Rs.2,50,000/-. Ex.P.9 is the format for MCLR Agreement dated 02.03.2018 which executed by the defendant No.2 being the proprietor of the defendant No.1. Ex.P.10 is the borrowers profile in respect of overdraft limit which reflects the defendant No.2 has executed the Ex.P.10. Ex.P.11 is the sanction letter reflects the loan of Rs.5,00,000/- has been sanctioned to the defendants. Ex.P.12 is On Demand Promissory Note which executed by the defendant No.2 after availment of the loan of Rs.5,00,000/- Ex.P.13 is the installment letter reflects the defendant No.2 has agreed to repay the loan amount of Rs.5,00,000/- on installments. Ex.P.14 is the barer letter which executed by the defendant No.2. Ex.P.15 is the hypothecation cum loan agreement reflects the defendant No.2 has executed the hypothecation agreement by hypothecating the items which shown in the schedule. Ex.P.16 is the comprehensive undertaken agreement executed by the defendant No.2 being the proprietar of the defendant No.1 in favour of the plaintiff bank. Ex.P.17 is the form for MCLR agreement executed by defendant No.2 being the proprietar of the defendant No.1 in favour of the plaintiff bank. Ex.P.18 is the legal notice reflects the plaintiff bank got issued a legal notice to the defendants to calling upon them to 16 Com.O.S.No.245/2021 secure the loan with interest. Ex.P.19 to Ex.P.21 are reflects the plaintiff bank got issued a legal notice through RPAD and RPAD covers are return as unserved. Ex.P.22 and Ex.P.23 are the statement of accounts are reflects the defendants are due a sum of Rs.7,96,168.57/- as on the date of suit. The documents which are marked as Ex.P.1 to Ex.P.23 are coupled with oral evidence of the PW1.
15. If at all the defendants were not availed the loan from the plaintiff bank nor executed the documents in response of the suit summons they would have appeared and the resist of the claim of the plaintiff bank. But the reasons best known to them in spite of service of summons they did not appear nor resisted the claim of the plaintiff. So, the contents of the plaint and the documents which are marked as Ex.P.1 to Ex.P.23 are remained unchallenged and the plaintiff bank has proved its case through oral and documentary evidence. 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;
ORDER The suit of the plaintiff bank is decreed with cost. The defendants are liable to pay the decretal amount of Rs.7,96,168.57/- along with interest @ 17 Com.O.S.No.245/2021 11.10% with monthly rests from the date of the suit till its realization.
Draw decree accordingly.
(Dictated to the Stenographer, transcript thereof corrected by me and then pronounced in the open court on this the 20th day of December, 2021) (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City 18 Com.O.S.No.245/2021 .
List of witnesses examined on behalf of plaintiff:
P.W.1 Savitha M.Bhat List of witnesses examined on behalf of defendant:
Nil List of documents exhibited on behalf of plaintiff:
Ex.P.1 Term loan application
Ex.P.2 Borrowers profile
Ex.P.3 Sanction letter dt:02.03.2018
Ex.P.4 On demand promissory note
dt:02.03.2018
Ex.P.5 Barer letter dt:02.03.2018
Ex.P.6 Installment letter dt:02.03.2018
Ex.P.7 Hypothecation cum loan agreement
Ex.P.8 Comprehensive undertaking
agreement dt:02.03.2018
Ex.P.9 Format for MCLR Agreement
dt:02.03.2018
Ex.P.10 Borrowers profile in respect of over
draft limit
Ex.P.11 Sanction letter dt:22.03.2019
Ex.P.12 On demand promissory note
dt:22.03.2019
Ex.P.13 Installment letter dt:22.03.2019
addressed to Bank Manager
19 Com.O.S.No.245/2021
Ex.P.14 Barer letter dt:22.03.2019
Ex.P.15 Hypothecation cum loan agreement
Ex.P.16 Comprehensive undertaking
agreement dt:22.03.2019
Ex.P.17 Format for MCLR Agreement
dt:22.03.2019
Ex.P.18 Office copy of the legal notice
dt:08.01.2021
Ex.P.19 Unserved Envelope cover(opened in
the open court)
Ex.P.19(a) Notice copy
Ex.P.20 Unserved Envelope cover(opened in
the open court)
Ex.P.20(a) Notice copy
Ex.P.21 Postal receipts in 2 Nos.
Ex.P.22 Statement of accounts
Ex.P.23 Statement of accounts
List of documents exhibited on behalf of defendant:
Nil (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City 20 Com.O.S.No.245/2021 Judgment pronounced in the open court, vide separate;
ORDER The suit of the plaintiff bank is decreed with cost.
The defendants are liable to pay the decretal amount of Rs.7,96,168.57/- along with interest @ 11.10% with monthly rests from the date of the suit till its realization.
Draw decree accordingly.
(P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City