Bangalore District Court
Bank Of Baroda vs Mr. Jagannath on 30 November, 2022
1 Com.O.S.No.487/2022
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 30th day of November 2022
Com.O.S.No.487/2022
Plaintiff: Bank of Baroda
Having its Branch Office at
No.1/1, 14th Cross, 5th Main,
RMV II Stage, Dollars Colony,
Bangalore-560 094
Represented by its Chief Manager
Mr.Aravind.R.
(By Sri.F.X., Advocate)
-vs-
Defendant: 1. Mr. Jagannath,
Aged about 40 years,
S/o. Mr.Selvam.R.
R/at. No.191/16, 1st Floor,
4th Cross, Appaiah Layout,
Subbannapalya,
M.S.Nagar,
Bangalore-560 033.
2 Com.O.S.No.487/2022
PAN:BBOPJ2910A
2. Mr. Jagadish.S.
Aged about 37 years,
S/o. Mr. Selvam.R.
R/at. No.109, 3rd Cross,
Balaram Building,
Subbannapalya, R.S.Palya,
M.S.Nagar Post,
Bangalore-560 033.
Nature of the suit Money suit
Date of institution of the 26.03.2022
suit
Date of commencement of 15.11.2022
recording of the evidence
Date on which the 30.11.2022
judgment was pronounced
Total duration Year/s Month/s Day/s
00 08 04
JUDGMENT
This is a suit filed by the plaintiff bank against the defendants for recovery of Rs.3,62,197.52/- as on 17.03.2022 with current and future interest from 18.03.2022 at the rate of 9.70% p.a. compounded at monthly rests along with 2% penal interest from the date of the suit till its realization.
2. Nutshell of the plaint are as under:
The plaintiff bank in its plaint has alleged that the 1 st defendant approached for financial assistance to purchase New 3 Com.O.S.No.487/2022 Nisan Micra XLD (Yellow Board) and submitted necessary documents. The second defendant agreed to be the guarantor for the said transaction, after considering the financials / documents submitted by the first defendant, sanctioned a sum of Rs.5,50,000/- and communicated to the defendant vide credit sanction intimation letter dated 09.11.2015, the terms and conditions and on due execution of the documents for the loan was extended to the first defendant. The rate of interest agreed to be paid 11.20% p.a., on floating rate of interest and the tenure of the loan was 60 monthly installments of Rs.12,013/- and in any event of default agreed to pay penal interest @ 2% p.a.. The defendant was willing to the terms of the sanction evidently so, and signed the sanction intimation letter dated 09.11.2015 in acceptance of the terms thereof. In further consideration of the said facilities being granted and in order to further secure the due repayment of the amounts due and payable and the defendant executed a loan agreement cum hypothecation deed dated 17.11.2015 to secure the limit to an extent of Rs.5,50,000/-
together with interest, penal interest, costs and charges the defendant hypothicated the car in its favour. The defendant executed undertaking thereby declaring that the vehicle has been 4 Com.O.S.No.487/2022 hypothecated in its favour has provided full particulars of the vehicle hypothicated.
3. The plaintiff bank in its plaint has alleged that the second defendant stood as guarantor for the transaction and inter alia guaranteeing the due performance of the terms and conditions. The defendants failed to maintain financial discipline and violated the terms and conditions of the sanction. The first defendant has been highly irregular in operating the accounts and in servicing the interest and charges in time. The defendant has totally neglected and failed to make prompt payments while availing the said limit and accordingly the account was declared as Non Performing Asset on 01.05.2018, as per extant guidelines laid down by the RBI, despite several demands on its behalf the borrower was not clear the dues. The defendant No.1 and 2 are jointly and severally liable to pay the loan amount with interest. As on 17.03.2022 the defendants are jointly and severally liable to pay a total sum of Rs.3,62,197.52, after reversing interest on penal interest. The compounding effect of penal interest in the account is reversed as per the directives of the Supreme Court of India and the present rate of interest applicable in the accounts is 9.70% p.a at monthly rest and penal interest at 2% p.a.. The 5 Com.O.S.No.487/2022 cause of action for the suit which arose on 09.11.2015 when the loan was sanctioned, on 17.11.2015 when the loan agreement was executed and on the dates of the demands were made to pay the outstanding due amount and on 23.11.2017 when the demand notice was issued and on 04.01.2018 when the last payment was made continue with 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 the plaint averments has examined its Joint Manager as PW.1 and got marked the documents as Ex.P.1 to Ex.P.14 and 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; 6 Com.O.S.No.487/2022
REASONS
9. POINT No.1: The plaintiff bank has approached the court on the ground that the defendant No.1 being the borrower and defendant No.2 being the guarantor were approached and requested for sanction of the loan for the purpose of the purchase of the vehicle. Accordingly, loan has been sanctioned and the defendants were executed the documents by agreeing to repay the loan amount with interest. But they did not keep up their promise as agreed in spite of 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 Joint Manager as PW.1 who filed his affidavit as chief-examination by reiterating the plaint averments stating that the 1st defendant approached for financial assistance to purchase new Nisan Mycran XLD (Yellow Board) and submitted necessary documents. The second defendant agreed to be the guarantor for the said transaction, after considering the financials/documents submitted by the first defendant, sanctioned a sum of Rs.5,50,000/- and communicated to the defendant vide credit sanction intimation letter dated 09.11.2015, the terms and conditions and on due execution of the documents for the loan 7 Com.O.S.No.487/2022 was extended to the first defendant. The rate of interest agreed to be paid 11.20% p.a., on floating rate of interest and the tenure of the loan was 60 monthly installments of Rs.12,013/- and in any event of default agreed to pay penal interest @ 2% p.a.. The defendant was willing to the terms of the sanction evidently so, and signed the sanction intimation letter dated 09.11.2015 in acceptance of the terms thereof. In further consideration of the said facilities being granted and in order to further secure the due repayment of the amounts due and payable and the defendant executed a loan agreement cum hypothecation deed dated 17.11.2015 to secure the limit to an extent of Rs.5,50,000/- together with interest, penal interest, costs and charges the defendant hypothicated the car in its favour. The defendant executed undertaking thereby declaring that the vehicle has been hypothecated in its favour has provided full particulars of the vehicle hypothicated.
11. The PW.1 has further stated the second defendant stood as guarantor for the transaction and inter alia guaranteeing the due performance of the terms and conditions. The defendants failed to maintain financial decipline and violated the terms and conditions of the sanction. The first defendant has been highly 8 Com.O.S.No.487/2022 irregular in operating the accounts and in servicing the interest and charges in time. The defendant has totally neglected and failed to make prompt payments while availing the said limit and accordingly the account was declared as Non Performing Asset on 01.05.2018, as per extant guidelines laid down by the RBI, despite several demands on its behalf the borrower was not clear the dues. The defendant No.1 and 2 are jointly and severally liable to pay the loan amount with interest. As on 17.03.2022 the defendants are jointly and severally liable to pay a total sum of Rs.3,62,197.52, after reversing interest on penal interest. The compounding effect of penal interest in the account is reversed as per the directives of the Supreme Court of India and the present rate of interest applicable in the accounts is 9.70% p.a at monthly rest and penal interest at 2% p.a.. Thereby the plaintiff bank has filed the instant suit against the defendants.
12. It is an admitted fact the plaintiff bank has filed the instant suit against the defendants for recovery of Rs.3,62,197.52 with interest @ 9.70% p.a. compounded at monthly rests on the ground that the defendant No.1 has availed the loan for the purpose of purchase of commercial vehicle and defendant No.2 has stood as guarantor to loan which availed by the defendant 9 Com.O.S.No.487/2022 No.1. Now, the question arises whether this court having the jurisdiction to adjudicate the matter which is dispute and whether this court having the pecuniary jurisdiction, though there is no dispute on these aspects. But, before considering the other aspects it is necessary to consider these aspects. 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 10 Com.O.S.No.487/2022 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 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 11 Com.O.S.No.487/2022 of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.
13. 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.
14. 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:
12 Com.O.S.No.487/2022
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 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.
15. 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 13 Com.O.S.No.487/2022 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 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.] 14 Com.O.S.No.487/2022 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 bank in its plaint itself has stated that the defendants are due a sum of Rs.3,62,197.52 with interest and the plaintiff bank has filed the instant suit against the defendants on 26.03.2022 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 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 provisions which stated supra.
16. The plaintiff bank in support of the oral evidence has produced the documents which marked as Ex.P.1 to Ex.P.14. Ex.P.1 is the Original GPA, Authorizing the PW.1 to prosecute the case against the defendants. Ex.P.2 is the loan application which filed by the defendants and sought for loan for the purpose of purchase of commercial vehicle. Ex.P. is the Original sanction letter reflects the plaintiff bank has sanctioned loan of Rs.5,50,000/- to the defendants for the purpose of purchase of 15 Com.O.S.No.487/2022 the commercial vehicle. Ex.P.4 is the original hypothecation dated 17.11.2015 reflects the defendant No.1 has hypothicated the vehicle in favour of the plaintiff bank. Ex.P.5 is the letter of guarantee which executed by the defendant No.2 in favour of the plaintiff bank. Ex.P.6 to Ex.P.11 are reflects the plaintiff bank got issued a notice to the defendants calling upon them for payment of due amount with intest. Ex.P.12 and Ex.P.13 are clear the plaintiff bank got issued a legal notice through RPAD. Ex.P.14 is the statement of accounts reflects the defendants were due a sum of Rs.3,62,197.52 as on the date of suit. So, the documents which are marked as Ex.P.1 to Ex.P.14 are coupled with the oral evidence of the PW.1.
17. If at all the defendants were not approached the bank nor availed the loan of Rs.5,50,000/- or executed the documents in response of the suit summons they would have appeared and resisted the claim of the plaintiff bank. But the reasons best known to the defendants in spite of service of the summons did not appear nor resisted the claim of the plaintiff bank. So, the contents of the plaint and the documents which are marked as Ex.P.1 to Ex.P.14 are remained unchallenged and plaintiff bank has proved its case through oral and documentary evidence. 16 Com.O.S.No.487/2022 Hence, I am of the opinion that the point No.1 is answered in the Affirmative.
18. 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 costs.
The defendants are jointly and severally liable to pay a decreetal amount of Rs.3,62,197.52 with current and future interest from 18.03.2022 at the rate of 9.70% p.a. compounded at monthly rests along with 2% penal interest 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 30th day of November, 2022) (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City 17 Com.O.S.No.487/2022 List of witnesses examined on behalf of plaintiff:
P.W.1 Sri.Honnappa Gowda List of witnesses examined on behalf of defendant:
Nil List of documents exhibited on behalf of plaintiff:
Ex.P.1 Original GPA
Ex.P.2 Loan application
Ex.P.3 Original sanction letter
Ex.P.4 Original hypothecation dt:17.11.2015
Ex.P.5 Letter of guarantee dt:17.11.2015
Ex.P.6 Copy of the demand notice
dt:29.12.2016
Ex.P.7 Copy of the demand notice
dt:18.05.2017
Ex.P.8 Postal receipt
Ex.P.9 Copy of the demand notice
dt:17.06.2017
Ex.P.10 Postal receipt
Ex.P.11 Copy of the demand notice
dt;11.07.2017
Ex.P.12 Postal receipt
Ex.P.13 Copy of the demand notice
dt:23.11.2017
18 Com.O.S.No.487/2022
Ex.P.14 Statement of accounts with certificate
List of documents exhibited on behalf of defendant:
Nil (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City 19 Com.O.S.No.487/2022 Judgment pronounced in open court vide separate:
ORDER The suit of the plaintiff bank is decreed with costs.
The defendants are jointly and severally liable to pay a decreetal amount of Rs.3,62,197.52 with current and future interest from 18.03.2022 at the rate of 9.70% p.a. compounded at monthly rests along with 2% penal interest till its realization.
Draw decree accordingly.
(P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City