Delhi District Court
Uco Bank vs Miss Anupama Jokhani on 30 September, 2010
IN THE COURT OF SH. SANJAY SHARMA, JSCC-CUM-ASCJ-
CUM-GUARDIAN JUDGE (WEST): DELHI
Suit No. 883/08
Unique Case ID No.02401C0347622005
UCO Bank, a Body Corporate constituted under the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970
having its Head office at 10 BTM Sarani (Brabourne Road),
Kolkatta - 700001 and one of its branches amongst others at 5,
Parliament Street, New Delhi- 110001. ......Plaintiff
Versus
1. Miss Anupama Jokhani
R/o 20/46, Lodhi Colony,
New Delhi - 110003.
2. Sh. Yash Pal Jokhani
R/o 20/46, Lodhi Colony,
New Delhi - 110003.
Also at:
Under Secretary,
Ministry of Urban Development and Poverty Alleviation,
Nirman Bhawan
New Delhi-110001. .....Defendants
Date of institution of the suit : 17.02.2007
Date of reserving judgment : 23.09.2010
Date of pronouncement : 30.09.2010
JUDGMENT
1. The plaintiff-bank, through Sh. S. K. Sharma, Chief Manager and Attorney and Sh. H. S. Darhel, Senior Manager/Attorney, filed a suit for recovery of Rs. 2,72,627/- against the defendants together with pendente lite and future interest @ 14% per annum with quarterly rests.
Suit No. 883/08 Page 1/282. The case set out in the plaint is that the plaintiff-bank had sanctioned and disbursed an education loan of Rs. 2,00,000/- to the defendant no.1 for completing MCA Course. According to the sanction letter dated 20.08.2001, the loan along with quarterly interest was repayable by way of 60 installments commencing six months after completion of the said course. The interest falling due during the moratorium period was serviced on quarterly basis. The defendant no.2/father of the defendant no.1 had guaranteed the repayment of the loan amount. The defendant no.1 had executed an agreement relating to term loan whereby she had agreed to repay the loan in 48 installments instead of 60 installments. The defendant no.2 had executed a continuing guarantee to discharge the liability to an amount not exceeding Rs. 3,63,000/-. The liability of the defendant no.1 and 2 is joint and several.
3. The case of the plaintiff-bank is that installment of the loan became due w.e.f. April, 2005 after six months from completion of the said course in September, 2004. The defendant no.1 failed to deposit the installments and therefore, the plaintiff-bank sent letters and reminders dated 18.07.2006, 15.09.2006, 03.10.2006, 07.12.2006 and 20.12.2006 to the defendants. The defendant no. 2 had asked for some information/documents vide letter dated 20.12.2006. The plaintiff-bank had provided desired information and further requested the defendant no.2 to deposit an amount of Rs. 1,06,656/- due as on December, 2006. The plaintiff-bank issued a demand notice dated 20.01.2007 to the defendants. The defendant no.2 had replied the said notice. The plaintiff-bank recalled the entire loan amount vide letter dated 31.01.2007. According to the plaintiff-bank, an amount of Rs. 2,72,627/- was Suit No. 883/08 Page 2/28 due from the defendants as on 15.01.2007.
4. The defendants in their joint written statement controvert- ed the averments made in the plaint. The defendants raised preliminary objection that the suit has not been filed by a duly authorized person. Sh. S. K. Sharma is not competent to sign and verify the plaint. The Board of Directors has not passed any resolution authorizing his to sign, verify and institute the suit. The plaintiff-bank has no cause of action against the defendants.
5. On merits, the defendants stated that they had applied for loan of Rs. 3,63,000/- for education purposes and the plaintiff- bank got the documents signed on the pretext that loan of Rs. 3,63,000/- had been sanctioned whereas the plaintiff-bank had sanctioned a loan of Rs. 2,00,000/-. The defendants had to suffer heavy suffer losses on account of non-sanctioning of the loan amount. It is stated that the manager of the plaintiff-bank had obtained signatures of the defendants on blank papers and forms. The plaintiff-bank filed the present suit on the basis of fabricated documents. The defendant no.2 had signed the documents as an attesting witness and not as a guarantor of the defendant no.1. The plaintiff-bank has not disclosed the mode of determination of liability of the defendants. The defendants had approached the plaintiff-bank for finalization of the accounts but the plaintiff-bank had been avoiding to settle the accounts on various pretexts.
6. According to the defendants, the plaintiff-bank had assured that no interest would be charged and therefore, the plaintiff- bank is not entitled to claim any interest. The plaintiff-bank has not disclosed the rate of interest charged on the defendants. The Suit No. 883/08 Page 3/28 plaintiff-bank can charge simple interest 6% per annum. The plaintiff-bank is not entitled to charge penal interest.
7. In the replication, the plaintiff-bank denied the contentions of the defendants and re-affirmed the averments pleaded in the plaint. The plaintiff-bank charged rate of interest in accordance with the scheme of education loan. It is stated that the statement of account duly certified under Banker Books of Evidence Act clearly reflects the mode of computation of Rs. 2,66,558/-.
8. In the Admission/Denial conducted on 08.05.2007, the defendant no.2 had admitted documents Ex.P-1 to Ex.P-6.
9. On the pleading of the parties, following issues were framed on 16.07.07.
1. Whether the suit has been signed, verified and instituted by a duly authorized or competent person as per law?
OPP
2. To what amount, if any, is the plaintiff entitled?
OPP
3. Whether the plaintiff is entitled to claim interest, if so, at what rate, on what amount and for which period? OPP
4. Relief.
10. Ex.P-2 is the Application for Education Loan of Rs. 3,63,000/- dated 07.08.2001. Ex.P-5 is the letter dated 17.08.2001 written by the defendant no.1 whereby she had requested for sanctioning of an amount of Rs.2,00,000/- instead of Rs.3,63,000/ already approved by the plaintiff-bank and further, she had informed that she had been allotted a free seat Suit No. 883/08 Page 4/28 in Ram Chameli Chadha Vishvas Girls College, Ghaziabad during re-counselling held on 14.08.2001 and requested for issuance of two Demand Drafts of Rs. 32,000/- and Rs.20,200/- each in favour of the said college.
11. Ex.P-1 is the letter dated 20.08.2001 whereby the plaintiff- bank had informed the defendant no.1 that her request for education loan of Rs. 2,00,000/- had been approved and a loan of Rs.2,00,000/- had been sanctioned on terms & condition stated therein. Ex.P-3 is the letter dated 20.12.2006 written by the defendant no.2 seeking complete information and informing that the beneficiary had been working on a project and he will inform the bank on her return. Ex.P-4 is the letter dated 27.01.2007 written by the defendant no.2 informing inter alia, it was not possible to repay the loan with penal interest till the defendant no.1 retuned. Ex.P-6 is the letter dated 08.06.2002 written by the defendant no.1 whereby she had requested for granting an amount of Rs.32,000/- for the year 2002-03 for MCA course from Graphics Era Institute of Technology, Dehradun.
12. In the evidence, the plaintiff-bank examined Sh. R. K. Bali, Manager (PW-1) and Sh. Ravi Parkash, Chief Manager (PW-2) whereas the defendant no.2 appeared as DW-1.
13. PW-1 filed his examination-in-chief by way of affidavit. He testified the facts pleaded in the plaint. He identified signatures of Sh. S. K. Sharma, Chief Manager and Sh. H. S. Darhel, Senior Manager on the plaint. He proved Agreement relating to Term Loan dated 11.08.2001 Ex.P-8 executed by the defendant no.1 in favour of the plaintiff-bank and Deed of Guarantee dated Suit No. 883/08 Page 5/28 11.08.2001 Ex.P-9 executed by the defendant no.2 in favour of the plaintiff-bank. He deposed that 1st disbursement of Rs. 32,000/- and Rs.20,200/- was made on 20.08.2001 and 2nd disbursement of Rs.32,000/- was made on 10.06.2002, and further disbursements were made on 02.01.2003, 07.06.2003 and 24.12.2003.
14. PW-1 deposed that the defendants neither deposited the installments due nor paid the accrued interest and therefore, the plaintiff-bank sent reminders to the defendants and finally, recalled the loan. He proved letter dated 18.07.2006 Ex.P-10, letter dated 15.09.2006 Ex.P-11, letter dated 03.10.2006 Ex.P-12, letter dated 07.12.2006 Ex.P-13, letter dated 20.12.2006 Ex.P-14, letter dated 06.01.2007 Ex.P-15, notice dated 20.01.2007 Ex.P-16 and notice dated 31.01.2007 Ex.P-17 recalling the outstanding loan amount of Rs.2,66,558/-. He proved Statement of Account Ex.P-18 certified by the Chief Manager as true copy of the entries made in the book of accounts.
15. In his cross-examination, PW-1 stated that he is working a Manager (Advances) in UCO Bank, Parliament Street with effect from August, 2006. He stated that he is dealing with matters relating to Education Loan also. He stated that the plaintiff-bank has issued a circular no.CHO/SISB/O2/2001-02 dated 29.05.2001 for granting loan for higher studies on the basis of a scheme formulated by RBI in consultation with Ministry of Finance. He stated that the defendant no.1 had applied for education loan of Rs. 3,63,000/- for MCA Course from I.I.M.S College, Meerut. He stated that the an agreement and guarantee were entered into by the defendants for an amount of Rs.3,63,000. He stated that Suit No. 883/08 Page 6/28 the defendant no.1 had modified the request and applied for an amount of Rs.2,00,000/- to study MCA from Ram Chameli College, Ghaziabad allotted by Moti Lal Nehru College, Allahabad. He stated the request for the education loan was examined by the Manager, UCO Bank and accepted. He stated that the no margin or security is insisted by instructions contained in the said circular dated 29.05.2001.
16. In his cross-examination, PW-1 stated that the plaintiff- bank is entitled to charge P.L.R. (12% simple interest) for education loan up to Rs. 4,00,000/- as per the said circular dated 29.05.2001. He stated that no penal or compound interest can be charged in such cases. He stated that no document/agreement was entered or executed by the defendant for an amount of Rs. 2,00,000/- as per letter dated 20.08.2001. He stated that Rs. 2,00,000/- was sanctioned by the Competent Authority on the request of the defendant vide letter dated 20.08.2001. He stated that the loan was to be disbursed in stages as per requirement/demand directly to the institution/college. He stated that repayment under the scheme dated 29.05.2001 commences after one year of the completion of the course or six months after getting job whichever is earlier. He stated that the loan shall be repaid in 5-7 years after commencement of repayment excluding duration of course. He stated that rate of interest shown in column 3 of Ex.P-1 is 12% p.a. quarterly compounding. He stated that the sanctioned loan amount with quarterly interest was repayable in 60 installments commencing from 6 months after completion of the course as mentioned in column no.4 of Ex.P-1. He stated that the defendant no.2 is shown as security in column no.5 of Ex.P-1. He stated that the disbursing Suit No. 883/08 Page 7/28 branch is required to follow up the progress of the student with the college/institution as mentioned in column no.12 of the circular Ex.PW-1/DA. He stated that he has brought any record that the defendant no.1 had completed her MCA in September, 2004. He stated that interest on the said loan would commence from the date of disbursal of loan as mentioned in col. no. 6 of Ex.PW-1/DA. He stated that the loan would become overdue for the purpose of repayment under the scheme when no installment is repaid.
17. PW-1 stated that interest is to be paid by the parents of the student during the moratorium period as and when debited and regular installments of principal and interest starts from one year after completion of course or six months after getting the job. He stated that mode of recovery of loan is provided under the scheme. He stated that Bank officer contact the parties and send reminders and then court. He stated that the entries of the released amount are required to be made in the books of account regularly and a detailed statement of account is also required to be sent to the borrower from time to time. He stated that the plaintiff-bank had sent the statement of account regularly from time to time but they were returned back refused. He stated that under the scheme, installment of loan is to be released to the college/institution and not to the borrower. He stated that the loan as per sanctioned letter dated 20.08.2001 Ex.P-1 was being disbursed through DDs in favour of the institution handed over to the borrower. He stated that there is no document on record to show that the DD were handed over to the borrower. Ex.P-5 is the document to show that the first installment of Rs.32,000/- and Rs.20,000/- was released to the Suit No. 883/08 Page 8/28 defendant no.1 on 20.08.2001 at her instance. He denied that disbursement mentioned in the para no.9 of the affidavit was never made to the defendant no.1 or the defendants. He stated that the loan of Rs.2,00,000/- was granted under sanction letter dated 20.08.2001 Ex.P-1 to study MCA from Ram Chameli College cannot be utilized for any other purpose/ institution. He stated that amount of Rs. 77,568/- indicated in the letter dated 18.07.2006 had become Rs. 89,264/- up to 30.09.2006 in the letter dated 15.09.2006. He stated that the amount had increased in a period of two months on the basis of compound interest.
18. PW-2 Sh. Ravi Parkash was the Chief Manager of the plaintiff-bank at Parliament Street Branch from 01.07.2001 to 16.05.2004. He filed his examination-in-chief by way of affidavit. He deposed that first disbursement of Rs.32,000/- and Rs.20,000/ was made on 20.08.2001, second disbursement of Rs. 32,000/- was made on 10.06.2002 and further disbursements were made on 02.01.2003, 06.07.2003 and 24.12.2003. He proved Loan Application Ex.P-2, Letter dated 17.08.2001 written by the defendant no.1 Ex.P-5, Sanction letter dated 20.08.2001 Ex.P-1, Term Loan Agreement Ex.P-8, Deed of Guarantee Ex.P-9, Letter dated 25.06.2002 written by the defendant no.1 for issuance of Demand Draft for Rs.30,000/- in favour of M/s Graphic Era Educational Society, Dehradun for the year 2002-03 Ex.PW-2/10 and Letter dated 30.12.2002 written by the defendant no.1 for issuance of two Demand Drafts of Rs.16,000/- and Rs.14,000/- in favour of M/s Graphic Era Educational Society, Dehradun for the year 2002-03 Ex.PW-2/11. He proved Letter dated 03.06.2003 written by the defendant no.1 for issuance of two Demand Drafts Suit No. 883/08 Page 9/28 of Rs. 16,000/- each in favour of M/s Graphic Era Educational Society Ex.PW-2/14 and demand letter Ex.PW-2/12. He proved letter dated 22.12.2003 written by the defendant no.1 for issuance Demand Draft of Rs. 16,000/- in favour of the said institute for the academic year 2003-04 Ex.PW-13 and Demand Letter Ex.PW-2/15.
19. In his cross-examination, PW-2 stated that he was in the Parliament Branch since 2001 to 2004. He stated that the loan application of the defendant no.1 related to his period. He stated that initially, the application was for a loan of Rs.3,63,000/- for education of the defendant no.1. Later on, it was reduced to around Rs.2,50,000/- on written request of the defendant no.1.
20. PW-2 stated that the loan application of the defendant no.1 was for I.I.M.S. Meerut and the loan was sanctioned for Ram Chameli Institute, Ghaziabad. He stated that the amount was disbursed to Graphic Era Educational Society. He stated that the loan was not given to Institute for which it was sanctioned. He stated that the process adopted by the Bank for change of institute is that the Bank receive request from the applicant and obtain sanction from sanctioning party. He stated that he was the Chief Manager at the time of sanction of the loan amount. He stated that as per guidelines issued by R.B.I., guarantee is not insisted upon in education loan up to Rs.4,00,000/- but there is no bar that guarantee cannot be taken by the Bank. He stated that the first default in payment of installment occurred in April, 2005. He stated that the defendant no.1 had already completed her education in April, 2005. He stated that the Bank had not advanced loan of Rs.3,63,000/- to the defendants as mentioned Suit No. 883/08 Page 10/28 in the agreement but Rs. 2,00,000/- was advanced as education loan to the defendant no.1 on the guarantee of the defendant no.
2. Loan agreement and guarantee agreement were executed for Rs.3,63,000/- and subsequently, request letter was received from the defendants for reduction of loan amount due to change of the institution and the loan of Rs. 2,00,000/- was finally released to the defendants. He denied that the bank had not advanced any loan in pursuance of agreement Ex.P-8 and Ex.P-9.
21. In his depositions, DW-1 stated that the defendants had applied for sanction of loan amount of Rs.3,63,000/-. He stated that the bank had promised to disburse the said loan amount to the defendants and in consideration thereof, the defendants had executed various loan documents. He stated that the loan was never disbursed. He stated that the amount alleged in the plaint was never released to the defendants. He stated that the plaintiff-bank never disbursed any amount to the defendants. The claim of the plaintiff-bank is without consideration. He stated that he had sent letter dated 01.11.2008 Ex.DW-1/1 to the plaintiff-bank to provide details of the disbursement. He stated that he had moved an application Under R.T.I. Act and sent letters vide letter dated 20.12.2006 Ex.DW-1/DB, 27.01.2007 Ex.DW-1/DC, 09.02.2007 Ex.DW-1/DD, 14.03.2007 Ex.DW-1/DE, 03.04.2007 Ex.DW-1/DF, 26.03.2007 Ex.DW-1/3, 10.04.2007 Ex.DW-1/4 and 26.04.2007 Ex.DW-1/5. He stated that the plaintiff-bank has charged higher rate of interest. He stated that no interest was payable on the loan amount as per scheme. He stated that the plaintiff-bank has charged penal interest. He stated that no amount is due and payable by the defendants to the plaintiff-bank.
Suit No. 883/08 Page 11/2822. In his cross-examination, DW-1 stated that he had retired as Under Secretary. He stated that he did not remember exact address of his daughter/the defendant no.1. He stated that she is residing in Gurgaon after her marriage on 17.11.2009. He deposed that he had signed the document Ex.P-9 after reading it. He stated that he had stood as a guarantor for his daughter/ the defendant no.1 in respect of loan obtained by her from the plaintiff-bank. He stated he was intimated by the Bank that the sanctioned amount was Rs. 2,00,000/-. He stated that he was not aware whether the bank had paid directly to the institution where she had studied.
23. I have heard arguments of Sh Sudhir Nagar, Advocate for the plaintiff-bank and Sh. Sanjay Sehgal, Advocate for the defendants and perused the suit file.
24. On careful assessment of evidence on record in the light of arguments addressed at the bar, issue wise finding is as under:
ISSUE NO.1:
25. The defendants in their written statement raised preliminary objection that the suit was not filed a duly authorized person and Sh. S. K. Sharma was competent to sign and verify the plaint. It was contended that the plaintiff-bank has not passed any resolution in favour of Sh. S. K. Sharma authorizing him to sign and verify the plaint. It was contended that the plaintiff-bank has not given the details of the General Power of Attorney executed in favour of Sh. S. K. Sharma. It was Suit No. 883/08 Page 12/28 contended that the plaintiff-bank has not filed minutes of the Resolution of the Board nominating Sh. S. K. Sharma and Sh. H. S. Darhel as Attorneys. Ld. counsel for the defendants contended that PW-1 cannot prove General Power of Attorney Mark A and B as he stated that the said Attorneys were executed in his presence. He argued that PW-1 stated that Sh. H. S. Darhel is still working in the Parliament Branch but the plaintiff-bank has not examined him. He argued that the plaintiff-bank has failed to prove that the plaint was signed and verified by a competent person and therefore, the suit should be dismissed being instituted by an incompetent person.
26. Onus to prove the issue no.1 was upon the plaintiff-bank. The plaintiff-bank through Sh. S. K. Sharma, Chief Manager and Sh. H. S. Darhel, Senior Manager filed the suit for recovery against the defendants. PW-1 deposed that the plaint was signed and signed by Sh. S. K. Sharma, Chief Manager and Sh. H. S. Darhel, Senior Manager of the plaintiff-bank. He had seen them signing and writing and identified their signatures on the plaint.
27. PW-1 has proved Power of Attorney Mark A and B executed by the plaintiff in favour of Sh. S. K. Sharma and Sh. H. S. Darhel authorizing them to sign plaint and institute suit for recovery of dues to the plaintiff-bank. The said Attorneys are notarized and therefore, can be presumed to have been executed and authenticated as provided under section 85 of the Evidence Act.
28. In United Bank of India v. Naresh Kumar, AIR 1997 SC 1; Hon'ble Supreme Court held that in the absence of any formal letter of authority or power of attorney having been executed, any Principal Officer of the Bank can sign and verify on behalf of the Bank by virtue of the office which he holds, sign and verify Suit No. 883/08 Page 13/28 the pleadings on behalf of the corporation. The suit had been filed in the name of the appellant; full amount of Court-fee had been paid by the appellant bank; document as well as oral evidence had been led on behalf of the appellant and the trial of the suit before the Sub Judge had continued for about two years. It is difficult, in these circumstances, even to presume that the suit had been filed and tried without the appellant having authorised the institution of the same. It was observed that where suits are instituted or defended on behalf of a public corporation, public interest should not be permitted to be defeated on a mere technicality.
29. Sh. S. K. Sharma, Chief Manager and Sh. H. S. Darhel, Senior Manager are principal officers of the plaintiff-bank and competent to institute the suit by virtue of the office they hold. Therefore, it is held that the plaint was signed and verified by authorized person and the suit was validly instituted on behalf of the plaintiff-bank. Accordingly, issue no.1 is decided in favour of the plaintiff-bank and against the defendants.
ISSUE NO.2:
30. Ld. Counsel for the defendants argued that no document was signed by the defendants regarding loan of Rs.2,00,000/-. He argued that PW-1 and PW-2 admitted that the documents Ex.P-8 and Ex.P-9 were executed in respect of loan of Rs.3,63,000/-. He argued that the defendant no.1 had applied for education loan of Rs.3,63,000/- vide Ex.P-2. He argued that the defendant no.1 had executed Agreement for Loan of Rs.3,63,000/- vide Ex.P-8 and the defendant no.2 had executed guarantee agreement for the said loan amount vide Ex.P-9. He argued that the plaintiff-bank Suit No. 883/08 Page 14/28 had not sanctioned the said loan amount of Rs.3,63,000/-. He argued that the defendants never applied for loan of Rs. 2,00,000/-. He argued that there is no application for education loan of Rs.2,00,000/- He argued that plaintiff-bank never advanced any loan amount of Rs.2,00,000/- to the defendants nor documents in that regard were executed. He argued that the plaintiff-bank has not mentioned in the plaint as to when the said loan of Rs.2,00,000/- was granted or disbursed. He argued that the plaintiff-bank has not mentioned as to whom the said loan amount was given and in which account the said amount was credited. He argued that the documents Ex.P-8 and Ex.P-9 were executed for education loan of Rs.3,63,000/- which was not advanced by the plaintiff-bank. He argued that the said documents cannot be considered as the plaintiff-bank had not advanced the loan of Rs.3,63,000/-. He argued that the defendant no.1 had applied for education loan for I.I.M.S Meerut and the plaintiff-bank sanctioned loan of Rs.2,00,000/- for Ram Chameli Chadha College, Ghaziabad and disbursed amount to M/s Graphic Era Institute of Technology, Dehradun and further, PW-1 and PW-2 admitted that the loan was never released to I.I.M.S Meerut, U.P.
31. Ld. Counsel for the defendants further argued that the plaintiff-bank never supplied application form, details of the disbursal, duly signed statement of account and rate of interest charged on education loan despite several letters and R.T.I. Application. He argued that there is no evidence that the plaintiff-bank had released to the institute or to the defendants. He argued that the plaintiff-bank cannot insist for security in education loan up to Rs. 4,00,000/- as per Scheme. He argued Suit No. 883/08 Page 15/28 that the plaintiff-bank has failed to prove the disbursal of the loan of Rs.2,00,000/-. He argued that the alleged loan amount was sanctioned on 20.08.2001 and disbursed on 10.06.2002 and the suit filed on 15.02.2007 is barred time. He argued that there is no written acknowledgement signed by the defendants acknowledging their liability and therefore, the suit is beyond the period of limitation.
32. Ld. Counsel for the plaintiff-bank argued that the defendant no.1 had applied for education loan of Rs. 3,63,000/- vide application dated 07.08.2001 Ex.P-2 and thereafter, an agreement relating to term loan Ex.P-8 and guarantee agreement Ex.P-2 were executed by the defendant no.1 and 2 respectively on 11.08.2001. He argued that the defendant no.1 had requested vide letter dated 17.08.2001 Ex.P-5 for sanctioning of Rs.2,00,000/- instead of Rs.3,63,000/- in view of change of institute in re-counseling and further, to issue two Demand Drafts each for Rs. 32,000/- and Rs.14,000/- in favour of Ram Chameli Chadha Vishwas Girls College, Ghaziabad. He argued that the request of the defendant no.1 was accepted and an education loan of Rs.2,00,000/- was approved on 20.08.2001 to the defendant no.1 vide sanction letter dated 20.08.2001 Ex.P-1 and two demand drafts each for Rs. 32,000/- and Rs. 14,000/- were issued in favour of the said college.
33. Ld. Counsel for the plaintiff-bank further argued that the terms and condition of the repayment of the said loan amount are mentioned in the sanction letter dated 20.08.2001 Ex.P-1. He argued that the defendant no.2 has admitted in his cross- examination that he was intimated by the plaintiff-bank that the Suit No. 883/08 Page 16/28 sanctioned amount was Rs.2,00,000/-. He argued that the plaintiff-bank disbursed the loan amount directly to the institute as per request of the defendant no.1 vide Ex.P-6, Ex.PW-2/10, Ex.PW-2/14 and Ex.PW-2/13. He argued that the statement of account Ex.P-18 is duly certified by Chief Manager and admissible in evidence under Bankers Books of Evidence Act. He argued that the defendant no.1 has not appeared in the evidence to prove the contrary. He argued that the defendant no.2 cannot depose on behalf of the defendant no.1 being her power of attorney. He argued that the defendant no.2 had taken the defence that he had signed the Guarantee Agreement Ex.P-9 as an attesting witness whereas in his cross-examination, he admitted that he had stood guarantor for his daughter/the defendant no.1. He argued that the defendants had taken the defence that the plaintiff-bank got his signatures on blank papers whereas in his cross-examination, he admitted that he had signed the Ex.P-9 after reading it. He argued that there is no denial to the averments made in the para no.3 of the plaint that the plaintiff-bank had sanctioned and disbursed an education loan of Rs.2,00,000/- to the defendant no.1 as per terms of the sanction letter dated 20.08.2001 Ex.P-1. He argued that the defendant no.2 had executed a continuing guarantee to discharge liability of the defendant no.1 to an amount not exceeding Rs.3,63,000/- and liability of the defendant no. 1/principal borrower and the defendant no.2/guarantor are joint and several.
34. Onus to prove the issue no.1 was upon the plaintiff-bank. The plaintiff-bank has examined Sh. R. K. Bali, Manager (PW-1) at Parliament Street Branch. Sh. R. P. Sharma (PW-2) was the Chief Suit No. 883/08 Page 17/28 Manager of the plaintiff-bank during the relevant period from 01.07.2001 to 16.05.2004. He has proved the loan documents, sanction letter dated 20.08.2001 Ex.P-1 and the letters Ex.P-5, Ex.P-6, Ex.PW-2/10, Ex.PW-2/11, Ex.PW-13 and Ex.PW-14 received from the defendant no.1 for issuance of demand drafts towards tuition fee and hostel fee to the college/institute. He had approved issuance of Demand Drafts to the college/institution as per request made by the defendant no.1 during 2001-2003. PW-1 proved the statement of account maintained by the plaintiff-bank in its ordinary and usual course of business duly certified by the competent authority Ex.P-18 wherein details of the demand drafts, date of disbursement and amount is mentioned. Ex.P-1 to Ex.P-6 are admitted documents.
35. In their written statement, the defendants have admitted that the defendant no.1 had applied for sanctioning education loan of Rs.3,63,000/-. Ex.P-2 is the loan application dated 07.08.2001. Admittedly, the defendants had signed loan documents in respect of loan of Rs.3,63,000/-. The defendants contended that their signatures on blank papers and the defendant no.2 signed the documents as an attesting witness. In his cross-examination, the defendant no.2 admitted that he had signed the document Ex.P-9 after reading it. The defendant no.2 admitted that he had stood as guarantor for his daughter/the defendant no.1 for the loan obtained by her from the plaintiff- bank. Hence, contention that the signatures of the defendants were obtained on blank papers and the defendant no.2 had signed as an attesting witness is rejected.
36. Contention that there is no application for sanctioning Suit No. 883/08 Page 18/28 education loan of Rs.2,00,000/- and further, there is no document signed by the defendants cannot be accepted. Ex.P-8 is the Agreement relating to Term Loan of Rs.3,63,000/- and Ex.P-9 is the Guarantee Agreement executed by the defendants on 11.08.2001. Ex.P-5 is the admitted document. The defendant no. 1 made a request for sanctioning of an amount of Rs.2,00,000/- instead of Rs.3,63,000/- already approved by the plaintiff-bank on the ground that she had been allotted a free seat in Ram Chameli Chadha Vishwas Girls College, Ghaziabad to study MCA during the re-counseling held on 14.08.2001 and further, undertaken to repay the sanctioned loan amount with interest in 60 installments w.e.f. employment. The plaintiff-bank had accepted the request of the defendant no.1 made vide Ex.P-5 and sanctioned a loan amount of Rs.2,00,000/-. The sanction letter dated 20.08.2001 is the admitted document. The defendants have admitted in their written statement that the plaintiff-bank had sanctioned an amount of Rs.2,00,000/-. The defendant no.2 has admitted in his cross-examination that he was intimated by the plaintiff-bank that the sanctioned amount was Rs.2,00,000/-. Further, the defendant no.2 duly acknowledged the said sanction letter Ex.P-1 vide his signatures thereon. The plaintiff-bank had sanctioned the said amount of Rs. 2,00,000/- vide Ex.P1 on the request of the defendant no.1 vide Ex.P-5. The loan application Ex.P-2 and the request for sanction of Rs.2,00,000/- are the applications for sanctioning education loan of Rs.2,00,000/-. The sanction letter contains the similar terms and condition for repayment of loan as contained in Ex.P-8 and Ex.P-9 rather it liberalized the repayment by increasing installments from 48 installments to 60 installments.
Suit No. 883/08 Page 19/2837. Contention that Ex.P-8 and Ex.P-9 cannot be considered as the said documents were signed for loan of Rs.3,63,000/- and not for Rs.2,00,000/- cannot be accepted. The defendant no.1 had made request for sanctioning of loan of Rs.2,00,000/- instead of Rs. 3,63,000/- was written in continuation of loan application dated 07.08.2001 Ex.P-2 in view of change of institution in re- counseling held on 14.08.2001. Agreement relating to Term Loan dated 11.08.2001 Ex.P-8 and Guarantee Agreement Ex.P-9 are legal and govern the loan in question. The defendant no.2 had given continuing guarantee vide Ex.P-9 to pay an amount not exceeding Rs.3,63,000/-. The sanctioned amount of Rs.2,00,000/- is within the limit of guarantee executed by the defendant no.2. The defendant no.2 admitted in his cross-examination that he was intimated by the plaintiff-bank that the sanctioned amount was Rs.2,00,000/-. He had received the sanction letter dated 20.08.2001 Ex.P-1 vide his signatures. He has been corresponding with the plaintiff-bank with regard to the loan in question. The defendant no.2 never disputed his status as a guarantor to his daughter/the defendant no.1 with regard to the loan amount of Rs.2,00,000/-. The defendant no.2 has admitted the receipt of letter dated 15.09.2006 Ex.P-11, 07.12.2006 Ex.P-13, 20.12.2006 Ex.P-14, 06.01.2007 Ex.PW-15 and 31.01.2007 Ex.P-15 but he never disputed that he was not the guarantor of the defendant no.1 in respect of sanctioned amount of Rs.2,00,000/- in his reply dated 20.12.2006 Ex.P-3 and 27.01.2007 Ex.P-4. Further, the defendant no.2 in his reply dated 27.01.2007 stated that he understands his responsibility very well as a guarantor. In his reply dated 01.11.2006 Ex.DW-1/2, the defendant no.2 mentioned himself as guarantor of the defendant no.1.
Suit No. 883/08 Page 20/2838. Moreover, in his Application for R.T.I. dated 09.02.2007 Ex.DW-1/DD, the defendant no.2 mentioned himself as guarantor. The defendant no.2 had given guarantee for an amount not exceeding Rs.3,63,000/- and hence, sanctioning of Rs. 2,00,000/- cannot be termed as variance in terms of contract. Moreover, the defendant no.1 has admitted that he was intimated by the plaintiff-bank regarding sanctioning of Rs. 2,00,000/- and he had received the sanction letter dated 20.08.2001 and corresponding with the plaintiff-bank as a guarantor of the defendant no.1. From the material on record, it can be held that the defendant no.2 had consented the sanctioning of Rs.2,00,000/- and repayment thereof in 60 installments instead of 48 installments originally agreed. The documents Ex.P-8 and Ex.P-9 are the documents governing the loan in question. The defendant is jointly and severally liable for repayment of the loan amount together with interest.
39. Contention that the plaintiff-bank never disbursed any loan amount to the defendants and not given details of disbursement and further, that no document regarding disbursal of the released amount to the institution and delivery of demand drafts to the defendants, cannot be accepted. The defendants have not disputed that the disbursal of loan amount to the defendant no.1 either in the in the written statement or the correspondence with the plaintiff-bank. Further, the defendants in the para no.13 of the reply on merits of the written statement stated that they had approached the plaintiff-bank for finalization of the accounts but the plaintiff-bank had been avoiding settlement with the defendants. The case of the defendants in the written statement Suit No. 883/08 Page 21/28 was that plaintiff-bank had not disclosed mode of determination of the amount demanded and rate of interest charged on such loan.
40. The defendant no.2 in his reply dated 20.12.2006 Ex.P-3 stated that the beneficiary had been working there on a project only and not as a regular employee and he had bee waiting for her return to inform the bank accordingly and further, in his reply dated 27.01.2007 Ex.P-4 stated that he understands his responsibility very well being a guarantor and till the defendant no.1 returns, it is not possible to repay the loan. It is evident that the defendant no.2 was corresponding with the plaintiff-bank being a guarantor and addressing the defendant no.1 as beneficiary and further, assuring to repay the loan on return of the defendant no.1. More so, the defendant no.2 in reply dated 01.11.2006 Ex.DW-1/2 acknowledged the letter dated 03.10.2006 Ex.P-12 and sought corrected version of duly signed statement and further, that the issue could be finally settled on return of the beneficiary.
41. In so far as contention that there is no document regarding disbursal of loan amount is concerned, it can be noted that Ex.P-5 is the admitted document. The defendant no.1 vide Ex.P-5 dated 17.08.2001 had requested for issuance of two Demand Drafts each for Rs.32,000/- and 20,200/- in favour of Ram Chameli Chadha Vishwas Girls College, Ghaziabad towards fee including boarding and lodging charges by 21.08.2001. The plaintiff-bank released the said amount vide two Demand Drafts on 20.08.2001. This letter also contained request for sanctioning of Rs.2,00,000/- instead of Rs.3,63,000/-. The plaintiff-bank had Suit No. 883/08 Page 22/28 sanctioned the said amount vide Ex.P-1 which was received by the defendant no.2. Ex.P-6 is the admitted document. Ex.P-6 is the letter dated 08.06.2002 whereby the defendant no.1 had requested for grant of an amount of Rs. 32,000/- to be deposited with M/s Graphic Era Institute of Technology, Dehradun for the year 2002-03.
42. The plaintiff-bank had released the said amount of Rs. 32,000/- vide Demand Draft on 10.06.2002. The defendant no.1 vide letter dated 25.06.2002 Ex.PW-2/10 acknowledged receipt of the demand draft dated 10.06.2002 for Rs.32,000/- and further, requested for issuance of a demand draft of Rs.30,000/- in favour of the said institute. Vide letter dated 30.12.2002 Ex.PW-2/11, the defendant no.1 had invited attention of the plaintiff-bank to return of the said demand draft vide letter dated 09.07.2002 and further, requested for issuance of two Demand Drafts each for Rs.16,000/- and Rs.14,000/- in favour of M/s Graphic Era Educational Society towards tuition fee and hostel fee for the year 2002-03. The plaintiff-bank released the said demand drafts of Rs.16,000/- and Rs.14,000/- in favour of the said institute on 02.01.2003. Vide letter dated 03.06.2003 Ex.PW-2/14, the defendant no.1 had requested the plaintiff-bank for issuance of two demand drafts each for Rs.16,000/- in favour of M/s Graphic Era Educational Society towards tuition fee for the academic year 2003-04 vide demand Ex.PW-2/12. The plaintiff-bank had issued the said demand drafts on 07.06.2003. The said demand drafts were received by the defendant no.2 on 07.06.2003. The defendant no.1 vide letter dated 23.12.2003 Ex.PW-2/13 had requested the plaintiff-bank for issuance of a demand draft of Rs. 16,000/- in favour of M/s Graphic Era Educational Society as Suit No. 883/08 Page 23/28 tuition fee for the academic year 2003-04 vide demand Ex.PW-2/15. The said amount of Rs. 16,000/- was released vide demand draft in favour of the said society on 24.12.2003. PW-2 was the Chief Manager of the plaintiff-bank at the relevant time and he had sanctioned the release of the said amount. It is evident that the defendant no.1 and 2 had received the demand drafts released by the Bank.
43. PW-1 proved the statement of account maintained by the plaintiff-bank in respect of loan account of the defendant no.1. Ex.P-18. The disbursements made by the plaintiff-bank on 20.08.2001, 10.06.2002, 02.01.2003, 07.06.2003 and 24.12.2003. Further, the defendant no.1/principal borrower has not appeared in the evidence to prove the contrary. The defendant no.2 cannot depose on behalf of the defendant no.1. The defendants have not led any evidence to prove that the amount released by the plaintiff-bank was not credited to the college/institution towards the tuition fee/hostel fee of the defendant no.1 for MCA course from 2001-03.
44. So far as contention that the plaintiff-bank had not released the amount to the college/institute for which it was applied is concerned, it can be stated that the defendants instead of feeling obliged to the bank for adopting an enabling approach rather hyper technical approach have found fault in it. The plaintiff-bank processed the request of the defendant no.1 promptly and guided by the spirit of the purpose of education loan rather than letter.
45. So far as contention that the scheme Ex.PW-1/DA provides that the bank shall not insist for security in case of education Suit No. 883/08 Page 24/28 loan up to Rs. 4,00,000/- is concerned, it can be stated that there is no bar that the bank shall not ask for any security or guarantee to secure repayment of the loan amount.
46. So far as contention that the suit is barred by limitation is concerned, it can be noted that the loan amount was repayable after six months from getting the job or one year after completion of the course Ex.PW-1/DA. The defendants have not stated as to when the defendant no.1 completed her MCA course and got job.
47. The course duration was three years vide Ex.P-2. The plaintiff-bank made last payment of Rs. 16,000/- to the institute for the academic year 2003-04 on 24.12.2003. According to Ex.P-3 dated 20.12.2006, letter dated 01.11.2006 Ex.DW-1/2 and Ex.P-4 27.01.2007, the defendant no.1 was working on a project in U.K. From this, it can be inferred that the defendant no.1 had completed MCA course in September, 2004 and got a job and therefore, the installments became due since April, 2005. The present suit filed on 15.02.2007 is within period of limitation.
48. In view of the aforesaid discussion, the plaintiff-bank has been able to discharge the onus in respect of issue no.2. The plaintiff-bank is entitled to recover the loan amount of Rs. 1,62,200/- from the defendants.
49. Accordingly, issue no.2 is decided in favour of the plaintiff- bank and against the defendants.
ISSUE NO.3:
50. Ld. Counsel for the defendants argued that the plaintiff-
Suit No. 883/08 Page 25/28bank has charged quarterly compound interest contrary to scheme for education loan Ex.PW-1/DA. He argued that the Scheme Ex.PW-1/DA provides for simple interest during the moratorium period. He argued that the plaintiff-bank did not disclose the rate of interest charged and mode of determination of the liablity of the defendants. He argued that the defendants had applied for education loan and therefore, no interest would be charged or in the alternative, not more than simple interest 6% per annum. He argued that the plaintiff-bank has charged interest at higher rate than the rate of interest directed to be applied by R.B.I. Scheme.
51. In so far as contention of Ld. counsel for the defendants that the plaintiff bank has charged compound interest instead of simple interest is concerned, it can be noted that the scheme for education loan for study dated 29.05.2001 Ex. PW-1/DA provides at sl. no.6 that upto Rs. 4 Lakh interest will be charged on Prime Lending Rates (PLR) and further, interest to be debited quarterly/half yearly on simple basis during the repayment holiday/Moratorium period. PW-1 has admitted in his cross- examination that the plaintiff bank is entitled to charge PLR (12%) simple interest for education loan upto Rs.4,00,000/- as per circular dated 29.05.2001 Ex-PW-1/DA. PW-1 further admitted that no penal interest or compound interest to be charged in such cases. In the present case, the plaintiff bank has charged interest as 12% per annum quarterly compounding. PW-1 admitted that an amount of Rs. 77,568/- mentioned in the letter dated 18.07.2006 had become Rs. 89,264/- in the letter dated 15.09.2006 on the basis of compound interest. It is evident that the plaintiff bank charged compound interest with quarterly rests Suit No. 883/08 Page 26/28 instead of simple interest on the loan amount during the Moratorium period.
52. Accordingly, the plaintiff bank is entitled to claim simple interest @ 12% per annum on the loan amount during the Moratorium period from 20.08.2001 to 31.03.2005. The interest charged on the actual loan amount on quarterly basis will be added to the principal but further, interest will be serviced on the actual loan amount due amount and not on the principal amount containing interest component. Charging of interest on the principal amount having interest component will be compounding the interest which is not permissible under the scheme dated 29.05.2001 Ex-PW-1/DA.
53. The plaintiff bank will be entitled to interest @12% per annum on the principal amount due as on 31.03.2005 w.e.f. 01.04.2005 to 15.02.2007.
54. Keeping in view the fact that the loan was advanced for education purposes, the plaintiff bank will be entitled to pendente lite and future interest @ 9% per annum on the decreetal amount.
55. Issue No.3 is decided accordingly.
RELIEF:
56. In view of findings on the issue no.1 to 3, the suit of the plaintiff-bank against the defendant no.1 & 2 is decreed as under:
A Rs. 1,62,200/- together with simple interest @ 12% per annum on the amount disbursed during the period from Suit No. 883/08 Page 27/28 20.08.2001 to 31.03.2005.
B The plaintiff bank will be entitled to interest @12% per annum on the principal amount due as on 31.03.2005 w.e.f. April, 2005 to 15.02.2007.
C (A+B) Decreetal amount D The plaintiff bank will be entitled to pendente lite and
future interest @ 9% per annum on the decreetal amount.
57. The plaintiff-bank shall be entitled to the costs of the suit.
58. Decree sheet be prepared accordingly.
59. File be consigned to Record Room.
Announced in the open court today the 30th September, 2010 (SANJAY SHARMA) JSCC-cum-ASCJ-cum Guardian Judge (West), Delhi 30.09.2010 Suit No. 883/08 Page 28/28