Delhi District Court
Punjab National Bank vs Rekha Jain And Ors (Lrs Of Sh. Surender ... on 4 July, 2024
In the Court of Shri Ashutosh Kumar, District Judge (Commercial
Court)-01, Tis Hazari Courts, West District, Delhi
CS (COMM.) No. 726/2022
CNR No. DLWT01-008691-2022
In the matter of :-
Punjab National Bank
Branch office situated at
At B-15, Shubham Enclave,
Paschim Vihar, New Delhi-110063
...Plaintiff
VERSUS
1. Ms. Rekha Jain
W/o late Sh. Surender Jain
H.No. A-3/61, Second Floor,
Sector-3, Rohini, New Delhi-110085
2. Sh. Vivek Jain
S/o late Sh. Surender Jain
H.No. A-3/61, Second Floor,
Sector-3, Rohini, New Delhi-110085
3. Ms. Kelashwati Jain
Mother of late Sh. Surender Jain
H.No. A-3/61, Second Floor,
Sector-3, Rohini, New Delhi-110085
...Defendants
Date of Institution s: 06.09.2022
Date of hearing of arguments : 03.07.2024
Date of decision : 04.07.2024
CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 1 of 14
Ld. Counsel for plaintiff - Sh. Saurav Bhasin
Defendants are ex-parte.
JUDGMENT
1. This is a suit for recovery of Rs. 10,44,838/- along with pendente lite and future interest @ 9.85% per annum along with penal interest @ 2% & other charges, filed by the plaintiff against the defendants, for outstanding loan amount.
2. It is pertinent to mention here that initially, the plaintiff bank had filed the present suit against M/s. V.M. Plastics, whose proprietor Surender Jain had passed away, and also against Ms. Rekha Jain (wife of Surender Jain), Vivek Jain (son of Surender Jain) and Kelashwati Jain (mother of Surender Jain), who are the LRs of said Surender Jain.
3. In this backdrop, stated briefly, the case of the plaintiff is that it is a body corporate constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970, having its head/corporate office at Plot No. 4, Sector-10, Dwarka, New Delhi- 110075 and branches amongst other places i.e. at B-15, Shubham Enclave, Paschim Vihar, New Delhi-110063.
4. It is further the case of the plaintiff that Rajendra Prasad Singh, Senior Manager of the Plaintiff Bank, posted at the aforesaid branch at Paschim Vihar, was a duly constituted attorney of the plaintiff bank and CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 2 of 14 was competent to sign & verify the pleadings and do needful on behalf of the plaintiff bank vide general power of attorney.
5. It is further the claim of the plaintiff that Sh. Surender Jain (since deceased), the Proprietor of M/s. V.S. Plastics, had availed a Cash Credit Loan for the amount of Rs. 8,00,000/- (Rupees Eight Lakhs only) from the plaintiff bank in the name of his proprietorship firm, qua which a loan application had been submitted by him on 26.10.2018 and he had also submitted a GST registration certificate in his legal name and the trade name of M/s. V.S. Plastics. It is further the case of the plaintiff that after the submission of loan application by Sh. Surender Jain (since deceased), it conducted the preliminary enquiries and after being satisfied on the basis of the assurance given by Sh. Surender Jain (since deceased) and as to the genuineness of loan requirement, the plaintiff bank processed the loan and sanctioned the cash credit loan facility for a sum of Rs. 8,00,000/- on 02.11.2018 in favour of Sh. Surender Jain (since deceased), being the proprietor of M/s. V.S. Plastics. It is further the claim of the plaintiff that Sh. Surender Jain (since deceased), being the proprietor of M/s. V.S. Plastics had submitted a sole proprietorship letter along with an affidavit to the plaintiff bank. It is further the case of the plaintiff that in respect of the C.C. loan facility, Sh. Surender Jain (since deceased) had executed the following loaning and security documents:-
CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 3 of 14Facility Document Amount/Limit Rate of interest as (rupees) per documents Cash i) Agreement of 8,00,000/- 11% Credit Hypothecation of Loan Assets dated 03.11.2018 ii.Common Agreement dated 03.11.2018
6. It is further claimed by the plaintiff that Sh. Surender Jain (since deceased), proprietor of M/s. V.N. Plastics (erstwhile defendant) executed a balance and security confirmation letter dated 30.09.2019, thereby confirming/acknowledging and admitting the liability. It is further the case of the plaintiff that defendants (LRs of late Surender Jain) informed the plaintiff bank that Sh. Surender Jain, proprietor of M/s. V.S. Plastics, had passed away and had assured the plaintiff bank that the loan amount would be cleared. However, despite this, they evaded the liability and did not pay the outstanding amount.
7. It is further the case of the plaintiff that when no payment was received from the defendants, the cash credit loan account bearing no. 51354011000134 of M/s. V.M. Plastics was classified as NPA on 31.03.2020 as per RBI guidelines and a legal notice dated 12.02.2022 was issued upon the defendants, stating that the loan facility granted had been recalled due to the reasons mentioned in the said notice.
8. It is further the claim of the plaintiff that statement of the CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 4 of 14 loan account, showing the amount due to the plaintiff bank till 25.08.2022, is Rs. 10,44,838/- and the same includes the memoranda dues calculated upto 25.08.2022. It is further the claim of the plaintiff that memoranda dues includes principal outstanding amount of Rs. 7,99,830.59/-, interest amount of Rs. 2,21,534/- and other charges of Rs. 23,473.60/-, thereby the total amount due to the plaintiff bank by the defendants as on 25.08.2022.
9. It is further the claim of the plaintiff bank that the present suit has been filed within the period of limitation as the balance and security confirmation letter had been executed by Sh. Surender Jain (since deceased) on 30.09.2019. The Ld. Counsel for the plaintiff had claimed that since the aforementioned balance and security confirmation letter (qua the liability in respect of the loan) was executed by Surender Jain (since deceased) on 30.09.2019, i.e. within 03 years of the sanction of the said cash credit loan facility on 02.11.2018, hence the limitation of 03 years for filing the suit, has to be counted from 30.09.2019 and since the suit was filed on 06.09.2022 (i.e. within 03 years of the said balance and security confirmation letter), hence the suit of the plaintiff is within limitation. He has further submitted that the present suit is a commercial suit as per Section 2 (1) (c) (i) of The Commercial Courts Act, 2015 since the loan for business purpose was sanctioned by the plaintiff bank. Ld. Counsel for the plaintiff has further argued that CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 5 of 14 the suit falls within the territorial jurisdiction of this Court as the borrower had availed the loan facility from Shubham Enclave Branch, Paschim Vihar, New Delhi, the loan documents were executed at the said branch, the account of the borrower was also maintained at the said branch and part payments during the tenure of the loan were also made at the said branch, which is situated within the territorial jurisdiction of this Court, and as such this Court has jurisdiction to entertain this present matter. I find force in the said arguments of Ld. Counsel for the plaintiff.
10. It is further the claim of the plaintiff that the defendants did not participate in the mediation proceedings before West District Legal Services Authority and as such, a Non-Starter Report dated 27.05.2022 was issued by the concerned authority.
11. The plaintiff has prayed for passing a decree in favour of the plaintiff and against the defendants for a sum of Rs. 10,44,838/- (being the recoverable amount of the Cash Credit Loan Facility), along with pendente lite and future interest thereon @ 9.85% per annum and penal interest @ 2% per annum and other charges from the date of filing of the suit till realization of the said amount to the plaintiff bank, with costs of the suit.
12. On 19.09.2022, an application u/s 151 CPC for bringing on record the authorized representative (AR) namely Rajendra Prasad Singh CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 6 of 14 and a fresh plaint along with an affidavit and statement of truth was filed on behalf of the plaintiff bank, which was allowed vide order dated 19.09.2022 itself, and the fresh plaint was taken on record.
13. On 30.01.2023, an application u/s 151 CPC for deleting the erstwhile defendant no. 1 M/s. V. S. Plastics was moved by the plaintiff on the ground that the original proprietor Surender Jain had passed away and that the remaining defendants were the LRs of said deceased erstwhile defendant. The said application was allowed. On 10.04.2023, the amended memo of parties was filed in terms of order dated 30.01.2023.
14. On 17.07.2023, an application u/s 151 CPC was moved on behalf of the plaintiff bank for substitution of authorized representative (AR). The said application was allowed and Ajay Puri was substituted as new AR, in place of earlier AR Rajendra Prasad Singh. Another application under Order 5 Rule 20 CPC for substituted service of defendants through publication was also allowed.
15. The defendants i.e. LRs of Surender Jain (as per amened memo of parties filed on 10.04.2023) were served through publication in English daily newspaper "The Sunday Statesman" and Hindi daily newspaper "Dainik Jagran", both Delhi Editions, dated 24.09.2023 and 28.10.2023 respectively. However despite their deemed service, neither did anyone appear on behalf of the defendants, nor was any WS filed on CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 7 of 14 their behalf (even after the expiry of extended period of 120 days from the date of service of the defendants). Therefore, the defendants were proceeded ex-parte vide order dated 07.02.2024.
16. On 19.02.2024, an application for substitution of Sh. Gagandeep Singh as new AR of the plaintiff bank was moved, which was allowed vide order dated 04.03.2024 and said Gagandeep Singh was substituted as new AR of the plaintiff bank.
17. To prove its case, the plaintiff Bank examined PW-1 Sh. Gagandeep Singh, its new AR. Vide his affidavit of evidence Ex. PW- 1/A, he deposed on the lines of plaint and proved the following documents:
(a) Copy of Power of Attorney dated 11-09-2023 in his favour, is Ex. PW-1/1 (OS&R);
(b) Copy of Application Form dated 26-10-2018 is, Ex. PW-1/2 (OS&R);
(c) Self Attested copy of GST Registration Certificate by Late Sh Surender Jain, Proprietor of M/s. VS Plastics, is Ex. PW-1/3 (OS&R)
(d) Copy of the sanction dated 2-11-2018, is Ex. PW-1/4 (OS&R),
(e) Copies of sole proprietorship letter alongwith affidavit, is Ex. PW-1/5 (Colly & OS&R)
(f) Copy of agreement of Hypothecation of Assets dated 3-11-2018, is Ex. PW-1/6 (OS&R);
(g) Copy of common agreement dated 03-11-2018, is Ex. PW-1/7 (OS&R);
(h) Copy of balance and security confirmation letter dated 30-09-2019, is Ex. PW-
1/8 (OS&R) CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 8 of 14
(i) Copy of Legal Notice dated 12-02-2022 alongwith postal receipts, is Ex. PW-1/9;
(j) True copy of account statement alongwith memoranda dues till 25-08-2022, is Ex. PW-1/10 ;
(k) Certificate under section 2A of Bankers Book Act and under section 65 B of Indian Evidence Act is Ex. PW-1/11 and
(l) Non-starter report dated 27-05-2022, is Ex. PW-1/12.
18. The cross-examination of PW1 was recorded as nil since none was present on behalf of the defendants to cross-examine the said witness, and the defendants were ex-parte.
19. The plaintiff bank had chosen not to examine any other witnesses and closed its ex-parte evidence vide a statement of its AR, recorded separately to that effect on 04.03.2024.
20. I have heard the Ld. Counsel for the plaintiff and perused the material available on record.
21. During course of arguments, it was argued by Ld. Counsel for the plaintiff that the present suit had been filed by the plaintiff bank against the three LRs of Surender Jain (since deceased), proprietor of M/s. V.S. Plastics (the borrower), who had passed away. He further argued that even if the aforesaid borrower had passed away, the present suit is maintainable against his 03 LRs, who are the defendants herein, and the decree can be passed against the said LRs/defendants in view of the judgment of Hon'ble High Court of Delhi in the case of Sanjeev Jain Vs Rajni Dhingra & Ors, CS (OS) 378/2018 & I.A. 16982/2018, CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 9 of 14 dated 19.12.2018, wherein it was held in para nos. 13 and 15 as under:-
13. The relevant paras of Bank of India (supra) are set out herein below:
"7. Order XXXVII does not exclude from its purview a suit where the heirs and legal representatives of a deceased are party defendants. Nor is there any protection under the Civil Procedure Code to the heirs and legal representatives of a deceased defendant from a decree being passed against them, provided of course, that the right to sue them survives. The protection which Section 52 of the Civil Procedure Code gives to the heirs and legal representatives of a defendant is a protection against the enforcement of a decree against them in execution. Under Section 52, where a decree is passed against a party as the legal representative of a deceased person and the decree is for the payment of money out of the property of the deceased, it may be executed by the attachment and sale of such property. The decree can be executed to the extent of the property of the deceased in his hands. This is a protection which is granted at the stage of execution. Hence even in a case where a decree is passed against such an heir or legal representative under Order XXXVII of the Civil Procedure Code, the decree can be executed only to the extent of the estate of the deceased coming to his hands. The apprehension of the learned judge in the case of Rajesh Steel Centre (supra) is, therefore, unfounded.
8. In the case of Lallu Bhagvan v. Tribjuvan Motiram (1889) I.L.R. 13 Bom. 633 (D.B.), a Division Bench of this Court held that the decree against the legal representatives of a deceased debtor can be passed even if they have not inherited any property. If they have not inherited any property, the only result is that the decree can not be executed against them. This is a matter to be decided at the stage of execution. It does not affect the right of a court to pass a decree. This decision has been CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 10 of 14 followed in the case of Ranjitsingh v. Narmadi (1931) A.I.R. Nagpur 173 where it is held that where an heir of a debtor is sued it is not open to him to raise the plea in course of the suit that he does not hold the assets of the deceased debtor.
The plea is confined to execution only.
9. In our view, therefore, the difficulty expressed by the learned single Judge in the case of Rajesh Steel Centre v. Rashmi K. Agarwal (supra) is misconceived. A summary Suit can be filed against an heir and legal representative of a deceased defendant and the provisions of Order XXXVII apply in full to such a suit also. The decree however, can be executed only to the extent of the estate of the deceased in the hands of the judgment debtor. We therefore agree with Variava J. that the summons for Judgment against the heirs of defendant No.3 is maintainable."
15. Thus, the above judgments are conclusive as to the maintainability of the present suit against the LRs of Late Mr. Virendra Dhingra. This Court however, is not going into the issue as to whether the said LRs in fact came into possession of any assets of Mr. Dhingra, or if the decree which may be passed in the present suit is executable against Mr. Dhingra's assets and if so, against which of the assets. This is not an issue that has been raised in the present suit."
22. I find force in the aforesaid arguments of Ld. Counsel for the plaintiff, in view of the said judgment of Hon'ble High Court of Delhi relied upon by him.
23. Now, I proceed with the merits of the case.
24. Vide Ex. PW-1/1, PW-1 has been able to substantiate that CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 11 of 14 he is the Authorized Officer / Constituted Attorney of the plaintiff Bank, who was authorized to sign and verify the pleadings, do the needful on behalf of the plaintiff bank, was competent to depose the facts on behalf of the Plaintiff Bank and further was fully conversant with the facts of the case as per the information received and derived from the record and books of the Plaintiff Bank, maintained by the Plaintiff Bank in its regular course of business/activity and thus was competent to depose and verify the facts.
25. From the testimony of PW1, the plaintiff has proved and established on record that Surender Jain (since deceased), was the proprietor of the erstwhile defendant M/s. V.S. Plastics, which is also evident from the GST registration certificate (Form GST REG-06) Ex. PW1/3. Surender Jain (since deceased) also filed a Loan Application Form dated 26.10.2018, Ex. PW1/2, with the erstwhile Oriental Bank of Commerce (Vide Gazette Notification No 133 dated 04.03.2020 of the Government of India, Oriental Bank of Commerce was amalgamated with Punjab National Bank under Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, judicial note of which has been taken by this Court) under PMMY Loan scheme. As per the document Ex.PW-1/4 proved on record, the said V.S. Plastics (Borrower) was sanctioned CC-Working Capital (Cash Credit) facility of Rs. 8,00,000/- (Rupees Eight Lakhs only) under PMMY scheme. It has CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 12 of 14 been further proved by PW1 that Surender Jain (since deceased) had furnished a sole proprietorship letter along with affidavit Ex. PW1/5 (colly) and had also executed an agreement of hypothecation of assets dated 03.11.2018 Ex. PW1/6, a common agreement dated 03.11.2018 Ex. PW1/7 and a balance and security confirmation letter dated 30.09.2019 Ex. PW1/8, thereby confirming/acknowledging and admitting the liability. From the testimony of PW1, it stands proved on record that the account bearing no. 51354011000134 of the said borrower maintained with plaintiff bank, was declared NPA on 31.03.2020. As per the true copy of the statement of account along with memoranda dues till 25.08.2022 Ex. PW-1/10, there was outstanding principal amount of Rs 7,99,830.59/- as on 17.03.2020 in the loan account bearing no. 51354011000134, which document stands duly proved from the testimony of PW-1, as the statement of account is duly certified under 2A of Banker's Book Evidence Act & u/s 65B of Indian Evidence Act Ex. PW-1/11. Furthermore, a legal notice dated 12.02.2022 Ex. PW1/9 was sent by the plaintiff bank to the defendants at their last known address vide registered posts, copies of registered postal receipts of which are part of Ex. PW1/9. Therefore, presumption has to be drawn as per section 27 of the General Clauses Act, 1897 and section 114 of Indian Evidence Act, 1872 that the said notice was duly served upon the defendants. The defendants neither replied to the said legal CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 13 of 14 notice of demand, nor made any payment to the plaintiff and therefore adverse inference has to be drawn against the defendants.
26. Perusal of the file reveals that the pre-litigation mediation held in the matter was a non-starter as the defendants did not appear before DLSA, West District and finally the non-starter report dated 27.05.2022 Ex. PW1/12 was issued.
27. The case of the plaintiff has remained uncontroverted, unrebutted and unchallenged. On the basis of pleadings, evidence led and the documents exhibited, plaintiff has discharged the onus of proving that defendants are jointly and severally liable to pay the outstanding principal amount of Rs. 7,99,830.59/- as on 17.03.2020, being the LRs of borrower Surender Jain (since deceased), proprietor of M/s. V.S. Plastics. Accordingly, the suit is decreed in favour of the plaintiff and against the defendants for a sum of Rs. 7,99,830.59/- along with interest @ 9.85% per annum from 17.03.2020 till actual recovery, alongwith costs of the suit.
Decree sheet be prepared accordingly.
File be consigned to record room.
(Announced in the open Court) on 04.07.2024. (Ashutosh Kumar) District Judge (Commercial Court)-01 West, Tis Hazari Courts, Delhi CS No. 726/2022 Punjab National Bank Vs Rekha Jain & Ors. Page 14 of 14