Bangalore District Court
Karnataka State Industrial & vs M/S.Nanjundeshwara on 15 June, 2016
IN THE COURT OF XL. ADDL.CITY CIVIL&
SESSIONS JUDGE (CCH-41) AT BENGALURU.
Dated this the 15th day of June 2016.
PRESENT
SRI.JINARALAKAR. B.L.
B.A.,LL.B. (Spl.)
XL Addl. City Civil & Sessions Judge, Bengaluru.
OS.NO.2429 / 2010
Plaintiff : KARNATAKA STATE INDUSTRIAL &
INFRASTRUCTURE DEVELOPMENT
CORPORATION LIMITED,
Khanija Bhavan, No.49, 4th Floor,
East Wing, Race Course Road,
Bengaluru-560 001,
Represented by its duly Constituted
Attorney-
R.Ramachandraiah,
Aged about 58 years,
S/o. Late H.Rangappa,
Deputy General Manager (Zone-I, II
& A), Karnataka State Industrial &
Infrastructure Development.
Corporation Limited.
(By Sri.B.N.JAYADEVA, Advocate.)
AND:
Defendants: 1. M/S.NANJUNDESHWARA
CONVENTION CENTRE,
Sy.No.94, Chandapura Post,
Next to K.E.B., Anekal Road,
Anekal Taluk, Bengaluru District,
Pin.562 145.
2 O.S.2429/2010
A registered partnership firm,
Represented by the Managing
Partner-
Sri.C.N.Shantha Kumar,
Major, S/o. Sri.N.Narayana Reddy,
And also at No.201, Old Chandapura
Hosur Main Road,
Anekal Taluk, Bengaluru-562 145.
2. SHRI.C.N.SHANTHAKUMAR,
Major, S/o. Sri.N.Narayana Reddy,
3. SHRI.N.NARAYANA REDDY,
Major, S/o. Late Sri.Nanja Reddy,
Both are residing at No.201, Old
Chandapura, Anekal Taluk, Bengaluru
District, Pin: 562 145.
(Defendants 2 and 3 are partners of
defendant No.1).
4. H.JANARDHAN RAO,
(Since deceased) represented by his
LRs.-
a) SMT.M.GURUDEVAMMA,
Major, W/o. Late H.Janardhan Rao.
b) SRI.H.H.DEEPAK,
Major, S/o. Late H.Janardhan Rao.
c) MS.H.KRITHIKA,
Aged about 14 years,
D/o. Late H.Janardhan Rao.
Defendants No.4(a) to (c) residing at
C/o. Shri.M.Shankara Rao, No.332,
"Guru Padma", 1st Main, 1st Cross,
3 O.S.2429/2010
Annapurneshwari Layout,
Chunchanagatta, Bengaluru-560 062.
And also at:
"Swagatham", No.15, Coconut
Garden, Old Bank Colony,
Konanakunte, Bengaluru-560 062.
(D1-By Sri.N.Suresh, Advocate.)
(D2, 3- In person.
(D4(a) to (c)- By Sri.C.V.Giddappa,
Advocate.)
***
) Date of Institution of the
suit. 07.04.2010
ii) Nature of the suit. Declaration & Mandatory
Injunction.
iii) Date of the
commencement of 09.03.2012
recording of evidence.
iv) Date on which the
judgment was pronounced. 15.06.2016
v) Total Duration Year/s Month/s Days
06 02 18
***
JUDGMENT
The plaintiff Corporation has filed this suit against the defendants for declaration to declare that loan closure letter issued by the plaintiff bearing 4 O.S.2429/2010 No.AGM(L)/NCC/1795/2007-08 dated 11.09.2007 as void, inoperative and direct the defendants No.1 to 3 to deliver the same for cancellation, to hold that the defendants No.1 to 3 are due the following sum of Rupees as on 20.01.2010;
(In Rupees)
Account No. Principal Interest Total
78501 61,75,000 4,95,02,760 5,56,77,760
78502 27,00,000 75,04,163 1,02,04,163
78503 23,12,000 1,27,65,779 1,50,77,779
78504 4,05,049 22,36,485 26,41,534
TOTAL 8,36,01,236
for a decree for sale of mortgaged schedule 'A' property -All that piece and parcel of the property in Sy.No.94, Chandapura, Anekal Taluk, Bengaluru District, measuring 36-guntas together with the buildings and other structures standing thereon bounded on East by: Land of Sri.Venkataswamy Reddy, West by: Road, North by: KEB property and South by: Land of Sri.Muniyellappa and schedule 'B' property- All that piece and parcel of house property bearing House List No.4, Khata No.233, Bommanahalli Village, Begur Hobli, Bengaluru South Taluk, 5 O.S.2429/2010 measuring East to West 21 feet and North to South 61 feet, together with building consists of ground floor and first floor and structures standing thereon and in the name of C.N.Shantha Kumar and bounded on East by: Property No.3 of Sri.Krishna Reddy, West by: Property of Sri.Muni Reddy and Sri.Narayana Reddy, North by: 20 feet wide road and South by: Private property, in potent to satisfaction of the decree against the defendants no.1 to 3 personally and for a decree against the L.Rs., of defendant No.4 being defendants No.4(a) to (c) for Rs.8,36,01,236/- due as on 20.01.2010 with future interest at 22% p.a. from 21.1.2010 till realization being the amount of fraud, which the 4th defendant had deliberately caused to the plaintiff and costs, etc. .2. The averments of the plaint in brief are that:
The plaintiff is a Public Limited Company incorporated under the provisions of the Indian Companies Act, 1956 and is represented by its duly constituted Attorney, who has been authorized to sign and verify the 6 O.S.2429/2010 pleadings and to prosecute the case by virtue of the Resolution dated 28.11.1997. The plaintiff is a financial Institution established by the State Government whose objects are financing of the industrial concerns. The Central Government by virtue of powers conferred by Sub- Section(1) of Section 46 of the State Financial Corporation Act, has made applicable, the provisions contained in Sec.29, 30, 31 and 32 of the State Financial Corporation Act, 1951 to the plaintiff by publishing in the Gazette of India on 27th December 1986 bearing No.PAUSA-6, 1908. Further the Government of India has issued another Notification dated 24.11.2006 making applicable the Sections 27, 32(a) to 32(g), 41, 42, 43(a) and 44 of the State Financial Corporation Act, 1951 to the plaintiff. By virtue of the said Notifications Sec.29 to 32 and Sections 27, 32(a) to 32(g), 41, 42, 43(a) and 44 of the State Financial Corporation Act have been made applicable to the plaintiff and the plaintiff is empowered to exercise the powers conferred under the aforesaid provisions of the State Financial Corporation Act.7 O.S.2429/2010
The 1st defendant is a partnership firm and defendants No.2 and 3 are its partners and are liable jointly and severally for the acts and debts of the firm. The defendant No.4(a) to (c) are the Legal Representatives of late H.Janardhana Rao, who was working in the Finance Section of the plaintiff, since he is liable for the suit claim by his acts and negligence and connivance in performance of his official duties and has caused financial loss by such acts of negligence. As he died on 13.04.2009, his LRs have been made party to the suit as they will be liable to the extent of devolution of the estate and are necessary parties.
The 1st defendant is a partnership firm and the defendants No.2 and 3 being its partners sought for financial assistance for setting up convention centre called "Nanjundeshwara Convention Centre" at Sy.No.94 measuring 36-guntas situated at Hosur Main Road, Chandapura, Anekal Taluk, Bengaluru. Considering the 8 O.S.2429/2010 request of defendants No.1 to 3, the plaintiff has sanctioned first term loan of Rs.90.00 lakhs subject to the terms and conditions stipulated in the sanction letter dated 08.01.1997 and 10.01.1997. As per the terms and conditions of the said sanction, the 1st defendant represented by its partners have executed Loan Agreement, Hypothecation Deed, Guarantee Deed executed by the defendants No.2 and 3, Surety Agreement by the 2nd defendant offering his schedule 'B' property as collateral security, Special Power of Attorney dated 10.03.1997, Confirmation Letter, Deed of Declaration dated 06.03.1997 and Net Worth undertaking on 10.03.1997. Apart from the same, the 1st defendant has also offered its schedule 'A' property as collateral security by way of equitable mortgage by deposit of title deeds of the said property. The 2nd defendant also offered schedule 'B' property as collateral security by way of equitable mortgage by deposit of title deeds of said property. To evidence the factum of creation of mortgage, the memorandum of entry recorded by Sri.A.V.Patel, the then 9 O.S.2429/2010 DGM (Legal) of the plaintiff. After executing all necessary documents, the plaintiff has disbursed the entire loan amount to the 1st defendant as indicated in the statement of account. As per the terms and conditions incorporated in the loan Agreement, the defendants No.1 to 3 have undertaken to repay the said loan amount in 20 quarterly installments with a moratorium period of 21 months from the date of first drawal of the loan with an applicable rate of interest at 19.5% p.a. and in case of default at 22% p.a. compounded quarterly.
The 1st defendant again approached the plaintiff for additional term loan. Considering the request of the defendants No.1 to 3, the plaintiff has sanctioned additional second term loan of Rs.30.00 lakhs subject to the terms and conditions stipulated in the sanction letter dated 09.12.1997. As per the terms and conditions of the sanction, the 1st defendant represented by its partners have executed Loan Agreement, Hypothecation Deed, Special Power of Attorney, Guarantee Deed of defendants 10 O.S.2429/2010 No.2 and 3, Confirmation letter and Surety Agreement by the defendant No.2 offering his 'B' schedule property. Apart from the same, 1st and 2nd defendants have offered schedule 'A' & 'B' properties as security by way of equitable mortgage by deposit of Title Deeds of the said properties. To evidence the factum of creation of mortgage, the Memorandum of entry recorded by Sri.A.V.Patel, then DGM (Legal) of the plaintiff.
After executing all necessary documents, the plaintiff has disbursed the loan amount to the 1st defendant as indicated in the statement of account. As per the terms and conditions incorporated in the loan Agreement, the defendants No.1 to 3 have undertaken to repay the said loan amount in 20 quarterly installments with a moratorium period of 15 months from the date of first drawal of the loan with an applicable rate of interest at 16.5% and in case of default 19% p.a. compounded quarterly.
11 O.S.2429/2010
The defendants No.1 to 3 have neglected to repay the loan amount in installments as indicated above and they requested for Reschedulement of the loan outstanding till 31.03.2001. Based on their request a sum of Rs.23,12,000/- being the loan installment due upto 31.03.2001 was converted into a Reschedulement loan to be repaid in 4 quarterly installments with interest at 19.5% p.a. and penal interest at 2.5% p.a. Thus, the rescheduled loan is a part of the first term loan sanctioned to the firm. Similarly, the interest outstanding of Rs.4,05,049/- as on 31.03.2001 in respect of first loan was funded and converted into a funded interest account to be repaid in 4 quarterly installments with interest at 19.5% p.a. and penal interest 2.5% p.a. The loan amounts were disbursed through cheques to the 1st defendant. Similarly, all payments to be received by the borrowers including defendants are received only through cheques. The practice with the plaintiff is that whenever cheques are received, the concerned zonal office 12 O.S.2429/2010 sent the cheques to the Finance & Account (F&A) Section of the plaintiff. The F&A Section will raise a receipt electronically through its computers. The software adopted by the plaintiff is such that whenever an electronic receipt is raised, automatically, the ledger account of the payee gets a credit entry. In the event of the cheque being dishonoured or the cheque is not presented at all, then the F & A section raises what is known as "reverse voucher". By raising the reverse voucher, automatically a debit is made to the same ledger account. Thus, whenever cheques are not honoured or returned raising of a reversal voucher is very critical and this raising of the reversal voucher will automatically negate the earlier credit that had been given at the time of raising the voucher for tendering the cheque.
Similarly, the defendants No.1 to 3 were in the habit of tendering cheques towards the repayment and some cheques had been returned dishonoured. In respect of such dishonoured cheques, Janardhan Rao had raised 13 O.S.2429/2010 reverse vouchers and had sent it to the concerned wing of the plaintiff for initiating action U/S.138 of the NI Act. In respect of such cheque, a criminal complaints bearing CC No.21412/2005, CC No.11495/2005, CC No.8828/2009 and PCR Nos.4607/2008 and 4608/2008 had been filed before the Metropolitan Magistrate Court at Bengaluru. These defendants No.1 to 3 were irregular in meeting their obligations.
The Corporation in accordance with the practice of other banks and financial Institutions had a policy of One Time Settlement (OTS) of loan accounts in respect of the borrowers whose accounts were classified as doubtful. The defendants taking advantage of the said policy, made a request for bringing their case under the said OTS scheme. The plaintiff after analyzing the required information regarding the value of the assets approved OTS of Rs.242.53 lakhs and foregone a sum of Rs.138.94 lakhs as on 30.11.2005. Accordingly, the letter of approval of OTS issued on the following conditions: 14 O.S.2429/2010
(i) You should pay an amount of Rs.2,42,53,000/- towards One Time Settlement (OTS) of dues to the Corporation. The initial payment of Rs.11.20 lakhs paid by you has been kept in a separate account and will form a part of the above settlement. With this, the resultant sacrifice by way of interest waiver is Rs.1,38,93,801/- as on 30.11.2005.
(ii) In addition, you will have to pay upfront, a sum of Rs.27,254/- towards other debits being expenditure incurred by the Corporation on getting the assets valued, security expenses, insurance etc.
(iii) The OTS amount shall be payable as given below:
15 O.S.2429/2010
a) First 25% of the OTS amount of Rs.60,63,250/- (including the initial amount paid) within 30 days of the date of this letter without interest (letter dt.20.01.2006).
b) Balance 75% of the OTS amount of
Rs.1,81,89,750/- within three
months from the date of this letter,
without interest.
c) Waiver of balance interest dues.
d) If the OTS amount / other indicated
above are not paid within the due
dates, the Corporation reserves the
right to withdraw the OTS,
appropriate the payments received,
towards normal dues and initiate
recovery action without further
intimation.
(iv) The Corporation has the right to
withdraw the OTS Package if it comes to
16 O.S.2429/2010
know subsequently that you have
furnished false or misleading or
incorrect or untrue information having bearing on the OTS decision. The Corporation's decision in this regard shall be final.
(v) If State / Central subsidy, interest
subsidy, Insurance claim, etc., are
received by the Corporation subsequent to the account closure on OTS, the amount sacrificed by the Corporation at the time of OTS approval shall be recovered and only the balance amount, if any will be refunded.
The 2nd defendant along with the said H.Janardhan Rao started playing fraud on the plaintiff. The defendants No.1 to 3 made payments through cheques towards OTS for which the receipts were raised. Subsequently, the Bank 17 O.S.2429/2010 dishonoured the cheques and the cheques had been returned, but the 2nd defendant prevailed upon H.Janardhan Rao managed to see that no reversal vouchers were raised. Consequently, the ledger account shown a credit to the account, which means that payment had been accounted for. A list of such cheques, which had been sent to the Bank and returned but no reversal vouchers had been raised by H.Janardhan Rao are produced. It was H.Janardhan Rao as a manager of the concerned finance wing of the plaintiff, who was responsible for raising such reversal vouchers and interacting with the auditors for getting the bank conciliation work done. He deliberately in collusion with the defendants No.1 to 3 suppressed non-realization of the cheque and also did not raise the reverse voucher. However, as the defendants No.1 to 3 in collusion with the said H.Janardhan Rao has committed fraud on the plaintiff Corporation and the accounts of the 1st defendant shown as if there is a credit to the account. This fact had not been known to the plaintiff till investigative audit was 18 O.S.2429/2010 conducted, which will be referred to in detail in the forthcoming paragraphs.
The plaintiff prays to leave of the Court to produce originals of the same at the appropriate stage, as these cheques and letters are required by the CCB Police, Bengaluru in respect of a criminal case registered against the 2nd defendant and H.Janardhan Rao. The defendants No.1 to 3 in connivance with H.Janardhan Rao played another type of fraud. The defendants No.1 to 3 tendered cheques towards repayment of OTS amount. The respective receipts were raised by H.Janardhan Rao by virtue of which the accounts shown a credit. Subsequently, H.Janardhan Rao did not send it to the bank for clearance. A list of such cheques, which were not sent to the bank for clearance, but the receipt of the amount had been recorded in the ledgers of the plaintiff is produced. The defendants No.1 to 3 in connivance with the said H.Janardhan Rao thus managed to show that the entire amount payable by them under the said OTS scheme was 19 O.S.2429/2010 fully paid. Believing the recommendations made by Janardhan Rao to the effect that the entire amount has been paid by the defendants No.1 to 3, the plaintiff's officers sent a communication dated 07.09.2007 to their legal Department for releasing the Title Deeds in respect of the schedule (a) & (b) properties, which had been mortgaged as security for the loans.
The 1st defendant by a letter dated 30.08.2007 made a request for issue of a No Due Certificate for having repaid the entire loan and release the original Title Deeds as they had repaid the entire loans including the delayed period interest. Based on the said request and said inter office note, legal Department took action to release the Title Deeds with a covering letter No.AGM(L)/NCC/1795/ 2007-08, dated 11.09.2007 indicating therein that consequent to the discharge of the entire loans the Title Deeds have been released on which the 1st defendant's Managing partner-Sri.C.N.Shanth Kumar, the 2nd defendant has acknowledged receipt of the documents. Thus, the 20 O.S.2429/2010 plaintiff has made to believe by the defendants No.1 to 3 that the entire loans have been duly repaid while in fact many of the cheques had not been either presented to the bank or had been dishonoured as detailed in Para-24. The defendants No.1 to 3 in connivance with H.Janardhan Rao have played fraud and misrepresented with the plaintiff the facts of loans having been duly settled under the OTS settlement.
H.Janardhan Rao went on sick leave from 19.08.2008 and during that period, the Deputy General Manager, Finance & Accounts Department started preparing the bank reconciliation statement himself. He found that H.Janardhan Rao had not prepared the bank reconciliation statement right from April 2008 and therefore, he started preparing bank reconciliation statement from April 2008. During the course reconciliation, he found that certain cheques, which dishonoured in respect of the account of M/s.Keerthana Enterprises, a firm promoted by the defendants No.1 and 2 21 O.S.2429/2010 along with one Smt.G.V.Aswathamma and Smt.Shobha and account had not been reflected in the bank reconciliation statement. No reversal entry had been passed after the dishonour of the cheque in that account. When he went back for the previous period of the reconciliation, he found startling discrepancies in the bank's reconciliation statement and immediately, he brought this fact to the notice of the Managing Director of the plaintiff, who thereupon suspended H.Janardhan Rao and a complaint was lodged with the police in respect of the said Keerthana Enterprises and its partners as also against Janardhan Rao. Simultaneously, a firm of Chartered Accountants viz., S.R.R.K. Sharma and Associates were commissioned to conduct an investigative audit in respect of the plaintiff's bank accounts for the period 01.05.2004 to 31.03.2008. The said firm of Chartered Accountants found that the cheques given by the defendants No.1 to 3 towards OTS had not been presented to the bank for encashment in some cases as detailed in para supra and in some cases, the cheques, which had been returned had not been 22 O.S.2429/2010 properly accounted for by raising the reverse vouchers, consequent to which the account shown a credit to the account of the 1st defendant. The report given by the said firm of Chartered Accountants dated 29.01.2009 is produced. After a detailed examination of the said report, the plaintiff came to know that the defendants No.1 to 3 in connivance with Janardhan Rao had played fraud on the plaintiff in respect of both Keerthana Enterprises and the 1st defendant's account. Immediately, thereafter, another complaint was given to the police alleging that a fraud has been played in respect of the repayment of the loans by the defendants No.1 to 3 in connivance with Janardhan Rao. As a fraud had been committed by the defendants No.1 to 3, the plaintiff issued a public notice dated 28.11.2008 and in the said public notice, the act of fraud committed by the defendants No.1 to 3 brought to the notice of general public and also the fact that no due Certificate issued to the firm is void and inoperative. 23 O.S.2429/2010
The defendants No.1 to 3 did not honour the OTS commitments and had practiced fraud on the plaintiff. The plaintiff by its letter dated 27.11.2008 withdrew the OTS facility and demanded the defendants No.1 to 3 to repay the entire amount due to it in accordance with the tenor of the documents executed for securing the loans sanctioned. The plaintiff categorically stated in the said letter that on account of fraud committed, the plaintiff had released the documents of title and issued letter of closure of the loan and therefore, it is to be treated as void. The release of Title Deeds, which had been deposited for creating mortgage by deposit of Title Deeds by the defendants No.1 to 3 was on account of the fraud played and misrepresentation made on the plaintiff. It was clearly indicated in the said letter of withdrawal that the mortgage created still subsists and the documents released did not affect the mortgage as the release of the documents was on account of fraud played by the defendants No.1 to 3 and H.Janardhan Rao. The defendants No.1 to 3 have caused a reply dated 06.12.2008 to the said public notice. 24 O.S.2429/2010
The list of cheques, which the defendants No.1 to 3 presented to the plaintiff and the actual encashment effected, cheques dishonoured and reversal entry passed, cheques not presented / no reversal entry passed is detailed at documents No.26 & 27. Thus, though the defendants No.1 to 3 have required to pay Rs.242.53 lakhs towards the payment of OTS, the said defendants did not make payments of the OTS amount and managed to commit fraud to show as if they had paid a sum of Rs.242.53 lakhs by adopting the modus operandi mentioned above.
Late H.Janardhan Rao, who had been assigned the duty of looking after the work of deposit of cheque in the bank / s and its retrieval case of dishonour of such cheques. He was also assigned the work of bank reconciliation. He presented the records to the auditors who certified that the reconciliation had been carried out. Thus, the plaintiff was made to believe that a sum of Rs.242.53 lakhs had been paid by the defendants No.1 to 25 O.S.2429/2010 3 even though they have not paid that amount and they had committed fraud against the plaintiff in connivance with the plaintiff's own officer the said late H.Janardhan Rao. Based on the certification, the plaintiff released all the documents of title in respect of the schedule property and confirmed closure of loan account. The defendants No.1 to 3 having in fact not paid the amount cannot get themselves unjustly enriched by their own act of fraud, which has been committed by them in connivance with late H.Janardhan Rao. The plaintiff is entitled to recover the entire loans granted to the defendants No.1 to 3 in accordance with the tenor of the documents. The plaintiff after issue of the letter of withdrawal of OTS re- appropriated the amounts in accordance with the tenor of the documents and also debited the amounts of cheques, which had been a part of the fraud. Thus, nullifying the wrong credits given. The plaintiff has reworked the ledger account and according to this, the defendants No.1 to 3 are liable to pay loan 1 and its reschedule portion and loan 2 and its reschedule portion. The defendants No.1 to 3 26 O.S.2429/2010 are liable to pay interest on the said loan at 19.5% p.a. + 2.5% at compounded rate with quarterly rests in respect of the rescheduled portion of the first loan and funded interest at 22% p.a. The notification mentioned in Para-4 and 5 has authorized the plaintiff to submit the certified statements of account, which is admissible in accordance with the Banker's Books Evidence Act, 1891 as provided under Sec.44 of the SFC's Act, 1952. The loans sanctioned to the defendants No.1 to 3 were secured by mortgage of schedule (a) & (b) properties. The plaintiff is entitled to recover the loan amounts by enforcing the mortgage created by the defendants No.1 to 3 by deposit of Title Deeds. The plaintiff has a subsisting right to recover the loan amounts out of the said properties and personally from defendants No.1 to 3, who have neglected to make any payments and are liable to pay the amount mentioned above. As the defendants are dodging to make payments, the plaintiff is filing this suit for recovery of amount by sale 27 O.S.2429/2010 of the mortgaged properties and personally from the defendants No.1 to 3 and also for declaration that mortgage is subsisting and letter of closure of loan bearing No.AGM(L)/NCC/1795/2007-08, dated 11.09.2007 is void and inoperative.
Late H.Janardhan Rao joined the services of the plaintiff as Senior Assistant during May 1985, Subsequently, the plaintiff granted him the promotions as Assistant Manager during January 1996, as Deputy Manager during January 2001 and as Manager during September 2007. He was working as Manager in the Finance Department of the plaintiff Corporation till his death. He was assigned the job of raising reverse vouchers, keeping track of bounced cheques and also bank reconciliation work. He gave an impression as if he was punctual and honest in his work and made his immediate official superiors believe him. He connived with the defendants No.1 to 3 and committed the fraud mentioned in detail above. He had a fiduciary position and was 28 O.S.2429/2010 required to exercise due care and diligence to see that the cheques given to the Corporation are properly dealt with for realization and in cases where the cheques bounced, he had the responsibility to raise reverse vouchers and return those cheques to the concerned Department of the plaintiff for taking action under the Negotiable Instruments Act. As late H.Janardhan Rao colluded and failed in his duties and was negligent in carrying out the duties, he is responsible to the plaintiff for the loss caused by him by his own act of fraud and connivance with the defendants No.1 to 3. H.Janardhan Rao died on 13.04.2009. The defendants No.4(a) to (e) are the Legal Representatives of late H.Janardhan Rao and are responsible to the acts of Janardhan Rao to the extent of devolution of his estate on them.
The action of defendants No.1 to 3 in getting the return of the documents of title and loan closure letter is tainted by fraud and misrepresentation and therefore the said letter issued certifying that the entire loan amount has 29 O.S.2429/2010 been paid is a void document and if the said void document continues to exist that would seriously jeopardize the financial position of the plaintiff and therefore, the plaintiff has no other recourse other than seeking for a judgment and decree for declaring that the said letter is cancelled as vitiated by fraud and misrepresentation. The plaintiff is also further entitled to a judgment and decree for recovery of a sum of Rs.8,37,01,236/- as on 20.01.2010 along with current interest at 22% p.a. from 21.01.2010 till the date of payment. The plaintiff is also entitled for issue of Mandatory Injunction directing the defendants No.1 to 3 to return all the original Title Deeds, which had been returned to them on account of fraud played by them. Hence, the plaintiff Corporation has filed the present suit. .3. In pursuance of summons, the defendants No.1 to 3 and LR's of defendant No.4 appeared through their respective counsels and filed their written statements. 30 O.S.2429/2010 .4. The defendants No.1 and 2 have filed their written statement and defendant No.3 also filed separate written statement contending almost similar contentions denying the material averments / allegations of the plaint regarding execution of Hypothecation Deed, Guarantee Deed, Surety Agreement, Special Power of Attorney, Confirmation Letter, Deed of declaration, Net Worth Undertaking, taking suit schedule 'A' & 'B' properties as security, alleged fraud in connivance with H.Janardhan Rao, liable to pay claim amount with interest, correctness of accounts regarding rescheduled portion of the loan, right to withdraw OTS package, correctness of accounts extract, 2nd defendant prevailing upon H.Janardhan Rao and managing to see that no reversal vouchers were raised, making the plaintiff to believe that entire loan amount cleared, a chartered accountant conducting investigation audit, giving report and correctness of the said report, etc. However, these defendants admitted that the 1st defendant is the partnership firm and defendants No.2 and 3 are its partners, sanction of a term loan of Rs.90.00 lakhs by the 31 O.S.2429/2010 plaintiff, 1st defendant approaching the plaintiff for additional term loan and sanction of the same, request for rescheduling the loan and acceptance, dishonour of some cheques, not regular in repayment, filing criminal cases U/S.138 of NI Act, OTS scheme sought by them etc., Further these defendants contended that the plaintiff is non-existing Company and got itself converted to another organization and even if the suit had been filed by an existing Company as and when it ceases to function or takes new name, unless Company becomes a party to the suit would not be maintainable. Sri.R.Ramachandraiah, Deputy General Manager is not authorized to sign and verify the pleadings and plaint is not signed and verified by a duly authorized person. The averments in Paras-4 and 5 of the plaint are not definitely known to these defendants. The moment Section 29, 30, 31 & 32 as well as 27, 32A to 32G, 41, 42, 43A and 44 of SFC Act is made applicable, the one and only remedy is to file a petition under Sec.31 of the State Financial Corporation Act and when a definite alternate remedy is provided, it is not permissible to 32 O.S.2429/2010 hoodwink the said provision and file the suit which is not maintainable. The averments made in so far as the defendants No.4(a) to (c) are not within the knowledge. Although Rs.90.00 lakhs was sanctioned, the same was not released in its entirety. The partners were told that the loan has been sanctioned and the same would be released on the partners signing various documents. The partners have signed several documents, the contents and purport of which are not known to the partners. Some of the documents on which signatures subscribed by the partners were blank in material particulars. As such, even though some of the documents furnished by the plaintiff have the signature of partner, it does not amount to due execution of documents and execution of any of the documents mentioned in Para-10 of the plaint.
At any rate it is contended by the plaintiff that Guarantee Deed had been executed by the defendants No.2 and 3. By getting the said Deed of Guarantee signed, the liability of these defendants is claimed on the basis of Guarantee Deed and as such, the defendants No.2 and 3 33 O.S.2429/2010 are entitled to the rights conferred under Chapter VIII of the Indian Contract Act. To see the solvency of the defendants, original documents had been collected by the plaintiff. The defendant No.1 was liable to repay the money received by it. There was outstanding interest of Rs.4,05,049/- as on 30.03.2001 and same was funded and converted into a funded interest account or that there was an Agreement to pay separate interest for the same are not admitted. The plaintiff has developed a Software by which whenever an electronic receipt is raised automatically the ledger account of the payee gets a credit entry and in the event of cheque being dishonoured (F&A) Section raises reverse voucher and automatically debit is made in the ledger account are not admitted. The defendants were repaying the accounts both by cheques and by cash. As on today, these defendants have completely settled all the claims of the plaintiff and are not due in any amount, the plaintiff has given a No Due Certificate stating that the defendant is not liable to pay any amount. The plaintiff has returned all the original 34 O.S.2429/2010 documents of title, which collected to see the solvency and regarding which a mortgage right is claimed in the suit. Hence, these defendants being defaulters at some point of time earlier is of no consequence. No allegation is correct, which are made to the effect that OTS was taken by furnishing false or misleading or incorrect and untrue information. The 2nd defendant has no relation whatsoever or transaction with Sri.H.Janardhan Rao and dealt with him as an employee of the plaintiff having only official transactions as he was authorized. Nothing beyond official relations exist between defendants Nos.1 to 3 on one hand and defendant No.4 or his LRs on the other hand. There is a cheque of 26.03.2007, which is dishonoured regarding which a claim has been made and the said claim is barred by law of limitation. In fact, all the claims are barred by law of limitation. No intimation of dishonour has been given till today and to their knowledge, all the cheques have been honoured. It is only after the cheques are honoured, the plaintiff gave no due Certificate and returned the original documents of title. There is no 35 O.S.2429/2010 correlation between the cheques mentioned in document No.26 and document No.27. If without presentation of the various cheques mentioned in document No.27, the entire balance stands cleared, what objection can be there for non-presentation of the cheques is not clear. These defendants do not remember if in reality they had given those cheques. These defendants do not admit that those cheques had been given and not presented. There was no occasion for Sri.H.Janardhan Rao to give misleading information. After the plaintiff was clear that the entire loan has been cleared, they asked for no due certificate and released the original documents and the plaintiff has released the same and given no due certificate. The plaintiff did not have any authority to withdraw the OTS and no authority to write a letter of 27.11.2008. Once, the original documents were returned, there cannot be a contention that the charge exists. H.Janardhan Rao had been assigned the duty of depositing the cheque, it is revival in case of dishonour, bank reconciliation is not known to these defendants. It is false that mortgage is 36 O.S.2429/2010 revived or interest is liable to be paid or that the plaintiff has a right to recover the loans. The plaintiff is not entitled to Mandatory Injunction. The suit is bad for mis-joinder of cause of action and prays to dismiss the suit. .5. The defendant No.4(a) in her written statement contended that the suit is not maintainable either in law or on facts. All averments made in the plaint are in no way connected with the legal heirs of the defendant No.4 and averments made in the plaint are not within the knowledge. 4th defendant died before Institution of the suit. The legal heirs filed an application U/O.I Rule 9 (2) r/w Sec.151 CPC and same is pending for the deletion of 4th defendant. She is house wife and her children are studying. The averments made in the plaint are not connected with the affairs of the family. She has not received the terminal benefit from the plaintiff and she has filed Writ Appeal No.4384/2009 before the Hon'ble High Court of Karnataka and same is pending. None of the family members are responsible nor connected with the 37 O.S.2429/2010 matters in relation to late H.Janardhan Rao with the plaintiff and they are not necessary parties to the suit. The plaintiff has not stated in the plaint about the properties alleged to have been inherited by her. The proceeding against the legal heirs will not only make them volunerable to the harassment and the expenditure because of no fault of them just being wife and children of the deceased H.Janardhan Rao. The plaintiff with an ulterior motive and malafide intention dragged into the suit without any valid documents or grounds. The plaintiff without any compassion showing mercy, has filed this suit against the legal heirs, which amounts to abuse of process of law and its necessary to struck off the names of legal heirs and prays to dismiss the suit as against the 4th defendant. .6. On the above pleadings of both parties, the following issues and additional issues framed:
ISSUES
1. Whether the plaintiff proves that when the loan raised by D1 to D3 had become over due and after that there was one time settlement (OTS) 38 O.S.2429/2010 arrived between the parties and accordingly D1 to D3 have issued cheques for repayment of OTS amount, but on presentation they have been dishonoured and as such the plaintiff has reversed OTS scheme as alleged?
2. Whether the plaintiff further proves that the loan closure letter issued by it bearing No. AGM(L)/NCC/17951/07-08 dated 11.09.07 as void and inoperative and D1 to D3 are liable to redeliver the same for cancellation as alleged?
3. Whether the plaintiff further proves that the deceased H.Janardhan Rao who was working in the Finance Section of the plaintiff had committed the acts of negligence and connivance in performance of his duties and has caused financial loss to the plaintiff in collusion with D1 to D3 as alleged?
4. Whether the plaintiff further proves that D1 to D3 are liable to pay Rs.8,36,01,236/- towards the loan dues as on 20.01.2010 as alleged?
5. Whether the plaintiff further proves that it has got every right to proceed with the mortgaged property of D1 to D3 under the circumstances alleged?
6. Whether the plaintiff further proves that the Legal Representatives of deceased Janardhan Rao who are the D4(a) to (c) are jointly and severally liable to pay the suit claim with interest as alleged?
7. Whether the plaintiff is entitled to charge future interest at 22% p.a. on the suit claim as alleged?39 O.S.2429/2010
8. Whether 3rd defendant proves that the plaintiff Corporation has no right to withdraw one time settlement (OTS) package once it was accepted as alleged?
9. Whether 3rd defendant further proves that the loan has been cleared and no-due-certificate has been issued by the plaintiff by releasing the original documents under the circumstances pleaded in para-22 of the written statement?
10. Whether the plaintiff is entitled to the relief of declaration as prayed?
11. Whether the plaintiff is entitled to recover the suit claim of Rs.8,36,01,236/- from the defendants jointly and severally with interest at 22% p.a. from 21.01.2010 till realization as prayed?
12. To what reliefs, if any, the parties are entitled?
ADDITIONALISSUES
1. Whether the defendants-1 and 2 prove that the plaintiff - Corporation has no right to withdraw One Time Settlement (OTS) package as alleged?
2. Whether the defendants-1 and 2 further prove that the loan has been cleared and no Due Certificate has been issued by the plaintiff by releasing original documents under the circumstances pleaded in Para-23 of written statement?
40 O.S.2429/2010.7. In support of the case, the plaintiff Corporation got examined its Deputy General Manager, Zone 1 & 2 as PW.1, Secretary and Deputy General Manager as PW.2, got marked documents at Ex.P.1 to Ex.P.45 and closed the side. The defendants have not adduced evidence on their behalf.
.8. Heard arguments.
.9. My answers to the above Issues are:
Issue No.1 - Affirmative.
Issue No.2 - Affirmative.
Issue No.3 - Affirmative.
Issue No.4 - Affirmative.
Issue No.5 - Affirmative.
Issue No.6 - Negative.
Issue No.7 - Affirmative.
Issue No.8 - Negative.
Issue No.9 - Negative.
Issue No.10- Affirmative.41 O.S.2429/2010
Issue No.11- Affirmative.
Addl. Issue No.1 - Negative.
Addl. Issue No.2 - Negative.
Issue No.12 - As per final order for the following:
REASONS .10. ISSUES No.1 to 5, 8, 9, ADDITIONAL ISSUES NO.1 & 2: As these Issues are connected to each other, I have taken all together for discussion for the sake of convenience and to avoid repetition.
In support of the case, the plaintiff Corporation got examined its Deputy General Manager, Zone 1 & 2 as PW.1 who in his affidavit evidence stated regarding the defendants No.2 and 3 being partners of the 1st defendant firm seeking financial assistance, sanction of term loan of Rs.90.00 lakhs on 08.01.1997 and sanction of additional term loan of Rs.30.00 lakhs on 09.12.1997, execution of necessary documents agreeing to repay the loan with interest in installments offering security of schedule 'A' & 42 O.S.2429/2010 'B' properties by equitable mortgage, non-payment of installments by the defendants, re-schedule of first loan, the plaintiff Corporation formulating OTS scheme, same facility offered to defendants No.1 to 3 and they required to pay a sum of Rs.242.53 lakhs and plaintiff forgoing a sum of Rs.138.94 lakhs as on 30.11.2005, the defendants approaching the Recovery Department on 30.08.2007 stating payment of entire amount under OTS scheme seeking for No Due Certificate and return of deposited Title Deeds, Janardhan Rao who working as a Manager in Accounts Department, certifying the receipt of entire OTS amount, upon such certification, the Accounts Department sending No Due Certificate to the Legal Department and based on the same, the Legal Department returning the documents of titles to the defendants, Janardhan Rao going to leave on medical grounds from 19.08.2008, Sri.V.Ramesh then Head of Finance and Accounts Department taking himself the work of preparing the Bank Reconciliation Statement and noticing the number of cheques issued by the 1st defendant for discharging of loan 43 O.S.2429/2010 dishonoured, making entries immediately on receipt of cheques even before realization, but such entries were not reversed after it was found that the cheques had been dishonoured and as a consequences, it had been falsely noted in the accounts ledger that the entire loan amount had been repaid, even though the cheques had been dishonoured, the plaintiff Corporation ordering Special Audit and upon such Special Audit found that though the 1st defendant has not actually paid the entire amount, because of fraudulent collusion of the defendants No.1 to
3 with Janardhan Rao, it had been made to appear in the books of accounts that the entire amount of Rs.242.53 lakhs had been repaid, not making reversal entries, etc. The plaintiff also got examined its Secretary and Deputy General Manager as PW.2, who in his affidavit evidence also stated regarding sanction and disbursement of total amount of Rs.90.00 lakhs and 30.00 lakhs, details of loan accounts and the amount payable, non-payment of any amount in respect of 3rd and 4th loan accounts, the 44 O.S.2429/2010 details of amount as on 30.11.2005, details of cheques issued by the defendants to discharge the amount and dishonour of said cheques and passing no reversal entries, details of cheques receipted and not presented into the Bank for clearance, Janardhan Rao not bringing to the notice of several non-presented and dishonoured cheques, not making reversal entries, Janardhan Rao in connivance with the defendants not bringing the notice of higher officers about bouncing of cheques and not taking steps for reversal of the entries, the defendants instead of paying the amount of Rs.2,42,53,000/- towards OTS in connivance with Janardhan Rao making it appears that they had repaid the said loan amount and making the plaintiff to believe that the loan amount is repaid, fraudulently inducing the plaintiff to return the documents of title, after coming to know the fraud, lodging police complaint, withdrawal of OTS offered on default in payment, etc. 45 O.S.2429/2010 It is not in dispute that the 1st defendant is a partnership firm and the defendants No.2 and 3 are its partners, the plaintiff has sanctioned a term loan of Rs.90.00 lakhs and additional term loan of Rs.30.00 lakhs, the defendants were not regular in repayment and some cheques had been dishonoured, criminal cases filed U/S.138 of N.I. Act, request for rescheduling the loan, OTS scheme was sought for by the defendants and offering OTS settlement, etc. The plaintiff alleges that the defendants taking advantage of OTS policy made a request for bringing their case under the said scheme and after analyzing the required information regarding value of assets, approved OTS of Rs.242.53 lakhs and foregone a sum of Rs.138.94 lakhs as on 30.11.2005 and accordingly, Letter of approval of OTS issued on conditions to pay the said amount and the defendants No.1 to 3 did not honour OTS commitments and practiced fraud in connivance with H.Janardhan Rao and managed to show entire amount 46 O.S.2429/2010 payable by them under OTS scheme was fully paid, believing the recommendation made by the said Janardhan Rao to the effect that the entire amount has been paid, the plaintiff's officers sent a communication to the Legal Department for releasing the Title Deeds, Title Deeds have been released as per the Letter No.AGM(L)/NCC/1795/2007-08 dated 11.09.2007, making to believe by the defendants No.1 to 3 that the entire loans have been duly repaid, etc. But, the defendants No.1 to 3 contended that after clear of entire loan amount, they asked for No Due Certificate and releasing the documents and the plaintiff has released the same and given No Due Certificate and plaintiff has no authority to withdraw the OTS and it is false that they were required to pay Rs.242.53 lakhs, etc. The plaintiff has produced Office copy of Letter dated 20.01.2006 at Ex.P.29, which shows addressing the said letter to the Managing Partner of the 1st defendant stating regarding availment of OTS, amount payable on terms and 47 O.S.2429/2010 conditions and one of the condition that the Corporation has a right to withdraw the OTS package, if it comes to know subsequently that the defendants furnished false or misleading or undue information or any material information having bearing on the OTS decision and Corporation's decision in this regard shall be final. The plaintiff has produced details of cheques dishonoured and reversal entry not passed in KSIIDC at Ex.P.30. The plaintiff has produced the details of cheques receipted and not presented in the bank for clearance at Ex.P.31. The plaintiff has produced True copy of Letter dated 30.08.2007 at Ex.P.41, wherein, the defendant No.2 has written the said Letter for issuance of No Due Certificate and release the original documents stating about payment and clearance of entire OTS amount. Thought the defendants; No.1 to 3 contended that they have paid entire OTS amount, but not produced statement of accounts of 1st defendant firm or statement of accounts of the defendants No.2 and 3 to show required amount in their accounts and they paid the OTS amount through the 48 O.S.2429/2010 cheques to the plaintiff. The defendants No.1 to 3 having failed to produce satisfactory documentary evidence having paid the OTS amount, their bare version that they have paid the OTS amount is untenable. On the other hand, the defendants No.1 to 3 have neither cross- examined PW.2 nor adduced their rebuttal evidence to substantiate their case. The defendants No.1 to 3 having availed OTS scheme on the terms and conditions and the plaintiff having reserved their right to withdraw OTS package, on false, misleading or untrue information, have a right to withdraw the OTS package.
The plaintiff has produced certified Account Extracts at Ex.Ps.26 to 28, which show balance loan amount, overdue principal amount and overdue interest amount in respect of the loan ledger of 1st defendant firm. PWs.1 and 2-officials of the plaintiff in their affidavit evidence stated regarding deceased Janardhan Rao working as Manage committing acts of negligence in connivance with the defendants No.1 to 3, etc. The defendants No.1 to 3 49 O.S.2429/2010 having failed to adduce satisfactory evidence to prove payment of amount towards OTS scheme, the evidence of Pw.1 and 2 is to be believed. The plaintiff having reserved right to withdraw the OTS scheme and having withdrawn the OTS scheme, it has got every right to proceed with the mortgaged properties. The defendants No.2 and 3 have not adduced satisfactory evidence to prove that the plaintiff Corporation has no right to withdraw the OTS package and they have cleared the loan and No Due Certificate has been issued by the plaintiff releasing the original documents, as such they have failed to prove the same. The defendants No.1 to 3 having failed to show that they have paid the OTS amount, the loan closure letter dated 11.09.2007 issued is void and inoperative and they are liable to redelivered the same and are also liable to pay the claim amount due as on 20.01.2010. Hence, the plaintiff Corporation has proved that it has withdrawn the OTS scheme, the loan closure letter is void, inoperative and the defendants No.1 to 3 are liable to redeliver the same for cancellation and the deceased H.Janardhan Rao 50 O.S.2429/2010 has committed acts of negligence, in connivance with the defendants No.1 to 3 in performance of his duties and has caused financial loss, the defendants No.1 to 3 are liable to pay the suit claim amount due as on 20.01.2010 and the plaintiff has right to proceed with the mortgaged property, accordingly, I answered Issues No.1 to 5 in the affirmative, Issues No.8, 9, Additional Issues No.1 & 2 in the negative.
.11. ISSUE NO.6: The plaintiff contended that the Legal Representatives of the deceased Janardhan Rao i.e., the defendant No.4(a) to (c) are responsible to the acts of Janardhan Rao to an extent of devolution of his estate. Though the plaintiff contended the same has not produced any documentary evidence, devolution of estate of Janardhan Rao by his Legal Representatives. Further PW.1 in his cross-examination stated that disciplinary action was taken against H.Janardhan Rao. The disciplinary action having taken against H.Janardhan Rao, in the matter of alleged fraud and for his negligence in official acts, his 51 O.S.2429/2010 Legal Representatives cannot be made responsible. Hence, the plaintiff has failed to proved that the Legal Representatives of deceased Janardhan Rao who are the defendant Nos.4(a) to (e) are jointly and severally liable to pay the suit claim with interest, accordingly, I answered Issue No.6 in the negative.
.12. ISSUE NO.7: The plaintiff Corporation contended that it is entitled to charge future interest at the rate of 22% p.a. The plaintiff has produced Loan Agreement at Ex.P.6, wherein as per Clause-2.4 Interest Charges, the borrower agreed to pay interest at such other rates fixed by the Corporation from time to time. The defendants having agreed such terms in respect of interest, the plaintiff is entitled for the interest at the rate of 22% p.a. on the suit claim, accordingly, I answered Issue No.7 in the affirmative.
.13. ISSUES NO.10 & 11: The plaintiff Corporation has filed this suit against the defendants for declaration to 52 O.S.2429/2010 declare that loan closure letter issued by the plaintiff bearing No.AGM(L)/NCC/1795/2007-08 dated 11.09.2007 as void, inoperative and direct the defendants No.1 to 3 to deliver the same for cancellation, to hold that the defendants No.1 to 3 are due for a sum of Rs.8,36,01,236/- as on 20.01.2010, for a decree for sale of mortgaged schedule 'A' property and schedule 'B' property in potent to satisfaction of the decree against the defendants no.1 to 3 personally and for a decree against the L.Rs., of defendant No.4 being defendants No.4(a) to
(c) for Rs.8,36,01,236/- due as on 20.01.2010 with future interest at 22% p.a. from 21.1.2010 till realization being the amount of fraud, which the 4th defendant had deliberately caused to the plaintiff and costs, etc. The plaintiff Corporation having proved that it has withdrawn the OTS scheme and the defendants No.1 to 3 having failed to prove that they have cleared the loan by paying amount towards OTS scheme and they having obtained No Due Certificate and got released the original 53 O.S.2429/2010 documents in connivance with Janardhan Rao, the defendants No.1 to 3 are jointly and severally liable to pay the suit claim amount with interest at the rate of 22% p.a. from 20.01.2010 till realization and the plaintiff is entitled for the relief of declaration as prayed and accordingly, I answered Issues No.10 & 11 in the affirmative. .14. ISSUE NO.12: In view of the reasons and discussion on the above Issues No.1 to 11 & Additional Issues No.1 & 2 , I proceed to pass the following:
ORDER Suit of the plaintiff is hereby decreed with costs as against the defendants No.1 to 3 as under:
It is declared that the loan closure letter bearing No.AGM (L) / NCC/ 1795/ 2007-08 dated 11.09.2007 is void, inoperative and the defendants No.1 to 3 are directed to deliver the same for cancellation.54 O.S.2429/2010
The defendants No.1 to 3 are due a sum of Rs.8,36,01,236/- as on 20.01.2010 and they are directed to repay the said amount jointly and severally to the plaintiff within 6 (Six) months with interest at the rate of 22% p.a. till realization. If the defendants No.1 to 3 fail to pay the decretal amount with interest, within stipulated time, the plaintiff is entitled to recover the said amount by sale of mortgaged suit schedule 'A' & 'B' properties.
Draw preliminary decree accordingly. (Dictated to the Judgment Writer, transcribed by her, the transcript print is corrected and then pronounced by me in the open court on this the 15th day of June 2016.) (JINARALAKAR. B.L.) XL Addl. City Civil & Sessions judge, Bengaluru.55 O.S.2429/2010
ANNEXURE WITNESSES EXAMINED ON BEHALF OF PLAINTIFF: PW.1 -R.Ramachandraiah S/o. Late H.Rangappa. PW.2 -B.Prem Kumar S/o. Byyanna.
DOCUMENTS PRODUCED ON BEHALF OF PLAINTIFF: Ex.P.1 Certified copy of Resolution dated 28.11.1997.
Ex.P.2 & Certified copy of Gazette Notifications. Ex.P.3 Ex.P.4 Sanctioned Letter dated 08.01.1997. Ex.P.5 Addendum to Sanction Letter dated 10.01.1997.
Ex.P.6 Loan Agreement dated 10.03.1997. Ex.P.7 Hypothecation Deed dated 10.03.1997. Ex.P.8 Deed of Guarantee dated 10.03.1997 executed by the defendants No.2 and 3.
Ex.P.9 Surety Agreement dated 10.03.1997 executed by C.N.Shantha Kumar.
Ex.P.10 Special Power of Attorney dated 10.03.1997.
Ex.P.11 Confirmation Letter dated 10.03.1997. Ex.P.12 Declaration Letter dated 06.03.1997 given by C.N.Shantha Kumar.
Ex.P.13 Net Worth Letter dated 10.03.1997 given by Narayan Reddy & Shanth Kumar.
Ex.P.14 & Memorandum of entries dated 10.03.1997 Ex.P.15 prepared regarding deposit of Title Deeds by C.N.Shanth Kumar.
Ex.P.16 Statement of Accounts certified regarding Account No.78501.
Ex.P.17 Sanctioned Letter dated 09.12.1997 for 56 O.S.2429/2010 having sanctioned Rs.30.00 lakhs of additional term loan to defendant No.1.
Ex.P.18 Loan Agreement dated 15.12.1997. Ex.P.19 Hypothecation Deed dated 15.12.1997. Ex.P.20 Special Power of Attorney dated 15.12.1997.
Ex.P.21 Deed of Guarantee dated 15.12.1997 executed by Narayana Reddy & Shanth Kumar.
Ex.P.22 Confirmation Letter dated 15.12.1997. Ex.P.23 Surety Agreement dated 15.12.1997 executed by C.N.Shantha Kumar.
Ex.P.24 & Memorandum of entries dated 16.12.1997. Ex.P.25 Ex.P.26 Certified Account Extract in respect of Account No.78502.
Ex.P.27 Certified Account Extract in respect of Account No.78503.
Ex.P.28 Certified Account Extract in respect of Account No.78504.
Ex.P.29 Office copy of Letter dated 20.01.2006. Ex.P.30 List of details of cheques dishonoured & reversal entry not passed in KSIIDC.
Ex.P.31 List of cheques receipted and not presented in to the Bank for payment.
Ex.P.32 Office copy of Internal communication given by AGM Finance & Account to AGM (Legal), dated 07.09.2007.
Ex.P.33 Copy of letter dated 11.09.2007 issued by AGM (legal) to defendant No.1.
Ex.P.34 True copy of letter dated 29.01.2009 given by SRRK Sharma Associates Chartered Accountant to the Managing Director, KSIIDC.
Ex.P.35 True copy of investigative report. Ex.P.36 Copy of complaint dated 06.01.2009 given to the Commissioner of Police, Bengaluru City.
Ex.P.37 True copies of Public Notices.
57 O.S.2429/2010
Ex.P.38 Copy of Letter dated 27.11.2008 regarding
cancellation of one time settlement OTS addressed to the defendants.
Ex.P.39 True copy of Reply given by defendants dated 06.12.2008.
Ex.P.40 True copy of Death Certificate of H.Janardhana Rao.
Ex.P.41 True copy of Letter dated 30.08.2007 written by the defendant No.1 to issue No Due Certificate & to release original documents.
Ex.P.42 True copy of Certificate issued by the Registrar of Companies regarding change of name of the plaintiff.
Ex.P.43 Certified copies of Order sheet, FIR, Complaint, Statement of witnesses with copy of Charge Sheet submitted by CCB Police in CC.No.17035/2010.
Ex.P.44 & Encumbrance Certificates.
Ex.P.45
WITNESSES EXAMINED ON BEHALF OF
DEFENDANTS:
-NIL-
DOCUMENTS PRODUCED ON BEHALF OF
DEFENDANTS:
-NIL-
(JINARALAKAR. B.L.)
XL Addl. City Civil & Sessions judge,
Bengaluru.