Delhi District Court
Bank Of Baroda vs M/S. Globus Fashions on 14 November, 2007
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IN THE COURT OF SHRI S. N. GUPTA: ADDITIONAL DISTRICT JUDGE
TISHAZARI COURTS: DELHI
Suit No : 291/04
Bank of Baroda,
A body corporate constituted under
the Banking Companies ( Acquisition & Transfer
of Undertakings) Act, 1970 having its Head office
at Mandvi, Baroda and having a branch office,
interalia at 1st Floor Vikram Tower, 16,
Rajendra Place, New Delhi110008 ...Plaintiff
Versus
1. M/s. Globus Fashions
A partnership firm through its partner(s)
2. Mr. Manjot Singh Channa
S/o Mr. Inderjeet Singh
Partner of M/s. Globus Fashions
3. Ms. Kulwant Kaur Sehra
W/o Mr. Harbhajan Singh Sehra
Partner of M/s. Globus Fashions
Defendants No. 1 to 3 at :
292, Aravali Apartments
Alaknanda
Mew Delhi 110019
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4. Ms. Harjinder Kaur
W/o Mr. Inderjeet Singh
6A/64, W.E. A. Karol Bagh
New Delhi110005
5. Mr. Harbhajan Singh Sehra
S/o S. Bhag Singh Sehra
i) 292, Aravali Apartments
Alaknanda
Mew Delhi 110019
ii) C/o M/s. Nagaland Enterprises
Pvt. Ltd. C75, Malviya Nagar,
New Delhi110016.
6. Mr. Gursharan Singh
S/o Late S. Tarlocahan Singh
C/o Shyam Telecom Ltd.
246, Phase IV, Udyog Vihar,
Gurgaon 122001
7. Ms. Mandeep Kaur
W/o Mr. Gursharan Singh
C/o Guru Harkishan Public School
Kalkaji
New Delhi110019
Defendants No. 6 & 7 Both ( also) at :
3
474, Mandakani Enclave
Alaknanda
New Delhi110019 ... Defendants
J U D G M E N T
This suit was filed for the recovery of Rs. 7,12,752.86/( Rupees Seven Lacs Twelve Thousand Seven Hundred Fifty Two & Paise Eighty Six Only) with interests and costs.
2. The brief facts mentioned in the plaint by the plaintiff is that plaintiff is a bank Constituted and functioning under the Banking Companies ( Acquisition and Transfer of Undertakings) Act, 1970 , having its head office at having its Head office at Mandvi, Baroda and having a branch office, interalia at 1st Floor Vikram Tower, 16, Rajendra Place, New Delhi110008. Mr. Devander Kumar Mahajan, Senior Manager of the plaintiff bank is duly constituted attorney and authorized signatory of plaintiff and is empowered to sign, and verity the present plaint, all interlocutory applications, proceedings, affidavits and other documents as may be necessary or required on behalf of the plaintiff and to do all acts as may be found incidental and consequential thereto.
3. It is submitted in the plaint that defendant No. 1 being a partnership firm through its partners defendant No. 2 & 3 approached the plaintiff and offered to avail certain 4 credit facilities for their business of retailing of readymade garments as franchisee of DCM Benetton India Ltd. The defendants 4 to 7 offered to guarantee the repayment of the amounts which may ultimately be found due and payable in respect of the credit facilities as above. Further the defendants 2 & 4 offered to create equitable mortgage by deposit of title deeds in favour of the plaintiff in respect of their joint property being part of Khasra No. 79 M, admeasuring 0834( 0.0836 hectares) at Village Lavva, Pargana Bhagwanpur, Tehsil Roorkee, District Haridwar. The plaintiff favourable considered the request of the defendant 1 to 3 in normal and usual course of its banking business and sanctioned cash credit( Hypothecation) facility with a limit of Rs. 4.50 Lacs, on the condition that the plaintiff shall be entitled to charge interest @ 3% over and above the prime lending rate with a minimum of 14.25% per annum plus interest tax compounded quarterly. Plaintiff shall be entitled to charge penal interest @ 2% per annum in case of default in compliance of the terms and conditions and the loan, as above, and the credit facilities shall be primarily secured by execution of loaning and security documents by defendants 1 to 3 and collaterally secured by personal guarantees of defendants 4 to 7 and creation of equitable mortgage of the properties of defendants 2,4,6 & 7 situated at Village Lavva, Pargana Bhagwanpur, Tehsil Roorkee, District Haridwar, admeasuring 0.0836 hectares. It is further mentioned in the plaint that defendants 1 to 3 agreed to abide by the terms and conditions of the credit facility by endorsing their acceptance on the letter of sanction dated 03.06.2000 and opening a cash credit A/c No. 20038 and ultimately loan was granted. The defendants 1 to 3 in 5 terms of their respective offers executed the following documents on 08.06.2000.
● Account opening form wherein defendants 2 & 3 have shown as partners and were jointly authorized to operate the loan account. ● Declaration, inter alia, about not enjoying any credit facility with any other bank and authorizing the plaintiff to debit service charges and close the account without assigning any reason therefor.
● Demand Promissory note for partnership firm for Rs. 4.50 Lacs. ● Letter of Continuing Security.
● Instrument of Hypothecation of Goods for Rs. 4.50 Lacs. Hypothecation in favour of the plaintiff all stocks of readymade garments and other apparels of DCM Benetton India Ltd.
● General undertaking, interalia to deal exclusively with the plaintiff and authorizing the plaintiff to charge penal interest @ 2% above the rate applicable to cash credit account on the entire outstandings in cases of default in compliance of terms and conditions applicable to the credit facilities and authorizing the plaintiff to charge the contractual rate of interest at its own discretion without any intimation to them. ● Undertaking, interalia, that monies advanced shall be utilized exclusively for the stipulated purpose and the plaintiff shall be entitled to change the contractual rate of interest unilaterally.
6● Undertaking, interalia , to deal exclusively with the plaintiff and submit statements of stocks, balance sheet etc from time to time.
● Letter of partnership wherein the defendant 1 to 3 declared the composition of defendant No. 1 and also containing therein the personal signatures of defendant No. 2 & 3.
● Draft undertaking wherein the defendants 2 to 7 have disclosed the details of their respective legal representatives.
● Letter of authority in favour of the plaintiff to disclose or publish name of borrower in case of default of loan/advance.
Thereafter the limit was further extended and defendant further executed the documents.
4. The defendant No. 1 is the firm so written statement was filed on behalf of defendant No. 2. One written statement was filed on behalf of defendants No. 3 & 5. One written statement was filed on behalf of defendant no. 4 and one written statement was filed on behalf of defendants No. 6 & 7. Preliminary objections were taken in the written statement such as there is no cause of action arose and suit is not maintainable but taking of the loan was not denied.
5. From the pleadings of the parties following issues are framed for disposal of the 7 case.
● Whether the suit is bad for the lack of cause of action? OPD ● Whether the suit is bad for the suppression of material facts? OPD ● Whether the plaintiff is entitled for injunction as prayed for? OPP ● Relief.
6. Thereafter the plaintiff filed affidavit of evidence of Sh. Ram Kumar Singhal, Manager of the plaintiff Bank and one of Sh. J.P. Srivastava, Senior Manager of the plaintiff bank.
7. In the affidavit of Sh. Ram Kumar Singhal it is mentioned that he was posted in the aforesaid branch of the plaintiff w.e.f. 03.05.1998 to 13.07.2000 so he is aware of the facts of the case. It is further stated that defendant No. 1 being a partnership firm approached the plaintiff bank and offered to avail certain credit facilities for their business of retailing of readymade garments. The plaintiff favourable considered the request of the defendants 1 to 3 and allowed cash credit ( hypothecation) facility with a limit of Rs. 4.50 lacs with the condition that the plaintiff shall be entitled to charge interest @ 3% over and above the prime lending rate with a minimum of 14.25% per annum plus interest tax compounded quarterly. Plaintiff shall be entitled to charge penal interest @ 2% per annum in case of default in compliance of the terms and conditions and the loan, as above, and the credit facilities shall be primarily secured by 8 execution of loaning and security documents by defendants 1 to 3 and collaterally secured by personal guarantees of defendants 4 to 7 and creation of equitable mortgage of the properties of defendants 2,4,6 & 7 situated at Village Lavva, Pargana Bhagwanpur, Tehsil Roorkee, District Haridwar, admeasuring 0.0836 hectares. He exhibited the following documents : ● Ex. PW1/1 is the letter of sanction dated 03.06.2000 duly accepted by defendants 1 to 3.
● Ex. PW1/2 is the account opening form.
● Ex. PW1/3 is the letter dated 08.06.2000 containing the specifying the
mode of operation of current account.
● Ex. PW1/4 is the Demand Promissory Note for partnership firm for
Rs. 4.50 Lacs.
● Ex. PW1/5 is the letter of continuing security.
● Ex. PW1/6 is the Instrument of Hypothecation of goods for Rs. 4.50
Lacs.
● Ex. PW1/7 is the General Undertaking.
● Ex. PW1/8 is undertaking.
● Ex. PW1/9 is undertaking, interalia, to deal exclusively with the
plaintiff and submit statements of stocks, balance sheet etc. from time 9 to time.
● Ex. PW1/10 is letter of partnership.
● Ex. PW1/11 is draft undertaking.
● Ex. PW1/12 is letter of authority.
● Ex. PW1/13 is the general form of guarantee executed on 08.06.2000. ● Ex. PW1/14 is the Memorandum of deposit dated 03.06.2000 which was drawn in his presence and bears his signatures.
● Ex. PW1/15 is the Annexure B which was executed by defendants 2 & 4 in his presence.
● Ex. PW1/16 is the sale deed dated 20.12.1995 which was registered on 27.12.1995.
● Ex. PW1/17 is request by defendants 2 & 4 for issuance of acknowledgment of receipt of title deeds.
● Ex. PW1/18 is registered memorandum of deposit of title deeds pertaining to the mortgaged joint property of defendants 2 & 4.
8. This witness Sh. Ram Kumar Singhal was crossexamined on behalf of defendants No. 3 & 5. In that he deposed that he is the senior manager of the plaintiff. At the time of advancing the loan in June'2000 he was manager of the bank. He signed the affidavit before he oath commissioner. He earlier knew Ms. Talwant Kaur Sehra as 10 she has already been operating the current account in the bank. Before opening the current account, Ms. Talawant Kaur Sehra was not know to him. He further deposed that defendant number 3 signed in his presence. He denied the suggestion that defendant number 3 Ms. Talwant Kaur Sehra had not gone to bank and had not signed in his presence. At the time of putting the signatures on documents, two partners of defendant and two guarantors were present. He admitted that on the execution of the documents, the attestation memo is attached by the bank to ascertain that which of the bank officer was present at that time. He has not brought the attestation memo along with him. He cannot say whether the bank has exchanged any communication with defendant number 3 after the execution of documents or not. In the further cross examination on behalf of defendant no.1, 2, 4, 6 & 7 he deposed that presently he is posted in the Regional Office, Chandigarh. On 15.7.2006 he was in Delhi, though he was posted in the Regional Office, Chandigarh. He admitted that he has not mentioned about his present posting in the affidavit. He further says that the documents Ex. PW 1/1 to PW 1/13 does not bear his signature. He also admitted that only document Ex. PW 1/14 bears his signatures out of the exhibited documents. The documents were executed by the defendant in his presence as in June 2000 he was posted as Manager of the concerned branch. He himself and the branch managers conducted the inquiry and verified before sanctioning the loan and the inspection report was submitted. He admitted that no such inspection report has been filed. He further deposed that the plaint has been signed by Sh. Devender Kumar Mahajan, Sr. Manager and the 11 constituted attorney but he can not recognize his signatures. No partnership deed was filed by the defendants for the purpose of sanctioning the loan. The partnership deed was never demanded by the bank.
9. PW2 is Sh. J.P. Srivastava. He filed his affidavit of evidence in that he deposed that he was posted in the aforesaid branch of the plaintiff w.e.f. 31.05.2001 to 16.11.2000. so he is aware of the facts of the case. It is further stated that when he joined the aforesaid branch of the plaintiff, the defendants had already been enjoying, availing of and utilizing the credit facilities. The plaintiff, in normal and usual course of its banking business, favourable considered the request of the defendants 1 to 3 and reviewed/enhanced the credit facilities vide letter of sanction/renewal dated 30.05.2001 which is Ex. PW2/1 and as per that
a) Cash Credit(hypothecation) facility with a limit of Rs. 6.00 lacs ( increment of the then existing limit from Rs. 4.50 lacs to Rs. 6.00 lacs) and.
b) Bank Guarantee facilitiy with a limit of Rs. 12.00 Lacs.
Interalia, on the condition that the plaintiff shall be entitled to charge interest @ 2% over and above the prime lending rate with a minimum of 13 % per annum plus interest tax compounded quarterly. Plaintiff shall be entitled to charge penal interest @ 2% per annum in case of default in compliance of the terms and conditions and the loan, as 12 above, and the credit facilities shall be primarily secured by execution of loaning and security documents by defendants 1 to 3 and collaterally secured by personal guarantees of defendants 4 to 7 and creation/extension of equitable mortgage of the joint property of defendants 2 & 4 situated at Village Lavva, Pargana Bhagwanpur, Tehsil Roorkee, District Haridwar, admeasuring 0.0836 hectares and further creation of equitable mortgage in respect of joint property of defendants 6 & 7 being property out of Khasra No. 79 M, admeasuring 0834(0.0836 hectares) at village Lavva, Pargana Bhagwanpur, Tehsil Roorkee, District Haridwar. He further deposed that in consideration of the extension of the aforesaid credit facilities, the defendants 1 to 3 in terms of their respective offers, in his presence, executed the following loaning and security documents on 25.06.2001 in addition to and in continuation of loaning and security documents executed on 08.06.2000 : ● Ex. PW2/2 is the Demand Promissory Note for partnership firm for Rs. 1.50 Lacs.
● Ex. PW2/3 is the letter of continuing security( with negative lien clause).
● Ex. PW2/4 is the Instrument of Hypothecation of goods for Rs. 1.50 Lacs.
● Ex. PW2/5 is the Undertaking cum declaration.
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● Ex. PW2/6 is the General Undertaking.
● Ex. PW2/7 is the undertaking.
● Ex. PW2/8 is Draft undertaking.
● In consideration of the extension/review of credit facilities to defendants 1 to 3, the defendants 4 to 7, in his presence, executed General Form of Guarantee on 25.06.2001 for Rs. 18 Lacs which is Ex. PW2/9. The aforesaid guarantee is a continuing guarantee. ● Ex. PW2/10 is the supplemental memorandum of deposit of title deeds dated 25.06.2001.
● Ex. PW2/11 (OSR) is the memorandum of deposit of title deeds dated 25.06.2001.
● Ex. PW2/12 is the Annexure B executed by defendants 6 & 7 declaring/confirming the creation of equitable mortgage of their aforesaid property.
● Ex. PW2/13 is the Security Bond dated 30.05.2001 executed by defendants 6 & 7 in favour of the plaintiff.
● Ex. PW2/14 is the sale deed dated 20.12.1995 registered on 27.12.1995.
● Ex. PW2/15 is Demand Promissory Note.
● Ex. PW2/16 is the letter of continuing security ( with negative lien 14 clause).
● Ex. PW2/17 is Instrument of Hypothecation of Goods for Rs. 4.00 Lacs.
He further deposed that in consideration of the extension/review of credit facilities to defendants 1 to 3, the defendants 4 to 7, in his presence, executed General Form of Guarantee on 10.12.2001 for Rs. 4 Lacs is Ex. PW2/18. He also deposed that defendants except for the brief initial period, started committing defaults by non compliance of the terms and conditions applicable to the credit facilities as above. He further deposed that Ex. PW2/9 is the letter dated 30.03.2002 received from defendants 1 to 3 promising therein to regularize the loan account and enclosing therewith balance sheet which is Ex. PW2/20 and profit and loss account which is Ex. PW2/21. The plaintiff called upon the defendants, interalia vide letters dated 15.04.2002 and 29.04.2002 which are Ex. PW2/22 & Ex. PW2/23 respectively to regularize the loan accounts. The defendants vide letter dated 31.05.2002 which is Ex. PW2/24 admitted their liability and undertook to deposit a sum of Rs. 25,000/ every week. Vide letter dated 20.09.2002 Ex. PW2/25 the plaintiff once again called upon the defendants to regularize the loan account. The defendants vide letter received in the branch of the plaintiff on 21.09.2002 which is Ex. PW2/26, again admitted their liability and assured to regularize the loan account. He further says that despite admissions by the defendants of their liabilities, they did not take any positive steps to liquidate the same. 15 He further deposed that vide letter dated 15.04.2002 Ex. PW2/22 the defendants were informed that the mode of compounding w.e.f. 01.04.2002 would be on monthly rests and not on quarterly rests as applicable to the credit facilities earlier. In the cross examination on behalf of defendant No. 1,2,4,6 & 7 he deposed that he is presently posted at Amritsar and his posting was at the same place on 14.7.2006. This fact, he has not mentioned in his affidavit. He was posted as Sr. Branch Manager Pusha Road on 25.6.2001. The documents were executed before him. He admitted that the documents does not bear his signatures. The plaintiff bank did not ask for the partnership deed from the defendant. He further admitted that the loan facility was renewed to the defendants being a partnership firm. He had verified the documents before the renewal of loan facility. The documents were executed on 25.6.2001. Except document Ex.PW2/10, 2/11, 2/22, 2/23 other documents does not bear his signatures anywhere. He further deposed that the plaint has been signed by Sh. D.K. Mahajan and he recognize his signatures. In the further crossexamination on behalf of defendants No. 3 & 5 he deposed that Defendant number 3 Ms. Kalwant Kaur Sehra and her husband Sh. Harbhajan Singh Sehra came to the bank to execute the documents in respect of equitable mortgage. He admitted that the property in equable mortgage is situated in Haridwar. He cannot tell the name of the person who had been operating the account to avail the facility. He denied the suggestion that defendant number 3 never visited the bank nor operated the account. The verification of the documents was being done in the bank itself at the time of execution of documents. He further denied the suggestion 16 that no verification of the documents is being done and it is accepted in routine. He also denied the suggestion that the documents were not executed in his presence and is deposing falsely.
10. PW3 is Sh. O.P. Tanwar. He filed his affidavit of evidence, in that deposed that he was posted in the aforesaid branch of the plaintiff w.e.f. June'2003 to April'2006. He is therefore, aware of the facts of the case. It is further stated that when he joined the aforesaid branch of the plaintiff, the defendants had already been enjoying and utilizing the credit facilities and there was huge outstanding in the loan account of various defaults. He further deposed that the plaintiff was constrained to serve upon the defendants legal notice dated 29.05.2004 under registered A.D. Post as well as UPC calling upon them, interalia, to pay the amounts outstanding along with interest thereon and cost of the notice within fifteen days thereof. Ex. PW3/1 is the legal notice dated 29.05.2004. The defendants were duly served with the aforesaid legal notice sbut did not comply with the same. The defendants even attempted to evade the service of legal notice at some of their addresses in respect of which some registered A.D. Envelops have been received back unserved. He further deposed that Ex. PW3/2 is the the certified true copy of statement of account pertaining to the cash credit hypothecation facility. The plaint has been signed and verified by Mr. Deveander Kumar Mahajan, Senior Manager whose signatures he identify. Ex. PW3/4(OSR) is the power of attorney in favour of Mr. Devander Kumar Mahajan, Senior Manager. In the 17 crossexamination on behalf of defendants number 3 & 5 he deposed that he is serving as Sr. Manager in the plaintiff bank. He joined the plaintiff bank in the year 1984 as Probationary Officer. He identify the signatures of Sh. D.K. Mahajan, who happened to be the Sr. Bank Manager in the year of 2004. He was not aware of the address of M/s Globus Fashions in the year 2004 at the time of sending the legal notice, so the notices were sent to the address of partners and guarantors. Sh. D.K. Mahajan is still serving in the bank as Chief Manager. He denied the suggestion that he deposed falsely. In the further crossexamination on behalf of defendants number 1,2,4 , 6 & 7 he deposed that he was not dealing with the case of the defendants at the time of sanctioning of the loan. The loan had already been disbursed before his joining and after his joining the recovery proceedings was initiated. He had been working as Credit Officer so being a Credit Officer, he supposed to initiate the recovery proceedings. He has not filed any specific authorization but under the Bank Rules Branch Manager is authorize to initiate the recovery proceedings. Mr. D.K. Mahajan was the branch Manager at the time of the issuance of the legal notice. He denied the suggestion that he is not competent /authorize to initiate the recovery proceedings. He did not have any specific attorney for making the deposition on behalf of the bank.
11. Defendant examined DW1 Sh. Harbhajan Singh Sehra. He filed his affidavit of evidence. In that he deposed that the deponents wife i.e. The defendant No. 3 in the present suit and sh. Manjot Singh who is the nephew of the deponent and is defendant 18 No. 2 , started the partnership business in the name of Globus Fashions. The deponents wife is simple housewife and is suffering from cardiovascular diseases therefore the deponents wife was to be a dormant partner and Sh. Manjot Singh, the defendant No. 2 was to manage the entire business affairs solely. He further stated that Sh. Manjot Singh, the defendant number 2 was managing the partnership business, obtained the signatures of the deponents wife on various documents in the presence of the deponent. Whenever Manjot Singh obtained the signatures from the deponents wife, he assured the deponent and his wife that the business was flourishing and none of them had any liability. It is further stated that in the year 2000 Sh. Mnjot Singh approached the deponent and his wife and represented them that he had made arrangements with the Bank of Baroda for raising a loan that was required for expanding the business and for making some immediate payments to DCM Benetton. Sh. Manjot Singh obtained the signatures from the deponent and his wife for the purpose of raising loan facility and assured them that the loan would be secured by way of equitable mortgage of property being part of Khasra No. 0836 Hectares at village Lavva, Paragana Bhagwanpur, Tehsil Roorkee, District Haridwar. It is further stated that Sh. Manjot Singh had assured the deponent and his wife that in the eventuality on nonpayment of the loan amount due to Bank of Baroda, the Bank could easily recover the same by selling the mortgaged property and the deponent and his wife will never owe any liability towards the Bank. It is only on these assurances that Sh. Manjot Singh was successful in obtaining the signatures from the deponent and his wife. It is further mentioned that deponent had 19 agreed to sign the documents only after the great persuasions from Sh. Manjot singh and his mother, the defendant number 4 and after being fully assured by them that neither the deponent nor his wife stood any risk of any claim from Bank as any debt which may arise against the partnership firm was fully secured and could be easily recovered by selling the mortgage property. It is further stated that deponent is about 72 years of age and a retired central government employee and does not have the capacity to pay the debt claimed by the bank. The deponent had signed the documents in good faith and never agreed to pay any debts of the bank. The deponents wife due to her ailing health was just a dormant partner and was never aware of the manner in which, Sh. Manjot Singh was using the credit facilities. He further deposed that Sh. Manjot Singh in collusion with the bank had used the credit facilities for his personal interest. It is also stated that in the year 2001 Sh. Manjot Singh again obtained the signatures of the deponents wife on the assurances that there was no outstanding liability against the partnership firm and neither the deponent nor his wife would have any liability in any eventuality. He further deposed that in 2001 Sh. Manjot Singh, the defendant No. 2 and Ms. Harjinder Kaur, defendant No. 4 and the mother of Sh. Manjot Singh extended the mortgage in respect of their joint property out of khasra No. 79M, admeasuring 0836 Hectares situated at village Lavva, Paragana Bhagwanpur, Tehsil Roorkee, District Haridwar to secure the loan that may be found due and payable towards the bank. He also stated that Sh. Gursharan Singh, the defendant number 6 and brother in law of Sh. Manjot Singh and Ms. Mandeep Kaur, the defendant number 7 and sister of Sh. Manjot 20 Singh also created mortgage in respect of their joint properties in favour of the plaintiff bank to secure the repayment of the loan/debt that may be found due and payable to the plaintiff bank at any point of time. It is also stated that deponent and his wife had signed the documents in good faith and only on assurances and promises that the sister and brother in law of Sh. Manjot Singh had also signed the documents and they would first discharge the liability if any towards the bank. Neither the deponent nor his wife had created any liability or charge on their personal assets in any manner whatsoever. He also deposed that the loan/debt claimed by he bank in the present suit is completely secured by mortgage of the property being part of the khasra No. 79M, admeasuring .0836 Hectares situated at village Lavva, Paragana Bhagwanpur, Tehsil Roorkee, District Haridwar. Therefore the act of the bank of filing the present suit for recovery without proceedings or taking any action against the mortgage property is illegal. In the crossexamination by the plaintiff counsel he deposed that he is B.E. ( Mechanical). The educational qualification of his wife, i.e. Defendant number 3 is 10th class. He further deposed that a partnership deed was executed between the defendant number 2 and defendant number 3. The defendant number 3 had invested some amount with the defendant number one. He admitted that defendant number 1 had cash credit facility from the plaintiff in June 2000. He can not say at that time whether the defendant number 1 firm was suffering the losses or earning the profits. He further deposed that the share of profit was not given to defendant number 3. He voluntarily says that the amount of profit of defendant number 3 used to be further 21 invested in the defendant number 1. He further admitted that defendant number 3 was partner in the enhanced capital of defendant number 1. He further deposed that the defendant number 2 had been managing the affairs of defendant number 1 including the accounts. He can not say whether there is any litigation between defendant number 2 and defendant number 3 with regard to the partnership or not. He did not feel any necessity to ask from defendant number 2 with regard to the account or the cash credit facility taken from plaintiff bank. He never responded to the correspondence of the plaintiff sent to defendant number 1 or any copy of the same sent to him . He has signed the document submitted with the plaintiff bank. He denied the suggestion that the documents were signed in the bank. He further denied the suggestion that he deposed falsely.
12. DW2 is Amarjeet Singh Sehra. He filed his affidavit of evidence, in that he mentioned that deponents mother i.e. the defendant No. 3 in the present suit and sh. Manjot Singh who is the cousin of the deponent and is defendant No. 2 in the present suit, started the partnership business in the name of Globus Fashions. The deponents mother is simple housewife and is suffering from cardiovascular diseases therefore the deponents mother was to be a dormant partner and Sh. Manjot Singh, the defendant No. 2 was to manage the entire business affairs solely. It was specifically agreed that Sh. Manjot Singh, the defendant No. 2 would be solely liable and responsible for any liability that may be due against the partnership firm at any point of time and neither 22 the deponents mother nor his father, the defendant No. 5 would be liable for any kind of liability whatsoever. He further stated that Sh. Manjot Singh, the defendant number 2 was managing the partnership business obtained the signatures of the deponents mother on various documents in the presence of the deponent. Whenever Manjot Singh obtained the signatures from the deponents mother, he assured the deponent and his mother that the business was flourishing and none of them had any liability.... It is further stated in the affidavit that the defendant number 2 Sh. Manjot Singh despite many requests from the deponent and his parents neither submitted the accounts of the partnership firm nor paid any share in profits to the deponents mother and taking advantage of the ailing condition of the deponents mother misappropriated the business proceeds. In the year 2000 Sh. Mnjot Singh approached the deponents parents and represented them that he had made arrangements with the Bank of Baroda for raising a loan that was required for expanding the business and for making some immediate payments to DCM Benetton. Sh. Manjot Singh obtained the signatures from the deponents parents and his mother for the purpose of raising loan facility and assured them that the loan raised would be secured by way of equitable mortgage of property being part of Khasra No. .0836 Hectares at village Lavva, Paragana Bhagwanpur, Tehsil Roorkee, District Haridwar. The deponent was also present when Sh. Manjot Singh obtained the signatures from the deponents parents and gave them false assurances. It is further stated that Sh. Manjot Singh had assured the deponent and his parents that in the eventuality on nonpayment of the loan amount due to Bank of 23 Baroda, the Bank could easily recover the same by selling the mortgaged property and the deponent and his parents will never owe any liability towards the Bank. It is only on these assurances that Sh. Manjot Singh was successful in obtaining the signatures from the deponents parents. It is further mentioned that deponents parents had agreed to sign the documents only after the great persuasions from Sh. Manjot singh and his mother, the defendant number 4 and after being fully assured by them that the neither the deponents parents did not stand any risk of any claim from Bank as any debt which may arise against the partnership firm was fully secured and could be easily recovered by selling the mortgage property. It is further stated that neither deponents mother who is simple house wife without any source of income and nor deponents father who is senior citizen of about 72 years of age and a retired central government employee have the capacity to pay the debt claimed by the bank. The deponents parents had signed the documents in good faith and never agreed to pay any debts of the bank. The deponents mother due to her ailing health was just a dormant partner and was never aware of the manner in which, Sh. Manjot Singh was using the credit facilities. Sh. Manjot Singh in collusion with the bank had used the credit facilities for his personal interest. It is also stated that in the year 2001 Sh. Manjot Singh again obtained the signatures of the deponents mother on the assurances that there was no outstanding liability against the partnership firm and neither the deponent nor his mother would have any liability in any eventuality. He further deposed that in 2001 Sh. Manjot Singh, the defendant No. 2 and Ms. Harjinder Kaur, defendant No. 4 and the mother of Sh. Manjot Singh extended 24 the mortgage in respect of their joint property being property out of khasra No. 79M, admeasuring .0836 Hectares situated at village Lavva, Paragana Bhagwanpur, Tehsil Roorkee, District Haridwar to secure the loan that may be found due and payable towards the bank. He also stated that Sh. Gursharan Singh, the defendant number 6 and brother in law of Sh. Manjot Singh and Ms. Mandeep Kaur, the defendant number 7 and sister of Sh. Manjot Singh also created mortgage in respect of their joint properties in favour of the plaintiff bank to secure the repayment of the loan/debt that may be found due and payable to the plaintiff bank at any point of time. This mortgage was separate and in addition to the mortgage by defendant No. 2 and defendant No. 4. It is further stated that sh. Manjot Singh obtained the signatures from the deponents parents on the assurances that the loan/debt raised by the partnership firm was fully secured by way of mortgage of the property and in any case whatsoever the deponents parents would have no liability for the loan raised by the partnership firm. The deponents parents also did not go to the bank and Sh. Manjot Singh had obtained signatures from them at their residence in the presence of the deponent. The deponents parents had signed the documents in good faith and only on assurances and promises that the sister and brother in law of Sh. Manjot Singh had also signed the documents and they would first discharge the liability if any towards the bank. The deponents parent had never created any liability or charge on their personal assets in any manner whatsoever. He also deposed that the loan/debt claimed by he bank in the present suit is completely secured by mortgage of the property being part of the khasra No. 79M, admeasuring 25 .0836 Hectares situated at village Lavva, Paragana Bhagwanpur, Tehsil Roorkee, District Haridwar. Therefore the act of the bank of filing the present suit for recovery without proceedings or taking any action against the mortgage property is illegal and arbitrary. In the crossexamination by the plaintiff counsel he deposed that during the period from June'2002 to December'2001 he was doing the business of retailing of garments. The defendants number 2 & 3 were partners of defendant number one. He is not aware of any dispute or litigation between defendants number 2 & 3. He did not know whether defendant number 1 has been suffering losses or earning profit during the period 20002002. He admitted that defendant number 2 was not disclosing the accounts to defendant number 3. Defendant number 2 was looking after the interest of defendant number 3 in the business of defendant number 1. He never interfered in the business of defendant number 1. The bank was informed that in case of losses to defendant number 1 , the defendant number 3 would not share the same. He further deposed that the roll of defendant number 2 in business of defendant number 1 was never subject matter of any challenged before any authority. He admitted that loaning documents executed before the bank were never questioned. He denied the suggestion that loaning documents were executed by defendant number 3 in the bank. He can no say whether the defendant number 3 has filed the income tax return during the period of 20022003. He further deposed that the defendant number 3 was heart problem, diabetic and suffering from hypertension. The treatment of defendant number 3 was being taken by the hospital. He further denied the suggestion that he did not have 26 knowledge of the contents of the affidavit. He denied the suggestion that he deposed falsely.
13. DW3 Sh. Manjot Singh Chanana. He filed his affidavit of evidence. In that he deposed that the deponent has suffered the physical problem of kidney ailment in the year 2002, due to which the movement of the deponent were restrained and the physical condition deteriorated drastically. He further says that due to the problem of kidney ailment the deponent could not concentrate on his business activity sand from the year 2002 the charge of the business was taken by the defendant No. 3 and the entire dealing from that time till the closing of the shutter finally was done by the defendant No. 3 along with the defendant No. 5 the husband & wife because they were already having a similar business of the same franchise still running at Green Park, New Delhi. In addition to the ailing physical condition of the deponent there has been other dominating reason of business failure. He further deposed that the road in front of the shop was also dug out by the Municipal Corporation for laying out the Sever Line and also the CNG Gas Pipe line for over 2 and a half month and there after the construction work of Metro Rail started so there was no space left what so ever for the customer to reach comfortably at the shop, resultantly it affected the sale at the shop and it started suffering recurring loses as informed by the defendant No. 3 & 5, which has become ultimate reason to shut down the shop. He further says that deponent was not informed about the inventory of the material/stock lifted by the defendants no. 3 & 5 from the 27 shop finally which they have sold out from the shop of their own at Green Park, New Delhi. Moreover the interior of the shop has also been removed by the defendant No. 3 & 5 and has been used by them which is best known to them. He further deposed that medical record of the deponent are Ex.DW1/1 which are about the transplantation of the kidney of the deponent conducted at Combatore, Tamilnadu on 13.10.2005 at KOVAI Medical Centre for which he was hanged up for the one reason of the other till 9 months since March'2005. The problem of kidney ailment of the deponent has caused many setback in the life of the deponent as the deponent is running from the financial crisis, which is even resulted in causing damage in matrimonial life of the deponent. He further deposed that deponent is the only bread earning member of the family and physical status of the deponent is such which does not allow him to put more labour to earn even the basic bread and butter of the life and has no financial source to met any liability. He also says that it is the fault of defendant No. 3 & 5 resulting in the closure/shut down of the defendant no. 1 i.e. M/s. Globus Fashions and because of his above stated health reasons the deponent could not do anything to save the firm to the extent to enable it to return/pay back the bank loan. As such the deponent is a victim of circumstances who could not refund/return the bank loan despite his strong desire to do the same. In the crossexamination on behalf of the plaintiff he deposed that the partnership firm namely M/s. Globus Fashions has already been closed. The accounts between the partners have not been settled so far and still to be settled. No litigation is pending between the partners with regard to the accounts. He was not aware about the 28 selling of the hypothecated goods. He was having good health during the period from 2000 to 2002. He denied the suggestion that he deposed falsely.
14. DW4 is Gursharan Singh. He filed his affidavit of evidence in that he stated that deponent being defendant number 6 in the present case is aware with the facts & circumstances of the case. It is further stated that deponent who is the husband of defendant number 6 is/was joint owner of the property out of Khasra No. 79M, admeasuring 0834( 0.0386 hectares) situated at village Lavva, Paragana Bhagwanpur, Tehsil Roorkee, District Haridwar. The deponent along with defendant number 7 have given guarantee to the defendant numbers 1 to 3 in obtaining the loan in question from the plaintiff bank by mortgaging his aforementioned property with the bank. He further mentioned that the deponent was present at the time of furnishing the loan papers/documents in respect of the loan in question but thereafter deponent was neither present during the proceedings of review/enhancement of credit facilities & Bank guarantee facility to the defendants number 2 & 3 nor the deponent had consented to this aforementioned review/enhancement of credit facilities & Bank guarantee facility to the defendant numbers 2 & 3. He also mentioned that the deponent had never extended his loan guarantee paper and all the documents have been executed by the deponent on the initial date/time of sanctioning of loan by the plaintiff bank and thereafter the deponent has never entered in the bank. As such the documents of the extension of the loan are fabricated by the plaintiff bank which are not enforceable 29 upon the deponent. In the crossexamination by the counsel for the plaintiff he deposed that the date mentioned in para 4 is approximately and the contents of rest para 4 are correct to the best of his knowledge. Ex. PW 3/1 i. e. notice was received by the defendant. He did not remember the date of giving the credit facility to the defendants number 1 to 3 for the first time. He is not aware if after the enhancement the bank has extended adhoc credit facility to defendants number 1 to 3. Until he received the notice from the bank, he was not aware that defendants number 1 to 3 has not repaid the loan. He had not made any complaint with regard to fabrication of the loan documents to any authority. He denied the suggestion that the he was liable to pay the claim of the plaintiff. He further denied the suggestion that he deposed falsely.
15. I have heard the Ld. Counsel for the parties and perused the record to my thoughtful consideration. My issue wise findings are as under. ISSUE NO. 1
The issues number one is that ' Whether the suit is bad for the lack of cause of action? The onus of this issue is on the defendant but the defendant has not proved that what is lack of cause of action whereas the plaintiff has categorically stated that loan was taken by the defendants and some of the defendants were stood as guarantor and loan was not paid so this issue is decided against the defendants. 30 ISSUE NO. 2
The issue number two is ' Whether the suit is bad for the suppression of material facts ? The onus of this issue also lies on the defendants. The defendant has not proved anything that what material was suppressed by the plaintiff whereas the plaintiff has placed crystals clear everything that how the loan was give, what was the property which was mortgage, who signed on which documents. Hence, this issue is also decided against the defendants.
ISSUE NO. 3 & 4
The issues number three is ' Whether the plaintiff is entitled for injunction as prayed for ? And issue number four is ' Relief '. The onus on these issues are on the plaintiff. The plaintiff by examining their witnesses and exhibited and placed the documents of loan, proved that the plaintiff has given loan to the defendants and defendants have availed loan from the plaintiff bank by keeping titled deed of their property. As per those documents the loan was applied on behalf of the M/s. Globus Fashions and loan was given to the Globus Fashions, the defendant No. 1. The defendant number one and defendant number two Mr. Manjot singh Channa and defendant No. 3 Ms. Kulwant Kaur were the partners so loan documents were executed and signed by them. The hypothecation of the goods document were also signed by 31 these two defendants as partner of the M/s. Globus Fashions. General Form of the guarantee was executed and signed by defendant No. 4 to 7. The other documents of the hypothecation were also signed by these two persons( defendants) regarding loan whereas form of guarantee regarding loan was signed by four defendants namely Ms. Mandeep Kuar, Ms. Harjinder Kaur,Mr. Harbhajan Singh Sehra and Mr. Gursharan Singh, the defendants No. 4, 5, 6 & 7 respectively and the sale deed of the land referred above was kept by Sh. Ms. Harjinder Kuar and Manjot Singh. As per the statement of account filed on record a sum of Rs. 7,11,116.32/ was due in C.C. Account No. 20038 as on 06.12.2004. Accordingly, the third issue is also decided against the defendants.
16. In these circumstances of the matter, the suit is decreed in favour of the plaintiff for the amount of Rs. 7,12,752.86/with pendente lite & future interest @ 16% per annum till realization and cost against the defendants who are jointly and severally likely to pay the decretal amount with interest.
17. The decree of permanent injunction is also passed against the defendants restraining them selling/transferring/ alienating and any third party interest whatsoever the property bearing number out of Khasra No. 79M, admeasuring 0834( 0.0386 hectares) situated at village Lavva, Paragana Bhagwanpur, Tehsil Roorkee, District Haridwar.
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18. A preliminary decree is passed in favour of the plaintiff directing that the defendant to pay the decretal amount along with interest and cost as mentioned above within 6 months failing which the plaintiff would be entitled to apply for final decree for sale of above referred mortgage property number out of Khasra No. 79M, admeasuring 0834( 0.0386 hectares) situated at village Lavva, Paragana Bhagwanpur, Tehsil Roorkee, District Haridwar and proceeds of sale after deducting of the expenses of sale to be deposited in the court in accordance with law.
19. Decree sheet be prepared. File be consigned to record room.
Announced in the open Court ( S. N. Gupta )
on 14th day of November'2007. Addl. District Judge
Delhi