Bangalore District Court
State Bank Of India vs M/S British Instruments on 20 December, 2021
KABC010296242016
IN THE COURT OF THE LXII ADDL.CITY CIVIL AND
SESSIONS JUDGE (CCH-63) BENGALURU CITY
Dated this the 20th day of December, 2021
:PRESENT:
Sri R. ONKARAPPA, B.Sc., LL.B.,
LXII Addl. City Civil and Sessions Judge (CCH63)
Bengaluru city.
O.S.NO: 8640/2016
PLAINTIFF : State Bank of India,
Small and Medium Enterprises Centre
(SMEC), #20, Badaga Nadu Sangha,
Building, Girl's High School Street,
Sheshadripuram, Kumar Park, Bengaluru-
560 020
Rep. By its Chief Manager
Smt. Khursheed Banu
W/o M. M. Ali,
Aged about 42 years
(By Sri. N. P. Singri, Advocate)
/Vs/
DEFENDANT : M/s British Instruments,
Rep. By its Prop: Ramanujam V,
No. 189, 3rd Cross, 1st Main road,
Byappanahalli Extension,
Indiranagarpost, Off old Madras road,
Bengaluru-560 038
2 O.S.NO: 8640/2016
(By Sri. G.M. Advocate)
Date of institution of the : 17.12.2016
suit
Nature of the suit : Money Suit
Date of commencement of : 20.11.2019
recording of the evidence
Date on which the : 20.12.2021
Judgment pronounced.
: Year/s Month/s Day/s
Total duration
05 00 03
(R. ONKARAPPA)
LXII Addl. City Civil and Sessions Judge,
(CCH63), Bengaluru City.
JUDGMENT
The suit has filed by the Plaintiff for recovery of Rs.5,43,385/- (Rupees Five Lakhs Forty Three Thousand Three Hundred and Eighty five Only) from the Defendant with current and future interest at rate of 13.00% per annum compounded at monthly rests under Cash Credit Facility, from the date of suit till realization.
2. The case of the Plaintiff in brief is that, the plaintiff is a banking institution constituted under the State 3 O.S.NO: 8640/2016 Bank of India Act 1955, having its Corporate Centre at Madam Cama Road, Mumbai-400021. The defendant approached the plaintiff bank in the capacity of a Proprietor of defendant firm for sanction of Cash Credit facility, pursuant to which the plaintiff bank sanctioned a cash Credit limit of Rs. 7,00,000/- on 02.02.2015 for the purpose of providing embedded solution, assembling, testing and installation of designed systems. On considering the request, the plaintiff bank had sanctioned and allowed the said amount in the accounts to be utilized by the defendant. The cash Credit loan has sanctioned on the condition that the same to be repaid on demand. The limit is available for 12 months, with interest at the rate of 3.00% above the Basic Rate at 10% per annum., with monthly rests; the effective rate is 13.00%. The Hypothecation of stocks and receivables were taken as security. On sanction of loan, the defendants in the capacity of proprietor of defendant firm, has executed letter of arrangements on 09.03.2015. The defendant has executed a Revival letter dated 10.06.2013 and another 4 O.S.NO: 8640/2016 revival letter dated 28.03.2016 confirming the balance standing in his account. The defendant fully availed the Cash Credit loan as carried out his business. Thereafter the defendant failed to adhere to various terms and condition mentioned in the agreement and has committed defaults. The defendant has not made payments as agreed and the dues of the bank accumulated. Inspite of several request the defendant did not regularize the account. Thus, the plaintiff bank got issued the legal notice dated 16.06.2016, called upon defendant to pay the amount due and for clear the entire outstanding balance, the notice sent have received by the defendant. Despite all this the defendant did not turn up to settle the account. Inpsite of the same the defendant has not cleared the dues. The defendant being the firm and representing by its Proprietor, being borrower is liable to pay the amount due to the plaintiff bank. Outstanding amount as per the extract as on 08.11.2016 is Rs. 4,81,256.00. Accrued interest as on 08.11.2016 is Rs. 62,129.00. Total dues as on 08.11.2016 is Rs. 5,43,385.00 Hence suit is before this court for recovery. 5 O.S.NO: 8640/2016
3. After admitting of the suit, summons was issued to the defendant, the defendant appeared through his counsel and filed written statement.
4. The defendant in their written statement urged that, at the outset, the present suit is not maintainable either on law or on facts and the same is liable to be dismissed. The plaintiff has suppressed the material facts and the present suit devoid of merits. The averments made in the para No. 3 are specifically denied as false. That the defendant is a company dealing with turn key projects providing software and hardware solutions to both Government and private entities. The defendant company is also a registered vendor for many DRDO labs. That under Central Government Medium and small scale enterprises Scheme the defendant since 2007 has availed cash credit limit of Rs. 5,00,000/- and bank guarantee of Rs. 2,00,000/- by the plaintiff. That the cash credit account with the plaintiff bank was regular as on 30.05.2013. That the plaintiff had sanctioned many Temporary overdrafts to the tune of Rs. 2,65,000/- to meet the excess cash required for 6 O.S.NO: 8640/2016 operations on short term return basis and the above cash credit limit. That in July the defendant requests the plaintiff for a temporary overdrafts of Rs. 1,20,000/- for 60 days to meet the sudden unexpected threat from a supplier to invoke the bank Guarantee submitted for raw materials. The plaintiff has stopped the temporary Overdraft facility to the defendant and inspite of several request and by vide letter dated 23.07.2013 the plaintiff rejected the temporary overdraft facility and allowed the bank guarantee to devolve on 12.08.2013 and then the debited Rs. 1,20,000/- from the defendants cash credit account. It is denied that the defendant failed to adhere to the various terms and conditions as per the agreement and has committed defaults. That the plaintiff intentionally allowed the defendant's account to became irregular. The plaintiff instead of devolving the Bank guarantee it could have debited the amount by allowing the temporary overdraft. The same was intentional and was a planned conspiracy of the then assistant General Manager of the plaintiff bank in order to harass the defendant. That inpsite of repeated 7 O.S.NO: 8640/2016 requests the plaintiff bank did not renew the cash credit limits nor they were putting any efforts for the renewal of the account hence the account expired on 09.09.2013. that after the expire of the validity the plaintiff bank on 16.09.2013 asked the defendant to submit their request for renewal along with the necessary documents vide letter dated 16.09.2013. That inspite of submitting the company profile and its liability statement which included orders worth Rupees one crore and still the defendant account was not regularized. That the actual position in the case the account was not renewed and the losses will be incurred in case the account was not renewed was clearly mentioned. That on 09.12.2013 the defendant had brought in Rs. 1,25,000/- to regularize the over drawn account and further Rs. 31,664/- was brought in and the account was regularized. That even after regularizing the account no attempt for renewal of account was made and the account was put on hold for operation. That on 23.12.2013 the plaintiff bank informed that they were unable to renew the account and asked the defendant to close the account. 8 O.S.NO: 8640/2016 Inspite of AGM Branch directing for necessary approval note, SMECC had not taken any further steps for renewal of the account and the defendant was kept in dark for nearly two months. That even though the account was regularized the plaintiff was not allowed to operate the account and a cheque issued was also returned. The bank guarantee request was intentionally avoided by the plaintiff bank. That the plaintiff bank is given guarantee under the CGTMSE Schemes to cover the advance paid to the small and medium enterprise sector. Inspite of this the plaintiff bank did not extend the bank guarantee for the year 2013- 2014. that insurance police is also arranged for the business operation of the unit to cover Rs. 6,00,000/- and to cover the advance amount sanctioned, this premium amount was debited to cash credit account on 16.09.2013. that inspite of the plaintiff having the security under the CGTMSE Scheme asked us to submit house property documents as security. That with lot of difficulties and under the impression that after producing property documents some sort of relief would be granted and the 9 O.S.NO: 8640/2016 account would be renewed. The defendant submitted the property documents. That the plaintiff bank for over years extended the CGTMSE cover with defence contract but it did not extend the same for the year 2014 and the defendant's request to get the approval from CGTMSE was also ignored. That the Aeronautical Development Established (ADE) which is out customer also sent a letter to the General Manager, SBI Trade Finance Division of SBI seeking clarification foe delay in submitting the bank guarantee by the defendant as the supply vendor. Inspite of which the SMECC refused to renew the account. That the defendant after various efforts for more than 10 months, then approached the Divisional Head i.e., Deputy General Manager and General Manager of the plaintiff bank at Basvanagudi requesting to address the problems of the defendant immediately. That once the request was made to DGM, the AGM immediately moved a note to the Regional Operation Division for renewal of the account. The note was approved by DGM-ROD and GM-LHO for renewal of the account and immediately on 03.07.2014 SMECC sent a 10 O.S.NO: 8640/2016 letter informing that the defendants cash credit account was renewed upto December -2014. That due to the deficiency of service on the part of the plaintiff bank to allow the defendant to operate the account in time, the defendant faced heavy losses for the orders worth more than Rs.70,00,000/- in June 2014. When this being the case the DRDO removed the defendant from the Standard Vendors list and because of this defendant suffered heavy loss. That on 12.08.2016 the defendant has sent a reply notice to the letter dated 16.06.2016 by the plaintiff bank, stating that the plaintiff has miserably failed in providing proper service and still continuing their misdeeds. That the averments made in para No. 6 are hereby denied as false and baseless. That the defendant is not liable to pay to the plaintiff Bank under Cash credit loan for a sum of Rs. 4,74,704/-. That the defendant had approached various higher authorities informing about the deficient service provided by the plaintiff bank and the defendant in many occasion requested the plaintiff bank to audit the account of the defendant in order to ascertain the facts and the 11 O.S.NO: 8640/2016 same was refused bluntly by the plaintiff bank. Inter alia on these grounds the defendant prays for dismissal of the suit.
5. Heard arguments on side of the plaintiff. Inspite of opportunities given to the defendant, the defendant did not turned up and address the argument. Hence defendant argument taken as nil. Perused the records.
6. Based on the pleadings,followed as many as four issues have been framed , they are;
ISSUES
(1) Whether the plaintiff proves that
the defendant borrowed a loan in
view of loan agreement dated
02.02.2015?
(2) Whether the plaintiff proves that
the defendant is over due for a
sum of Rs. 4,81,256?
(3) Whether the plaintiff is entitle for
the relief as sought in the plaint?
(4) What Order or Decree?
7. My finding on the above points are as under:
Issue No.1 to 3 - In the Affirmative
Issue No.4 - as per the order for the
following :
REASONS
12 O.S.NO: 8640/2016
10. Issues No.1 to 3 :- In order to prove the case, the plaintiff, the plaintiff got examined himself as P.W.1 and got marked the documents as Ex.P1 to Ex.P8. The P.W.1 in his examination in chief he filed affidavit in his affidavit ,he reiterated the averments made in the plaint that, the plaintiff is a banking institution constituted under the State Bank of India Act 1955, having its Corporate Centre at Madam Cama Road, Mumbai-400021. The defendant approached the plaintiff bank in the capacity of a Proprietor of defendant firm for sanction of Cash Credit facility, pursuant to which the plaintiff bank sanctioned a cash Credit limit of Rs. 7,00,000/- on 02.02.2015 for the purpose of providing embedded solution, assembling, testing and installation of designed systems. On considering the request, the plaintiff bank had sanctioned and allowed the said amount in the accounts to be utilized by the defendant. The cash Credit loan was sanctioned on the condition that the same has to be repaid on demand. The limit is available for 12 months, with interest at the rate of 3.00% above the Basic Rate at 10% per annum., with 13 O.S.NO: 8640/2016 monthly rests; the effective rate is 13.00%. The Hypothecation of stocks and receivables were taken as security. On sanction of loan, the defendants in the capacity of proprietor of defendant firm, has executed letter of arrangements on 09.03.2015. The defendant has executed a Revival letter dated 10.06.2013 and another revival letter dated 28.03.2016 confirming the balance standing in his account. The defendant fully availed the Cash Credit loan as carried out his business. Thereafter the defendant failed to adhere to various terms and condition mentioned in the agreement and has committed defaults. The defendant has not made payments as agreed and the dues of the bank accumulated. Inspite of several request the defendant did not regularize the account. Thus, the plaintiff bank got issued the legal notice dated 16.06.2016, calling upon defendant to pay the amount due and for clearing the entire outstanding balance, the notice sent is received by the defendant. Despite all this the defendant did not turn up to settle the account. Inpsite of the same the defendant has not cleared the dues. The defendant 14 O.S.NO: 8640/2016 being the firm and representing by its Proprietor, being borrower is liable to pay the amount due to the plaintiff bank. Outstanding amount as per the extract as on 08.11.2016 is Rs. 4,81,256.00. Accrued interest as on 08.11.2016 is Rs. 62,129.00. Total dues as on 08.11.2016 is Rs. 5,43,385.00
11. In order to substantiate the case, the plaintiff also got marked one sanction letter as per Ex.P2, Ex.P2 speaks loan transaction between the plaintiff and the defendant. Letter of arrangements as per Ex.P3. As per Ex.P3 letter of arrangements that the plaintiff have agreed to advance to SME segment sanction of credit facilities. Revival letter as per Ex.P4. As per Ex.P4 revival letter that the defendant have revive the loan transaction before the plaintiff as per dated 10.06.2013. Another one revival letter as per Ex.P5. Ex.P5 also speaks that the defendant have revive the loan at before the plaintiff bank as per dated 28.03.2016. Even after go through cross examination of PW1, the defendant nothing of the single suggestion that he has made to the PW1 that the Ex.P1 to Ex.P5 documents 15 O.S.NO: 8640/2016 have not executed in favour of the plaintiff bank. It is pertinant note that, according to the defendant suit of the plaintiff not barred by law of limitation. As such the oral testimony of PW1 corroborated by the contents Ex.P1 to Ex.P5 documents, in so far granting the loan and continuance of his liabality. It is further case of the plaintiff that in view of the defendant failed to repay the loan amount, the plaintiff have issued Legal notice as per Ex.P6. Postal acknowledgement as per Ex.P7. Servicing of legal notice as per Ex.P6 and signature available on Ex.P7 postal acknowledgment have also not denied by the defendant. As such herein this the plaintiff also succeed to prove that the plaintiff before he knock off the door of justice he demand the defendant for repayment. Perused the Ex.P8. Ex.P8 is one of the account extract belonging to the defendant. Against to contents available on Ex.P8 documents, the defendant have not hold any cross examination. Also the defendant have not disputed account number, loan transaction between the plaintiff and the defendant as per Ex.P8. As such herein this the plaintiff 16 O.S.NO: 8640/2016 have also established that the defendant is liable to pay total dues of Rs. 4,74,703/-.
12. Even after go through the cross examination potion of PW1, the defendant nothing elicited through the mouth of PW1 to disbelieve the case of the plaintiff except denial of suggestion. Contrary, it is particular defence of the defendant against to testimony of PW1 that the plaintiff bank being one bank have not provided any proper service to the defendant. As such the defendant sustained a loss for the deficiency of service. If really the defendant have sustained any loss as he contended he could have more option against to the plaintiff bank for deficiency of service. Even for a sake of argument that the plaintiff have default in their service, mere that alone the liability of the defendant cannot to be declined.
13. On the contrary the defendant also examined at before the Court and in lieu of his examination in chief he filled the sworn affidavit, wherein he reitrated the all contention that he has taken at his written statement. DW.1 to substantiated his contention he also got marked 17 O.S.NO: 8640/2016 as many as eighteen documents as per Ex.D1 to Ex.D18. Ex.D1 is one of the letter issued by the plaintiff bank stating advances to SME segment to the plaintiff company. As per Ex.D2 that, the plaintiff under take credit facilities to the defendant company. Ex.D3 is one of the letter issued by the plaintiff bank to the defendant stated existing credit facilities were sanctioned on 10.09.2013 is expired on 09.09.2013. perused the EX.D4, as per Ex.D4 that the plaintiff advances to SME sector to the defendant limit of Rs. 5,00,000/-. perused the EX.D5, as per Ex.D5, the plaintiff have offered required for bank guarantee from the defendant. Perused the EX.D6,as per Ex.D6 requisition fore renewal of limits. Perused the EX.D7,as per Ex.D7 letter, renewal of CC limit. Perused the EX.D8, as per Ex.D8 renewal and temporary over draft requirement. Perused the EX.D9,as per Ex.D9, the plaintiff have issued a final notice to the defendant. Perused the Ex.D10. Ex.D10 is one of the letter issued by the plaintiff against to defendant,in response by the plaintiff bank to the defendant. Perused the Ex.D11. Ex.D11 letter issued by the defendant 18 O.S.NO: 8640/2016 company stated that he show sincerity and responsibility of SMECC in servicing the customers . Perused the Ex.D12. Ex.D12 speaks that plaintiff have request the defendant to close the account on or before 28.02.2014 to avoid in occasion of guarantee claim from CGTMSC. Perused the Ex.D13. Ex.D13 is the document issued by the plaintiff to the defendant sought to respond at early date with respect to bank guarantee. Perused the Ex.D14. Ex.D14 is one of the letter issued by the plaintiff to the defendant stated investigation in respect to the defendant's property title. Ex.D15 and Ex.D16 are the letter issued by the defendant to the plaintiff bank sought to response from the plaintiff bank. Perused the Ex.D17. Ex.D17 is one of the loan document, executed by the defendant in favour of the plaintiff with respect to loan transaction. Ex.D17 and Ex.P2 are one and the same document, the same EX.D17 and EX.P2 have established the loan transaction between the plaintiff and the defendant. Perused the Ex.D18. Ex.D18 speaks that, the defendant wrote letter to the plaintiff for requisition a copy of minutes of meeting.
19 O.S.NO: 8640/2016
14. On go through the cross examination portion of DW1, DW1 voluntarily answered to the question that he readily liable for the due sum of Rs. 4,74,000/- to the plaintiff and not to an Rs. 5,43,385/-. The same relevant portion of cross examination is herein extracted " ವವದಯಯ ಈ ದವವವಯನಯನ ಹಹಡಯವ ದನವನಕಕವಕ ನವನಯ ರಹ. 5,43,385/- ಹಣವನಯನ ಬವಕ ಇರಸಕವಹನಡರಯತವವತನವ ಎನದರವ ಸರಯಲಲ. ಆದರವ ಸವಕಕಯಯ ಮಯನದಯವರವದಯ ರಹ. 4,74,000/- ನವನಯ ವವದಯ ಬಳ ಬವಕ ಇರಸಕವಹನಡರಯತವವತನವ ಎನದಯ ನಯಡಯಯತವತರವ" .
15. After go through further cross examination of DW1, DW1 also deposed that he got produced some of the documents to substantiate his liability to the plaintiff to a tune of Rs. 4,74,000/-. The same relevant portion is also herein extracted "ನವನಯ ಈ ದನವವ ಸಹ ವವದಯ ಹಣವನಯನ ಪವವತಸಲಯ ತಯವರರಯತವತತನವ". DW1 in his further cross examination answered to the question in so far filing of case against to the defendant for recovery of the money, the DW1 answered to the question that " ನವನಯ ವವದಗವ ಪವವತಸಬವತಕವದ ಹಣವನಯನ ಪವವತಸದ ಕವರಣ ವವದಯಯ ಈ ದವವವಯನಯನ ಸಲಲಸರಯತವತರವ ಎನದರವ ಸವಕಕಯಯ ನನಗವ ವವದಯನದ 20 O.S.NO: 8640/2016 ಆಗರಯವ ನಷಷ ಭರಸಲಯ ನವನಯ ಗವಗಹಕರ ವವತದಕವಯಲಲ ಪಗಕರಣವನಯನ ಸಲಲಸರಯತವತನವ ಎನದಯ ನಯಡಯಯತವತರವ"
16. By considering the cross examination portion of DW1, according to the defendant, the defendant as of now that he readily liable to pay all dues to the plaintiff. As the defendant admitted the case of the plaintiff in the written statement as well as in the cross examination. Further the defendant voluntarily answered in his cross examination to the question that, he readily liable to due sum of Rs. 4,74,000/- to the plaintiff and not Rs. 5,43,385/-. At this point it necessary me to perused the claim of the plaintiff. As per the pleadings of the plaintiff, the plaintiff also claimed the dues against to the defendant as outstanding amount of Rs. 4,81,256/- as on 08.11.2016. As per the contention of the defendant there is only Rs. 7,000/- difference in the principle amount as it claimed by the plaintiff. In support to his contention the defendant have not elicited anything through the mouth of PW1 and no material evidence that he has brought on record, that the defendant is liable only to the principle amount of Rs. 21 O.S.NO: 8640/2016 4,74,000/- and Rs. 481,256/-. On the contrary the same Ex.D1 to Ex.D18 documents are also speak loan transaction, relationship between the plaintiff and the defendant and further the same Ex.D1 to Ex.D18 documents have not speak anything that no liability on the defendant.
17. It is not disputed fact that the defendant executed the Ex.P2 to Ex.P5 documents in favour of the plaintiff and also not disputed fact that all documents which are got marked as per Ex.D1 to Ex.D18 document are too also speak the loan transaction between the plaintiff and the defendant. Further no where either in written statement or in the cross examination, the defendant have denied the rate of interest. On the contrary the plaintiff have specifically pleaded that, the defendant have agreed to pay 13.00% per annum interest on the principle amount. Further as per EX.P 2 document it can be seen on EX.P2 document rate of agreed interest upon the principle amount, as per EX.P2 loan agreement the rate of interest is 13.00. on the contrary the defendant have not 22 O.S.NO: 8640/2016 disputed the rate of interest either in his written statement or in the cross examination of PW.1, when such being the case that I have no hesitation to believe the contention of the plaintiff in relating to the interest. Therefore, I am of the view that the defendant is herein also failed to establish the fact that the plaintiff have claimed exorbitant interest over the principle amount. Hence, I answer the issue Nos. 1 to 3 as affirmative.
18. Issue No. 4 : In view of the above discussion and my finding on Issue No.1 to 3, I proceed to pass the following;
ORDER The suit of the plaintiff is here by decreed with costs for a sum of Rs.
5,43,385/-.
The defendant liable to pay the decretal amount to the plaintiff along with interest @ 13.00% per annum compounded at monthly rests under Cash Credit facility, from the date of suit till complete realization.
In default, the plaintiff is at liberty to recover the decretal amount from 23 O.S.NO: 8640/2016 the defendants in accordance with law.
Draw decree accordingly.
(Dictated to the Stenographer, transcribed and computerized by her and then corrected and pronounced by me in open court on this the 20th day of December, 2021).
(R. ONKARAPPA), LXII Addl. City Civil and Sessions Judge (CCH63) Bengaluru City.
ANNEXURE I. List of witnesses examined on behalf of :
(1) Plaintiff's side :
P.W.1 - Krishna Iyengar B.R. (2) Defendant's side :
D.W.1 - Ramanujam II. List of documents exhibited on behalf of :
(5) Plaintiff's side :
Ex.P.1 - Authorization letter Ex.P2 - Sanction letter Ex.P3 - Letter of arrangements Ex.P4 - Revival letter dated 10.06.2013 Ex.P5 - Revival letter dated 28.03.2016 Ex.P6 - Legal notice dated 16.06.2016 Ex.P7 - Postal receipt Ex.P8 - Loan statement 24 O.S.NO: 8640/2016 (6) Defendant's side : N I L Ex.D.1 - Letter of plaintiff dated 30.05.2013 Ex.D2 - Letter dated 23.07.2013 of the defendant Ex.D3 - Letter dated 16.09.2013 of the plaintiff Ex.D4 - Letter dated 29.11.2013 of the plaintiff Ex.D5-Requisition for bank guarantee dtd 09.12.2013 Ex.D6-Requisition for renewal of limits dtd 18.12.2013 Ex.D7-Letter dated 23.12.2013 of plaintiff bank Ex.D8- Letter dated 21.08.2014 of the plaintiff bank Ex.D9- Final notice dated 18.03.2014 Ex.D10- Letter dated 31.12.2015 of the plaintiff bank Ex.D11-Letter dated 09.01.2016 of the defendant Ex.D12-Letter dated 20.02.2014 of the plaintiff bank Ex.D13-Letter dated 28.01.2014 of the plaintiff bank Ex.D14-Letter dated 15.07.2014 of the plaintiff bank Ex.D15-Letter dated 01.02.2016 of the defendant Ex.D16-Letter dated 03.03.2016 of the defendant Ex.D17-Sanction letter dated 02.02.2015 Ex.D18-Letter dated 25.07.2016 of the defendant LXII Addl. City Civil and Sessions Judge (CCH63), Bengaluru City.