Delhi District Court
And Having Its Branch Office At vs Chander Muni on 16 February, 2012
IN THE COURT OF SHRI. ASHISH AGGARWAL, CIVIL JUDGE1,
SOUTH WEST DISTRICT, DWARKA COURTS, DELHI
CS No: 484/11
Unique Case ID No. 02405C0178822011
Kotak Mahindra Bank Limited,
Having its registered office at
3638, Nariman Bhawan,
227, Nariman Point, Mumbai400021
And having its Branch office at:
G1, 2, 3 Manish Mega Plaza
Plot No. 13, Sector5, Dwarka,
New Delhi - 110075
Through its Authorized Representative
Ms. Sheetu Bhat ... Plaintiff
Versus
Chander Muni
128, Bhadola, New Azad Pur,
New Delhi110045 ... Defendant
Date of Institution: 19.05.2011
Date on which judgment was reserved: 24.01.2012
Date of pronouncing judgment: 16.02.2012
SUIT FOR RECOVERY OF RS. 2,21,931/ UNDER ORDER XXXVII OF
CODE OF CIVIL PROCEDURE
KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI
CS No.484/11 page 1 of 26
J U D G M E N T
1. This is a suit under Order XXXVII of Code of Civil Procedure, 1908. The facts relevant for disposal of the suit are that the plaintiff has instituted the suit pleading that the plaintiff is a banking company and has instituted the suit through its authorized representative. It is averred that the defendant had approached ICICI Bank Ltd. for financial assistance to purchase a vehicle. The loan was sanctioned by ICICI Bank on 30.06.2005 under the LoancumHypothecation Scheme of the bank. A sum of Rs. 2,53,000/ was granted as loan to purchase an "Alto LXI" vehicle. The vehicle was hypothecated. The loan was to be repaid by the defendant in 58 equated monthly installments of Rs. 5360/ each. Loan documents comprising of a loan agreement dated 30.06.2005, a deed of hypothecation and an irrevocable power of attorney were executed between the ICICI Bank and the defendant. The defendant defaulted in repayment of the loan in terms of the agreement. He also failed to allow the plaintiff's representative to inspect the vehicle.
2. The plaintiff has further stated in the plaint that by deed of assignment dated 30.06.2008, the loan accounts of ICICI Bank Ltd., including the loan of the defendant, were assigned to M/s. Asset Reconstruction Company (India) Ltd., and the said loan accounts KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 2 of 26 came to be further assigned by the latter in favour of the plaintiff bank by deed of assignment dated 31.12.2009.
3. The plaintiff has further stated in the plaint that it had issued demand notice dated 28.04.2011 demanding payment of a sum of Rs. 2,21,931/ from the defendant which was outstanding as on 31.10.2009, alongwith interest. The defendant was also directed to return the hypothecated vehicle. The defendant failed to comply with the notice. The plaintiff therefore instituted the present suit to recover the said sum of money.
4. An application for leave to defend has been filed on behalf of the defendant on a number of grounds, which are summarized as follows:
a. That the suit is false, frivolous and concocted.
b. That the plaintiff has no right to institute the suit since the defendant has not taken any loan from the plaintiff. The plaintiff bank has failed to file the assignment deed dated 30.06.2008 in favour of the plaintiff to establish that the loan account stands assigned to the plaintiff.
c. That the plaintiff bank has no cause of action against the defendant.
d. That when the defendant took loan of Rs. 2,53,000/ from ICICI Bank of 30.06.2005, the bank obtained signatures of the defendant on blank papers.
e. That the defendant has been regularly making payment of monthly installments and has paid 18 installments.
KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI
CS No.484/11 page 3 of 26
f. That the hypothecated vehicle has already been lifted by ICICI
Bank Ltd., without any notice or information to the defendant. The defendant, who had no knowledge of this had registered FIR no. 142 dated 09.07.2009 regarding theft of vehicle. The vehicle has already been illegally sold by the bank.
5. I have heard arguments and have perused the record.
6. According to the plaintiff, the defendant had availed loan from ICICI Bank Ltd. and defaulted in repayment. The loan account stood assigned to the plaintiff and therefore the plaintiff has prayed for recovery of the outstanding sum.
7. The pleas taken in the application for leave to defend are separately assessed hereinafter.
A. That the suit is false, frivolous and concocted.
8. The defendant has contended that the suit is false, frivolous and based on concocted facts.
9. The facts mentioned in the plaint which are incorrect or untrue have not been pointed out by the defendant. The contention of the defendant appears to be bald and unsubstantiated. It is settled law that the pleas in defence have to be specific. Where misrepresentation is alleged, its particulars have to be spelt out.
10. Having failed to give particulars of the allegedly incorrect facts, the said contention cannot be accepted. If such contentions, unsupported KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 4 of 26 by any material, are allowed to deprive the plaintiff of judgment in a suit under Order XXXVII of Code of Civil Procedure, it would be frustrate the very objective of a summary trial. The aforesaid contention of the defendant is vague and is hereby rejected. B. That the plaintiff has no right to institute the suit since the defendant has not taken any loan from the plaintiff. The plaintiff bank has failed to file the assignment deed dated 30.06.2008 in favour of the plaintiff to establish that the loan account stands assigned to the plaintiff.
11. The defendant has, in paragraph no.7 of the application for leave to defend, admitted that he had taken loan of Rs. 2,53,000/ on 30.06.2005. According to the defendant, the loan had been taken not from the plaintiff but from ICICI Bank and therefore the plaintiff has no right to recover the outstanding dues.
12.The aforesaid plea presents a question of law and not a question of fact. This is because the fact that loan had been availed by the defendant from ICICI Bank Ltd. is not disputed by the defendant. It is therefore the admitted case of both parties that loan had been taken from ICICI Bank Ltd. This fact does not require adjudication and therefore there is no need to hold trial.
13.The aforesaid question of law is answered herein. It is settled law that a debt can validly be assigned. For the said assignment, consent of KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 5 of 26 the debtor is not needed. The right to obtain money is a benefit arising out of the contract. Before recovering the loan, there was nothing remaining to be done by the creditor i.e. ICICI Bank Ltd. Hence, the bank had only to receive the benefits of the contract. These benefits are assignable. For this assignment of debt, the bank did not require the consent of the debtor. It is settled law that benefits arising out of a contract can be assigned without the consent of the remaining contracting parties and such assignment is binding on such parties such that the transferee can compel such parties to perform their part.
Reference may be made to Section 3 of the Transfer of Property Act, 1882 which defines "actionable claim" as under :
"actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent."
14.The right to recover money as an unpaid debt qualifies as "actionable claim", as defined above. An actionable claim is transferable and assignable, as per Section 130 of the Transfer of Property Act, 1882. It is further laid down under the said provision that in a suit by the transferee (which in this case is the plaintiff) to enforce performance KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 6 of 26 of the contract, it is not necessary to join the transferor (which in this case is ICICI Bank Ltd). Section 130 of Transfer of Property Act, 1882 is quoted as under:
"(1) The transfer of an actionable claim whether with or without consideration shall be effected only by the execution of an instrument in writing signed by the transferor or his duly authorised agent, shall be complete and effectual upon the execution of such instruments, and thereupon all the rights and remedies of the transferor, whether by way of damages or otherwise, shall vest in the transferee, whether such notice of the transfer as is hereinafter provided be given or not.
Provided that every dealing with the debtor other actionable claim by the debtor or other person from or against whom the transferor would, but for such instrument of transfer as aforesaid, have been entitled to recover or enforce such debt or other actionable claim, shall (save where the debtor or other person is a party to the transfer or has received express notice thereof as hereinafter provided) be valid as against such transfer.
(2) The transferee of an actionable claim may, upon the execution of such instrument of transfer as aforesaid, sue or institute proceedings for the same in his own name without obtaining the transferor's consent to such suit or proceeding and without making him a party thereto.
Exception : Nothing in this section applies to the transfer of a marine or fire policy of insurance or affects the provisions of section 38 of the Insurance Act, 1938 (4 of 1938)."
15.One of the foremost authorities on this point was the case of Sakalaguna Nayudu v. Chinna Munuswami Nayakar AIR 1928 PC
174. In that case, the facts were that a village was sold with an option KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 7 of 26 to the seller to repurchase the village after 30 years on payment of Rs. 10,000. The seller later assigned this right of repurchasing the village to the plaintiff. The plaintiff tendered Rs. 10,000 and asked the owner of the village to sell it to him. The owner of the village refused. The plaintiff sued the owner. The owner contended that the plaintiff was a stranger to the initial transaction. He contended that the option to repurchase was not even a ripe contract and was a mere offer which could not be assigned. This contention was rejected by the Privy Council by holding that the benefit of the initial contract could be validly assigned to a third party and that third party was entitled to sue for its enforcement.
In the case of Champarun Sugar Co. Ltd. v. Haridas Mundhra and Ors. AIR 1966 Cal 134, the Hon'ble High Court of Calcutta quoted with approval the following observation of Collins M. R. made in the case of Tolhurst v. Associated Cement Manufacturers, (1902) 2 KB 660:
"...it is equally clear that the benefit of a contract can be assigned, and wherever the consideration has been executed, and nothing more remains but to enforce the obligation against the party who has received the consideration, the right to enforce it can be assigned, and can be put in suit by the assignee in his own name after notice."
In the case of Manmatha Nath Mullick v. Hedait Ali (1932) 34 Bom L R 489, the Hon'ble Bombay High Court upheld the right of the plaintiff KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 8 of 26 to recover money as attorney of the creditor from debtors with whom he had no privity of contract.
Reference may also be made to clause 5 of "Rights and Remedies of ICICI Bank" prescribed in the vehicle loancumhypothecation agreement whereby the right of the ICICI Bank to transfer the debt has been expressly preserved.
From the aforesaid, it is clear that the right to recover the debt is assignable and could be validly transferred by ICICI Bank Ltd. in favour of the plaintiff without obtaining the consent or permission of the defendant.
16.Careful perusal of the application for leave to defend reveals that the defendant has not denied or disputed the assignment of debt. His only grievance is that the assignment deed dated 30.06.2008 is not on record. That plea is factually incorrect and contrary to the record since the assignment deed is very much on the judicial record having been filed by the plaintiff with the plaint. It also finds mention in the list of documents filed by the plaintiff. Hence, the assignment of the debt cannot be doubted. The said plea of the defendant is therefore rejected. Since the defendant's denial to the assignment of debt, if any, is based on the alleged absence of the assignment deed and since this averment as to the absence of the assignment deed has been negatived, the said denial to the assignment of debt cannot be KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 9 of 26 accorded credence.
17. Moreover, the plea of the defendant is that "the plaintiff bank has not filed any such document dt. 30.06.2008 i.e. Deed of assignment in favour of the plaintiff bank" (para no.3 of the application for leave to defend). It is worth mentioning that it is nobody's case that by deed of assignment dated 30.06.2008, the debt stood assigned in favour of the plaintiff. It is clearly stated in the plaint that by the said deed of assignment dated 30.06.2008, the debt was assigned in favour of M/s. Asset Reconstruction Company (India) Ltd. The debt came to be assigned to the plaintiff not by the aforesaid deed but by a subsequent deed of assignment dated 31.12.2009. It appears that the defendant has misunderstood the pleadings. His contention is without merit.
18.The plaintiff had issued demand notice dated 28.04.2011 to the defendant prior to institution of the suit. The plaint is accompanied by copies of the said notice as well as postal receipt which shows that the notice had been duly dispatched to the correct address. The defendant is deemed to have been served with the notice. The defendant has also not denied receipt of the notice. It is strange that the defendant did not raise the instant plea regarding assignment of debt by responding to the said notice. If the defendant had a bona fide defence regarding the authority of the plaintiff to recover the loan, KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 10 of 26 he would have canvassed that defence by replying to the notice. He could have questioned the competence of the plaintiff to issue demand notice seeking recovery of dues owed to ICICI Bank Ltd. Failure to reply to the notice shows that defendant had nothing to state in response thereto and the instant plea of the defendant is not tenable.
In the case of Ajab Singh Punia vs. Joginder Singh, AIR 2003 NOC 496, the Hon'ble High Court of Delhi observed that the legal demand notice had been served upon the defendant and was not replied to. It was also noticed that a promissory note had been executed between the plaintiff and the defendant. The application for leave to defend was rejected.
19.The plaintiff has admitted that he has taken loan from ICICI Bank Ltd. The assignment deeds dated 30.06.2008 and 31.12.2009, the genuineness of which has not been disputed by the plaintiff, clearly show that the said loan stands assigned to the plaintiff. Hence, plaintiff is entitled to recover the debt.
20.The contention of the defendant is rejected. C. That the plaintiff bank has no cause of action against the defendant.
21.The defendant has contended that the plaintiff bank has no cause of KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 11 of 26 action against him. The defendant has however not elaborated or explained this contention.
22.The expression "cause of action" has been succinctly explained by Hon'ble High Court of Delhi in the case of Kanwal Kishore Manchanda & Anr. V. S.D.Technical Services Pvt. Ltd. 121(2005) DLT 98 in which it was observed as follows:
"What then is a cause of action? Till there is no cause, there cannot be any action. For a cause, there has to be a right to sue. Infringement of a right or a clear and unequivocal threat to infringe that right would constitute a cause to bring an action. Whether a particular threat gave rise to a compulsory cause of action depends, upon the question whether that threat effectively invades or jeopardises the right. To constitute a cause of action, first is the coming into existence of a right and secondly, its infringement or threat to be infringed."
23. From the above, it is inferred that cause of action is the threat to the invasion of one's rights which prompts that person to move Court for the enforcement of his rights. In the present case, the plaintiff has clearly stated in the plaint that the defendant has failed to repay his debt in full. The defendant had also not disputed that his debt is yet to be discharged. The failure of the defendant to adhere to be repayment schedule furnishes sufficient cause to impel the plaintiff to institute the suit. That despite service of demand notice (which has not been disputed by the defendant in the application for leave to defend), the defendant failed to repay the loan or to even respond to KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 12 of 26 the notice, made it abundantly clear that the defendant would not honour his undertaking to repay the debt. In those circumstances, the plaintiff was left with no option but to move court. The plaintiff had cause of action in his favour. The contention of the defendant is rejected.
D. That when the defendant took loan of Rs. 2,53,000/ from ICICI Bank of 30.06.2005, the bank obtained signatures of the defendant on blank papers.
24.The defendant had admitted that he had taken loan. He has admitted the terms of contract in paragraph no.7 of his application for leave to defend. He has however submitted that his signatures were obtained on blank papers.
25.Once the terms of agreement and the liability of the defendant to pay installments is admitted by the defendant, the question as to whether the signatures were obtained on the blank sheets or on the contract papers becomes irrelevant. Since the terms of contract stand admitted, they need not be proved.
26.Moreover, to appreciate this contention in proper perspective, reference may be made to the documents filed by the plaintiff with the plaint. The documents include the loancumhypothecation agreement and the demand promissory note. The terms of agreement are mentioned therein. The schedule to the agreement is KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 13 of 26 also filled in and indicates the hypothecated vehicle and the installments of repayment. The agreement is executed on standard form, which ex facie reveals that it was not completely blank at the time of being signed by the defendant.
27. Significantly, the defendant has not denied his signatures on the abovementioned documents. He has also not pleaded that the documents were prepared against his will or without his authority or that they were not intended to be used for the present purpose. Having admittedly signed and executed the said documents, it is not open to the defendant to take a contrary plea before the Court. The contention of the defendant is barred by Section 92 of the Evidence Act, 1872.
28.The defendant is an educated person. There is no reason for him to refrain from filling up the blank sheets, if any, by himself or to depend on the officials of the ICICI Bank for this. It is not the case of the defendant that any kind of pressure, influence or coercion was exerted upon him to compel him to sign the said documents. Yet, if the defendant does so, it must be at his own peril. The defendant cannot now be permitted to assail the validity of the documents on the ground that they were not filled up by him.
29.Even if it is assumed that the defendant had signed blank documents, by doing so, the defendant is deemed to have authorized the officials KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 14 of 26 of ICICI Bank Ltd. to fill up the document on his behalf. Hence, while filling up the document, the officials of the ICICI Bank Ltd. were acting as agents of the defendant. In conformity with Section 226 of the Contract Act, 1872, the defendant is bound by this act of the agents.
30.Further, had the defendant wanted to disclaim or repudiate the agreement on the ground that he had not consented to the terms of loan agreement, he ought to have done so at the earliest opportunity. He should not have waited for the loan to be sanctioned. Even after sanction of the loan, he could have refused to accept the money disbursed. At least after disbursement of the money, he could have returned it to the bank. The defendant chose not to do any of this. Instead, he accepted the money, used it up, defaulted in repaying the loan and only after the plaintiff sued to recover the outstanding sum did the defendant raise the instant plea to escape from her liability. This is not permissible under law. The delay in raising this plea shows that it is a mere afterthought. In this behalf, reference may be made to the case of KLG Systel Ltd. vs. M/s. Fujitsu ICIM Ltd. AIR 2001 Delhi 357. In that case, the plaintiff had instituted a summary suit to recover payment of purchase price of goods sold and delivered to the defendant. The defence of the defendant was that the goods were defective. The Hon'ble High Court of Delhi rejected the defence and declined leave to defend on the ground that this plea had been raised KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 15 of 26 for the first time after institution of the suit. It was observed as under :
"To judicially countenance complaints raised after several months would tantamount to violating the legislature's intent of an expeditious disposal of commercial complaints. Leave to defend should be granted only if a valid defence, requiring a trial, is disclosed. Such a defence if entertained may be allowed subject to terms. However, in the present case the defence in essence is of the unsuitability of Autovesl and Isogen, and not delay in their supply. No triable issue has arisen. The present case is what was envisaged in category (d) of the decision of the Supreme Court in the M/s. Mechalec Engineers case (supra).
In this analysis the defendant's application is dismissed. The suit is decreed with costs."
31. Having accepted and used up the loan amount, the defendant had impliedly accepted the terms of the loan, in keeping with Section 8 of the Contract Act, 1872. He cannot now avoid the said terms. Hence, even if the explicit agreement bearing the signatures of the defendant is not taken into consideration, the implied acceptance of the defendant fortifies the claim of the plaintiff. This is besides the fact that the terms of the loan agreement have been admitted by the defendant in his application for leave to defend.
32.Further, the mere filling up of the document by the officials of ICICI Bank Ltd. does not invalidate the agreement. It does not indicate that the consent of the defendant was not free or that it was induced by coercion, undue influence, fraud or misrepresentation so as to impinge upon the validity of the agreement.
KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 16 of 26 In the case of Vipin Gupta v. Prem Singh 2007(5) R.C.R.(Civil) 223, the Hon'ble High of Court of Delhi emphasized the binding nature of written documents and observed as under :
"We have perused the record and we find that the appellant/defendant has not denied his signatures on any of the documents which have been annexed and relied upon by the plaintiff/respondent in filing the present suit. Both these cheques in question bear the signatures of the appellant. We have also perused the non judicial stamp paper placed on record by the plaintiff/respondent in which the appellant/defendant has given an undertaking in writing that he will return the sum of Rs. 3,00,000/ by 13.06.2001. The appellant has put his signatures on this undertaking on nor judicial stamp paper and besides that, he has also put his thumb impression on the said undertaking. We have also gone through the receipt placed on record by the plaintiff/respondent. The receipt has also been duly executed by the appellant for having received Rs. 3,00,000/ in cash. This receipt is also duly signed by the appellant. After perusing all these documents, it appears that the appellant has taken a false defence that he had lost these two cheques in question which have been stolen by the plaintiff/respondent and has filed a false suit against the appellant. We do not find any force in the plea taken by the appellant in this case. The other documents which have been signed by the appellant are the undertaking given by the appellant on a non judicial stamp paper in which he has stated that he will refund the amount of Rs. 3,00,000/ by 13.06.2001 and the appellant has also put his signatures as well as the thumb impression on the undertaking. The appellant has also executed a receipt duly signed by him for having received a sum of Rs. 3,00,000/ in cash. So, we are of the opinion that all these documents cannot be created by the plaintiff/respondent. In our opinion, the plea taken by the appellant is a sham and has got no force."
KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 17 of 26
33.After availing the loan, the defendant admittedly made payment of certain installments. If the terms of loan were not acceptable to him, he would not have repaid any part of the loan. The payment of certain installments itself shows that the terms of loan were acceptable to the defendant and that the instant plea is only a feeble attempt to escape from contractual liabilities.
34.The defence raised by the defendant does not inspire confidence. The defendant had consciously executed the loancum hypothecation agreement. The document contains the terms and conditions of loan. The defendant cannot be permitted to plead ignorance thereof. It was his duty to read the document and to satisfy himself as to its terms and conditions before executing it. After having signed the agreement, after having availed the loan and after defaulting in repayment, he cannot be permitted to resile from its terms on flimsy grounds. If the defendant is permitted to release himself from the document admittedly signed by him, the very purpose of executing the document would be frustrated and the document would be rendered devoid of sanctity. In the case of Sapna Saree Centre v. Bank of Rajasthan AIR 2001 Raj 67, the Hon'ble Rajasthan High Court held that merely denying the execution of incriminating documents is not sufficient to entitle the defendant to leave to defend. It was observed:
KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 18 of 26 "15.As regards other issues, mere denial of the documents as to the execution being made in favour of the plaintiff Bank under credit facility for being renewed from time to time would not by itself entitle the defendants to the grant of leave to defend in view of partial acknowledgment as the deposits having been made by them towards repayment of the loan and the last deposit was admittedly made by them on 15788. In this view of the matter, in my considered view, the defence set up by the defendants in their application for leave to defend is sham, illusory and practically moonshine and their contentions are contrary to the material on record and hence the learned trial Court has rightly declined to grant leave to defend the suit by rejecting the application under Order 37, Rule 3, CPC thereby has also rightly decreed the suit for recovery of outstanding loan amount under the credit facility. The findings recorded by the learned trial Court do not warrant any interference by this Court in this first appeal, because they are based on due appreciation of the material on record and is supported by cogent reasons."
In the present case, the claim of the plaintiff is crystallized by the documents filed by it. The credibility of the documents is not eroded by the aforesaid plea of the defendant, which is hereby rejected. E. That the defendant has been regularly making payment of monthly installments and has paid 18 installments.
35.The defendant has contended that he has been regularly paying monthly installments and has already paid 18 installments.
36.Firstly, the aforesaid plea is in conflict with other contentions of the defendant. On one hand, the defendant has stated in paragraph no.7 of his application for leave to defend that he has been regularly KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 19 of 26 paying installments. On the other hand, in paragraph no.8 of the application, he has stated that payment of installments was irregular. In view of the patent contradiction, the contention of the plaintiff that he has been regularly paying installments cannot be believed.
37. Secondly, all the 18 installments claimed to have been paid by the defendant have been shown in the statement of account. It is only after taking into account the said installments that, as per the statement of account, the recovery of the balance sum is prayed for. Hence, making payment of the aforesaid installments does not enable the defendant to escape his liability.
38.Thirdly, the defendant has not placed on record any receipt or other document to establish that he had made payment of a sum of money which has not been shown in the statement of account or that the sum shown to have been paid by the defendant in the statement of account is less than that actually paid. This contention has not even been urged in the application for leave to defend. In what manner the statement of account filed by the plaintiff is incorrect has not been explained by the defendant. A denial has to be specific. The defendant has not filed his own statement of account to establish that the statement of account of the plaintiff is erroneous. He has not stated the amount which, according to him, is payable by him to the creditor bank.
KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 20 of 26
39.For the aforesaid reasons, the above contention of the defendant is bald and does not furnish a valid defence.
F. That the hypothecated vehicle has already been lifted by ICICI Bank Ltd., without any notice or information to the defendant. The defendant, who had no knowledge of this had registered FIR no. 142 dated 09.07.2009 regarding theft of vehicle. The vehicle has already been illegally sold by the bank.
40.The defendant has contended that the hypothecated vehicle has already been lifted by ICICI Bank Ltd., without any notice or information to the defendant, and has been illegally sold. The defendant has stated that he had registered FIR no. 142 dated 09.07.2009 regarding theft of vehicle.
41. The first question is whether the vehicle has been illegally acquired by ICICI Bank Ltd. According to the defendant, the vehicle was stolen by the officials of the bank. This plea is however negated by the FIR no. 142/2009 admittedly registered by the defendant. In the said FIR, the defendant has not mentioned that his vehicle has been taken away by the officials of the bank. Rather he has pleaded ignorance of the identity of the person who had committed the theft. Having regard to the FIR, the submission of the defendant that theft was committed by officials of the plaintiff bank appears to be concocted and an afterthought. Yet, even assuming that to be so, it is settled law that KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 21 of 26 there is no vicarious liability of a criminal act. Hence, for the said theft, the defendant may have his remedies against the delinquent officials but cannot saddle the bank with liability for the said criminal act. Consequently, he cannot set off his own contractual liability with the value of the vehicle.
42.Further, it has already been noted above that the defendant is bound by the vehicle loancumhypothecation application signed by him. As per clause 20 of the said agreement, the bank is at liberty to regain possession of the hypothecated vehicle and is not responsible for loss or damage to the vehicle by any means including theft. Hence, the alleged theft does not aid the defendant in escaping his liability.
43.Further, as per the aforesaid agreement (clause 3 of "Rights and Remedies of ICICI Bank"), the bank is not under an obligation to sell the vehicle and the bank is entitled to proceed against the borrower (defendant herein) independently of sale of the vehicle. Hence, the defendant is not entitled to raise any objection regarding sale of the vehicle and application of proceeds.
44.According to the defendant, the sale of the vehicle is illegal and unlawful. In what manner and for what reason the said sale is tainted has not been explained by the defendant. He has simply stated that the bank was not empowered to sell the vehicle without notice to the defendant. However, the requirement of issuance of prior notice has KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 22 of 26 not been specified in the loancumhypothecation agreement and therefore even if it is assumed that the vehicle was sold without notice to the defendant, that would not vitiate the alleged sale. According to the terms of the loancumhypothecated agreement, the plaintiff bank is free to dispose off or sell the vehicle in the manner it deems fit. The defendant, having executed the said document, cannot resile from its terms. Importantly, it is not the case of the defendant that the vehicle has been sold at a value less than its market worth thereby causing loss to the defendant. Hence, the said sale has no bearing on the defendant's liability.
In the case of ONGC Vs. State Bank of India AIR 2000 SC 2548, the Hon'ble Supreme Court held that leave to defend shall not be granted unless the existence of fraud pleaded to disclaim liability is clearly demonstrated. It was observed as under:
"In the light of what is stated above, in the absence of a plea relating to fraud, mush less of a finding thereto, we find that the Court could not have stated that the defence raised by the respondent Bank on the grounds set forth earlier is sufficient to hold that unconditional leave should be granted to defend the suit".
45.The aforesaid contention of the defendant is devoid of merit and is rejected.
46.The contentions of the defendant are sham. The defendant has no substantial defence to raise and there are no triable issues in the KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 23 of 26 case.
In the case of Santosh Kumar v. Bhai Mool Singh, AIR 1958 SC 321, it was held as under:
"It is always undesirable, and indeed impossible, to lay down hard and fast rules in matters that affect discretion. But it is necessary to understand the reason for a special procedure of this kind in order that the discretion may be properly exercised. The object is explained in Kesavan v. South India Bank Ltd., ILR (1950) Mad 251 : (AIR 1950 Mad 226) (K), and is examined in greater detail in Sundaram Chettiar v. Valli Ammal, (F), (supra) to which we have just referred. Taken by and large, the object is to see that the defendant does not unnecessarily prolong the litigation and prevent the plaintiff from obtaining an early decree by raising untenable and frivolous defences in a class of cases where speedy decisions are desirable in the interests of trade and commerce."
In the case of M/s Mechalec Engineers and Manufacturers Vs. M/s Basic Equipment Corporation 1977 AIR SC 577, the Hon'ble Supreme Court held that leave to defend must not be granted if the defence set up is illusory, sham or practically moonshine. In the case of Mrs. Raj Duggal v. Ramesh Kumar Bansal AIR 1990 SC 2218 it was held as follows :
"Leave is declined where the Court is of the opinion that the grant of leave would merely enable the defendant to prolong the litigation by raising untenable and frivolous defences."
The defendant is only trying to avoid the responsibility to repay the loan. This cannot be permitted. The application for leave to defend is KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 24 of 26 hereby dismissed.
47. The plaintiff is entitled to judgment and decree in his favour and against the defendant in accordance with Order 37 Rule 3 (6)(a) of Code of Civil Procedure, 1908.
48.The plaint and documents enclosed therewith are perused. According to the plaint, the defendant has failed to make payment as per the agreement and a sum of Rs. 2,21,931/ is outstanding and payable by the defendant to the plaintiff. The plaint is accompanied by documents which establish the correctness of the averments made in the plaint. The claim for presuit interest is founded on the agreed rate as embodied in the loan documents. The entire claim of the plaintiff is a liquidated sum and falls within the purview of Order 37 Rule 1 of Code of Civil Procedure. There is nothing on record to establish that the defendant has paid the sum claimed by the plaintiff or that he is not liable to make the said payment on account of some other reason. The suit is within limitation and this Court is vested with territorial and pecuniary jurisdiction to entertain the suit. Having perused the plaint and documents filed in support thereof, I am satisfied that the plaintiff has made out a case for recovery of the sum taken on loan by the defendant as well as presuit interest at the agreed rate. The plaintiff is entitled to recovery of a sum of Rs.
KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI CS No.484/11 page 25 of 26 2,21,931/ from the defendant.
49.The plaintiff has also prayed for pendente lite and future interest at the rate of 24% per annum. However, having regard to the prevailing bank rates, ends of justice would be met if the plaintiff is awarded pendente lite interest at the rate of 6% per annum from the date of institution of the suit till the date of decree and future interest at the rate of 6% per annum from the date of decree till realization. The plaintiff is also entitled to recovery of costs of suit from the defendant.
50.Hence, in terms of Order XXXVII of Code of Civil Procedure, 1908, the suit is decreed in favour of the plaintiff and against the defendant for a sum of Rs. 2,21,931/ alongwith pendente lite interest at the rate of 6% per annum from the date of institution till the date of decree, future interest at the rate of 6% per annum from the date of decree till realization on the sum adjudged and also costs of the suit. Decree sheet be prepared accordingly. File be consigned to Record Room.
Announced in the open
th
Court on 16 February, 2012 (Ashish Aggarwal)
Civil JudgeI,
South West District,
Dwarka Courts, Delhi
KOTAK MAHINDRA BANK LTD. VS. CHANDER MUNI
CS No.484/11 page 26 of 26