Delhi District Court
Jammu And Kashmir Bank vs Amit Negi on 6 June, 2025
IN THE COURT OF MS. KIRAN BANSAL:
DISTRICT JUDGE (COMMERCIAL COURT-02
SHAHDARA DISTRICT
KARKARDOOMA COURTS : DELHI
Civil Suit (Comm) No. 295/2024
IN THE MATTER OF:
The Jammu & Kashmir Bank Ltd.
Having its corporate office at:
M.A. Road, Srinagar, Kashmir and
A branch amongst at
others at Naveen Shahdara, Delhi
Through AR Sumit Mahajan
.... PLAINTIFF
Versus
1. Mr. Amit Negi,
S/o Sh. Shankar Singh Negi
R/o S-22, Second Floor, Kamla Sadan,
Naveen Shahdara, North East, Delhi - 110032
Also at:
1/9936, Ground Floor, Babarpur Road,
West Gorakh Pur, Delhi
Also at:
M/s Amit Shop having its office at
1/9708, 2 West Rohtash Nagar,
Pratap Pura, Shahdara,
East Delhi - 110032
2. Mr. Ajay Negi,
S/o Sh. Shankar Singh Negi
R/o S-22, Second Floor, Kamla Sadan,
Naveen Shahdara, North East, Delhi - 110032
Also at:
1/9708, Gali No.2,
Near Post Office West Rohtash Nagar,
Shahdara, East Delhi - 110032
Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 1 of 25
3. Mr. Satish Sachdeva,
S/o Late Sh. K.L. Sachdeva,
R/o BT-34, Near SBI Bank,
Shalimar Bagh, Saraswati Vihar,
North West, Delhi - 110024
Also at:
1051/1A, Rohtash Nagar,
Shahdara, below Jammu & Kashmir Bank,
Delhi - 110032 .... DEFENDANTS
Date of Institution : 17.05.2024
Date of hearing final arguments : 02.06.2025
Date of Conclusion: : 06.06.2025
JUDGMENT
1. The plaintiff bank has filed the present suit for recovery of Rs.5,07,308.60/- along with pendent-elite and future interest from 01.12.2023 till its realisation against the defendants.
2. It is stated that Sh. Sumit Mahajan working as Bank Manager is authorized to sign, verify, file, institute and to depose on behalf of plaintiff bank vide authorization/power of attorney dated 20.02.2023. It is submitted that defendant no. 1 Sh. Amit Negi is a sole proprietor of M/s Amit Shop, defendant no. 2 Sh. Ajay Negi along with Sh. Satish Sachdeva, defendant no.3 were guarantors in cash credit facility of Rs.4 lakhs. It is stated that plaintiff bank has allowed cash credit limit of Rs.4 lakhs in favour of defendant no.1 against the security of hypothecation of stock including all types of photographic goods, films, artificial wood clocks, time pieces and parts etc. and collateral security of third party guarantee of defendant no.2 and 3.
Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 2 of 25 2.1 Plaintiff has stated that defendant no. 1 approached the bank for availing loan facility and at his request vide sanction letter dated 29.11.2017, the cash credit facility of Rs.4 lakh was provided on execution of the following documents:
i. Letter of Undertaking dated 06.12.2017; ii. Hypothecation Agreement dated 06.12.2017; iii. Loan Agreement dated 06.12.2017; iv. Irrevocable Power of Attorney dated 06.12.2017; v. Affidavit dated 06.12.2017; vi. Letter of Waiver dated 21.12.2017; vii. Demand Promissory Note of Rs.4 lakhs dated 21.12.2017; viii. Letter of Continuity dated 21.12.2017 2.2 It is submitted that apart from said security documents
defendant no. 2 and 3 also executed Deed of Guarantee dated 06.12.2017 and on 20.12.2020 defendant no. 1 executed the Fresh Demand Promissory Note of Rs.4 lakhs. It is submitted that defendant no. 2 and 3 both stood as guarantors in their personal capacity and individual capacities and are jointly and severally liable to pay the liability of the cash credit facility of Rs. 4 lakhs. It is submitted that loan amount of Rs.4 lakhs was to be repaid along with interest @ MCLR + 3.50% i.e. 12.30% per annum with monthly rest in terms of agreement. Further, it is submitted that a loan account bearing no. 0287020100002837 was started with effect from 21.12.2017 and defendant no.1 started utilizing the funds, but, on various occasions defaulted in due payments of loan amount. Further, it is submitted that due to breach of terms and conditions of the agreements and other security documents, the account of defendant no. 1 was declared as Non Performing Asset (NPA) on 03.07.2021 as per RBI guidelines. Thereafter, defendant no.1 approached the plaintiff Bank and executed the balance confirmation dated 08.11.2021 for an amount of Rs.4,14,818.60 as on 31.10.2021. On 02.08.2022, the last payment Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 3 of 25 was made by the defendant no. 1 in loan account no.
0287020100002837. Legal notice dated 03.09.2022 was served upon the defendants, but, despite that neither of defendants paid the outstanding amount. Thereafter, after several requests and follow ups, plaintiff bank eventually sent two legal notices i.e. notice for liquidation of balance outstanding and notice regarding invocation of personal guarantee extended in cash credit loan availed by defendant no.1. It is submitted that plaintiff bank being a banking company maintains a correct and regular accounts in normal course of banking business which reflects the total outstanding balance as on 30.11.2023 as Rs.5,07,308.60/-, therefore, the defendants are liable to pay interest on outstanding amount @ 12.30% compounded monthly with effect from 01.12.2023 till its realisation.
2.3 It is submitted that proceedings under Section 12A of Commercial Courts Act, 2015 has been completed and Non Starter Report dated 23.01.2024 was issued. Further, it is submitted that the present court has the territorial jurisdiction as all the contractual transactions, opening of account, signing of documents, disbursement of amount and deposits in account took place within the jurisdiction of this court. Further, it is submitted that this court has pecuniary jurisdiction to try and adjudicate the present matter. Further, it is submitted that value of the suit for purpose of court fees is fixed for Rs.5,07,308.60 on which requisite court fees of Rs.7,400/- is paid.
3. WS has been filed by defendant no.1 stating that the dispute between the parties is a result of special circumstances occurred due to pandemic situation of Covid - 19 as defendant no.1 suffered losses in photo studio during that time and had closed his shop due to continuous losses. Defendant submitted that he had taken the loan to invest the money in his photo studio situated at Naveen Shahdara in the name and style of M/s Amit Studio, but, when Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 4 of 25 pandemic came the defendant had no option except to close his shop which was taken on lease and due to losses, defendant no. 1 came under huge debt and was not able to pay the installments of plaintiff bank after year 2022. Defendant has submitted that he continuously paid the interest against the loan from 2017 to 2022, but, thereafter, he was not able to pay interest and installments of loan amount.
3.1 It is stated that defendant is now working on daily wages as a waiter in marriage function and other basic functions and is hardly able to earn Rs.15,000/- per month and his shop at Naveen Shahdara has already been closed. Defendant submitted that he has old aged parents, wife and a minor child in his family who are totally dependent upon defendant and in this meager income, the defendant has to pay rental charges of Rs.6,500/- per month of the flat in which he is residing. Lastly it is submitted that defendant no.1 never been defaulter in paying loan installments, but, it was his worst financial circumstances due to which he was not able to pay the installments.
Remaining material contents of the plaint are denied by the defendant and prayer has been made for dismissal of the suit with heavy cost.
4. Defendant no.2 filed the WS stating that dispute between the parties is a result of special circumstances which occurred due to pandemic situation as brother of defendant no.2, namely, Amit Negi who took the loan had suffered losses in his photo studio. Defendant no. 2 submitted that due to losses, defendant no. 1 was not able to pay the installments of plaintiff bank after 2022 and he was stood as guarantor in the loan. He further submitted that defendant no. 1 had continuously paid the interest against the loan from the year 2017 to 2022, but, due to serious financial crisis, he could not able to pay the interest and installments of loan amount and even he and his family members came on starvation and hardly managed to bear the expenses Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 5 of 25 of their livelihood. Lastly, it is submitted that the interest upon the principal amount is beyond the financial capability and they are not in a position to pay this amount.
Remaining material contents of the plaint are denied by the defendant and prayer has been made for dismissal of the suit with heavy cost.
5. Defendant no.3 filed the WS stating that suit is not maintainable qua defendant no.3, in as much as, he had only signed a blank document at the request of defendant no.1. It is submitted that neither the bank official, nor the witnesses were present at the time of signing of document. Further, it is submitted that defendant no.3 had signed the blank document at the request of mother of defendant no.2 who has been working with defendant no.3 for more than 25 years. It is submitted that the document did not bear the signatures of bank representative or witnesses at the time of signing by defendant no.3. Further, it is submitted that plaintiff's loan is fully secured by way of hypothecation agreement dated 06.12.2017 and the same can be recovered by invoking hypothecation. Lastly, it is submitted that the alleged document Deed of Guarantee is neither legal nor valid in eyes of law and the same having not been executed as per law.
Remaining material contents of the plaint are denied by the defendant and prayer has been made for dismissal of the suit with heavy cost.
6. During admission/denial, defendant no. 1 and 2 have admitted the following documents of the plaintiff i.e. • Copy of GPA/Authorization dated 20.02.2023 as Ex.P1; • Copy of Sanction dated 29.11.2017 with application form, borrowers' statement and guarantor statement as Ex.P2; • Copy of letter of undertaking dated 06.12.2017 as Ex.P3; • Copy of hypothecation agreement dated 06.12.2017 as Ex.P4;
Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 6 of 25 • Copy of loan agreement dated 06.12.2017 as Ex.P5;
• Copy of GPA dated 06.12.2017 as Ex.P6; • Copy of affidavit as Ex.P7; • Copy of letter waiver dated 21.12.2017 as Ex.P8; • Copy of demand promissory note dated 21.12.2017 as Ex.P9; • Copy of letter of continuity dated 21.12.2017 as Ex.P10; • Copy of third party guarantee dated 06.12.2017 as Ex.P11; • Copy of demand promissory note as Ex.P12;
The defendant no. 3 during admission/denial has not admitted any of the documents of plaintiff.
On the otherhand, ld. counsel for plaintiff has submitted that as the defendants have not filed any documents along with the WS, thus, no admission and denial of documents are required on behalf of plaintiff.
7. On completion of pleadings of parties, following issues were framed for consideration vide order dated 24.02.2025:
i. Whether the plaintiff is entitled for money decree? If so, to what amount? OPP.
ii. Whether the plaintiff is entitled to any interest? If so, at what rate and for which period? OPP.
iii. Relief.
8. It is pertinent to mention that an application under Section 151 CPC filed on behalf of plaintiff for substitution of AR which was allowed vide order dated 17.03.2025 and plaintiff was permitted to pursue the present case through its new AR Sh. Ravi Kant Sharma.
9. Plaintiff has examined its AR Sh. Ravi Kant Sharma as PW-1 who tendered his evidence by way of affidavit which is Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 7 of 25 Ex.PW1/A and has relied upon the following documents:
• Certificate as per Bankers Book Evidence Act as Ex.PW1/1; • Certificate under Section 65B Indian Evidence Act as Ex.PW1/2;
• Affidavit of statement of truth as Ex.PW1/3; • Copy of POA/Authorization dated 15.12.2016 as Ex.PW1/4 (OSR);
• Sanction Letter dated 29.12.2017 along with Loan Application Form and customer statement of defendants as Ex.PW1/5 (colly) (also Ex.P2);
• Letter of undertaking dated 06.12.2017 as Ex.PW1/6 (also Ex.P3);
• Hypothecation Agreement dated 06.12.2017 as Ex.PW1/7 (also Ex.P4);
• LoanAgreement dated 06.12.2017 as Ex.PW1/8 (also Ex.P5); • GPA dated 06.12.2017 as Ex.PW1/9 (also Ex.P6);
• Affidavit dated 06.12.2017 as Ex.PW1/10 (also Ex.P7); • Letter of waiver dated 21.12.2017 as Ex.PW1/11 (also Ex.P8); • Demand Promissory Note dated 21.12.2017 as Ex.PW1/12 (also Ex.P9);
• Letter of continuity dated 21.12.2017 as Ex.PW1/13 (also Ex.P10);
• Deed of Gaurantee dated 06.12.2017 as Ex.PW1/14 (also Ex.P11);
• Demand Promissory Note dated 20.12.2020 as Ex.PW1/15 (also Ex.P12);
• Balance Conformation dated 08.11.2021 as Ex.PW1/16; • Demand notices to all defendants along with postal receipts are Ex.PW1/17;
• Demand promissory note dated 31.10.2023 as Ex.PW1/18; • Balance Conformation dated 31.10.2023 as Ex.PW1/19;
• Certified Copy of Statement of Account No. Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 8 of 25 0387020100000124 dated 09.01.2019 to 31.01.2024 along with certificate as Ex.PW1/20;
• Original NSR issued by South East DLSA 21.02.2024 as Ex.PW1/21.
• Affidavit under Order XI Rule 6 (3) of Commercial Courts Act is Ex.PW1/22 (inadvertently not mentioned in my affidavit).
PW-1 was cross examined by the respective counsel for defendant no. 1, 2 and 3 and thereafter, PE was closed on the statement of plaintiff.
10. In rebuttal, defendant no. 1 examined himself as DW-1 and tendered his evidence by way of affidavit Ex.DW1/A. He was duly cross examined by ld. counsel for plaintiff. 10.1 Sh. Satish Sachdeva examined himself as DW3/1 and he was also cross examined by ld. counsel for the plaintiff. Thereafter, DE was closed on the statement of defendant.
11. The court has thoroughly gone through the testimony of witness and perused the material on record and have also duly considered the arguments advanced. The findings on the issues are as under :
ISSUE No. (i) : Whether the plaintiff is entitled to money decree? If so, to what amount?OPP
12. The onus to prove the said issue is upon the plaintiff. Plaintiff has duly complied with mandatory provision of Pre- Institution Mediation and Conciliation as provided in Section 12 A of Commercial Courts Act, as per the Non-Starter Report dated 23.01.2021 Ex.PW1/21.
13. As far as the territorial jurisdiction is concerned, this court has the territorial jurisdiction over the present case since the loan Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 9 of 25 has been sanctioned by Naveen Shahdara Branch which falls within the jurisdiction of this Court and the defendants are also residing as well as running his business within the jurisdiction of this Court.
14. As far as the period of limitation is concerned, as per Sanction Letter Ex.PW1/5 (colly) which is admitted by defendant as Ex.P2, the loan amount of Rs.4,00,000/- was sanctioned on 29.11.2017 and as per Statement of Account Ex.PW1/20 the last payment of Rs.2,000/- was made on 02.08.2022. The application for Pre- Institution Mediation was filed by plaintiff before the DLSA, Shahdara District on 20.11.2023. Since the period of limitation is three years and the present suit is filed on 17.05.2024, thus, the present suit is filed within the limitation period of three years.
15. Moreover, this court also has the pecuniary jurisdiction over the matter since the suit amount claimed by the plaintiff is more than the specified value of Rs.3 lacs of the Commercial Courts.
16. The defendant no. 1 and 2 has not pleaded any specific defence and their only plea is that due to Covid-19 pandemic they could not repay the loan amount. However, ld. counsel for defendant no. 3 has argued that defendant no. 3 is not liable to pay the loan amount as he has signed on blank document and it is further argued that the dispute in the present case is not a commercial dispute and therefore, the present court does not have jurisdiction over the subject matter of the case.
17. Ld. Counsel for the defendant no.3 has relied upon the following judgment in support of his contentions. The court shall now deal with these judgments one by one.
(i) Reactive Chemicals and Solvents vs Indian Overseas bank Civil Suit (Commercial Division) 639 of 2018 decided by Hon'ble Madras HC on 09.06.2022 Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 10 of 25
18. The said suit was filed by the plaintiff against the bank seeking to recover the surplus amount received by the bank in the auction of the mortgaged property. In the said case, the plaintiff had availed a cash credit facility by creating a mortgage on a property. Thus, issued before the Hon'ble Madras HC in the said case was that whether section 34 of the SARFAESI Act is attracted or not? The defendant in that case has contended that the dispute involved pertained to the loan account and the sale was ordered under SARFAESI Act and thus, the jurisdiction to try the matter was with the DRT and not with civil courts, in view of Section 34 of the SARFAESI Act r/w Section 11 of the CC Act.
19. In this regard, Hon'ble HC held that the suit was incidental or ancillary to sale under section 13(4) of the SARFAESI Act and the amount due and payable to the bank is a matter within jurisdiction of the DRT. Thus, it was held that civil court's jurisdiction was barred by Section 34 of the SARFAESI Act. However, the said decision is squarely distinguishable on the facts of the case as in the present case, the jurisdiction of the DRT is not attracted by virtue of the fact that jurisdiction of the DRT can be availed of only if the disputes involved the subject matter of value more than Rs. 20 Lacs. Moreover, the said case was suit to recover the surplus amount of the money received by the bank in sale under SARFAESI Act. On the other hand, the present case is a suit for recovery filed by the bank against the defendant(s) when the defendant defaulted on its cash credit facility. Thus, the said judgment is not applicable in the facts of the case.
(ii) Meena Vohra vs Master Hosts Pvt Ltd 2025:DHC:1795 decided by Hon'ble Delhi HC on 18.03.2025
20. In this case, the plaintiff's deceased brother Late Mr. Mohinder Kapur advanced a loan of Rs.16,50,000/- out of his own Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 11 of 25 funds to the defendant no. 1 at interest of 12% p.a. with no fixed timeline for repayment. Moreover, the loan was given out of his own funds. Therefore, the Hon'ble HC held that on account of facts and circumstances, the transaction pertains to personal loan and that would not constitute a commercial dispute within meaning of the Act. It is was also observed by the Hon'ble Delhi HC that the loan was not advanced in the ordinary course of business and has no relation to trade, commerce or business of the plaintiff's deceased brother. However, the above said decision is distinguishable on the facts of the case in as much as the loan involved in that case was given in the personal capacity and out of his own funds and also the terms and conditions of the loan reflected that the dispute was not commercial dispute. In the present case, the loan was given by public bank and not out of its personal fund rather it was the public money. Moreover, it was given in the ordinary course of business and commerce and with intention of profit making. Thus, the said case is not applicable to the facts of the present case.
(iii) Qatar Airways Q.C.S.C vs Airport Authority of India and Anr CS (Comm) No. 52/2017
21. This case pertains to dispute related to the recovery for damages for loss on account of damage to the plaintiff's aircraft attributable to the defendant. The facts of the case are also distinguishable from the facts of the present case and therefore, it can not be said to apply in the present case.
(iv) Ladymoon Towers Private Limited vs Mahendra Investment Advisors Private Limited CS/99/2020 decided by Hon'ble Calcutta HC on 13.08.2021
22. In this case the plaintiff had provided for a loan to the defendant. It was also observed by the court that plaintiff and defendant were known to each other because of which plaintiff Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 12 of 25 provided defendant with short term loan. Further, from the memorandum of association of the plaintiff, it was observed that the plaintiff's regular business was not of lending money rather was of construction. The Hon'ble HC stated the same to be a 'hand-loan' which was not given in the regular course of business or as a commercial loan. It was held by the Hon'ble HC that the loan in dispute does not pertains to commercial dispute as the essential commercial flavour in such loan was lost by reason of the informal terms under which money is lent. However, it was observed that categories under the term 'commercial disputes' seeks to bring within its fold an inclusive range of disputes where the underlying purpose of transaction is a commercial interest of the parties.
23. The said judgment is not applicable to the facts of the present case as there was a formal transaction between the parties in this case and that the transaction was intended to serve the commercial interest of the parties i.e. expected return of interest on the part of bank and availing of cash credit facility by the defendant.
(v) Bharat Huddanna Shetty vs Ahuja Properties & Developers 2021 LawSuit (Bom) 2036 decided by Hon'ble Bombay HC on 13.07.2021
24. In this case, the plaintiff has given a friendly loan to the defendant. The defendants executed bills of exchange and issued cheques as well. But the cheques were dishonoured, so the plaintiff filed the present suit against the defendants for recovery. The Hon'ble HC observed that not every instance of lending must reek of business or trade. Thus, it was held that where plaintiff lent a friendly loan, it is not a transaction between them in the course of their ordinary business and it can be treated as money lending per se. However, the present case does not pertain to the informal or friendly loan, therefore, this case is also inapplicable in the facts of the present case.
Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 13 of 25
(vi) Rolta Private limited vs Varanium Cloud Limited and Anr. Summary Suit No. 18 of 2023 decided by Hon'ble Bombay HC on 11.11.2024
25. In this case, the plaintiff was engaged in the business of providing leasing services and defendant was involved in business of information technology and web solutions. The defendant approached the plaintiff for acquiring the secured financial debt and thereafter, plaintiff entered into an agreement with the defendant. As per agreement, the defendant would pay an amount of Rs. 800 Crores to the plaintiff. Since the defendant did not pay the amount, plaintiff filed the present suit. The Hon'ble HC held that since the dispute relating to assignment of debt by the plaintiff no. 1 in favour of defendant no. 1 is not an ordinary transaction of merchant, banker, financier or trader and other classes of persons mentioned in Section 2(1)(c)(i) of the Act, therefore, the same is not a commercial dispute. However, the above said case is not applicable to the facts of the case as in the present case one of the parties involved is a public bank whose ordinary transaction was to provide loans in the course of business. Moreover, the present case does not involve any question of assignment of debt rather it is a simpliciter suit for recovery on account of default by the defendant in repaying the loan amount availed through cash credit facility.
(vii) IHHR Hospitality (Andhra) Pvt Ltd vs Mrs. Seema Swami & Ors. 2022:DHC:4647 decided by Hon'ble Delhi HC on 14.11.2022
26. The said case pertains to suit for recovery, Declaration and Permanent Injuction filed by the plaintiff and against the defendants. It is stated that Late Shri Manoj Kumar Swami was employed by the plaintiff company as unit Financial Controller. He had access to the bank account of the plaintiff company and it was discovered that he had, in conspiracy with other defendants, Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 14 of 25 embezzled huge amounts through forged cheques. The present suit was filed for recovery of the money on account of illegal withdrawals of money from the account of plaintiff company. Thus, the question before the court was whether the recovery sought on account of embezzlement of money from the bank account of the plaintiff can be held to be a suit of commercial nature.
27. The Hon'ble Delhi HC held that the transaction involved was not a transaction out of ordinary business transaction and 'having arisen in the ordinary course of business.' Thus, it was held that it is not a commercial dispute. Ld. Counsel for the defendant relied upon the observation made by Hon'ble Delhi HC in para 10 of the judgement which is re-produced as follows:
"10. In the case of Lady Moon Towers Pvt. Ltd. vs. Mahindra Investment Advisors Pvt. Ltd. MANU/WB/0547/2021 it was observed by the High Court of Calcutta that the definition contemplates a commercial dispute and not any other form of dispute where the basis of disagreement between the parties has a non- commercial cause. The gradation of disputes in Section 2(i)(c) takes into account all possible forms of Agreements from which a commercial dispute may arise; it makes it clear that the framers of the statute gave emphasis on the commercial flavour of the transaction as opposed to agreements entered into between the parties without a commercial purpose. The commercial purpose would generally mean a transaction by which a person's commercial or economic interest may be advanced and would result in an Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 15 of 25 economic benefit to that person. It would not include an agreement where profit making is an incidental outcome of the transaction or may happen by accident. Home Loan for example is given by a person or entity to another with the expected outcome of principle sum being returned with interest. The essential commercial flavour in such a loan may be lost by way of informal terms under which the money is lent and advanced and the consequent uncertainty which may result therefrom. It was further observed that in terms of Section 2(i)(c) ordinary transactions of merchants, bankers, financers and traders such as those relating to mercantile documents implies ordinary transactions between the named persons and the "mercantile documents" indicates that all transactions between the specified classes of persons will not result in a commercial dispute where the transaction does not relate to mercantile documents. Only those disputes arising out of a transaction between the named classes of persons which has been formalised by way of a mercantile document would be termed as a commercial dispute. In the said suit, a loan of Rs. 50 lakhs had been given by the plaintiff Company to the defendant since the Directors of the Plaintiff Company were known to the defendant since long. It was held that simplicitor because a loan transaction was involved would not attract a commercial flavour to it and was held to be not a commercial dispute."
Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 16 of 25 The above said case is not applicable on the facts of the present case as the suit for recovery filed was for embezzled money and secondly, the loan was not offered in ordinary course of business. In the present case, on the other hand, the defendant no. 1 has availed a cash credit facility and the loan was disbursed as an ordinary course of business by the plaintiff bank.
28. None of the case relied upon by counsel for defendant no. 3 applies to the fact of the present case. The cash credit facility was granted by the plaintiff bank to the defendant and therefore, the suit is commercial in nature and squarely falls within the purview of Section 2 (1) (C) of Commercial Courts Act.
29. The defendant no.1 and 2 in the present case had admitted the facts in their WS that defendant no.1 had taken loan to invest the money in his photo studio situated at Naveen Shahdara in the name and style of M/s Amit Studio, but, when pandemic came he had no option except to close his shop which was taken on lease and due to losses, defendant no. 1 came under huge debt and could not able to pay the installments of plaintiff bank after 2022. Even during cross examination DW-1 admitted that he had taken the loan for the business of photo studio and he has signed Ex.PW1/5 to Ex.PW1/13, Ex.PW1/15, Ex.PW1/16, Ex.PW1/18. The relevant portion of the cross examination of DW-1 is as under:
"I had taken the loan for the business of photo studio. I was doing the business of photo studio since 2014. My business was closed in the year 2019 - 2020 due to Covid - 19 pandemic........ ........At this stage, Ex.PW1/5 to Ex.PW1/13, Ex.PW1/15, Ex.PW1/16, Ex.PW1/18 and Ex.PW1/19 are shown to the witness. The witness Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 17 of 25 admits that the said exhibits bears his signature........"
30. Defendant no.3, however, has taken the plea in the WS that suit is not maintainable qua him, in as much as, he had only signed a blank document at the request of defendant no.1 and neither the bank official, nor the witnesses were present at the time of signing of document and he had signed the blank document at the request of mother of defendant no.2 who has been working with him for more than 25 years. The contents of the plaint and documents proved on record by PW-1 appear to be of an unimpeachable character. Also, once a person signs a document voluntarily, he/she cannot subsequently escape his/her liability and plead that he/she had signed blank documents. Even If he/she signs any blank document, he/she does so at his/her own peril. Reliance can be placed on the judgment in Corporation Bank Vs. Sushil Enterprises & ors. 2003 VIAD Delhi 467 dt. 16.5.2007 wherein it was held that:
"Nobody is expected to sign the documents without reading it or when it is blank and if he does so he does at his own risk and the very fact that the plaintiff Bank has disbursed the loan amount and defendants had availed it also shows that the documents were valid and duly executed".
31. It was further held that :
"The admission of signatures of the defendant No. 1 upon the documents in question raises a presumption that the documents were duly filled in when these were signed. Had the defendants not availed the loan amount and had the payment of the machinery purchased by defendant Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 18 of 25 No. 1 not been made by the plaintiff, the aforesaid plea of signing the documents when these were blank might have cut ice, not otherwise".
32. In view of the above case law and considering the fact that defendant no. 3/Satish Sachdeva has signed Deed of Guarantee dated 06.12.2017 Ex.PW1/14 (admitted by defendant no.1 as Ex.P11) at bottom of every page as well as on the last page at relevant place as guarantor, thus, his plea of signing blank document is not legally tenable. Ex.PW1/14 also bears the signature of defendant no. 2/Ajay Negi as other Guarantor and signature of Branch Manager along with stamp and signature of two witnesses Abhishek Kumar and Sahil Singh and is a notarized document, thus, this plea of defendant no.3 that the document did not bear the signatures of bank representative or witnesses at the time of signing by defendant no.3 is not sustainable. Further, the plea of defendant no.3 that he had signed the blank document at the request of mother of defendant no.2 is also not sustainable in view of the fact that defendant no.3 has not filed any documentary proof along with WS to prove that at the time of signing the documents, the same were blank and have been filled later on. Moreover, the signature of defendant no. 3 is appearing exactly same as on WS as well as on Ex.PW1/14. After careful perusal of Ex.PW1/14 and the signatures of the defendant no.3 appearing at the relevant places on the said document, it cannot be said that blank documents were signed by the defendant no.3, in as much as, the signatures are appearing exactly at the relevant places at the bottom of the page where the complete page is written / typed or in the end of the page, where contents of the documents are concluded. Even during cross examination DW3/1 Satish Sachdeva admitted that Ex.PW1/14 bears his signature at two places on each page. The relevant portion of the cross examination of DW3/1 is as under:
"......The Ex.PW1/14 from page no.5 to page no.11 Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 19 of 25 bears my signature at two places on each page. I have signed the Ex.PW1/14 which was duly typed document at the time of execution and signature of the same. However, at that time sign and stamp of the bank was not there. It is correct to say that I had the knowledge when I signed the said document Ex.PW1/14 that the same is for the purpose of granting loan to the defendant no.1 Amit Negi......"
33. Furthermore, defendant no.3 neither disputed the execution of loan document such as Hypothecation Agreement dated 06.12.2017 Ex.PW1/7 (also Ex.P4) as he stated in the WS that plaintiff's loan is fully secured by way of hypothecation agreement dated 06.12.2017 and the same can be recovered by invoking hypothecation.
34. The argument of ld. counsel for the defendant no. 3 that the suit qua defendant no.3 is not maintainable as Deed of Guarantee is neither legal nor valid in eyes of law does not hold any ground. It is an admitted position that defendant no. 3 stood as guarantor for defendant no. 1, thus, the liability of the defendant no. 3 is co-extensive with that of defendant no. 1 (Principal debtor)1. The principal liability is of the principal debtor and therefore, the issue if arises, at all, is whether the suit pertains to the commercial dispute between the plaintiff and defendants.
35. Perusal of the loan application along with sanction letter reveals that the defendant no. 1 had obtained a cash credit facility of Rs. 4 lacs for the purpose of expansion of business. It is also pertinent to mention here that the defendant no. 1 is sole proprietor of the M/s Amit Shop.
1 Section 128 of The Indian Contract Act, 1872 Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 20 of 25
36. In Ladymoon Towers (supra), one of the cases relied upon by the defendant no. 3, Hon'ble Calcutta HC had discussed the definition of traders. It was observed that trader is one who buys goods and sells them at profit. The relevant observation is as follows:
"Traders: The commonly accepted definition of a "trader" is one who trades in goods, buys goods and sells them at a profit. Black's Law Dictionary, Eighth Edition, also defines a trader as one who sells goods substantially in the form in which they are bought or as a member of a stock exchange, buys and sells securities on the exchange floor or one who buys and sells commodities and commodity futures for others or for his / her own account in anticipation of a speculative profit."
Thus, on the basis of above observation, it can be said that defendant is a trader as he buys and sells the good for profit and that he had availed the cash credit facility for expansion of the said business. On the other hand, it is admitted that plaintiff is a bank and is covered under definition of bankers u/s 2(1)(c) of the Act.
37. Since the dispute between the plaintiff and the defendant no. 1 is a commercial dispute and liability of defendant no. 3 is co- extensive with that of principal debtor thus, the contention of the defendant no. 3 that the suit is not a commercial dispute is not maintainable.
38. The counsel for the defendant no. 3 has argued that suit against the defendant no. 3 was filed in capacity of guarantor, thus, the defendant no. 3 is not a necessary party. However, this argument is not acceptable. Once the defendant no. 3 admits that he stood as guarantor Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 21 of 25 and also executed a guarantee deed in favour of defendant no. 1, his liability becomes co-extensive to that of principal debtor and is considered as necessary party.
39. Moreover, the defendant has argued that the jurisdiction of the commercial court is hit by Section 34 of SARFAESI Act r/w Section 11 of the CC Act as the jurisdiction to adjudicate the dispute lies with DRT. However, this contention is not sustainable as the minimum value/amount of the suit should be Rs. 20 Lacs in order to be adjudicated by DRT. In this regard, a notification dated 06.09.2018 was published by the Government of India. The said notification is as follows:
"NOTIFICATION New Delhi the 6th September, 2018 8.0. 4312(E). Whereas, sub-section (4) of section 1 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 ( 51 of 1993) provides that the provisions of the said Act shall not apply where the amount of debt due to any bank or financial institution or to a consortium of banks or financial institutions is less than ten 1akh rupees or such other amount, being not less than one 1akh rupees, as the Central Government may, by notification, specify; And whereas, the Central Government has considered it necessary to raise the pecuniary limit from ten 1akh rupees to twenty 1akh rupees for filing application for recovery of debts in the Debts Recovery Tribunals by such banks and financial institutions. Now therefore, in exercise of the powers conferred by sub--section (4) of section 1 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the Central Government hereby specifies that the provisions of the said Act shall not apply where the amount of debt due to any bank or financial institution or to a consortium of banks or financial institutions is less than twenty 1akh rupees.
[F. No. 3/4/2018--DRT] SUCHINDRA MISRA, Jt. Secy"
Thus, the contention of the defendant is not acceptable Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 22 of 25 being devoid of merits. On the basis of the statement of account Ex.PW1/20, it is established that there is an outstanding amount of Rs.5,07,308.60/- as on 30.11.2023. This amount includes an unapplied interest for an amount of Rs.1,33,233/- and the principal amount on this as on date of NPA is Rs.3,74,075/-. The plaintiff, thus, is entitled to an amount of Rs.5,07,308.60/- as principal.
Issue no. (i) is, accordingly decided in favour of plaintiff and against the defendant.
Issue no. (iii) Whether the plaintiff is entitled to any interest? If so, at what rate and for which period? OPP.
40. The onus to prove this issue is upon the plaintiff. It has been proved on record that a Cash Credit Facility of Rs.4,00,000/- was granted on 29.11.2017 vide sanction letter Ex.PW1/5 (colly) and thereafter, funds was disbursed to defendant vide loan account bearing no. 0287020100002837.
41. Plaintiff has claimed unapplied interest upto 30.11.2023 for a sum of Rs.1,33,233/- as per books of accounts maintained by it. Plaintiff has also included the interest in the amount claimed in the plaint upto 30.11.2023.
42. Section 34 of the Code of Civil Procedure, 1908 deals with award of interest by the Court in suits for money. It reads as follows:
"34. Interest (1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent, per Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 23 of 25 annum, as the Court deems reasonable on such principal sum, from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit.
Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent, per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to commercial transactions."
43. Section 34 empowers the court to award interest for the period from the date of the suit to the date of the decree and from the date of the decree to the date of payment where the decree is for payment of money.
44. Section 34 CPC does not empower the court to award pre-suit interest. The pre-suit interest would ordinarily depend on the contract (express or implied) between the parties or some statutory provisions or the mercantile usage, as held by Hon'ble Supreme Court in Secretary/General Manager, Chennai Central Co-operative Bank Ltd. Vs. S.Kamalaveni Sundaram 2011 (99) A/C 140 (SC).
45. As far as interest, pendent-lite and future is concerned, plaintiff has not claimed any specific rate of interest in the prayer clause at which pendent-elite and future interest is claimed since 01.12.2023 till its realisation. Neither any document was pointed out by the counsel for plaintiff during arguments mentioning the rate of interest at which pendent-elite and future interest is claimed. Interest of justice would be served if defendant is directed to pay interest @ 9% per annum on the abovesaid principal amount. Thus, it is directed plaintiff is entitled to Rs.5,07,308.60/- (includes the unapplied interest) as Civil Suit (Comm) No. 295/2024 The Jammu & Kashmir Bank Ltd. Vs. Mr. Amit Negi Page No. 24 of 25 principal against abovesaid loan account alongwith interest @ 8% from 01.12.2023 till its realization on the principal amount of Rs.5,07,308.60/-.
Issue no. (ii) is thus, decided in favour of plaintiff and against the defendant, accordingly.
ISSUE No. (iii)/Relief :
46. In view of findings on the above issue, the suit of the plaintiff Bank is hereby decreed in its favour and against the defendant for a principal amount of Rs.5,07,308.60/- towards the loan account bearing no. 0287020100002837 along with interest @ 9% per annum on the principal amount of Rs.5,07,308.60/- w.e.f. 01.12.2023 till its realisation. Costs of the suit to the extent of court fees and Rs.25,000/-
as litigation cost are also awarded to the plaintiff as per law. The plaintiff has not paid the court fees on the pre-suit interest claimed from 30.11.2023 till date of filing of the suit i.e. 17.05.2024. It is, thus, directed that the decree for the interest amount shall be executable only subject to deposit of the court fees in respect of interest amount.
Decree Sheet be prepared accordingly.
File be consigned to Record Room.
Digitally signed
KIRAN by KIRAN
BANSAL
BANSAL Date: 2025.06.06
15:18:55 +0530
Announced in the open court (Kiran Bansal)
on 06.06.2025 District Judge, Commercial Court-02
Shahdara, Karkardooma
Delhi/ 06.06.2025
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