Delhi District Court
Canara Bank vs M/S Yaaden Enterpriese And Ors on 28 March, 2024
IN THE COURT OF MS. KIRAN BANSAL:
DISTRICT JUDGE (COMMERCIAL COURT-02
SHAHDARA DISTRICT
KARKARDOOMA COURTS : DELHI
Civil Suit (Comm) No. 527/2021
Canara Bank,
A corporate body constituted under the banking companies
(Acquisition and Transfer of undertaking Act, 1970), having its
head office at Ramanashree Arcade No.18 III, Mahatma
Gandhi Road, Bengaluru, Karantaka - 560001
Also at one of its Branches at 177, Saini Enclave, Karkardooma
New Delhi - 110092
........... Plaintiff
Vs.
1. M/s. Yaaden Enterprises,
288-A, Shalimar Garden, Extn.-1,
Ghaziabad, Uttar Pradesh - 201005
2. Mr. Dheeraj Kumar Roy,
S/o Sh. Chandra Mauleshwar Roy,
Partner of M/s. Yaaden Enterprises,
288-A, Shalimar Garden, Extn.-1,
Ghaziabad, Uttar Pradesh - 201005
3. Sh. Sujeet Suman,
S/o Sh. Y.P. Bhagat,
Partner of M/s. Yaaden Enterprises,
104, Shubha Apartments, Plot No.27,
Sector-5, Sahibabad,
Uttar Pradesh - 201005. .............. Defendant
Date of institution : 13.12.2021
Date of hearing arguments : 11.03.2024
Date of judgment : 28.03.2024
Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 1 of 49
JUDGMENT
1. The plaintiff Bank has filed the present suit for recovery of Rs.19,45,451.11/- outstanding as on 31.10.2021 along with expenses, pendent-lite and future interest against the defendant. The plaintiff Bank is stated to be constituted under the Bankings Companies Act, 1970 (Acquisition and Transfer of Undertaking Act) having its head office at 112, JC Road, Bangalore - 560002 and branch office at 177, Saini Enclave, Karkardooma, New Delhi - 110092. Ms. Upasana Gaur is the Senior Manager holding a valid power of attorney in her favour and is stated to be fully authorised and empowered by the plaintiff bank to sign, verify and institute plaint, applications and claims, pleadings, affidavits etc. It is stated that the defendant no. 1 is a partnership firm and defendant no. 2 and 3 as the partners of defendant no.1 had approached and had applied for grant of OCC limit of Rs.5 lakhs and Term Loan of Rs.15 lakh under CGTMSE Scheme and accordingly after considering and examining the request of the defendants and after being satisfied, plaintiff sanctioned OCC limit of Rs.5 lakhs vide loan account no. 333261000055 and Term Loan of Rs.15 lakhs and charged interest @ 11.25% per annum against the hypothecation of plant and machinery, stocks and books debts, vide sanction letter dated 04.08.2015. The said loan was disbursed to defendants after execution of all necessary loan and security documents in favour of plaintiff bank. It is stated that defendant no. 2 and 3 as the partner of defendant no.1 again approached the plaintiff bank and requested for enhancement of OCC limit from Rs.5 lakhs to Rs.15 lakhs and after considering the request of the defendant, the OCC limit was enhanced from Rs. 5 lakhs to 15 Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 2 of 49 lakhs vide sanction letter dated 01.03.2017 and the defendant again executed all necessary loan and security documents in favour of plaintiff bank. The defendant no. 2 and 3 as partner of defendant no.1 again applied for renewal of loan facility and the said loan was renewed on 28.02.2019 and the defendant executed all necessary loan and necessary documents in favour of plaintiff bank. Thereafter, defendant no. 2 and 3 as partner of defendant no.1 approached the plaintiff bank and requested to grant working capital demand loan (WCDL) of Rs.1.49 lakh. Accordingly, plaintiff bank sanctioned working capital demand loan facility of Rs.1,49,000/- vide loan account no. 3333753000007 and charged interest @ 7.30 % per annum and the said amount was payable in a period of 24 months including a moratorium period of 6 months but during the moratorium period interest should be served vide sanction letter dated 12.05.2020. The loan was thereafter, disbursed to the defendant after execution of all necessary loan and security documents in favour of the plaintiff. It is stated that defendant no. 2 and 3 as partner of defendant no. 1 again applied for renewal/reduction of the aforesaid loan facility and after being satisfied, plaintiff bank reduced OCC limit from Rs.15 lakh to Rs.14.90 vide sanction letter dated 24.07.2020. It is stated that plaintiff bank, as per government policy due to covid 19, converted over due interest amount of Rs.77,412/- into CFITL facility through loan account no. 3333710000021 on 01.09.2020 and the said amount was payable in 7 months.
2. It is stated that defendant no. 2 and 3 as the partner of defendant no.1 again approached plaintiff bank and requested to restructure the pending/overdue interest of OCC limit and the Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 3 of 49 plaintiff bank considered and examined the request of the defendants and restructure the pending interest of OCC limit and converted pending/overdue interest of Rs.74,000/- into Funded Interest Term Loan (FITL) under loan account no. 33337471000002 and charged interest @ 9.45% per annum. The said amount was payable in a period of 27 months including a moratorium period of 3 months but during the moratorium period, interest should be served vide the sanction letter dated 31.12.2020. It is stated that thereafter the loan was disbursed to defendants after execution of all necessary loan and security documents in favour of plaintiff bank. After availing the loan, the defendants miserably failed to deposit monthly installments on time and the account of the defendant became irregular. The defendants failed to regularize the account despite regular follow up and ultimately the defendant's account was classified as NPA on 02.05.2021. The plaintiff bank issued legal notice through advocate on 14.09.2021, but, the defendant failed to pay entire dues of the bank. The plaintiff bank applied for the pre-institution mediation and settlement under Section 12A of the Commercial Courts Act, on 22.09.2021, none appeared on behalf of defendant and non starter report was issued on 22.10.2021.
3. It is further stated that the following amounts are due against the defendants against the following account numbers as follows:
S.No. Type of loan and its Outstanding Amount Date Date Interest number (Outstanding (per as on) annum)
1. OCC Loan Rs.16,43,849/- 31.10.2021 8.45% 3333261000055
2. Working Capital Rs.1,46,763.11/- 31.10.2021 6.90% Demand Loan 3333753000007 Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 4 of 49
3. FITL Loan Rs.70,853/- 31.10.2021 9.45% 3333747000002
4. CFITL Loan Rs.83,986/- 31.10.2021 8.45% 3333710000021 Total outstanding Rs.19,45,451.11/-
4. It is stated that the amount of Rs.1,72,889.11 is claimed as interest as per the following details (A) (B) (C) (D) (E) The rate at which The date from The total amount The total The daily rate at interest is claimed which it is of interest amount of which interest claimed and claimed to the without accrues after the date to date of interest that date. And which it is calculation claimed to the total outstanding calculated date of (including calculation arrears penalty) amount up to date of 3333261000055 @ 31.01.2021 1,53,849/- 14,90,000/- 16,43,849/-
to 8.45% 31.10.2021 3333753000007 @ 13.06.2020 10,179.11/- 1,36,584/- 1,46,763.11 to 6.90% 31.10.2021 3333747000002 @ 31.01.2021 Rs.2,287/- Rs.68,566/- Rs.70,853/-
to 9.45% 31.10.2021 3333710000021 @ 31.10.2020 Rs.6,574/- Rs.77,412/- Rs.83,986/-
to 8.45% 31.10.2021 Total Amount 15.05.2018 Rs.1,72,889.11 Rs.17,72,562 Rs.19,45,451.11 to 31.10.2021
5. It is further stated that the plaintiff bank is entitled to interest @ 8.45% per annum under the OCC account no. 3333261000055 and 6.90% per annum under the WCDL account no.3333753000007 and 9.45% per annum under the CFITL account no.3333747000002 and 8.45% per annum under the CFITL account no. 3333710000021.
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6. The cause of action stated to have arisen in favour of the plaintiff bank on 04.08.2015 when the plaintiff bank sanctioned the loan under the loan account no. 3333261000055 and also on 12.05.2020 when WCDL loan was sanctioned under Loan Account No.3333753000007. Thereafter, on 01.09.2020, when the plaintiff bank sanctioned CFITL loan under the loan account no. 3333710000021 and further on 31.12.2020, when the plaintiff bank sanctioned restructuring of the pending interest of OCC Limit under Loan Account No. 33337471000002. It is stated that the suit of the plaintiff is within limitation as defendant no. 2 and 3 came to the branch of plaintiff bank and signed a pro note on 31.12.2020 and last payment made by the defendants is of Rs.500/- on 11.04.2021 and hence, the suit is within the period of limitation. The said loan has been sanctioned at Saini Enclave branch of bank situated within the jurisdiction of the present court, therefore, the present court is stated to have territorial jurisdiction. It is also stated that the loan amount was also repayable by the defendants to the plaintiff bank within the jurisdiction of the present court. Plaintiff has thus, prayed
(a) pass a decree in favour of the plaintiff bank and against defendant for a sum of Rs.16,43,849/- (Rupees Sixteen Lakh Forty Three Thousand Eight Hundred Forty Nine Rupees Only) outstanding as on 31.10.2021 along with expenses, pendete lite and future interest @ 8.45 % per annum with monthly rests in OCC Loan Account no. 333261000055 and Rs.1,46,763.11 outstanding as on 31.10.2021 along with expenses, pendent-lite and future interest @ 6.90% per annum with monthly rests I working capital demand loan (WCDL) loan account no. 3333753000007 and Rs.70,853/- outstanding as on 31.10.2021 along with expenses, pendent-lite and future interest @ 9.45% per Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 6 of 49 annum with monthly rests in FITL Loan Account No. 33337471000002 and Rs.83,986/- outstanding as on 31.10.2021 along with expenses, pendetelite and future interest @ 8.45% per annum with monthly rests in CFITL Loan Account No. 3333710000021. Total outstanding in all accounts is Rs.19,45,451.11 as on 31.10.2021 and penal interest @ 2% per annum with monthly rest till realization is also claimed.
7. Along with this plaint affidavit cum statement of truth of AR of plaintiff is filed. It is pertinent to mention that at the time of final arguments, an objection was taken on behalf of defendant that the Statement of Truth filed along with the plaint is not as per Appendix - 1, Order VI Rule 15A CPC regarding verification of pleadings in a Commercial dispute. The plaintiff, thereafter, filed an application under Section 151 CPC along with fresh statement of truth for taking on record fresh statement of truth which was allowed vide order dated 16.12.2023 and the fresh statement of truth was taken on record.
8. Summons of the suit was issued to the defendant. The defendant no. 3 was served on 03.07.2022. Defendant no.2 appeared in person in the court on 16.07.2022 on behalf of defendant no.1 and 3 as well as for himself and sought time to file the WS on behalf of the defendants along with an application under Order VIII Rule 1 CPC for condonation of delay in filing WS which was allowed vide order dated 04.11.2022 and WS was taken on record.
9. Defendant has taken preliminary objections in the WS and has stated that at the time of disbursement of loan and Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 7 of 49 sanction of the credit facility by plaintiff bank on 04.08.2015, it was offered by plaintiff bank that credit facilities/loan sanctioned are to be availed within 3 months from the sanctioned date of loan i.e. 04.08.2015, but, defendant never agreed to avail the same on the rate of interest as shown by the plaintiff bank. Then it was told by the bank officials/representatives that present loan was only to prompt the business as per government policies and it was agreed that rate of interest would be minimized and for this reason paper were signed even after the date of sanction of the loan amount by the plaintiff bank i.e. 04.08.2015, but at the time of signing the papers, the bank officials had not even filed the blank columns and had agreed the rate of interest would not be beyond 7.25% per annum and hence, the document annexed by the plaintiff bank are not even having the signature of officials of plaintiff bank, which is sufficient to endorse the version of the defendants and then bank officials got signed another set of documents which were also signed by plaintiff's representative which is not placed intentionally by plaintiff bank on record and it is submitted that the defendant completed the loan/debt within stipulated period of 48 months.
10. Defendants have further stated that they had applied for reduction of aforesaid loan facility during covid 19 pandemic, as they were not interested to continue the aforesaid loan facilities but the plaintiff bank in order to cheat the defendants even in the pandemic of covid 19 reduced the said OCC limit by only Rs.10,000/- and prepared two more loan accounts in the name of defendants and started making interest even upon interest amount as shown in loan account but never given any amount to Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 8 of 49 defendants. It is stated that the plaintiff bank has filed the present suit for recovery against four loan accounts in which two loan accounts are self created account of plaintiff bank by converting some interest amount into loan on their own in order to keep the matter in limitation by clever drafting, while suit of the plaintiff in respect of the loan amount which was sanctioned vide order dated 04.08.2015 which was repaid by the defendants, is totally time barred and is liable to be dismissed.
11. It is stated that the plaintiff bank did not pay the actual court fees as per their claim and also did not mention that how much advolourm fees has been paid by plaintiff bank. It is stated that the loan agreement placed by the plaintiff bank is not enforceable as the same is not signed by both the parties. It is stated that there is no declaration in whole of the pleadings that the plaintiff bank does not have any other document in their power, possession and custody as the plaintiff bank knows very well that contract on which defendants and plaintiff had signed equally with actual clauses are not filed by the plaintiff bank intentionally with ulterior motive. It is further stated that executive of plaintiff bank offered the defendants for term loan and to grant OCC limits in order to prompt the business of the defendant on a small rate of interest and the bank officials very well taken the signatures of both the defendants on blank printed documents and before the same was signed by AR of bank, they had filed 11.25% per annum in the place of interest for which the defendant denied to avail the facilities. Then the bank officials had prepared another agreement which was signed by the defendant and officials of bank in which the rate of interest was minimized for the loan sanctioned on 04.08.2015 for a period of 48 months and it is Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 9 of 49 stated by the defendant that they had repaid the same within the stipulated period. The defendant have further stated that they had settled the earlier loan sanctioned on 04.08.2015 and when they were in need, then as per their need they only avail the capital demand loan facility of Rs.1,49,000/- vide loan account no. 3333753000007 @ 7.30% per annum for the period of two years in the year 2020 and otherwise, according to the defendant nothing is left upon the defendants. It is stated that plaintiff bank without any intimation first as their own calculate the interest of Rs.77,412/- and themself converted that interest amount in loan account no. 3333710000021 on 01.09.2020 while defendant never got any amount from this loan account. The defendants have denied that they had approached plaintiff bank for restructure pending/overdue interest of OCC limit and the defendants have stated that they got to know about the new loan account number 3333710000021, when they had approached the plaintiff bank in December, 2020 and as per the defendant, the plaintiff had got the signature on the some blank documents and in this way with dishonest intention to cheat the defendants falsely created two loan account of the interest amount of Rs.77,412/-. It is stated by the defendant while denying the contentions of the plaintiff, that the bank officials of plaintiff had stopped the defendant to come in DLSA for pre-institution mediation and they called the defendant to come to bank, otherwise, the defendants were always ready, if plaintiff bank comes with fair calculation. The defendant have denied receiving of any legal notice and have prayed that the suit of the plaintiff be dismissed. Defendant no. 2 and 3 have filed their affidavit and statement of truth in support of WS.
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12. The plaintiff also filed replication to the written statement of the defendant, reiterating the contents of the plaint and denying the counter allegations and has admitted that the term loan of Rs.15 lakhs which was sanctioned on 04.08.2015 vide account number 3333766000016 was already closed but OCC Limit, WCDL, CFITL and FITL limit sanctioned to defendants are still outstanding as per statement of account.
13. The defendant in his affidavit of admission/denial of documents has admitted following documents of plaintiff:
i. Copy of POA as mentioned at serial no. 1 of the list of doc- uments of plaintiff which is Ex.P1(page 20); ii. Partnership deed dt. 10.05.14 & 18.12.13 as mentioned at serial no. 2 of the list of documents of plaintiff which is Ex.P2 (colly)(page 21-26);
iii. True copy of sanctioned memorandum dt. 04.08.15 as men- tioned at serial no. 3 of the list of documents of plaintiff, however, the rate of interest as mentioned in the said document is dis- puted which is Ex.P3(page 27);
iv. Copy of request of over draft facility dt. 05.08.15 as men- tioned at serial no. 5 of the list of documents of plaintiff which is Ex.P4(colly)(page 40-42);
v. Copy of deed of hypothecation of machinery dt. 05.08.15 as mentioned at serial no. 6 of the list of documents of plaintiff which is collectively Ex.P5(colly) (page 44-52); vi. Copy of letter of undertaking, reloans/advances dt. 05.08.15 as mentioned at serial no. 7 of the list of documents of plaintiff which is collectively Ex.P6(colly)(page 53-56);
Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 11 of 49 vii. Copy of certificate of loan papers obtained dt. 05.08.15 as mentioned at serial no. 8 of the list of documents of plaintiff which is Ex.P7(page 57);
viii. Copy of sanctioned MOU dt. 01.03.17 as mentioned at se- rial no. 11 of the list of documents of plaintiff which is Ex.P8(page
63);
ix. Copy of letter of renewal dt. 01.03.17 as mentioned at se- rial no. 12 of the list of documents of plaintiff which is collectively Ex.P9(colly)(page 64-67);
x. Copy of agreement against the books debts dt. 01.03.17 as mentioned at serial no. 13 of the list of documents of plaintiff the contents of which are denied is Ex.P10(colly)(page 68-76); xi. Copy of supplementry agreement as mentioned at serial no. 14 of the list of documents of plaintiff the contents of which are denied is Ex.P11(colly)(page 77-81);
xii. Copy of certificate of loan paper obtained on 01.03.17 as mentioned at serial no. 15 of the list of documents of plaintiff, the execution and issuance of receipt are denied Ex.P12(colly)(page 82-83);
xiii. Copy of letter of partnership dt. 01.01.17 as mentioned at serial no. 18 of the list of documents of plaintiff which is Ex.P13(page 86);
xiv. Copy of acknowledgement of debt and security as men- tioned at serial no. 19 of the list of documents of plaintiff, the con- tents of which are denied is Ex.P14(page 87); xv. Copy of application for loan to Micro & Small Enterprises dt. 28.02.19 as mentioned at serial no. 20 of the list of documents of plaintiff, the contents of which are denied being incomplete is Ex.P15(colly)(page 88-92);
Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 12 of 49 xvi. True copy of sanction MOU dt. 28.02.19 as mentioned at serial no. 21 of the list of documents of plaintiff which is Ex.P16(page 93);
xvii. Copy of letter of renewal dt. 28.02.19 as mentioned at se- rial no. 22 of the list of documents of plaintiff which is collectively Ex.P17(Colly)(page 94-97);
xviii. Copy of certificate of loan papers obtained as mentioned at serial no. 23 of the list of documents of plaintiff, the execution and issuance of receipt are denied is Ex.P18(page 98-99); xix. Copy of letter of partnership dt. 28.02.19 as mentioned at serial no. 25 of the list of documents of plaintiff which is collec- tively Ex.P19(page 101);
xx. Copy of application form for loans to Micro & Small Enter- pries dt. 12.05.2020 as mentioned at serial no. 26 of the list of documents of plaintiff, the contents of which are denied is Ex.P20(page 102-105);
xxi. Copy of sanction memorandum dt. 12.05.2020 as men- tioned at serial no. 27 of the list of documents of plaintiff, the con- tents of which are denied is Ex.P21(page 106-107); xxii. Copy of undertaking letter from non corporate borrowers dt. 12.05.2020 as mentioned at serial no. 28 of the list of docu- ments of plaintiff, the contents of which are denied is collectively Ex.P22(page 108);
xxiii. Copy of agreement cum deed of hypothecation as men- tioned at serial no. 29 of the list of documents of plaintiff, the con- tents of which at page 119 are blank and unsigned is Ex.P23(colly)(page 109-119);
xxiv. Copy of letter of undertaking reloans/advances dt. 12.05.2020 as mentioned at serial no. 30 of the list of documents Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 13 of 49 of plaintiff, the contents of which are denied is collectively Ex.P24(colly)(page 122-123);
xxv. Copy of sanction MOU dt 24.07.2020 as mentioned at se- rial no. 33 of the list of documents of plaintiff which is collectively Ex.P25(page 130);
xxvi. True copy of letter of renewal dt. 24.07.2020 as mentioned at serial no. 34 of the list of documents of plaintiff the contents of which are denied being not legible is Ex.P26(colly)(page131-134); xxvii. Copy of application to branch for reconstructing under RBI guidelines of 01.01.2019 dt. 31.12.2020 as mentioned at serial no. 35 of the list of documents of plaintiff the contents of which are denied is collectively Ex.P27(colly)(page 135-140); xxviii.Copy of sanctioned MOU dt 31.12.2020 as mentioned at serial no. 36 of the list of documents of plaintiff which is collec- tively Ex.P28(page 141);
xxix. Copy of agreement cum deed of hypothecation dt. 31.12.2020 as mentioned at serial no. 37of the list of documents of plaintiff, the contents of which are denied is Ex.P29(colly)(page 142-153);
xxx. Copy of take delivery letter of DPN dt. 31.12.2020 as men- tioned at serial no. 38 of the list of documents of plaintiff, the con- tents of which are denied as plaintiff was not authorized debit any- thing is Ex.P30(colly) (page 154-157);
xxxi. Copy of pronote dt. 31.12.2020 as mentioned at serial no. 39 of the list of documents of plaintiff which is collectively Ex.P31(colly)(page 158-159);
xxxii. Copy of letter undertaking reloans/advances dt. 31.12.2020 as mentioned at serial no. 40 of the list of documents of plaintiff the contents of which are denied which is collectively Ex.P32(page 160-163);
Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 14 of 49 xxxiii. Copy of statement of account and certificate u/s 2A of Evi- dence Act as mentioned at serial no. 44 of the list of documents of plaintiff which is collectively Ex.P33(colly)(page 182-204).
14. On the other hand, the plaintiff has admitted the following document of the defendant:
(i) True copy of statement of account of defendant no.1 having a/c no.3333766000016 from 01.03.19 to 31.03.2020. Same is Ex.D1(page 2931).
15. Thereafter, on the basis of the pleadings of parties, following issues were framed:
i. Whether the suit of plaintiff is time barred? OPD. ii. Whether the cash credit note dt. 05.08.15 is not a legally enforceable document? OPD.
iii. Whether the plaintiff has mis-used the documents of defendant? If so, its effect? OPD.
iv. Whether the plaintiff is entitled for money decree? If so, to what amount?OPP.
v. Whether the plaintiff is entitled for interest? If so, at what rate and for which period? OPP.
vi. Relief.
16. Plaintiff has examined Ms. Upasana Gaur, Senior Manager and AR of Canara Bank as PW-1 who tendered her evidence by way of affidavit which is Ex.PW1/A and has relied upon the following documents:
(i) Authority letter as Ex.PW1/1 (which is now marked as Mark A being photocopy). However, same is also Ex.P1 being admitted document;
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(ii) General Power of Attorney dated 08.04.1998 as Mark 1;
(iii) Partnership deed dated 10.05.2014 and dated 18.12.2013 as Mark 2 (colly). Also Ex.P2 being admitted document;
(iv) Sanction Memorandum dated 04.08.2015 as Ex.PW1/2 (which is already Ex.P3 during admission / denial of documents);
(v) Cash Credit Agreement dated 05.08.2015 as Ex.PW1/3;
(vi) Request for overdraft facilities dated 05.08.2015 as Ex.PW1/4 (which is already Ex.P4 during admission / denial of documents);
(vii) Deed of Hypothecation dated 05.08.2015 as Ex.PW1/5 (which is already Ex.P5 during admission / denial of documents);
(viii) Letter of undertaking dated 05.08.2015 as Ex.PW1/6 (which is already Ex.P6 (colly) during admission / denial of documents);
(ix) Certificate of loan papers dated 05.08.2015 as Ex.PW1/7 (which is already Ex.P7 during admission / denial of documents);
(x) Pro note dated 05.08.2015 as Ex.PW1/8;
(xi) Loan application dated 01.03.2017 as Ex.PW1/9 (OSR);
(xii) Sanction memorandum dated 01.03.2017 as Ex.PW1/10 (which is already Ex.P8 during admission / denial of documents);
(xiii) Letter of renewal dated 01.03.2017 as Ex.PW1/11 (which is already Ex.P9 during admission / denial of documents);
(xiv) Agreement dated 01.03.2017 as Ex.PW1/12 (which is already Ex.P10 during admission / denial of documents);
(xv) Supplemental agreement dated 01.03.2017 as Ex.PW1/13 (which is already Ex.P11 (colly) during admission / denial Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 16 of 49 of documents);
(xvi) Certificate of loan papers dated 01.03.2017 as Ex.PW1/14 (which is already Ex.P12 (colly) during admission / denial of documents);
(xvii) Pro note dated 01.03.2017 as Ex.PW1/15; (xviii) Letter evidencing execution of documents dated 01.03.2017 as Ex.PW1/16;
(xix) Letter of partnership deed dated 01.03.2017 as Ex.PW1/17 (which is also Ex.P13 during admission / denial of documents);
(xx) Acknowledgment of debt and security dated 01.03.2017 as Ex.PW1/18 (which is also Ex.P14 during admission / denial of documents);
(xxi) Application form for loans to Micro and small enterprises dated 28.02.2019 as Ex.PW1/19 (which is already Ex.P15 (colly) during admission / denial of documents); (xxii) Sanction Memorandum dated 28.02.2019 as Ex.PW1/20 (which is already Ex.P16 during admission / denial of documents);
(xxiii) Letter of renewal dated 28.02.2019 as Ex.PW1/21 (which is already Ex.P17 being admitted document during admission / denial of documents);
(xxiv) Certificate of loan papers dated 28.02.2019 as Ex.PW1/22 (which is also Ex.P18 (colly) during admission / denial of documents);
(xxv) Letter evidencing execution of documents dated 28.02.2019 as Ex.PW1/23;
(xxvi) Letter of partnership dated 28.02.2019 as Ex.PW1/24 (which is already Ex.P19 during admission / denial of documents);
Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 17 of 49 (xxvii)Application form for loans dated 12.05.2020 as Ex.PW1/25 (which is already Ex.P20(colly) during admission / denial of documents);
(xxviii) Sanction memorandum dated 12.05.2020 as Ex.PW1/26 (which is already Ex.P21 (colly) during admission / denial of documents);
(xxix) Letter of undertaking dated 12.05.2020 as Ex.PW1/27 (which is already Ex.P22 during admission / denial of documents);
(xxx) Agreement cum deed of hypothecation dated 12.05.2020 as Ex.PW1/28 (which is already Ex.P23 during admission / denial of documents);
(xxxi) Letter of undertaking dated 12.05.2020 as Ex.PW1/29 (which is already Ex.P24 (colly) during admission / denial of documents);
(xxxii) Taken delivery letter to DPN dated 12.05.2020 as Ex.PW1/30;
(xxxiii) Pro Note dated 12.05.2020 as Ex.PW1/31; (xxxiv) Letter of renewal dated 24.07.2020 as Ex.PW1/32 (colly) (which is already Ex.P26 during admission / denial of documents);
(xxxv) Application to the branch for restructuring under RBI guidelines dated 31.12.2020 as Ex.PW1/33 (colly) (which is already Ex.P27 (colly) during admission / denial of documents);
(xxxvi) Sanction Memorandum dated 31.12.2020 as Ex.PW1/34 (which is already Ex.P25 during admission / denial of documents);
(xxxvii) Agreement cum deed of hypothecation dated 31.12.2020 as Ex.PW1/35 (colly) (which is already Ex.P29 (colly) Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 18 of 49 during admission / denial of documents);
(xxxviii) Taken delivery letter to DPN dated 31.12.2020 as Ex.PW1/36 (which is already Ex.P30 (colly) during admission / denial of documents);
(xxxix) Pro Note dated 31.12.2020 as Ex.PW1/37 (which is already Ex.P31 (colly) during admission / denial of documents);
(xxxx) Letter of undertaking re loans/advances dated 31.12.2020 as Ex.PW1/38 (which is already Ex.P32 (colly) during admission / denial of documents);
(xxxxi) Debt restructuring agreement dated 31.12.2020 as Ex.PW1/39;
(xxxxii) Debtor credit agreement dated 31.12.2020 as Ex.PW1/40;
(xxxxiii) Legal Notice dated 14.09.2021 as Ex.PW1/41; (xxxxiv) Non Starter Report dated 22.10.2021 as Ex.PW1/42;
PW-1 was duly cross examined on behalf of defendant.
17. The defendant has examined three witnesses in support of its case. Sh. Dheeraj Kumar Roy, S/o Sh. Chandra Mauleshwar Roy examined as DW-1 who tendered his evidence as Ex.DW1/A and has relied upon the following documents:
(i) Copy of account statement as Ex.DW1/1 of account no. 3333766000016 (also Ex.D1 being admitted document);
(ii) Copy of account statement dated 29.09.2022 as Mark A;
(iii) Copy of account statement dated 29.09.2022 as Mark B;
He was duly cross examined by ld. counsel for the plaintiff.
Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 19 of 49
18. Ms. Upasana Gaur, Senior Manager, Canara Bank, Branch Karkardooma is also examined as summoned witness DW-2 who brought the copy of account statements of the defendants and proved the following documents:
(i) Account statement of account No. 3333261000055 for the month of December, 2020 as Ex.DW-2/1.
(ii). Account statements of account No. 3333261000055 for the month of September, 2022 as Ex.DW-2/2.
(iii). Account statements of account No. 3333753000007 for the month of Septemeber, 2022 as Ex.DW-2/3.
19. A summoned witness Sh. Sanjay Aggarwal has been examined as DW-3 who stated that he filed OTR (One Time Restructuring) reports in the financial year 2019-20 and 2020-21 in approximately 150 to 175 cases of Canara Bank and at that time the Manager of the Bank was Mr. Ramesh Chauhan. He stated that he has filed the OTR Report on the basis of report of Mr. Ramesh Chauhan-Bank Manager of Canara Bank and he has not visited the firm of defendant, neither he was looking after the books of Accounts, GST, and income-tax matter of defendant's firm nor later was he engaged with the defendants or their firm. He stated that he was approached only by the then Bank Branch Manager namely Mr. Ramesh Chauhan and that he had no authority from the defendant to file an OTR Report in respect of their Account No. 3333261000055 in Canara Bank, Saini Enclave, Karkardooma. He stated that he has charged Rs. 12 to 25 thousands from the then Bank Manager for filing the OTR Report and that there is no signature of defendants upon the report filed by him in the Bank. He stated that as per his knowledge, CA Report is required for OTR. He stated that he cannot say whether Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 20 of 49 Bank Manager transferred the fees of OTR either from Canara Bank or defendant's account. He further stated that there is no conspiracy as he has served with approximately 35 Branches and that as per account statement of defendant, his fees for OTR Report was deducted from the account of defendant. He stated that he has addressed the OTR report and Bill for professional fees to the Manager of the Canara Bank and it is correct that he never raised bill of OTR Report to defendants.
Thereafter, DE was closed on the statement of defendant.
20. The court has heard ld. counsel for the plaintiff as well as ld. counsel for the defendant and have also gone through the written submissions filed by the plaintiff and defendant as well as records of the case. The findings on the issues are as under :
ISSUE No. (i) : Whether the suit of plaintiff is time barred?
OPD.
21. The onus to prove the said issue is upon the defendant. The claim of the plaintiff is in relation to four different loan / accounts which are being discussed hereinbelow one by one:
(i) OCC Loan Account bearing no.3333261000055:
The sanction memorandum of the account of term loan of Rs.15,00,000/- and OCC Limit of Rs.5,00,000/- is dated 04.08.2015 and is an admitted document Ex.P3 (though the rate of interest is disputed). The cash credit agreement dated 05.08.2015 in this regard is Ex.PW1/3 which as per the affidavit of admission and denial of defendant is denied and it was stated by the defendant that similar document with correct contents was signed Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 21 of 49 on same day. The request for overdraft facility of Rs.5,00,000/- is dated 05.08.2015 and is Ex.P4 and is an admitted document. The deed of hypothecation Ex.P5 is also an admitted document and is dated 05.08.2015. Ex.P6 is the letter of undertaking dated 05.08.2015 which is also an admitted document. Certificate of loan papers obtained is P7 and is again an admitted document.
The loan application dated 01.03.2017 for additional loan / working limit of Rs.10 lakhs is Ex.PW1/9, however, the same is not signed by any of the defendant. This document Ex.PW1/9 also contains a link letter in respect of enhancement of credit facility from Rs.5 lakhs to Rs.15 lakhs, wherein it is stated that the credit limit be enhanced to Rs.15 lakhs. The sanction memorandum, dated 01.03.2017 is Ex.P8 and is an admitted document whereby a OCC facility of Rs.15 lakhs was sanctioned to the defendant. Ex.P9 is the letter of renewal dated 01.03.2017. The existence and execution of document Ex.P9, dated 01.03.2017 is admitted (the correctness and issuance is denied) wherein the defendant has sought an additional OCC Limit of Rs.10 lakhs after which the total limit is Rs.15 lakhs. Ex.P10 is the Agreement against Books of Debts dated 01.03.2017 which also mentions about the OCC Limit of Rs.15 lakhs (existence and execution is admitted). Similarly, Ex.P11 is the Supplemental Agreement dated 01.03.2017 which mentions that the OCC Limit was enhanced from Rs.5 lakhs to Rs.15 lakhs (existence and execution is admitted). The certificate of loan papers of claim is Ex.P12 and is again an admitted document which mentions that the loan papers have been obtained on 01.03.2017 by the bank. The acknowledgment of debt by the defendants dated 31.07.2017 is Ex.P14 and the existence and execution of the said document is admitted, though, the correctness of the same has been denied.
Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 22 of 49 Ex.P15 is the Application form dated 28.02.2019 for 'loan to my Micro and Small Enterprises' in which the customer account number is stated to be 333261000055 and the existence and execution of the same is admitted. The sanctioned memorandum dated 28.02.2019, which sanctioned / renewed the OCC Limit of Rs.15 lakhs is Ex.P16 (also Ex.PW1/20) and is an admitted document. The letter of renewal, dated 28.02.2019 is Ex.P17 (also Ex.PW1/21) and is bearing the signatures of both the defendants and is also an admitted document. Ex.P18 is the Certificate of Loan papers obtained which mentions the nature of advance as OCC and is dated 28.02.2019 and further mentions the amount of Rs.15 lakhs (correctness and existence is admitted). The loan was thus, renewed on 28.02.2019. The statement of account of open cash credit bearing no. 333261000055 is also an admitted document and is Ex.P33. The transactions as per this account statement continued till December, 2019, also in February 2020. An amount of Rs.500/- was also deposited on 11.04.2021. From the above document, it is clear that the cash credit facility of Rs.5 lakhs was availed in the year 2015 which was enhanced to Rs.15 lakhs on 01.03.2017 and was renewed on 28.02.2019. It is pertinent to mention that document related to renewal Ex.P17 (Letter of renewal) and Sanction Memorandum Ex.P16 dated 28.02.2019 are admitted documents on behalf of defendant. Thus, it is not disputed that the defendant had applied for renewal of loan on 28.02.2019 which was granted to them. Copy of sanction MOU dt 24.07.2020 Ex.P25 is an admitted document. Ex.P26 (also Ex.PW1/32) is copy of letter of renewal dt. 24.07.2020, the correctness of contents is denied, however, the execution and existence of the document is admitted. The OCC limit was thus, reduced to Rs.14,90,000/- on the application signed by defendants Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 23 of 49 on 24.07.2020. The present suit has been instituted on 13.12.2021. By no stretch of imagination it can be said that the claim of Rs.16,43,849/- by the plaintiff against this OCC Loan Account no. 333261000055 is time barred.
(ii) Working Capital Demand Loan (WCDL) Loan Account no. 3333753000007:
22. Sanction memorandum dt. 12.05.2020 in respect of above loan is Ex.P21, the correctness of contents, execution and existence of document is admitted, however, the issuance or receipt of the same is denied by the defendant. Ex.P22 is undertaking letter from non corporate borrowers dt. 12.05.2020, existence and execution of the document is admitted, however, the contents as well as issuance or receipt of the same is denied by the defendant. Ex.P23(colly) is agreement cum deed of hypothecation, the execution and existence of document is admitted, however, the issuance or receipt of the same is denied and the defendant has stated that the contents of Ex.P23 at page 119 are blank and unsigned. Ex.P24(colly) is letter of undertaking reloans/advances dated 12.05.2020, the existence, execution and issuance of document is admitted, however, the correctness of contents of the same is denied by the defendant. Similarly, Taken delivery letter to DPN dated 12.05.2020 is Ex.PW1/30 and the Pro Note dated 12.05.2020 is Ex.PW1/31, the existence, execution and issuance of document is admitted, however, the correctness of contents of the same is denied by the defendant. The said working capital demand loan has been sanctioned on 12.05.2020 (as per sanction memorandum Ex.P21, an admitted document) and the suit has been instituted on 13.12.2021 and thus, the claim of the plaintiff for an amount of Rs.1,46,763.11 against the WCDL Loan Account No. 3333753000007 is not time Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 24 of 49 barred.
(iii) FITL Loan Account No. 33337471000002 and CFITL Account Number 3333710000021:
23. Ex.P27(colly) (also Ex.PW1/33) is the copy of application to branch for re-structuring under RBI guidelines dated 31.12.2020, the correctness of contents is denied, however, existence, execution and issuance of the same is admitted. Ex.P28 (also Ex.PW1/34) copy of sanctioned MOU dt 31.12.2020 is an admitted document. Ex.P29 (colly) (also Ex.PW1/35) is copy of agreement cum deed of hypothecation dt. 31.12.2020, the correctness and issuance of which are denied, however, the execution and existence of the document is admitted.
Ex.P30(colly) (also Ex.PW1/36) is copy of take delivery letter of DPN dt. 31.12.2020 and the correctness of contents of which are denied as according to defendant they never authorized bank to debit anything. Copy of pronote dt. 31.12.2020 Ex.P31(colly) (also Ex.PW1/37) is an admitted document. Ex.P32 (also Ex.PW1/38) is copy of letter undertaking reloans/advances dt. 31.12.2020 and the existence, execution and issuance of same is admitted.
24. These two loans are of the year 2020 and thus, the claim of the plaintiff against these loans i.e. FITL Loan Account No. 33337471000002 and CFITL Loan Account No. 3333710000021) is also not time barred.
Issue no.(i) is, thus, decided in favour of the plaintiff and against the defendant.
ISSUE No.(ii)Whether the cash credit note dt. 05.08.15 is not a legally enforceable document? OPD.
ISSUE No.(iii) Whether the plaintiff has mis-used the Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 25 of 49 documents of defendant? If so, its effect? OPD.
25. Both the issues being interconnected are being taken up together. Onus of these issues was also upon the defendant. Ld. counsel for the defendant has argued that the bank officials had dominated the Will of the defendant due to earlier loan account and due to undue influence by the bank, the defendant had executed the loan documents. The counsel has further relied upon Section 16 of the Indian Contract Act, 1872 as well as Illustration 'C' in this regard. Section 16 and Illustration C are reproduced hereinbelow:
"16. Undue influence defined.-- (1) A contract is said to be induced by "undue influence" where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other. (2) In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a position to dominate the will of another--
(a) where he holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress.
(3) Where a person who is in a position to dominate the will of another, enters into a Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 26 of 49 contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other.
Nothing in this sub-section shall affect the provisions of section 111 of the Indian Evidence Act, 1872 (1 of 1872).
Illustrations
(c) A, being in debt to B, the money-lender of his village, contracts a fresh loan on terms which appear to be unconscionable. It lies on B to prove that the contract was not induced by undue influence."
26. As per Section 16, undue influence can be said to be induced where the relationship between the parties is such that one of the parties is in a position to dominate the will of the other and holds a real or apparent authority over the other. In the present case, it cannot be said that the bank officials were holding any real or apparent authority over the defendant. The transaction in the present case also does not appear to be unconscionable. In the illustration (c), the creditor is the money lender of the village. In the present case, the creditor is a bank. Though the bank is in the business of money lending but still cannot be equated to money lender of the village. Moreover, if consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused as per Section 19A of the Indian Contract Act. The Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 27 of 49 defendant nowhere has taken any step to get declare the said contract void. On the other hand, the defendants have obtained benefit under the said contract and as per Illustration B to Section 19A of the Indian Contract Act, even if any court set asides such voidable contract, then an order to repay the benefit along with interest taken by the debtor is to be made. Thus, even if for the sake of arguments the plea of the defendant is accepted that they had signed the loan documents due to undue influence by the bank officials, still they are liable to repay the benefits of the loan availed by them along with interest as per Section 19A of the Indian Contract Act.
27. The plea of the defendant is that the cash credit loan is not a legally enforceable document, in as much as, the same was signed later on, whereas, as per sanction memorandum Ex.P3 (also PW1/2) the loan i.e. of Rs.5 lakhs was sanctioned on 04.08.2015. Ld. Counsel for the defendant no.1 has relied upon the testimony of PW-1 wherein PW-1 has stated that as a process OCC (Open Cash Credit) Agreement is executed first and then sanction letter is executed.
28. The relevant portion of cross examination of PW-1 is reproduced hereinbelow:
".....As a process, the OCC (Open Cash Credit) agreement always execute first then after sanction letter is executed. Vol. The OCC Agreement and Sanction Letter can be executed on the same day also....
.....It is wrong to suggest that there is no such Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 28 of 49 guidelines and the loan agreement has both the column for signatures of banker as well as borrower, otherwise it is not a legally enforceable document.....
......It is correct that after 04.08.2015 defendants are under the loan obligation of bank till date. It is wrong to suggest that due to loan obligation bank officials were in position to dominate the will of defendants due to loan agreement. It is further wrong to suggest that Bank with their malafide intention due to loan obligation taken the signatures of defendant dominantly on various documents.
.....It is correct that the plaintiff has not placed any loan agreement dated 04.08.2015 or prior to that. Vol. It is not mandatory that documentation should also be of the same day when the loan was sanctioned. Loan is sanctioned on the basis of application. The guideline in this regard should be there with the bank....
....Ques. I put it to you that on 22.03.2023 cross was deferred for want of RBI Guidelines in respect of documentation. What do you have to say?
Ans. I have not brought the guideline, however, as per the Sanction Letter Ex.P3 the documents can be signed within three months..... .....The account No. 3333766000016 sanctioned on 04.08.2015 as term loan was closed on
29.02.2020. On 04.08.2015 two loans were Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 29 of 49 sanctioned in the name of defendants.....
.....Ques: I put it to you that in the loan account number 3333710000021 amounting to Rs.74,762/- what was the criteria to sanction the same?
Ans. During the covid period the interest portion was converted to a separate loan as CIFTL loan since the borrower was not able to service the interest as per the reason best known to the borrower......
.....Ques. I put it to you that what is the date of RBI guideline upon which you prepared the abovesaid account no. 3333710000021?
Ans. Guideline of RBI Circular no. DOR No. BP.BC.47/21.04.048/2019-2020, dated 27.03.2020, DOR No. BP.BC.62/21.04.048/2019-
2020, dated 17.04.2020, DOR No.
BP.BC.63/21.04.048/2019-2020, dated
17.04.2020, DOR No. BP.BC.71/21.04.048/2019- 2020, dated 23.05.2020 and circular DOR No. BP.BC.72/21.04.048/2019-2020, dated 23.05.2020....
.....It is wrong to suggest that in the complete document there is no such guideline which says to convert the interest to different loan as converted by us in account no. 3333710000021. The Central Government had announced 20% of total outstanding of borrower as Guaranteed Emergency Credit Line during covid period...... .....Ques. I put it to you that account no.
Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 30 of 49 3333747000002 amounting to Rs.74,000/- was sanctioned on which date and under which head? Ans. Account no. 3333747000002 was sanctioned on 31.12.2020 as FITL ( Funded Interest Term Loan). The first OTR (One Time Restructure) was done on 31.12.2020 for the total liability of OCC Limit. It is correct that after OTR on 31.12.2020, loan under FITL vide account no. 3333747000002 was sanctioned. It is wrong to suggest that at that time, defendants were not agreed to avail the OTR facility and bank dominantly with undue influence, due to earlier loan obligations, name the OTR as their own.....
......It is correct that as per the outstanding amount the defendant was eligible for 3 lakhs Guaranteed Emergency Credit Line, Vol., however, there are other guidelines also to arrive for the eligiblity. Vol. Furhter the borrower was granted Canara covid support (Working Capital Demand Loan) to help during the covid which is a part of recovery suit.....
.....It is incorrect to suggest that I am deliberately not answering the question in order to conceal the same. WCDL was sanctioned to the borrower in the month of May, 2020 for approximately Rs.1,49,000/-. Under WDCL approximately 10% of existing liability in the cash credit account. The amount under WDCL was given against the cash credit account of the defendant......
....It is wrong to suggest that a bank with their Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 31 of 49 malafide intention misused the documents of defendant and dominate the will of defendants by undue influence only for making the case in limitation as loan transactions on dated 04.08.2015 is time barred......
....It is further wrong to suggest that defendants actually taken the Rs.15 lakhs term loan on 04.08.2015 and same was paid by the defendant and other loans shown by bank is only by dominate the will of defendants due to earlier loan application with malafide intention by tracking the defendants with a undue influence....."
29. PW1 though initially has deposed that as a process, OCC agreement is executed first and then sanction letter is executed but has further stated that both can be executed on same day also. She further deposed that as per Sanction Memorandum Ex.P3 (also Ex.PW1/2), the documents can be signed with in three months. The relevant portion of Ex.P3 are reproduced herein below:-
"Credit facilities sanctioned are to be availed within 3 months from the date of this letter failing which the limits will automatically cancelled".
30. Thus, the facilities were to be availed within 3 months and therefore, the defendants cannot escape their liability to repay the loan amount on the ground that th documents were executed on 05.08.2015 and not prior to 04.08.2015. The defendant in their WS have admitted that loan was to be availed Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 32 of 49 within 3 months and that they had executed the document after sanction. Also, the OCC limit sanctioned in the year 2015 was only 5 lakhs which was enhanced to 15 lakhs later on and also renewed in 2019 and this aspect cannot be ignored.
31. Another plea of the defendant is that they have signed on blank documents of loan. Once a person signs a document voluntarily, he cannot subsequently escape his liability and plead that he had signed blank documents. Even If he signs any blank document, he does so at his 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".
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 No. 1 not Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 33 of 49 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 the fact that the defendant has signed the relevant documents of loan as borrower and has also executed the various Agreements, the plea of the defendant that plaintiff has mis-used his documents cannot be taken into account and is liable to to be rejected.
33. The main defence of the defendant is that they had not agreed to avail the amount on 04.08.2015 at the rate of interest as shown by the plaintiff bank and therefore, the defendant have admitted the existence and execution of almost all documents, but, has denied the correctness of the same. On 04.08.2015, the OCC Limit of Rs.5 lakhs was only sanctioned. This fact that Rs.5 lakhs was enhanced to Rs.15 lakhs on 01.03.2017 cannot be ignored. If the defendant had not agreed to the rate of interest as leveled by the plaintiff bank then why he has executed and signed the document on 01.03.2017 and had got the OCC Limit enhanced from Rs.5 lakhs to Rs.15 lakhs. The various Sanction Memorandum also clearly mention the rate of interest. If the defendant did not wish to avail the loan at the rate of interest mentioned in the Sanction Memorandum, they could have opted not to utilize the amount of loan. DW1 has admitted during cross-examination that they have utilized the OCC limit of Rs.5 lakhs.
Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 34 of 49
34. The relevant portion of cross examination of DW-1 is reproduced hereinbelow:
".....Ques: Is it correct that the plaintiff bank sanctioned you a term loan Rs.15 lacs and OCC limit of Rs.5 lacs under CGTSME Scheme vide Memorandum dated 04.08.2015 which is Ex.P3? Ans: It is correct that I have approached the bank for a term loan of Rs.15 lacs but OCC limit of Rs.5 lacs under CGTSME Scheme was sanctioned by Bank as their own in addition. It is correct that I have taken a term loan of Rs.15 lacs for purchasing plant and machinery. I have also utilized the OCC limit of Rs.5 lacs. .... .....It is correct that the Bank has disbursed the term loan of Rs.15 lacs in my loan account and OCC limit of Rs.5 lacs was also granted to me for day to day business expenses. I have never given any application dated 01.03.2017 for enhancement of OCC limit in account no.3333261000055. Witness has shown the documents namely Letter of Renewal dated 01.03.2017 which is Ex P9, Agreement dated 01.03.2017 Ex.P10, Supplementary agreement Ex.P11, Promote Ex.PW1/15(OSR), letter of partnership Ex. P13, Acknowledgment of debt and security dated 31.07.2017 Ex. P14. It is correct that all the above documents bear my signatures.....
.....It is correct that I have utilized enhanced OCC limit of Rs.15 lacs for the business purpose because of business losses and I have required Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 35 of 49 the come out.....
.....The documents Ex.P15, P16, P17, P19 bear my signatures.....
.....It is correct that I was under loan obligation of the Bank. Ques: Is it correct that vide application form dated 12.05.2020 you had applied to the plaintiff for fund based working capital demand loan?
Ans: I have applied for 30% as per announced by Government during Covid pandemic and I had never applied under WCDL on 12.05.2020 and signature upon Ex.P20 was taken by Bank officials on later stage. The signatures on E.P21 are of Partner and Ex.P22, Ex.P23, Ex.P24. Ex.PW1/31(OSR) bear my signatures...... .......It is correct that loan under WCDL of amounting Rs.1,49,000/- disbursed in my-OCC account No.3333261000055......
......I have given the application for reducing my OCC limit in the year 2019 and I have not given the same on 24.07.2020......
......It is correct that plaintiff bank disbursed Rs.74,762/- on 03.09.2020 in my account no. 3333710000021 OCC loan account in order to recover their interest amount by Bank and nothing was utilized by us. I have never applied for FITL (OTR) and Bank Manager namely Mr. Ramesh threatened me for locking the factory of defendants and dominantly due to earlier loan obligation with undue influence taken my Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 36 of 49 signature of me and my partner upon the document Ex.P27 of OTR.....
....The documents Ex.P28, Ex.P29, Ex.P30(Colly), Ex.P31, Ex.P32, Ex.PW1/39(OSR) and Ex.PW1/40(OSR) bear my signatures taken by Bank dominantly on later stage with undue influence and reason being on page No.159 even there is no signature of any Bank representative or Manager and also on page no.129 there is no signature of any of the bank representative or Manager.
It is correct that I default in repaying in aforesaid loan account No.3333261000055 (OCC), account No.3333753000007 (WCDL), account No.3333710000021 (CFITL) and account No.3333747000002 (FITL). Vol. Bank as their own converted the various loan account by interest to principal amount and also wrongly done the OTR without consent of me and my partner as well as Bank also not provided her 30% help which was announced by Government during Covid period to come out from financial crisis and Bank due to earlier loan obligation taken number of signatures of me and my partner upon various documents with undue influence by threatening to lock my factory.
.....It is correct that the address mentioned in the legal notice is correct but I do not remember that I had received the legal notice or not....."
Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 37 of 49
35. Once the defendants have availed/utilized the loan amount and has also admitted the execution of the relevant loan documents, they cannot be permitted to take frivolous pleas that the documents were executed under undue influence.
36. Ld. Counsel for defendant further has argued that Ex.PW1/9 is not signed by the defendant. However, there is a link letter attached to Ex.PW1/9 which is signed by the defendant on 01.03.2017. Also the sanction memorandum dated 01.03.2017 is Ex.P8 and is an admitted document by defendant. Similarly, a letter for renewal Ex.P9, dated 01.03.2017 is also admitted, as far as existence and execution is concerned. Ex.P10 is the Agreement against Books Debts as term security, the same is also signed by the defendant and its execution and existence is also admitted. There is also one supplementary agreement Ex.P11, and other documents relating to enhancement of OCC limit i.e. Ex.P12, Ex.P13, Ex.P14. Merely because Ex.PW1/9 is not signed by the defendant, the remaining documents signed by the defendant dated 01.03.2017 regarding enhancement of OCC Limit from Rs.5 lakhs to 15 lakhs cannot be ignored by the court. Again, if the defendant had not agreed to the rate of interest then the defendant should not have not got the loan i.e. OCC limit renewed again on 28.02.2019. The documents related to renewal of OCC Limit are Ex.P15, P16, P17, P18, P19, P23. Copy of application form for loan to Micro & Small Enterprises in which the defendant has requested for a overdraft limit of Rs.15 lakhs and has offered stock as security and the rate of interest agreed is MCLR + 2.15% per annum. This fact that initially the loan OCC Limit of Rs.5 lakhs was sanctioned in the year 2015 which was enhanced to Rs.15 lakhs in the year 2017 on the request of the Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 38 of 49 defendant and further renewed in the year 2019 again on the request of the defendant and was subsequently reduced to Rs.14,90,000/- on 12.05.2020, clearly establishes that the defendant had availed that OCC Limit and had got the same renewed from time to time. The defendant also got the same enhanced as per his requirement and thereafter, got the same reduced to below Rs.15 lakhs in the year 2020, clearly leading to an inference that the defendant has availed the said OCC Limit as per the rate of interest as mentioned in the Sanctioned Memorandums which were issued from time to time.
37. As far as Working Capital Demand Loan (WCDL) is concerned, the defendant has not disputed availing of the said loan in para 6 of the WS. According to the defendant he had never requested for restructuring of his loan and in this regard he has examined DW-3 whereby DW-3 has stated that "he was approached by the then Branch Manager for OTR (One Time Restructuring). The one time restructuring application of the defendant is 31.12.2020 and is Ex.P27 (also PW1/33). This Ex.PW1/27 clearly mentions that the same was applied / filed by the defendant for restructuring the outstanding loan amount. Again, the defendant cleverly has admitted, the existence, execution and issuance of the said document in his affidavit of admission and denial of documents, but, has denied the correctness of the same. Ex.P28 i.e. Sanction Memorandum in this regard is also an admitted document. Ex.P29 which is Agreement Cum Deed of Hypothecation dated 31.12.2020 and Ex.P30 delivery letter of DPN and Pro Note Ex.P31 are again admitted documents. Ex.P32 i.e. letter of undertaking. Ex.PW1/39 and Ex.PW1/40 Debt Restructuring Agreement clearly revealed that Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 39 of 49 one time restructuring was done on the request of the defendant. In fact, Ex.PW1/39 is signed on behalf of defendant and as per the counsel for defendant as the same is not signed by the concerned Branch Manager or any official of the bank, therefore, the same is not a binding agreement. This fact that the defendant had applied for restructuring and on his request OTR was done and FITL and loan were granted cannot be ignored. The defendant has availed the said loan facility and has also executed all the necessary documents to avail the said loan facility and now the defendants wants to escape the consequences of the same. Once the defendant has availed the loan facility in his account, he cannot, thereafter, turn around and take the plea that as loan documents has not been signed by the concerned official of bank, the same are not binding upon the defendant.
Also, the amount of interest in the OCC account number 3333261000055 was converted to separate loan account as CFITL and FITL loan during covid period. The defendant otherwise are also liable to pay the said amount as interest on the principal amount in OCC loan amount.
38. The defendant has not been able to discharge the onus or prove that the cash credit note dated 05.08.2015 is not a legally enforceable document or that the plaintiff has misused the document of the defendant.
Issue no. (ii) and (iii), thus are decided in favour of the plaintiff and against the defendant.
ISSUE No.(iv) Whether the plaintiff is entitled for money decree? If so, to what amount?OPP.
39. Another plea taken by the defendant is that an amount of Rs.8,36,765/- has been credited in the account number Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 40 of 49 3333261000055 and an amount of Rs.78,212/- was credited in the account number 3333753000007 by CGTMSEand therefore, as the plaintiff bank has received the said amount from CGTMSE, the plaintiff is not entitled to claim the said amount from the defendant.
40. The relevant portion of cross examination of PW-1 is reproduced hereinbelow:
Ques. I put it to you that on 29.09.2022 and amount of Rs.8,36,765/- in account no. 3333261000055 and Rs.78,212/- in account no. 3333753000007 was received in Bank and you have not disclosed the same either in your evidence?
Ans: As per the statement of account with the plaint, the transactions upto 31.10.2021 are mentioned. Thus, on the basis of statement of account on record it cannot be said if any such payment has been made by the defendant. It is correct that CGTMSE charges are deducted from the borrower's account. It is correct that I have filed the affidavit by way of evidence in the month of February 2023. It is wrong to suggest that in my evidence I am not intentionally disclosed about the transaction dated 29.09.2022 amounting to Rs.8,36,765/- and Rs.78,212/-."
41. PW-1 was also subsequently examined as DW-2 and has proved the relevant account statement Ex.DW2/2 and Ex.DW2/3 as per which an amount of Rs.8,36,765/- was credited Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 41 of 49 in the account no. 3333261000055 and an amount of Rs.78,212/- was credited in the account no.3333753000007 on 29.09.2022. However, the description of the said amount in the statement of account Ex.DW2/2 and Ex.DW2/3 clearly reveals that the same is subject to refund. Merely, because the loan was insured from CGTMSE does not stipulates that the liability of the defendant is extinguished. The liability of the defendant would still remain. The counsel for defendant had asked for the relevant RBI circulars etc. and same are filed by the plaintiff on 31.03.2023 and are available on record. But, the counsel for defendant has not been able to point out any clause in the said RBI Circulars or guidelines to substantiate his plea that if an amount is deposited by CGTMSE, then the liability of the borrower/debtor to that extent is reduced or extinguished. The amount as and when realised by the plaintiff bank from the defendant will have to be refunded to CGTMSE as per law and the defendant cannot take benefit of the deposit of the said amount by CGTMSE.
42. The defendant has further raised a plea that they had applied for reduction of aforesaid loan facility during covid 19 pandemic, as they were not interested to continue the aforesaid loan facilities, however, the plaintiff bank reduced the said OCC limit by only Rs.10,000/- and prepared two more loan accounts in the name of defendants. Even if it is presumed to be correct, it does not mean that the defendant has no liability. The plaintiff has duly proved all the documents vide which the loan was granted.
43. The Hon'ble High Court of Delhi in case titled as M/s ICICI Bank Limited vs Surbhi Gupta, in RFA 342/2015, decided on 31 January, 2018 has held that Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 42 of 49 "7. Banks and financial institutions, which disburse loans to citizens, operate on the trust and faith that the citizens who avail of loans would pay back the same honestly and with diligence. Banks hold the money of the public in trust with them, and the financial cycle of investments, deposits and loans are essential for the functioning of the economy. If people, who avail loans, default in payment of the same and also avoid the Court processes, there would be enormous distress in the system.
8. Courts also have a duty to safeguard public money and by applying completely incorrect principles of procedure and evidence, suits filed by these financial institutions cannot be dismissed in this manner. A perusal of the documents filed in this case shows that there is nothing more that the Plaintiff bank could have done apart from taking all the steps to serve the Defendant and placing the entire set of original documents on record. The statement of accounts clearly shows that the Defendant paid several of the installments but defaulted in some of the installments.....
10.......The fact that several of the instalments were paid by the Defendant, is itself evidence of the loan having been disbursed by the Plaintiff bank and availed of and enjoyed by the Defendant. The trial court record does not show any report by the court appointed receiver. This Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 43 of 49 matter calls for some serious consideration, inasmuch as the Defendant appears to have completely gone off the radar. The vehicle is untraceable and the Defendant could not be traced as well. Such cases call for some severe remedies to be taken in order to ensure that persons who avail of loans do not default in such a negligent manner and also escape the consequences.
20. The statement of accounts is duly accompanied by a certificate under Section 65B of the Evidence Act. The witness of the Plaintiff bank PW-1 has appeared before the Court and has tendered his evidence. There is no reason to disbelieve his deposition. The documents on record clearly reveal that the Defendant availed of the loan and has failed to repay part of the same......"
44. In the present case also, the defendants have availed and enjoyed the loan amount. Perusal of the statement of account Ex.P33 also reveals that the defendant was repaying the amount and had paid several installments. The various deposits made by the defendant in the loan account also leads to inference regarding the availing of the loan by the defendant. The amount CFITL loan and FITL Loan was deposited in the OCC account of the defendant. The amount of Working Capital Demand Limit was also deposited in the OCC account of the defendant as revealed from Ex.P33. The defendant is, thus, liable to pay the principal amount against all the four accounts.
Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 44 of 49 In view of the above discussion, issue no. (iv) is also decided in favour of the plaintiff and against the defendant.
ISSUE No.(v)Whether the plaintiff is entitled for interest? If so, at what rate and for which period? OPP.
45. The onus to prove this issue is upon the plaintiff. It has been proved on record that on 04.08.2015, the defendant has been granted/sanctioned the loan under the loan account no. 3333261000055 and also on 12.05.2020 WCDL loan was granted/sanctioned under Loan Account No.3333753000007 by plaintiff bank and thereafter, again on 01.09.2020, defendant has been granted/sanctioned CFITL loan under the loan account no. 3333710000021 by plaintiff bank and again on 31.12.2020, plaintiff bank sanctioned restructuring of the pending interest of OCC Limit under Loan Account No. 33337471000002.
46. Plaintiff has also quantified the interest of Rs.1,72,889.11 as per books of accounts maintained by it and the rate of interest as well as the period of interest, is tabulated hereunder:
(A) (B) (C) (D) (E)
The rate at which The date from The total amount The total The daily rate at
interest is claimed which it is of interest amount of which interest
claimed and claimed to the without accrues after
the date to date of interest that date. And
which it is calculation claimed to the total outstanding
calculated date of (including
calculation arrears penalty)
amount up to
date of
3333261000055 @ 31.01.2021 1,53,849/- 14,90,000/- 16,43,849/-
to
8.45%
31.10.2021
3333753000007 @ 13.06.2020 10,179.11/- 1,36,584/- 1,46,763.11
to
6.90%
31.10.2021
Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 45 of 49
3333747000002 @ 31.01.2021 Rs.2,287/- Rs.68,566/- Rs.70,853/-
to
9.45%
31.10.2021
3333710000021 @ 31.10.2020 Rs.6,574/- Rs.77,412/- Rs.83,986/-
to
8.45%
31.10.2021
Total Amount 15.05.2018 Rs.1,72,889.11 Rs.17,72,562 Rs.19,45,451.11
to
31.10.2021
47. 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 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."
48. Section 34 empowers the court to award interest for the period from the date of the suit to the date of the decree and Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 46 of 49 from the date of the decree to the date of payment where the decree is for payment of money.
49. 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).
50. The outstanding amount of Rs.16,43,849/- against OCC Loan 3333261000055 includes the unserved interest for an amount of 1,53,849/- and an outstanding amount of 1,46,763.11 against Working Capital Demand Loan 3333753000007 includes interest amount of 10,179.11/- towards unserved interest. Similarly, an amount of Rs.70,853/- against FITL Loan 3333747000002 includes interest amount of Rs.2,287/- towards unserved interest and an amount of Rs.83,986/- against CFITL Loan 3333710000021 includes interest amount of Rs.6,574/- towards unserved interest, upto 31.10.2021.
51. The interest amount has been claimed/calculated at the applicable rate of interest as per the RBI guidelines and the agreement between the parties. No ground is made out not to grant the amount claimed as interest to the plaintiff bank. The defendants have availed the loan and are bound to repay the same along-with interest. The plaintiff has also claimed penal interest @2%. However, the amount as per penal interest for pre suit period has neither been quantified by the plaintiff bank nor any Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 47 of 49 court fees paid on the same. Hence, no ground made out to grant the claim of penal interest for pre-suit period. As far as interest, pendent-lite and future is concerned, plaintiff has claimed the same at different rates as per the agreement and RBI guidelines along with penal interest @ 2% per annum. However, plaintiff is granted pendent-lite and future interest @ 8% on the principal amount.
52. Thus, it is directed plaintiff is entitled to 1,53,849/- as unserved interest upto 31.10.2021 (i.e. from 31.01.2021 to 31.10.2021) against loan account no. 3333261000055 and an amount of 10,179.11/- as unserved interest upto 31.10.2021 (i.e. from 13.06.2020 to 31.10.2021) against loan account no. 3333753000007 and an amount of Rs.2,287/- as unserved interest upto 31.10.2021 (i.e. from 31.01.2021 to 31.10.2021) against loan account no. 3333747000002 and an amount of Rs.6,574/- as unserved interest upto 31.10.2021 (i.e. from 31.10.2020 to 31.10.2021) against loan account no. 3333710000021 alongwith pendente-lite and future interest @ 8% per annum on the principal amount of Rs.17,72,562/- (Rs.19,45,451.11 - Rs.1,72,889.11) from the date of filing of the present suit till realization on the principal amount.
Issue no. (v) is thus, decided in favour of plaintiff and against the defendant.
ISSUE No. 6/Relief :
53. In view of the 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.14,90,000/- against OCC Loan Account No. 333261000055 along with Rs.1,53,849/- as Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 48 of 49 unserved interest and Rs.1,36,584/- as principal towards Working Capital Demand Loan Account No.3333753000007 along with Rs.10,179.11/- as unserved interest and Rs.68,566/- as principal towards FITL Loan Account No. 33337471000002 along with Rs.2,287/- as unserved interest and Rs.77,412/- as principal towards CFITL Loan Account No. 3333710000021 along with Rs.1,72,889.11 as unserved interest alongwith pendente-lite and future interest @ 8% per annum on the principal amount of Rs.17,72,562/- (Rs.19,45,451.11 - Rs.1,72,889.11) from the date of filing of the present suit till realization on the principal amount.
Costs of the suit are also awarded to the plaintiff as per law.
Decree Sheet be prepared accordingly.
File be consigned to Record Room.
Announced in the open court (Kiran Bansal) on 28.03.2024 District Judge, Commercial Court-02 Shahdara, Karkardooma Delhi/28.03.2024 Civil Suit (Comm) No. 527/2021 Canara Bank Vs. M/s. Yaaden Enterprises Page No. 49 of 49