Bangalore District Court
Bank Of Baroda vs Vishwanth R on 17 October, 2025
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IN THE COURT OF LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE,
COMMERCIAL COURT, BENGALURU (CCH-84)
Present: Sri S. Sudindranath, LL.M., M.B.L.,
LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE
BENGALURU.
COM.O.S.No.578/2024
Dated on this 17th day of October 2025
Plaintiff/s BANK OF BARODA
A Body Corporate constituted by and
under the Banking Companies
(Acquisition & Transfer of Undertakings),
Act, 1970, having head office situated at
Baroda Bhavan, R C Dutt Road, Alkapuri,
Vaddoara, Gujarat State and inter alia
Branch Office at Peenya Branch,
Bengaluru, Rep by its Chief Manager,
Mr. Mahesh Kumar Srivastava,
S/o Sheo Shankar Lal,
Aged about 42 years
(By Sri Nagaraj N. Damodar, Advocate)
// versus //
Defendant/s MR. VISHWANATH R
S/o Ramu
Aged about 39 years,
PROPRIETOR
M/S. JAI MAA ENTERPRISES
No. 07 & 08, Raghavendra Layout,
18/A Cross, Thigalarapalya Main Road,
Peenya 2nd Stage, Bengaluru-560 058.
(Rep.by Sri. Satyanarayana, Advocate)
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Date of Institution of suit : 18-04-2024
Nature of the suit : Recovery of money
Date of commencement of : 16-10-2024
recording of the evidence
Date on which the : 17-10-2025
Judgment was pronounced.
: Year/s Month/s Day/s
Total duration
01 05 29
JUDGMENT.
This is a suit filed by the plaintiff bank against
defendant for recovery of loan amount in respect of three
loans of total sum of Rs. 11,29,365/= along with future
interest.
2. The plaint averments in brief are that, the defendant,
is the proprietor of M/s Jai Maa Enterprises and has availed
three loans from the plaintiff. The first loan is term loan of
Rs. 9,50,000 availed on 6-2-2020. The second loan is
working capital term loan of Rs. 1,14,637 availed on 13-1-
2021 and the third loan is also availed on the same date
that is 13-1-2021 and it is FITL loan of Rs. 15,363. The
defendant has also executed all the documents in respect of
having availed the said loans and agreeing to repay the
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same. Thereafter, defendant has defaulted in repayment of
the loans and has not repaid the loans in spite of the loans
having become NPA and in spite of issuance of loan recall
notice. Hence, for recovery of the balance amounts due in
respect of the above loan accounts, viz. Rs. 9,74,377 in
respect of the first loan, Rs. 1,44,607 in respect of the
second loan and Rs. 7,381 in respect of the third loan, i.e.
for recovery of total sum of Rs. 11,26,365 along with
interest at 9.30% per annum together with penal interest of
2% per annum compounded monthly from 1-4-2024 till date
of realization, the present suit is filed.
3. On issuance of suit summons to the defendant, the
defendant has entered appearance through counsel and
filed detailed written statement. In the written statement of
defendant, the defendant admits that he is proprietor of M/s
Jai Maa Enterprises and also admits having availed the first
term loan of Rs. 9,50,000. However, he has raised the
contention that the other two loans, i.e. working capital
term loan of Rs. 1,14,637 and FITL loan of Rs. 15,363, were
opened at the insistence of the plaintiff and he had never
sought for the said loans. He has pleaded that, due to the
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COVID-19 pandemic, he faced difficulties in his catering
business and therefore he had requested the plaintiff bank
to extend the time for repayment by 24 months by fixing
the EMI at Rs. 20,000. But it is contended that the plaintiff
bank has refused and ignored all his legitimate requests
made by way of various request letters dated 28-6-2021,
17-3-2023 and 2-5-2023. Thereby, it is contended that the
bank has acted in a malafide manner and instead of
encouraging an entrepreneur, the bank is trying its best to
ruin his business. Another contention raised is that the loan
agreement and supplementary documents including the
acknowledgement of debt have been manipulated by
obtaining signatures of the defendant on blank papers and
thereafter filling the contents. Another contention raised is
that although the term loan of Rs. 9,50,000 was sanctioned
on 6-2-2020, the disbursal of the loan amount was made
belatedly by disbursing Rs. 6,48,449 on 12-9-2020 and
remaining amount of Rs. 3,01,550 on 1-2-2021. It is
contended that this belated disbursal came in the way of
defendant procuring the raw materials and machinery for
his business at the right time. Another contention raised is
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that the defendant's loan account is covered by CGTMSE
and hence as per the concerned circular, defendant's loan
account falls within waiver of legal action. With these
various contentions, the defendant has prayed for dismissal
of the suit and also made a prayer to direct the plaintiff
bank to consider defendant's request to renew the loan
account with EMI of Rs. 20,000 per month.
4. On the basis of the above rival pleadings, this court
has framed the following issues;
(1) Whether the plaintiff proves that
plaintiff has advanced term loan of
Rs. 9,50,000 on 6-2-2020 and
working capital term loan of Rs.
1,14,637 on 13-1-2021 and FITL loan
of Rs. 15,363 on 13-1-2021 to the
defendant and the defendant has
failed to repay the said loans and
thereby the plaintiff is entitled to
recover the total sum of Rs.
11,29,365 along with interest from
the defendant?
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(2) Whether the defendant proves that
the plaintiff bank got the agreement
and supplementary document signed
by the defendant on blank paper and
thereafter inserted the contents
without the consent of the defendant
and therefore defendant is not aware
of the terms and conditions of the
loan agreement?
(3) Whether the defendant proves that
although the plaintiff bank advanced
loan of Rs. 9,50,000 on 6-2-2020, the
plaintiff bank credited only part
amount of Rs. 6,48,449 on 12-9-2020
and credited the remaining amount
of Rs. 3,01,550 on 1-2-2021 and due
to the delay in releasing the loan
amount by the plaintiff, the
defendant was unable to procure raw
materials and other machinery at the
right time and thereby defendant has
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suffered loss due to the delay of the
plaintiff in releasing the loan
amount?
(4) Whether the defendant further
proves that as per circular, the
defendant's loan account is entitled
to waiver of loan?
(5) Whether the plaintiff is entitled to
the reliefs claimed?
(6) What order or decree?
5. In the trial, the manager of plaintiff bank is examined
as PW1 and got marked Ex. P1 to P23. In the cross-
examination of PW1, by confronting to him, Ex. D1 and D2
are marked. On behalf of the defendant, the defendant is
examined as DW1 and got marked Ex. D3 to D11.
6. After closure of evidence of both sides, I have heard
the arguments of both sides and perused the records of the
case.
7. My answers to the issues are as follows;
Issue No. 1 : As per finding.
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Issue No. 2 to 4 : In the negative.
Issue No. 5 : As per finding.
Issue No. 6 : As per final order for the following ;
REASONS.
Issue No. 1 and 2 :-
8. These issues require common discussion & hence
considered together.
9. The case of the plaintiff in brief is that, the
defendant, is the proprietor of M/s Jai Maa Enterprises and
has availed three loans from the plaintiff. The first loan is
term loan of Rs. 9,50,000 availed on 6-2-2020. The second
loan is working capital term loan of Rs. 1,14,637 availed on
13-1-2021 and the third loan is also availed on the same
date that is 13-1-2021 and it is FITL loan of Rs. 15,363. The
defendant has also executed all the documents in respect of
having availed the said loans and agreeing to repay the
same. Thereafter, defendant has defaulted in repayment of
the loans and has not repaid the loans in spite of the loans
having become NPA and in spite of issuance of loan recall
notice. Hence, for recovery of the balance amounts due in
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respect of the above loan accounts, viz. Rs. 9,74,377 in
respect of the first loan, Rs. 1,44,607 in respect of the
second loan and Rs. 7,381 in respect of the third loan, i.e.
for recovery of total sum of Rs. 11,26,365 along with
interest at 9.30% per annum together with penal interest of
2% per annum compounded monthly from 1-4-2024 till date
of realization, the present suit is filed.
10. In support of its case, the plaintiff has examined its
manager as PW1 and got marked Ex. P1 to P23.
11. Ex. P1 is the loan application form under which
defendant has applied for loan. Ex. P2 is the sanction
memorandum dated 6-2-2020 under which, in addition to
the existing loan of Rs. 13,50,000, the plaintiff bank has
sanctioned the term loan of Rs. 9,50,000. Ex. P3 is the on-
demand promissory note for Rs. 9,50,000. Ex. P4 is letter of
proprietorship stating that the defendant R. Vishwanath is
proprietor of Jai Maa Enterprises to which the loan is
sanctioned. Ex. P5 is the declaration-cum-undertaking dated
6-2-2020 executed by the defendant for having availed the
said term loan of Rs. 9,50,000. Ex. P6 is the composite
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hypothecation agreement in respect of the said term loan of
Rs. 9,50,000.
12. Ex. P7 is the supplemental hypothecation deed.
Although this was marked without any objections,
subsequently in the cross-examination of PW1, contention
was raised that this document is insufficiently stamped and
hence deserves to be impounded. Therefore, this court
heard both sides on the question of stamp duty on the said
document and by detailed order dated 7-2-2025, this court
has held that stamp duty paid on Ex. P7 is sufficient on the
ground that Ex. P6 and Ex. P7 are contemporaneous
documents and Ex. P6 is adequately stamped by paying
stamp duty of Rs. 950/= and since no further loan amount
in addition to that secured under Ex. P6 is sought to be
secured under Ex. P7, no further stamp duty is payable on
Ex. P7. Therefore, the objection regarding Ex. P7 being
inadequately stamped has been duly addressed by this
court and rejected.
13. Ex. P8 is application for restructuring of loan. Ex. P9
are 2 modification deeds for restructuring of loan by
advancing working capital term loan of Rs. 1,14,637 and
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modification deed for restructuring of loan by advancing
FITL loan of Rs. 15,363. Ex. P10 is letter of
acknowledgement of debt dated 12-1-2023 purported to be
executed by the defendant in respect of all three loans.
However, in the cross-examination, the contention raised is
that signature to blank document was obtained and has
been manipulated to create the said acknowledgement of
debt. Ex. P11 is the loan demand notice dated 10-1-2023
along with postal receipt & postal acknowledgement. Ex.
P12 is non-starter report of PIM. Ex. P13 are the loan
account statements of all three loan accounts which are
marked collectively. Ex. P14 is certificate under Bankers
Book Evidence Act. Ex. P15 is the summary of loan accounts
of the defendant. Ex. P16 is the loan account statement in
respect of the earlier term loan of Rs. 13,50,000 availed by
the defendant which has been cleared. Ex. P17 is another
loan account statement of the term loan for Rs. 9,50,000
which is one of the loan accounts sought to be recovered in
the present suit. Ex. P18 is the loan account statement of
loan account ending with the numbers 2055 for Rs.
1,30,000 which was subsequently closed and instead of
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single loan account, two loan accounts, that is working
capital loan account of Rs. 1,14,637 and FITL of Rs. 15,363,
were opened. This opening of the loan account for Rs.
1,30,000 and thereafter closing the same and instead
of that opening the two loan accounts has resulted in
some confusion which has resulted in defendant
taking up various contentions which are considered
infra. Ex. P19 is the loan account statement of working
capital loan account which is also one of the loans which is
sought to be recovered in the present suit. Ex. P20 is the
loan account statement of the FITL loan which is also sought
to be recovered in the present suit. Ex. P21 is the circular
regarding credit guarantee fund scheme for MSME
enterprises and this is produced because one of the
contentions taken in the present suit is that since the
defendant's loan account is covered under CGTMSE scheme
there is waiver from legal action. Ex. P22 is certificate under
Bankers Book Evidence Act in respect of the various loan
accounts. Ex. P23 is certificate under Section 65B of the
Evidence Act.
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14. Per contra, the defence raised by the defendant
in the Written Statement is that, while the defendant admits
that he is proprietor of M/s Jai Maa Enterprises and also
admits having availed the first term loan of Rs. 9,50,000,
however, he has raised the contention that the other two
loans, i.e. working capital term loan of Rs. 1,14,637 and FITL
loan of Rs. 15,363, were opened at the insistence of the
plaintiff and he had never sought for the said loans. He has
pleaded that, due to the COVID-19 pandemic, he faced
difficulties in his catering business and therefore he had
requested the plaintiff bank to extend the time for
repayment by 24 months by fixing the EMI at Rs. 20,000.
But it is contended that the plaintiff bank has refused and
ignored all his legitimate requests made by way of various
request letters dated 28-6-2021, 17-3-2023 and 2-5-2023.
Thereby, it is contended that the bank has acted in a
malafide manner and instead of encouraging an
entrepreneur, the bank is trying its best to ruin his business.
Another contention raised is that the loan agreement and
supplementary documents including the acknowledgement
of debt have been manipulated by obtaining signatures of
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the defendant on blank papers and thereafter filling the
contents. Another contention raised is that although the
term loan of Rs. 9,50,000 was sanctioned on 6-2-2020, the
disbursal of the loan amount was made belatedly by
disbursing Rs. 6,48,449 on 12-9-2020 and remaining
amount of Rs. 3,01,550 on 1-2-2021. It is contended that
this belated disbursal came in the way of defendant
procuring the raw materials and machinery for his business
at the right time. Another contention raised is that the
defendant's loan account is covered by CGTMSE and hence
as per the concerned circular, defendant's loan account falls
within waiver of legal action. With these various
contentions, the defendant has prayed for dismissal of the
suit and also made a prayer to direct the plaintiff bank to
consider defendant's request to renew the loan account
with EMI of Rs. 20,000 per month.
15. In support of his case, the defendant has examined
himself as DW1 and got marked Ex. D1 to D11. Amongst
these, Ex. D1 and D2 are marked in the cross-
examination of PW1 while Ex. D3 to D11 are marked in
the chief examination of DW1.
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16. Ex. D1 and D2, which are marked by confronting to
PW1, are the statement of current account of the defendant
and statement of the term loan of Rs. 9,50,000. Ex. D3 and
D4 are request letters seeking restructuring of the term
loan of Rs. 9,50,000 by extending the moratorium period.
Ex. D5 are postal receipts and acknowledgement for having
sent the above request letters. Ex. D6 is a certificate under
Section 65B of the Evidence Act. Ex. D7 is the scanned copy
of the modification deed for restructuring of loans and it is
produced to show that when defendant signed the same,
the details thereof were not filled and were blank, and
thereby defendant alleges that this document which is
allegedly signed by the defendant has been manipulated.
Ex. D8 is a loan account summary of account of defendant.
Ex. D9 is a request letter issued by defendant to the plaintiff
dated 4-12-2020 for restructuring of loan by extending the
moratorium period. Ex. D10 is account statement of current
account of defendant. Ex. D11 is another statement of
current account of defendant which is produced to show
payment of loan installments.
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17. Having considered the rival contentions and the
oral and documentary evidence on record, at the
outset it is to be noted that the various loan accounts
opened in the name of the defendant are forthcoming from
the summary of accounts produced at Ex. P15 which
discloses that totally 5 loan accounts have been opened by
the plaintiff in favour of the defendant. Amongst these, it is
undisputed that defendant has availed the two term loans
of Rs. 13,50,000 and Rs. 9,50,000 (column No. 1 and 2 of
Ex. P.15). This is because DW1 in his cross-examination at
paragraph 2 dated 2-08-2025 has stated that in 2013
plaintiff bank gave loan of Rs. 13,50,000 for buying ice
cream machine and in 2020 plaintiff bank gave loan of Rs.
9,50,000 for buying chapati machine. Thereby, it is
undisputed that defendant has availed two term loans of Rs.
13,50,000 and Rs. 9,50,000 respectively. It is relevant to
note that according to the plaintiff, the first term loan of Rs.
13,50,000 has been fully repaid. Therefore, the present suit
is filed for recovery of balance amount due in respect of the
term loan of Rs. 9,50,000 availed on 6-2-2020, working
capital term loan of Rs. 1,14,637 and FITL loan of Rs. 15,363
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both availed on 13-1-2021. In the written statement, the
defendant admits availing the term loan of Rs. 9,50,000 but
disputes availing of working capital term loan and FITL loan
dated 13-1-2021. In this regard, at paragraph 2 of the
written statement, the defendant has pleaded that all facts
are denied except the fact that defendant is sole proprietor
of M/s Jai Maa Enterprises and availed loan from the plaintiff
for amount of Rs. 9,50,000.
18. In the background of this contention set up by the
defendant, the court has to see whether plaintiff has proved
sanctioning and availing of working capital term loan and
FITL loan which totally come to Rs. 1,30,000. In this regard,
some confusion is created because initially plaintiff opened
one loan account for entire loan amount of Rs. 1,30,000
with account number ending 2055. Then, due to certain
technical considerations, the said single loan account for Rs.
1,30,000 was closed and instead two loan accounts, that is
FITL loan account with number ending 2067 for Rs. 15,363
and working capital term loan with number ending 2068 for
Rs. 1,14,637, have been opened. It is these two loan
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accounts as well as the earlier single loan account for Rs.
1,30,000 which is denied by the defendant.
19. According to the defendant, he sought for
restructuring of the loan by extending the loan period from
3 years to 6 years so that the EMI would come down to Rs.
20,000 which he was comfortable to pay, and instead of
either accepting his request or denying the request for such
restructuring, the plaintiff has unilaterally sanctioned
additional loan accounts for total sum of Rs. 1,30,000 and
has adjusted the said loan amount towards earlier due
amounts for the term loans of Rs. 13,50,000 and 9,50,000,
and thereby the said act of the plaintiff is unilateral and
illegal besides causing loss to the defendant, and thereby
the acts of the plaintiff bank is vitiated with malafides and
plaintiff is not entitled to recover any amount from the
defendant.
20. In this regard, as already noted, the confusion has
arisen because initially the bank opened only one common
WCTL-FITL loan account for Rs. 1,30,000, which is reflected
at column No. 3 of the summary of loan accounts at Ex.
P15. PW1 at paragraph 50 of his cross-examination dated
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10-6-2025 has clarified in that regard, stating that at the
time of restructuring the two loan accounts, by mistake, the
two loan accounts had been clubbed and a single account
opened in number ending 2055, but later on the said
account was closed and 2067 and 2068 loan accounts were
opened. Anyhow, there is absolutely no dispute that the
entire loan amount in respect of the two additional loan
accounts of Rs. 1,30,000 has been utilised for clearing the
earlier dues in respect of the term loan accounts of the
defendant himself. In this regard, at paragraph 59 and 60 of
cross-examination of PW1, it has been elicited by learned
counsel for defendant himself that out of the said
sanctioned additional loan amount of Rs. 1,30,000, Rs.
81,741 was adjusted towards earlier loan account with
number ending 457, i.e., term loan of Rs. 13,50,000, and by
adjusting the said amount, the said term loan is closed. The
remaining sum of Rs. 30,757 is transferred to the term loan
account for loan of Rs. 9,50,000 towards part payment.
Apart from this, perusal of the loan account statement of
the term loan marked as Ex. P13 discloses that at page 74,
there is an entry dated 13-1-2021 for having credited Rs.
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17,507 into the said loan account. Thereby it is clear that
out of the additional sanctioned loan of Rs. 1,30,000, sum of
Rs. 81,741 was utilised for clearing the term loan of Rs.
13,50,000, and thereby the said loan account was closed.
The remaining amounts of Rs. 30,757 and Rs. 17,507 were
utilised for making part payments to the term loan account
for loan of Rs. 9,50,000, thereby regularising the same since
there were unpaid dues accumulated in respect of the said
loan account. Thereby it is clear that by sanctioning
additional loan of Rs. 1,30,000 under the two loan
accounts, i.e., working capital term loan account and
FITL loan account, the entire benefit of the said
additional sanctioned loan has been given to the
defendant by utilising the same towards part
payment of his earlier loan accounts. It is to be noted
that according to the defendant himself, he approached the
bank for restructuring of the loan since he suffered business
losses due to COVID-19. The defendant's understanding of
restructuring is that the tenure of the loan should be
extended, thereby reducing his EMI, simultaneously
extending the moratorium period. However, such a course
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of action was not acceptable to the bank, and instead of
extending the tenure of the loan in order to reduce the EMI
to Rs. 20,000 per month, the bank has sanctioned additional
loans and utilised the said additional sanctioned loans for
clearing the earlier dues of the term loans of the defendant
himself.
21. The question is whether such an act of the bank is
illegal and thereby, there is bar for the bank to seek
recovery of the additional loan amounts from the defendant.
This contention of the defendant cannot be accepted
because the defendant has signed the modification deeds
for restructuring of loans at Ex. P9 for having availed the
said additional loans. No doubt, it is the contention raised
by the defendant by producing scanned copy of the said
modification deed at Ex. D7 to contend that his signature
was taken on blank agreements. Further, in cross-
examination of PW1, it is suggested that various particulars
of Ex. P9 are left blank. However, the fact remains that,
even according to the defendant, he has signed the two
modification deeds for restructuring of the loans. Even
assuming that the particulars of the said modification deeds
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had not been entered when the defendant signed the same,
the defendant should have been well aware of the nature of
the modification and only then signed the same. Admittedly,
the additional loans have been utilised for clearing the dues
of the earlier loans of the defendant himself and this is not
a case where additional loan amounts have been
misappropriated by the bank. The defendant, having taken
the benefit of said additional loan amounts, which is
adjusted towards earlier dues of his own admitted loan
accounts, cannot now turn around and level allegations
against the bank. The bank has acted in a legal and proper
manner and has not misappropriated a single rupee of the
additional loan amount sanctioned and has adjusted the
entire additonal amount towards earlier dues of the
defendant's loan account. Such being the case, it does not
lie in the mouth of the defendant to level allegations of
improper sanctioning of the additional loans against the
plaintiff, and it is the liability of the defendant to
repay all the three loans. This is because the first term
loan of Rs. 9,50,000 is admitted by the defendant and the
two additional loans, although disputed by the defendant,
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the additional loan amounts have been utilised for making
part payments towards the admitted term loans.
22. For the sake of argument, even if it is accepted that
the plaintiff sanctioned the two additional loans without the
consent of the defendant, the fact remains that, the rate of
interest in the term loans is higher at 9.30%, whereas the
rate of interest for the two additional loans which are
disputed is lower being 8.10% and 7.60% respectively, and
therefore practically speaking what has happened is that,
the bank has sanctioned additional loan at lower rate of
interest and utilised the additional loans for making part
payments towards the admitted term loans which have
higher rate of interest, and viewed from this angle also it is
the defendant who has been benefited and therefore the
plaintiff bank cannot be blamed for any action in this
regard, and on the contrary, the plaintiff bank was justified
in sanctioning the additional loans at lower rate of interest
and utilising the loan amount for making payment for term
loans, which carried higher rate of interest.
23. Therefore, I hold that the plaintiff bank has
proved having sanctioned the three loans to the
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defendant, and it is the liability of the defendant to
repay the same. Further, in view of my above finding that,
the act of the plaintiff bank in sanctioning additional
working capital term loan and FITL loan is not mala fide or
illegal and has benefited the defendant, I hold that, the
defendant has failed to prove any illegal or improper act by
the officials of plaintiff and Defendant has failed to prove
that, signatures of defendant were taken to blank paper
without making the defendant aware about the terms and
conditions of the loan agreement. Accordingly, I answer
Issue No. 2 in the negative.
24. At this stage, it is to be noted that the 3 loans are
sanctioned to proprietorship concern namely M/s Jai Maa
Enterprises, and admittedly the defendant is the proprietor
of the same, which is also forthcoming from the letter of
sole proprietorship marked at Ex. P4. The law is settled that
proprietorship concern does not have legal identity of its
own, and it is only a trade name under which the proprietor
carries on business as per law laid down by Hon'ble Apex
Court in the case of Vinayak Purshottam Dube
(Deceased) through L.Rs. vs. Jayashree Padamkar
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Bhat and Ors. (01.03.2024 - SC) : Civil Appeal Nos.
7768-7769 of 2023;
In Raghu Lakshminarayanan v. Fine Tubes,
MANU/SC/7276/2007 : 2007:INSC:379 : (2007) 5
SCC 103, while distinguishing a juristic person
such as a company, a partnership or an
association of persons from a proprietary concern,
it was observed that a person who carries on
business in the name of a business concern,
but he being a proprietor thereof, would be
solely responsible for conduct of its affairs. A
proprietary concern is not a company.
Further, a proprietary concern is only the
business name in which the proprietor of the
business carries on the business. A suit by or
against a proprietary concern is by or
against the proprietor of the business. In the
event of the death of the proprietor of a
proprietary concern, it is the legal representatives
of the proprietor who alone can sue or be sued in
respect of the dealings of the proprietary business
which is by representing the estate of the
deceased proprietor. The real party who is
being sued is the proprietor of the said
business. Therefore, if a proprietor had to carry
on certain obligations personally under a contract,
the same cannot be fastened on his legal
representatives.
(Emphasis Supplied)
25. Therefore, it is clear that proprietorship concern and
its proprietor are one and the same entity, and therefore, it
is the defendant who is liable to repay the loans availed by
his proprietorship concern.
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26. Now turning to the question as to what is the balance
amount due in respect of the above 3 loans, the plaintiff has
produced and marked the account statements in respect of
the three loans at Ex. P13.
27. A contention is raised in the cross-examination of PW1
that Ex. P13 is not certified as required under the Bankers'
Books Evidence Act. This contention cannot be accepted
because under Section 2A of the Bankers' Books Evidence
Act, it is provided as follows;
2-A. Conditions in the printout.--A printout
of entry or a copy of printout referred to in sub-
section (8) of section 2 shall be accompanied
by the following, namely: --
(a) a certificate to the effect that it is a
printout of such entry or a copy of such
printout by the
principal accountant or branch manager ;
and
(b) a certificate by a person in-charge of
computer system containing a brief
descriptions of the computer system and the
particulars of--
(A) the safeguards adopted by the system to
ensure that data is entered or any other
operation performed only by authorised
persons;
(B) the safeguards adopted to prevent and
detect unauthorised change of data;
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(C) the safeguards available to retrieve data
that is lost due to systemic failure or any other
reasons;
(D) the manner in which data is transferred
from the system to removable media like
floppies, discs, tapes or other electro-magnetic
data storage devices;
(E) the mode of verification in order to ensure
that data has been accurately transferred to
such removable media;
(F) the mode of identification of such data
storage devices;
(G) the arrangements for the storage and
custody of such storage devices;
(H) the safeguards to prevent and detect any
tampering with the system; and any other
factor which will vouch for the integrity and
accuracy of the system.
(c) a further certificate from the person in-
charge of the computer system to the effect
that to the best of his knowledge and behalf,
such computer system operated properly at the
material time, he was provided with all the
relevant data and the printout in question
represents correctly, or is appropriately
derived from, the relevant data.
28. Therefore, it is clear that where the bank statement
produced is a digital printout, the same has to be supported
with the certificate of the bank manager and person in
charge of computer system and in this case, the loan
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account statements at Ex. P13 are admittedly supported by
the certificate under Section 2A of the Bankers' Books
Evidence Act, which is marked at Ex. P14. Therefore, there
is no defect in the bank statements, and the same can be
looked into.
29. If the bank statements at Ex. P13 are looked into, it is
forthcoming that at page 81, the balance due in respect of
the term loan of Rs. 9,50,000 is stated as outstanding
balance of Rs. 8,44,067 and applied interest of Rs. 93,614,
interest of Rs. 25,433, and compounding interest of Rs.
11,237. The total thereof comes to Rs. 9,74,337, which is
also the principal amount claimed in respect of the said loan
account. At page 87 of Ex. P13, the loan amount due in
respect of the working capital term loan is stated as
outstanding balance of Rs. 1,26,585, and applied interest of
Rs. 13,121, un-serviced interest of Rs. 3,325, and
compounding interest of Rs. 1,575. The total thereof comes
to Rs. 1,44,607, which is the principal amount being claimed
in respect of the said loan account. At page 94 of Ex. P13,
the balance amount due in respect of the FITL loan is stated
as outstanding balance of Rs. 6,589, and applied interest of
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Rs. 696, un-serviced interest of Rs. 11, and compounding
interest of Rs. 84. The total thereof comes to Rs. 7,381,
which is also the principal amount being claimed in respect
of the said loan account.
30. With respect to the balance amount shown in these
bank statements, the contention raised in the cross-
examination of PW1 is that it includes penal interest, which
is impermissible. This contention cannot be accepted
because in the sanction memorandum at Ex. P2, at serial
number 5 under terms and conditions, it is specifically
stated that 2% penal interest will be charged on non-service
of interest. This sanction memorandum is duly signed by
the defendant for having accepted the terms and
conditions. Therefore, doubt cannot be thrown on the
balance amount shown in these bank statements on the
ground that it includes penal interest, since defendant has
categorically accepted to pay penal interest for non-service
of interest. These bank statements are maintained by the
bank in the regular course of its business, and therefore
they are reliable documents, and therefore relying upon the
same, I hold that plaintiff has proved that plaintiff is entitled
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to recovery of the aforesaid balance amount as shown in
the said bank statements.
31. In so far as interest component is concerned, the
plaintiff is claiming interest at 9.30% per annum on the total
loan amount along with 2% penal interest compounded
monthly from 1-4-2024. It is to be noted that interest is
claimed from 1-4-2024, whereas suit is filed on 18-4-2024.
However, no court fee is paid on the interest accumulated
from 1-4-2024 till date of filing of the suit. Therefore,
Plaintiff can claim interest only from the date of suit
onwards. In so far as rate of interest is concerned, as
already noted, there are different rates of interest for the
different loans, and therefore claiming of interest at 9.30%
uniformly for the total loan amount is unacceptable.
Therefore, I hold that plaintiff is entitled to recover
sum of Rs. 9,74,377 along with interest at 9.30% per
annum from date of suit till date of realization
towards the term loan and entitled to recover sum of
Rs. 1,44,607 along with interest at 8.10% per annum
from date of suit till date of realization in respect of
the working capital term loan and sum of Rs. 7,381
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along with interest at 7.60% per annum from date of
suit till date of realization towards FITL loan.
Accordingly, I answer Issue No. 1.
32. Plaintiff is also claiming compound interest with
monthly rest, but in my view it is only simple interest that
can be awarded by this court. Plaintiff is also claiming penal
interest at 2% per annum. However, it is to be noted that
this is not a fit case to impose penal interest because the
defendant has all along shown himself to be diligent and
honest towards repayment of the loan and had also issued
request letters citing COVID-19 difficulties and on that
ground seeking extension of the loan period from 3 years to
6 years so as to bring down the EMI to Rs. 20,000 so as to
enable him to honestly repay the loan. But the plaintiff
could not consider the same, and instead the plaintiff
restructured the loans by way of granting additional working
capital term loan and FITL loan, and the said additional loan
amounts were utilized for making balance payment towards
the earlier dues. In these circumstances, it cannot be said
that there is a deliberate default on the part of the
defendant in repaying the loan, and such being the case,
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facts of the case do not make out a case for imposing penal
interest of 2%.
33. Before parting, the question of limitation may be
considered. Although this has not been specifically raised in
the written statement, a contention in this regard is taken in
the arguments and in cross-examination by contending that
the acknowledgement of debt marked at Ex. P10 is invalid
since signature of defendant was taken to blank document
and later on the date is filled up. For the sake of argument,
even if the acknowledgement of debt dated 12-1-2023
marked at Ex. P10 is eschewed from consideration, even
then, suit would be within the period of limitation in respect
of all three loan accounts for the following reasons.
34. At paragraph 4 of cross-examination of DW1, he has
admitted the suggestion that to the term loan account of
Rs. 9,50,000 bearing No. 777, he has made payment of Rs.
10,000 on 1-5-2023. Therefore, by making the said part
payment on 1-5-2023, limitation gets extended under
Section 19 of the Limitation Act, and counted from 1-5-
2023, suit is filed within three years on 18-4-2024, and
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therefore, suit is within the period of limitation in respect of
the term loan of Rs. 9,50,000.
35. In so far as the additional working capital term loan
and FITL loan is concerned, they were sanctioned on 13-1-
2021, which is during the COVID-19 period. Due to COVID-
19 lockdown, the Hon'ble Apex Court has directed in the
orders dated 10-01-2022 in RE- Cognizance for
Extension of Limitation in Suo-Motu WP [C]. No. 3 of
2020, that period from 15-03-2020 till 28-02-2022 shall
stand excluded for the purpose of limitation. Therefore, the
limitation in respect of the said two loans begins to run only
from 1-3-2022, and counted from the said date, suit is filed
within two years on 18-4-2024, and therefore suit is within
the period of limitation even in respect of the two additional
loans.
Issue No. 3 :-
36. This issue is raised in view of the contention raised by
the defendant that, out of the term loan of Rs. 9,50,000,
initially only Rs. 6,48,449 was disbursed on 12-9-2020, and
remaining amount of Rs. 3,01,550 was disbursed only on 1-
2-2021, and due to delay in releasing the loan amounts,
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defendant was unable to procure raw materials and other
machinery at the right time, thereby suffering loss. This
contention has to be stated only to be rejected because
admittedly the defendant has availed the benefit of the
entire loan amount of Rs. 9,50,000. The defendant has
received the benefit of the loan amount without raising any
objection at the relevant point of time. Moreover, interest is
charged only from the date of disbursal and not from the
date of sanction. Such being the case, no prejudice has
been caused to the defendant, and the defendant has also
not been able to prove that defendant suffered any loss due
to belated disbursal of the loan, and therefore I answer
Issue No. 3 in the negative.
Issue No. 4 :-
37. In so far as Issue No. 4, this issue is raised in view of
the contention raised by defendant that, since the loan is
covered by CGTMSE, defendant is entitled to waiver from
legal action. In this regard, in the cross-examination of PW1,
at the end of paragraph 33, dated 16-1-2025, it is elicited
that under CGTMSE scheme, as on date, the bank has
received from the government Rs. 4.77 lakhs, which is 56%
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of the due amount. However, the plaintiff has produced and
marked the circular in respect of CGTMSE scheme at Ex.
P21. At clause 13 of the said scheme, it is provided as
follows;
"Appropriation of amount realized by the
lending institution in respect of credit
facility after guarantee has been invoked.
Where subsequent to the trust having released
a sum to the lending institution towards amount
in default, in accordance with the provisions
contained in Section 10 of the scheme, the
lending institution recovers money
subsequent to the recovery proceedings
initiated by it, the same shall be
deposited by the lending institution with
the trust after adjusting towards the legal
cost incurred by it for recovery of the
amount."
38. Therefore, it is clear that, merely because bank has
received certain amounts from the CGTMSE authority does
not mean that the defendant can be left to go scot-free, and
it is for the plaintiff bank to institute legal proceedings and
recover the due amount from the borrower and refund the
realized amount recovered to the CGTMSE authority.
39. In this regard, reference may also be made to the law
laid down by the Hon'ble High Court of Judicature at
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Hyderabad in WP 32288/2017 dated 19-01-2018 in the
case of Sai Sree Ganesh Industries v. UOI. In the said
ruling, the Hon'ble High Court has elaborately referred to
the CGTMSE scheme and observed that under Clause 10 (iii)
of the scheme, the CGTMSE is required to pay 75% of the
guaranteed amount on preferring of eligible claim by the
bank within the time frame and is required to pay the
balance 25% of the guaranteed amount on conclusion of
recovery proceedings or if the decree gets time-barred.
Then the Hon'ble High Court has referred to the frequently
asked questions in respect of the said scheme and referred
to Question No. 11, which states that the CGTMSE does not
take over the responsibility to recover the loan and the
lender bank continues to remain responsible to take all
efforts for recovery of the loan. Ultimately, the Hon'ble High
Court has disposed of the writ petition by holding as follows:
"The writ petition is accordingly disposed off
directing the Syndicate Bank to immediately
inform the CGTMSE of the factum of the
petitioner firm's loan accounts having become
NPAs in terms of the CGTMSE scheme and
thereafter abide by the procedure prescribed
under the said scheme for realizing its dues in
relation thereto. It is made clear that the
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petitioner firm's understanding that it
need not pay 75% of the guaranteed
amount in default which would be
released by CGTMSE under the first
installment is incorrect, being contrary to
the import and intendment of the scheme.
The Syndicate Bank would necessarily have to
endeavor to recover the entire outstanding
dues from the petitioner firm so as to
make good the amounts released by
CGTMSE and it is only if the recovery
proceedings fall short that CGTMSE would have
to release the second installment of 25% of the
guaranteed amount. The Syndicate Bank shall
take steps accordingly."
(Emphasis Supplied)
40. Therefore, from the above law laid down by the
Division Bench of the Hon'ble High Court of Judicature at
Hyderabad, it becomes crystal clear that merely because
the loan is covered under the CGTMSE scheme does not
mean that the borrower is not liable to pay the loan or that
the CGTMSE authority takes over the responsibility for
recovery of the loan. Irrespective of the loan being
guaranteed under the CGTMSE scheme, it is the duty of the
bank to take all necessary steps for recovery of the loan
and only if all steps fail, the CGTMSE authority will release
the remaining 25% of the guaranteed amount. In case any
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amount is recovered from the borrower, the bank is duty-
bound to transfer the same to the CGTMSE authority.
41. In the light of the above legal position, it follows that
merely because the loan is covered by CGTMSE does not
absolve the borrower from paying the loan amount or result
in waiver of legal proceedings by the bank, and even if the
bank has received amount from CGTMSE authority, it is the
duty and authority of the bank to institute all legal
proceedings and the duty and liability of the borrower to
repay the full defaulted amount. After recovery of the
default amount from the borrower, the bank will have to
refund the said amount to the CGTMSE Authority.
Therefore, Issue No. 4 is answered in the negative.
Issue No. 5:-
42. Having answered issue No. 1 as above, I hold that
Plaintiff is entitled to the relief of recovery of the balance
amounts towards the three loan accounts along with
respective rates of interest, as per my finding on issue No.
1.
43. Apart from this, plaintiff is also seeking recovery of Rs. 1,000 towards PIM court fee and Rs. 2000 for 39 CT 1390_Com.O.S.No.578-2024_Judgment.doc KABC170011532024 miscellaneous expenditure for preparation of pleadings and obtaining photocopies. However, when the suit is being decreed with cost, there is no justification to decree such miscellaneous amounts, and accordingly the same is refused. Accordingly, I answer issue No. 5. Issue No. 6 :-
44. Having answered Issue Nos. 1 to 5 as above, I proceed to pass the following :-
ORDER.
The suit is partly decreed, with cost. It is held that, the plaintiff is entitled to recover the following sums of money from the defendant;
i) Rs.9,74,377/= along with interest at 9.30 % per annum from date of suit till date of realization towards term loan.
ii) Rs. 1,44,607/= along with interest at 8.10 % per annum from date of suit till date of realization in respect of working capital term loan.
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iii) Rs. 7,381/= along with interest at 7.60% per annum from date of suit till date of realization towards FITL loan.
Office to draw decree accordingly. Office to issue soft copy of this judgment to both sides by email if furnished.
[Dictated using MacWhisper Pro 10.8.1, transcript revised, corrected, signed and then pronounced by me in open court on this the 17th day of October, 2025] SUDINDRA Digitally signed by SUDINDRA NATH S NATH S Date: 2025.10.23 14:47:42 +0530 (S. Sudindranath) LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT, BENGALURU ANNEXURE
1. List of witnesses examined on behalf of Plaintiff/s:
PW1 : Sri. T. Yogananda
2. List of witnesses examined on behalf of
Defendant/s:
DW1 : Sri. Vishwanath R.
3. List of documents marked on behalf of
Plaintiff/s:
Ex.P1 : Original loan application form.
Ex.P2 : Sanction memorandum.
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Ex.P4 : Letter of proprietorship. Ex.P5 : Declaration-cum-undertaking. Ex.P6 : Hypothecation agreement. Ex.P7 : Supplemental hypothecation deed. Ex.P8 : Application for restructuring of the loan.
Ex.P9 : Modification deed.
Ex.P10 : Letter of acknowledgment of debt dated
12.01.2023.
Ex.P11 : Recall notice (2 in Nos.) with RPAD receipt and acknowledgement card.
Ex.P12 : Non starter report of PIM Ex.P13 : Loan account statement (3 in Nos.) Ex.P14 : Certified under BBEA. Ex.P15 : Summary of loan accounts of the defendant. Ex.P16 : Loan account statement in respect of the earlier term loan of Rs. 13,50,000 availed by the defendant.
Ex.P17 : Another loan account statement of the term loan for Rs. 9,50,000.
Ex.P18 : Loan account statement of loan account ending with the account No.2055 Ex.P19 : Loan account statement of working capital loan account end with account No.2068. Ex.P20 : Loan account statement of the FITL loan Ex.P21 : Circular regarding Credit Guarantee Fund Scheme for MSME Enterprises.
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CT 1390_Com.O.S.No.578-2024_Judgment.doc KABC170011532024 Ex.P22 : Certificate under U/Sec. 2A(B) & A(C) Bankers Book Evidence Act in respect of the various loan accounts.
Ex.P23 : 65-B Certificate
4. List of documents marked on behalf of Defendant/s:
Ex.D1 : Statement of current account for the period 01.12.2020 to 31.12.2020.
Ex.D2 : Statement of current account for the period 01.01.2021 to 31.01.2021.
Ex.D3 : Office copy of letter dated 17.03.2023 Ex.D4 : Office copy of letter dated 02.05.2023 Ex.D5 : RPAD receipts and one RPAD acknowledgement Ex.D6 : 65-B certificate.
Ex.D7 : Digital copy of modification deed (4 sheets). Ex.D8 : Digital account summary (3 sheets) produced along with I.A.No.1 Ex.D9 : Copy of letter dated 04.12.2020 with seal of plaintinff bank.
Ex.D10 : Digital account statement of account No.117300301000615.
Ex.D11 : Digital account statement and account summary.
(S. Sudindranath) LXXXIII ACC & SJ, (COMMERCIAL COURT), BENGALURU