Delhi District Court
State Bank Of India vs Riyasat Ali Proprietor M/S Sufiya ... on 29 August, 2025
IN THE COURT OF DISTRICT JUDGE
(COMMERCIAL COURT)-02, NEW DELHI DISTRICT,
PATIALA HOUSE COURTS, NEW DELHI
CS (COMM) No. 671/2023
CNR No. DLND01-010413-2023
IN THE MATTER OF:
State Bank of India
having Corporate Office at:
State Bank Bhawan, Madame Cama Road,
Nariman Point, Mumbai.
Branch Office at:-
SMECC (15711), Naraina Industrial Area,
Naraina, New Delhi-110028.
. . . . . . Plaintiff
VERSUS
Riyasat Ali
S/o Sh. Alauddin
Proprietor, M/s Sufia Enterprises
F-103, Extension, F/F, JJ colony,
Raghubir Nagar, Tagore Garden,
New Delhi - 110027.
. . . . . . Defendant
SUIT FOR RECOVERY OF RS. 9,28,456/- ALONG WITH
PENDENTELITE AND FUTURE INTEREST
Date of Institution of Suit : 07.12.2023
Date of Reserving Judgment : Not reserved
Date of Pronouncement of Judgment : 29.08.2025
J U D G M E N T :-
1. Vide this judgment, I shall decide the present suit CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 1 of 14 filed by the plaintiff for recovery of Rs.9,28,456/- along with pendent-lite and future interest, costs, etc. against the defendant.
BRIEF FACTS OF THE CASE
2. The case of the plaintiff as set up in the plaint is that the plaintiff is a body corporate constituted under the provisions of The State Bank of India Act, 1955 (23 of 1955) having its Central Office at Madame Cama Road, Nariman Point, Mumbai-400021, and one of its Branch at SMECCC (15711) Naraina Industrial Area, Naraina, New Delhi-110028. Mr. Pravesh Kumar, Manager (NPA) of plaintiff's branch office at SMECCC (15711) Naraina Industrial Area, Naraina, New Delhi-110028 is duly authorized to file the present suit on behalf of the plaintiff bank.
3. It is averred that the defendant who is proprietor of M/s Sufia Enterprises approached the plaintiff's aforesaid branch at Naraina Industrial Area, Naraina, New Delhi for sanction and grant of Case Credit (Hypo) of Rs. 8,00,000/- under Pradhanmantri Mudra Yojna vide Loan Application dated 07.12.2020 against hypothecation of stocks, books and other current assets. The plaintiff bank sanctioned and granted working capital loan of Rs. 8,00,000/-to the defendant with interest chargeable @ 3.25% above EBR (External Benchmark Rate) which was 6.65% per annum (w.e.f. 01.07.2020) and hence the last effective rate was 9.90% per annum calculated on the daily balance of the loan account with monthly rests. In pursuance thereof, the CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 2 of 14 defendant executed security documents i.e. Agreement of Loan-cum-Hypothecation and Undertaking/Affidavit, both dated 11.02.2021. It is further averred that the loan amount was disbursed/made available to the defendant by the plaintiff bank under Cash Credit (Hypo) Account No. 40010715838, which was opened and maintained in the usual books of the plaintiff bank at its Paschim Vihar branch, and all entries of debits and credits were correctly entered therein by the plaintiff, in the regular, ordinary and usual course of banking business and subsequently the loan account was transferred to SMECCC Branch at Naraina Industrial Area, Naraina, Delhi.
4. It is alleged that the defendant did not adhere to financial discipline and did not care to pay the installments regularly within stipulated time as a result of which the loan account became irregular and despite repeated requests and reminders, the defendant failed to regularize his loan account and resultantly, the loan account of the defendant was classified as NPA on 08.08.2022.
5. It is stated that a sum of Rs. 8,05,487.88/- towards principal amount is due and outstanding in the loan account of the defendant upto 08.08.2022 i.e. date of NPA, thereafter in accordance with the accounting procedure being consistently followed by the bank and instructions of Reserve Bank of India, no interest as accrued, is applied, however the plaintiff is entitled to recover a sum of Rs. 97,732/- towards interest from 09.08.2022 to 08.09.2023 and penal interest of Rs. 25,236/-, as per terms CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 3 of 14 of sanction.
6. It is, thus, claimed that the defendant is liable to pay to the plaintiff, aggregate sum of Rs. 9,28,456/- (including Rs. 8,05,488/- Principal and Rs. 1,22,968 towards interest, along with all costs, charges and expenses etc. of this suit and pendente-lite and future interest, as the liability of the defendant has arisen in commercial transactions with the Plaintiff. It is stated that the defendant has failed and neglected to pay the amount outstanding and hence he is liable to pay the pendente-lite and future interest @ 12.40% p.a. The plaintiff got issued a Legal Notice dated 27.03.2023 thereby calling upon the defendant, to pay the outstanding amount, however the defendant did not pay the same. Hence, the present suit.
7. Summons of the suit was directed to be issued to the defendant vide order dated 07.12.2023. The defendant was duly served with the summons of the suit and pursuant to service filed the written statement along with an application under Section 5 of Limitation Act seeking condoation of delay in filing the application. The said application was allowed by the Ld. Predecessor of this court vide order dated 12.03.2025 and the written statement filed by the defendant was taken on record.
8. In his written statement, the defendant has contended that the AR of the plaintiff has not signed each page of the plaint and hence the same is liable to dismissed having been filed without following all the procedural formalities under the the Commercial Courts Act, 2015. It CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 4 of 14 is further contended that the plaintiff advanced the loan to the defendant without proper verification regarding assets, property, bank balance of the defendant and hence the loan granted by the plaintiff was an unsecured loan. It is stated that the defendant is a senior citizen and is in the business of selling old jeans, pants, trousers in weekly market at various places in Delhi after renewing them. The defendant took the loan from the plaintiff bank in February 2021 to invest and expand his business, but he was not able to pay the interest or repay the loan amount within the time because due to Covid-19 crises, the loan amount was not properly invested and used effectively by him as his business came to an indefinite halt on account of shut down of cloth market as per the orders of the Delhi Government and Health Ministry. The defendant has further contended that he is an illiterate person and does not understand the English language. He did not understand the rules and conditions of the loan as mentioned in the loan agreement dated 11.02.2021. It is further contended that while the talks of the loan was going on, the officials of the plaintiff made the defendant sign on various documents such as Loan Application, copy of his Aadhar and Pan card, copy of electricity bill, although the said address dos not belong to him, Letter of Arrangement, Agreement of Loan-cum-Hypothecation dated 11.02.2021, Undertaking, Affidavit dated 11.02.2021 by misrepresenting and concealment of several material facts. The defendant has denied to have received CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 5 of 14 any letters dated 22.07.2022 and 09.01.2023 from the plaintiff bank and contended that the suit amount of Rs. 9,28,456/- is unjustified amount which has been calculated by the plaintiff bank by imposing irrelevant interest and charges. The defendant has prayed for dismissal of the suit.
Issues
9. From the pleadings of the parties, following issues were framed by the LD. Predecessor of this Court vide order dated 12.03.2025: -
1. Whether the plaintiff is entitled to recover Rs. 9,28,456/- from the defendant? OPP.
2. Whether the plaintiff is entitled to recover interest from the defendant? If yes, then at what rate and for which period? OPP.
3. Relief
10. It is pertinent to mention here that at the request of the parties, on 30.04.2025, the matter was referred to the Lok Adalat held on 10.05.2025 for exploring the possibility of settlement, however settlement could not take place between the parties as the defendant did not appear before the Lok Adalat. The defendant also stopped appearing before this Court after filing the written statement and hence was proceeded ex-parte vide order dated 20.08.2025.
11. At this juncture, it may be also noted that on an application moved on behalf of plaintiff bank for CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 6 of 14 substitution of its AR, Sh. Anil Kumar Tyagi, Assistant Manager was permitted to be substituted in place of previous AR, namely, Sh. Pravesh Kumar vide order dated 12.03.2025. Subsequently, another application was moved on behalf of plaintiff bank for substitution of its AR, which was allowed vide order dated 30.04.2025 and accordingly new AR Sh. Pritesh Kumar Bhagat was substituted in place of previous AR Sh. Anil Kumar Tyagi.
12. In support of its case, the plaintiff bank has examined its AR, namely, Sh. Pritesh Kumar Bhagat, as PW-1, who deposed on the lines of the averments made in the plaint during his chief examination by way of affidavit (Ex.PW1/A). He also relied upon/proved the following documents:-
Sl. Document/Particulars Exhibit(s) No
1. Copy of Gazette Notification Ex. PW1/1 dated 27.03.1987.
2. Loan Application dated Ex. PW1/2 (Colly) 07.12.2020 alongwith Self Attested Copies of Aadhar Card, Pan Card, Electricity bill and GST Registration Certificate of the defendant
3. Letter of Arrangement dated Ex. PW1/3 11.02.2021 along with consent letter dated 11.02.2021
4. Agreement of Loan Cum Ex. PW1/4 Hypothecation dated11.02.2021
5. Undertaking/Affidavit dated Ex. PW1/5 11.02.2021
6. Statement of Account of Loan Ex. PW1/6 Account of the defendant
7. Letters dated 22.07.2022 and PW1/7 (Colly) 09.01.2023 CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 7 of 14 Sl. Document/Particulars Exhibit(s) No
8. Office copy of notice dated Ex. PW1/8 (Colly) 27.03.2023 along with postal receipt and tracking report
9. Non Starter Report issued by Ex.PW1/9 NDDLSA
13. On statement of AR of plaintiff bank, the ex-parte plaintiff evidence was 20.08.2025.
14. I have heard Counsel for the plaintiff and perused the record.
LIMITATION
15. Firstly, I shall deal with issue as to whether or not the present suit is within the period of limitation? In this regard, while referring to the relevant documents, Ld. Counsel of plaintiff submitted that the last payment of Rs. 10,000/- was made by defendant on 26.11.2022, as also duly reflected in the Statement of Account Ex.PW1/6, which is duly supported by affidavit. It is, therefore, claimed that since the suit was filed on 07.12.2023, the same is well within the period of limitation.
16. This is a suit for recovery of money and limitation to file such a suit is 3 years from the date when the cause of action arises. As is evident from the above discussions, the loan facility was sanctioned in favour of the defendant against execution of Letter of Arrangement and Agreement of Loan Cum Hypothecation dated 11.02.2021. Further, the defendant is shown to have made last payment to the plaintiff bank on 26.11.2022 as also reflected in loan CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 8 of 14 statement of account of the defendant Ex. PW1/6. Therefore, this Court is in agreement with Ld. Counsel for the plaintiff that the present suit having been filed on 07.12.2023 is instituted within the prescribed period of limitation.
JURISDICTION:
17. While referring to the Loan Agreement entered into between the parties and other documents, it is submitted by Ld. Counsel of plaintiff that the loan account was being maintained by the plaintiff bank at its branch situated at SMECCC (15711), Naraina Industrial Area, Naraina, New Delhi-110028, which falls within the territorial jurisdiction of this Court.
18. Admittedly, the defendant had approached the plaintiff bank and submitted requisite documents for availing financial assistance/cash credit facility and the same was sanctioned to the defendant. Further, it is the specific case of the plaintiff bank that the aforesaid loan was executed and maintained by plaintiff bank at its SMECC (15711), Naraina Industrial Area, Naraina, New Delhi-110028 branch. Hence, this Court has territorial jurisdiction to adjudicate the dispute.
19. Since the suit amount is above specified value i.e. Rs. 3 lakhs, as prescribed under the Commercial Courts Act, 2015, this Court has also pecuniary jurisdiction to adjudicate the suit.
CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 9 of 14
20. Now, coming to issue wise findings, which on the basis of material available on record are as under:-
Issue No. 1Whether the plaintiff is entitled to recover Rs. 9,28,456/- from the defendant?
21. The onus to prove this issue was on the plaintiff .
22. In order to discharge the onus, the plaintiff got examined its AR Sh. Pritesh Kumar Bhagat as PW-1 who has deposed on the lines of the averments made in the plaint and his deposition is duly supported by the relevant documents as Ex.PW1/1 to Ex.PW1/9, as already referred noted herein above. The testimony of PW-1 has gone unrebutted and unchallenged as the defendant chose not to cross-examine the witness.
23. Even otherwise, the defendant has admitted the factum of availing loan of Rs. 8,00,000/- from the plaintiff and his failure for non payment of the installment towards repayment of the loan amount in time in written statement filed by him. Though he contended that loan was availed by him for expansion of his business but he could not properly and effectively invest the loan amount in his business due to shut down of the cloth market on account of Covid - 19 crisis. However, once the defendant has admitted to have availed the loan facility from the plaintiff bank, he cannot be absolved from his liability to repay the loan amount to the plaintiff bank on account of financial crisis.
CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 10 of 14
24. As such, nothing contrary to the case of plaintiff has been brought on record. Hence, there is no reason to disbelieve testimony of PW-1 Sh. Pritesh Kumar Bhagat made on oath.
25. From the unchallenged and uncontroverted testimony of PW-1 Sh. Pritesh Kumar Bhagat coupled with documents proved during the course of evidence, it is duly established on record that the defendant approached the plaintiff bank to avail cash credit facility vide Loan Application Ex. PW1/2 and also submitted relevant documents i.e. his Aadhar card, PAN card etc, pursuant to which the working capital loan of Rs. 8,00,000/- was sanctioned and granted to the defendant vide Letter of Arrangement dated 11.02.2021 Ex.PW1/3. The defendant also executed other loan documents i.e. Agreement of Loan cum Hypothecation dated Ex.PW1/4 and Undertaking/Affidavit dated 11.02.2021 Ex. PW1/5.
26. The defendant though in the written statement has taken a plea that he is an illiterate person and he was made sign the aforesaid documents by the officials of the plaintiff bank by misrepresenting and suppressing the material facts, but in the absence of any evidence being led by the defendant in this regard, this plea of the defendant has remained unsubstantiated.
27. It further stands proved from the unchallenged testimony of PW-1 that the defendant could not adhere to financial discipline and failed to make the payment of CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 11 of 14 installment towards repayment of the loan amount which fact has also been admitted by the defendant in the written statement; and ultimately the loan account of the defendant was classified as NPA on 08.08.2022. PW-1 has also proved on record the Statement of account of the Loan Account of the defendant maintained by the plaintiff bank, as per which, a sum of Rs. 8,05,487.88/- is due and outstanding against the defendant towards principal amount. The plaintiff bank also sent a legal notice dated 27.03.2023 to the defendant through speed post Ex.PW1/8 (colly) calling upon him to pay the due amount plus interest within 07 days from service, but the defendant despite service of said legal notice failed to comply with the said legal notice. Therefore, this Court is of the view that the plaintiff is entitled to recover total amount of Rs.9,28,456/- (out of which Rs. 8,05,487.88/- is the principal outstanding and Rs.1,22,968/- includes interest of Rs. 97,732/- from 09.08.2022 to 08.09.2023 and penal interest of Rs. 25,236/-). In these terms, this issue is decided in favour of the plaintiff and against the defendant.
Issue No. 2(Whether the plaintiff is entitled to recover interest from the defendant? If yes, then at what rare and for which period?)
28. The onus to prove this issue was on the plaintiff .
29. The plaintiff has claimed that as per Letter of Arrangement dated 11.02.2021 Ex. PW1/3,, the defendant CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 12 of 14 had agreed to pay interest chargeable @ 3.25% spread above EBR which was 6.65% per annum (w.e.f. 01.07.2020) and hence the last effective rate was 9.90% per anum calculated on the daily balance of the loan amount at monthly rests. The defendant in his written statement has not disputed the execution of the loan documents including the Letter of Arrangement containing terms and conditions. The contention of the defendant that he was made to sign the loan documents by misrepresentation has remained unsubstantiated in the absence of any evidence being led by the defendant. The relevant portion of the testimony of PW-1 in this regard has also remained unchallenged and uncontroverted. Therefore, the plaintiff has proved on record that there is a contractual agreement between the parties regarding rate of interest.
30. Considering all the facts and circumstances of the case, this Court is of the opinion that the plaintiff bank is entitled to recover agreed rate of interest from the defendant from the date when it became due till the date of filing of the suit.
31. As regards pendent-lite and future interest, the plaintiff bank has claimed interest at the rate of 12.40% per annum. However, the Court is of the view that it is on higher side keeping in view the overall facts and circumstances of the case and interest of justice would be met by awarding pendent-lite and future interest @ 6% per CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 13 of 14 annum from the date of filing of the suit till the date of realization of the decretal amount.
RELIEF
32. As a sequel to my findings under Issue No. 1 & 2, the suit of the plaintiff is decreed in its favour and against the defendant for a sum of Rs. 9,28,456/- along with pendente-lite and future interest @ 6% per annum from the date of filing of the suit till the date of realization of the decretal amount. Cost of the suit is also awarded in favour of the plaintiff.
33. Decree sheet be prepared accordingly.
34. File be consigned to Record Room, after due compliance.
Digitally signed
BALWANT by BALWANT
RAI BANSAL
RAI Date:
Announced in the open court BANSAL 2025.08.29
16:20:57 +0530
on 29th August, 2025
(Balwant Rai Bansal)
District Judge (Commercial Court)-02 Patiala House Courts, New Delhi CS (Comm.) No.: 671/2023 State Bank of India vs. Riyasat Ali Page 14 of 14