Bangalore District Court
Canara Bank vs Mr. Daya Shankar G on 27 July, 2022
1 Com.O.S.No.141/2022
IN THE COURT OF THE LXXXVIII ADDL. CITY CIVIL &
SESSIONS JUDGE (EXCLUSIVE COMMERCIAL COURT):
BENGALURU CITY. (CCH-89)
Present: Sri. P.J. SOMASHEKARA, B.A.,LL.M,
LXXXVIII Addl. City Civil & Sessions Judge
Bengaluru City.
Dated this the 27th day of July 2022
Com.O.S.No.141/2022
Plaintiff: Canara Bank, (E-Syndicate Bank),
Bannerghatta Road Branch,
No.183, Doresanipalya,
Bannerghatta Road, Near Bilekahalli
Signal, Bengaluru - 560 076.
Rep. by Mr. Satish Kumar,
S/o A. Venkatasubbaiah, Aged 58 years,
Senior Branch Manager.
(By Sri. T.P.M., Advocate)
-vs-
Defendant: Mr. Daya Shankar G.,
S/o Annachi Gunavelu,
Aged about 53 years,
Proprietor, M/s Annapoorna Cakes,
No.519, 20th 'C' Main Road,
8th Block, Koramangala,
Bengaluru - 560 095.
(Exparte)
Nature of the suit Money suit
2 Com.O.S.No.141/2022
Date of institution of the 27.01.2022
suit
Date of commencement of 13.07.2022
recording of the evidence
Date on which the 27.07.2022
judgment was pronounced
Total duration Year/s Month/s Day/s
00 06 00
JUDGMENT
This is a suit filed by the plaintiff bank against the defendant for recovery of Rs.14,47,508.55/- against the defendant for recovery of Rs.11,88,423.43/- under SOD loan account No.06641400000066 as debt due and current and future interest @ 14.40% with 2% penal interest, in total 16.40% p.a. compounded quarterly and Rs.2,58,085.12/- under the term loan account No.06649910000161 as debt due, current and future interest @ 8.80% plus 2% penal interest in total 10.80% p.a. compounded quarterly from the date of the suit till its realization.
2. Brief facts of the plaint are as under :
The plaintiff bank in its plaint has alleged that the defendant being the Proprietor of M/s Annapoorna Cakes approached for financial assistance of Rs.8,00,000/- by way of secured overdraft facility to improve his bakery business and filed the loan 3 Com.O.S.No.141/2022 application. After considering the loan application, sanctioned a loan of Rs.8,00,000/- on 14.11.2014 for the purpose of improve his bakery business and the defendant has executed the documents in its favour like a demand promissory note and composite hypothecation agreement. The defendant being the proprietor of M/s Annapoorna Cakes requested for enhancement of credit facility limit from Rs.8 lakhs to 10 lakhs and filed the loan application and considering the request of the defendant enhanced SOD limit of Rs.10 lakhs as per sanction letter dated 25.04.2017 on the terms and conditions mentioned therein and the defendant has executed a demand promissory note and composite hypothecation agreement. The defendant being the proprietor of M/s Annapoorna Cakes approached for financial assistance of Rs.3.5 lakhs by way of term loan facility for the purpose of purchase of new baking machine. On 03.08.2016 considering the application which filed by the defendant disbursed a loan of Rs.3,50,000/- to purchase new baking machine on the terms and conditions of the loan agreement.
3. The plaintiff bank in its plaint has further alleged the defendant has executed composite hypothecation agreement dated 03.08.2016 agreeing to repay the entire loan in 84 monthly 4 Com.O.S.No.141/2022 installment of Rs.5,936.30/- each commencing from 30.09.2016 along with floating interest at 10.80% p.a. compounded at monthly rest and in the event of default in payment of any one installment or in regularizing or in clearing the account as per the terms the defendant has agreed to pay penal interest @ 2% p.a., but the defendant has failed to follow the repayment schedule as agreed, as a result of default the entire liability under the loan accounts became over due and classified as NPA and in spite of repeated request, the defendant failed to repay the loan dues, thereby legal notice has been issued to the defendant on 23.08.2019 calling upon to repay the entire loan amount along with interest but the defendant did not come forward nor clear the loan dues. Now the defendant is due a sum of Rs.11,88,423.43/- as on 18.12.2020 under the SOD loan account together with further interest from 19.12.2020 and the defendant is also liable to pay a sum of Rs.2,58,085.12/- as on 30.11.2020 under the term loan account together with interest from 01.12.2020. Thus the cause of action for the suit which arose on 18.11.2014, 26.04.2017 when the defendant executed the composite hypothecation agreement and other documents and on 30.05.2019 and 29.02.2020 when the last payment which 5 Com.O.S.No.141/2022 made by the defendant in respect of SOD loan and in respect of term loan on 03.08.2016 when the defendant executed the composite hypothecation agreement and other documents and when the defendant defaulted in repayment of monthly installment and on 30.07.2019 and 29.11.2019 when the last payments which made by the defendant within the jurisdiction of this court and prays for decree the suit.
4. In response of the suit summons the defendant did not appeared nor filed his written statement as he was placed exparte.
5. The plaintiff bank in order to prove the plaint averments has examined its Senior Manager as PW.1 and got marked the documents as Ex.P.1 to Ex.P.16. The plaintiff bank has not examined any witness in its favour.
6. Heard the arguments on the plaintiff side.
7. The points that arise for court consideration are as under:
1. Whether the plaintiff bank is entitled for the relief as prayed for?
2. What order or decree?
8. My answer to the above points are as under:
Point No.1: In the Affirmative;
6 Com.O.S.No.141/2022Point No.2: As per final order, for the following;
REASONS
9. POINT NO.1: The plaintiff bank has approached the court on the ground that the defendant being the proprietor of M/ s Annapoorna Cakes approached the bank for financial assistance of Rs.8 lakhs by way of secured overdraft facility to improve his bakery business and filed the application and after considering the application, sanctioned loan of Rs.8 lakhs to the defendant on 14.11.2014 for the purpose of improving of his bakery business and the defendant has executed on demand promissory note and composite hypothecation agreement. The defendant requested for enhancement of the said credit facility limit from Rs.8 lakhs to 10 lakhs. So considering the request of the defendant, enhanced SOD limit to Rs.10 lakhs and sanction letter has been issued to the defendant and the defendant has agreed to the terms and conditions of the said loan and executed demand promissory note on 26.04.2017 for Rs.10 lakhs by agreeing to repay the said loan amount with interest @ 9.75% p.a. with penal interest @ 1% over and above banks base rate and also executed composite hypothecation agreement dated 26.04.2017 and hypothecating current assets, stocks etc by agreeing the terms and condition of the said loan. The defendant being the proprietor of M/s 7 Com.O.S.No.141/2022 Annapoorna Cakes requested for financial assistance of Rs.3.5 lakhs by way of term loan facility for the purpose of purchase of new baking machine and filed the application, accordingly loan of Rs.3,50,000/- has been sanctioned and disbursed to the defendant and the defendant has executed the documents by agreeing to repay the loan amount with interest @ 10.80% on 84 monthly installment of Rs.5,936.30/- each and also agreed to pay penal interest @ 2% p.a. but the defendant failed to repay the loan amount with interest as agreed in spite of repeated request and demand, thereby got issued a legal notice on 23.08.2019 calling upon the defendant to repay the loan amount with interest within 7 days but the defendant failed to repay the same. Now the defendant is due a sum of Rs.14,43,227/- term loan for business development and Rs.2,85,252/- towards term loan with interest for purchase of new baking machine, in total the defendant is due a sum of Rs.17,29,479/- with interest, thereby the plaintiff bank has filed the instant suit against the defendant.
10. It is an admitted fact the plaintiff bank has filed the instant suit against the defendant for recovery of Rs.14,43,227/- with interest @ 16.40% p.a. compounded at monthly rest and Rs.2,86,252/- with interest @ 10.80% p.a. compounded quarterly 8 Com.O.S.No.141/2022 from the date of the suit till its realization on the ground the defendant has availed the loan for his business purpose and failed to repay the loan amount with interest.
11. Now, the question arises whether this court having the jurisdiction to adjudicate the matter which is dispute and whether this court having the pecuniary jurisdiction, though there is no dispute on these aspects. But, before considering the other aspects it is necessary to consider these aspects. Thus, this court drawn its attention on Sec.2(i)(c) of Commercial Courts Act, 2015 which reads like this:
(c) "commercial dispute" means a dispute arising out of-
(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;
(v) carriage of goods;9 Com.O.S.No.141/2022
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or commerce;
(viii) franchising agreements;
(ix) distribution and licensing agreements; (x) management and consultancy agreements; (xi) joint venture agreements; (xii) shareholders agreements; (xiii) subscription and investment
agreements pertaining to the services industry including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage;
(xv) partnership agreements;
(xvi) technology development agreements;
(xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits; (xviii) agreements for sale of goods or provision of services;
(xix) exploitation of oil and gas reserves 10 Com.O.S.No.141/2022 or other natural resources including electromagnetic spectrum;
(xx) insurance and re-insurance; (xxi) contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.
12. The provision under Sec.2(c)(i) which referred above is very much clear the first category which referred above, includes disputes of ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents including enforcement and interpretation of such documents. The definition naturally will cover the dispute of all kinds of ordinary transactions of merchants, bankers, financiers and traders. The banks are established under Banking Regulation Act for the purpose of business and commerce, naturally all transaction of bank about giving of loans, recovery thereof, deposits in banks etc., should fall within the category of commercial dispute. If the specified value there of is more than Rs.3,00,000/-. So the facts which pleaded in the plaint comes under the commercial dispute.
11 Com.O.S.No.141/2022
13. Now the question is whether the dispute which stated supra comes under the jurisdiction of commercial court. Thus, this court drawn its attention on Sec.6 of Commercial Courts Act, 2015 which reads like this:
Section 6: Jurisdiction of Commercial Court.
6. The Commercial Court shall have jurisdiction to try all suits and applications relating to a commercial dispute of a Specified Value arising out of the entire territory of the State over which it has been vested territorial jurisdiction.
Explanation.-For the purposes of this section, a commercial dispute shall be considered to arise out of the entire territory of the State over which a Commercial Court has been vested jurisdiction, if the suit or application relating to such commercial dispute has been instituted as per the provisions of sections 16 to 20 of the Code of Civil Procedure, 1908 (5 of 1908).
The above provision is very much clear that the commercial court shall have the jurisdiction to try all suits and applications relating to commercial dispute.
14. Now, the question is whether this court having the pecuniary jurisdiction to adjudicate the matter which is in dispute. 12 Com.O.S.No.141/2022 Thus, this court drawn its attention on Sec.3 of Commercial Courts Act, 2015 which reads like this:
Section 3: Constitution of Commercial Courts.
3. (1) The State Government, may after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under this Act:
2[Provided that with respect to the High Courts having ordinary original civil jurisdiction, the State Government may, after consultation with the concerned High Court, by notification, constitute Commercial Courts at the District Judge level:
Provided further that with respect to a territory over which the High Courts have ordinary original civil jurisdiction, the State Government may, by notification, specify such pecuniary value which shall not be less than three lakh rupees and not more than the pecuniary jurisdiction exercisable by the District Courts, as it may consider necessary.] 3[(1A) Notwithstanding anything contained in this Act, the State Government may, after consultation with 13 Com.O.S.No.141/2022 the concerned High Court, by notification, specify such pecuniary value which shall not be less than three lakh rupees or such higher value, for whole or part of the State, as it may consider necessary.] The above provision is very much clear that by virtue of the notification specified the pecuniary value of this court which shall not be less than Rs.3,00,000/- Admittedly, the plaintiff in the plaint itself has stated that the defendant is due a sum of Rs.17,29,479/- with interest and the plaintiff bank has filed the instant suit against the defendant on 27.01.2022 i.e. after the amendment of Commercial Courts Act, 2018. Prior to the amendment, the pecuniary jurisdiction of the commercial court is of Rs.1 Crore and above, but by virtue of the amendment of Commercial Courts Act, the pecuniary jurisdiction of the commercial court shall not be less than Rs.3,00,000/-. So this court having the pecuniary jurisdiction to adjudicate the matter which is in dispute by virtue of the provisions which stated supra.
15. The plaintiff bank in support of the oral evidence has produced the documents which marked as Ex.P.1 to Ex.P.16. Ex.P.1 is the loan application which filed by the defendant and sought for 14 Com.O.S.No.141/2022 Rs.8 lakhs for business purpose. Ex.P.2 is the demand promissory note which executed by the defendant after availment of loan of Rs.8 lakhs. Ex.P.3 is the composite hypothecation agreement which executed by the defendant in favour of the plaintiff bank. Ex.P.4 is the loan application which filed by the defendant and sought for enhancement of SOD limit to Rs.10 lakhs. Ex.P.5 is the letter which addressed to the defendant for enhancement of working capital limit of Rs.10 lakhs. Ex.P.6 is the demand promissory note which executed by the defendant after enhancement of Rs.10 lakhs from Rs.8 lakhs. Ex.P.7 is the composite hypothecation agreement which executed by the defendant in favour of the plaintiff bank. Ex.P.8 is the application which filed by the defendant for financial assistance of Rs.3.5 lakhs for the purpose of purchase of baking machine. Ex.P.9 is the particulars of assets and liabilities which executed by the defendant. Ex.P.10 is the composite hypothecation agreement which executed by the defendant in favour of the plaintiff bank. Ex.P.11 to P.14(a) are reflects the plaintiff bank got issued a legal notice through RPAD calling upon the defendant for payment of outstanding due amount with interest. Ex.P.15 and P.16 are reflects the defendant was due a sum of Rs.14,88,423.43/- and 15 Com.O.S.No.141/2022 Rs.2,58,085.12/- with interest. So the documents which are marked as Ex.P.1 to P.16 are coupled with the oral evidence of P.W.1.
16. If at all the defendant was not approached the plaintiff bank nor obtained the loans or executed the documents, in response of the suit summons, the defendant would have appeared and resisted the claim of the plaintiff bank. But the reasons best known to the defendant in spite of service of summons did not appear nor resisted the claim of the plaintiff bank. So, the contents of the plaint and documents which are marked as Ex.P.1 to Ex.P.16 are remained unchallenged and plaintiff bank has proved its case through oral and documentary evidence. Hence, I am of the opinion that the point No.1 is answered in the Affirmative.
17. POINT NO.2: In view of my answer to point No.1 as stated above, I proceed to pass the following;
ORDER The suit of the plaintiff bank is decreed with cost. The defendant is hereby directed to pay the decretal amount of Rs.14,47,508.55/- comprising of Rs.11,88,423.43/- under the SOD loan account with 16 Com.O.S.No.141/2022 current and future interest @ 14.40% p.a. plus penal interest @ 2% p.a. in total 16.40% p.a. and Rs.2,58,085.12/- under the term loan account with future interest @ 8.805 p.a. with penal interest @ 2% in total 10.80% p.a. compounded quarterly from the date of the suit till its realization.
Draw decree accordingly.
(Dictated to the Stenographer, transcript thereof corrected by me and then pronounced in the open court on this the 27th day of July, 2022) (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City List of witnesses examined on behalf of plaintiff:
P.W.1 Satish Kumar List of witnesses examined on behalf of defendant:
Nil List of documents exhibited on behalf of plaintiff:
Ex.P.1 Loan application dt:14.11.2014 Ex.P.2 Demand promissory note dt:18.11.2014 17 Com.O.S.No.141/2022 Ex.P.3 Composite hypothecation agreement dt:18.11.2014 Ex.P.4 Loan application for advance dt:25.04.2017 Ex.P.5 Sanction letter dt:25.04.2017 Ex.P.6 Demand promissory dt:26.04.2017 Ex.P.7 Composite hypothecation agreement dt:26.04.2017 Ex.P.8 Application for credit facilities Ex.P.9 Particulars of Assets and liabilities Ex.P.10 Composite hypothecation agreement dt:03.08.2016 Ex.P.11 Copy of the legal notice dt:23.08.2019 Ex.P.12 Postal receipts in 2 Nos. Ex.P.13 Unserved postal cover(opened in the open Court) Ex.P.13(a) Copy of the notice Ex.P.14 Unserved postal cover(opened in the open Court) Ex.P.14(a) Copy of the notice Ex.P.15 Statement of accounts relating to SOD loan Ex.P.16 Statement of accounts relating to term loan List of documents exhibited on behalf of defendant:
Nil (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City