Delhi District Court
M/S Ambica Enterprises vs 2 on 5 September, 2007
IN THE COURT OF SH. SUNIL KUMAR AGGARWAL
ADDL. DISTRICT JUDGE, DELHI
Civil Suit No. 78/07
Dr. Sanjeev Jindal,
S/o. Sh. M D Jindal
A-10, New Friends Colony,
New Delhi
Versus
1. M/s Ambica Enterprises
G-57, F. S Saket,
New Delhi
2. Sh. Sudhir Kapoor
G-57, F S Saket
New Delhi
3. Sh. Verghise T Verghese
22/375, Chullikal O
Ernakulam Kerala
4. Sh. Mohd Hanifa
Farm House Kottamam
Parasuvaikkal, PO Parasala
Trivandarum District, Kerala
5. Sh. Vikam Bhargava
11, Ring Road, Lajpat Nagar IV,
New Delhi- 110 24
6. Mrs.. V. Raihanath Beevi
Farm House, Kottamam,
Parasuvaikkal PO Parasala
Trivandarum Distt. Kerala
7. Sh. M S Asgar,
Farm House, Kottamam
Parasuvaikkal PO Parasala
Trivandarum Distt. Kerala
Plaint presented on 02.09.04
JUDGMENT
This suit for recovery of Rs. 17,57,953/- and sale of mortgaged property had been filed by the Plaintiff against .. 2 ..
Defendants stating that Defendant No. 1 is the partnership firm comprising Defendant No. 2-4 as its partners . Defendant No. 1 through its partners avail financial accommodation in the shape of packing credit limit of Rs. 10,00,000/- from Indian Bank , Shanti Niketan, New Delhi of which Plaintiff and Defendants No. 5-7 became co- obligants and guarantors . Defendants No. 6 and 7 in order to secure the financial interest of Bank had created equitable mortgage of their property ie Northern most 116.5 acres of surveyed and un-surveyed lands on the Western one half of Anaimad Mount. Ruby and Saffire Estate Comprising 914 acres excess if any within the boundaries planted with coffee, Cardomom, Oranges, Cinamom and all buildings and structures, plants, trees and improvements standing thereon situated at Village Muthalmada, District Palkkadu, Kerala, with the bank. Defendants No. 1-4 failed to pay the dues of bank therefore, the bank filed a recovery suit in the Hon'ble High Court of Delhi which was later on transferred to Debt Recovery Tribunal, Delhi. Since none of the Defendants in the said case had appeared, it was decided exparte. Final order of payment of Rs. 19,23,329.00 along with pendent-lite and future interest at the rate of 21.25 % per annum besides costs of Rs. 44,708/-was passed therein on .. 3 ..
01.12.98. Pursuant to the same recovery certificate No. 59/2000 was issued by the Debt Recovery Tribunal, Delhi . The bank then starting putting all sorts of pressure upon Plaintiff for making payment who in turn tried to persuade the Defendants to approach the bank for compromise or to sell the mortgaged land to pay off the decreetal amount but they did not pay any heed. Under a scheme of Reserve Bank of India, the bank had offered to settle the case on receipt of Rs. 14,50,000/- plus Rs. 58,000/- being interest on delayed payment, to the Defendants. Since the dues in terms of decree by that time had crossed Rs. 1.5 crores , Plaintiff avail the opportunity for himself and on behalf of all the Defendants and made payment of Rs. 15,08,000/- to the bank by way of compromise of the decree. The bank gave no objection regarding subrogation of their rights in the mortgaged property of Defendants No. 6 and 7 in favour of the Plaintiff. The Defendants were asked to pay their share of the amount to the Plaintiff despite repeated requests, demand and service of legal notice dated 18.08.04 hence, the suit.
Only Defendants No. 4, 6 and 7 have contested the case to some extent . They have appeared through Counsel on 25.08.05.
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Defendant No. 3 was served through registered post on his non appearance, he was proceeded exparte on 25.08.05. He was again proceeded exparte on 22.02.06. Defendants No. 1,2 and 5 could not be served in ordinary manner despite repeated efforts . They were thus directed to be served by substituted means of publication. They were accordingly served by means of proclamation carried in The Statesman in its issue of 24.10.05 and were proceeded exparte on non appearance.
In his Written statement Defendant No. 4 alleged that Plaintiff has not approached the Court with clean hands. The suit has been filed on concocted facts with a view to fastened liability on Defendant No. 4. It was Defendants No. 2 and 3 who had approached Indian Bank for financial assistance. The Defendant No. 4 had remained only a silent spectator. Plaintiffs and Defendants No. 5 to 7 has stood as guarantors but immediately on coming to know that Defendants No. 2 and 3 intend to cheat the other Defendants and not to strive to achieve the object of constitution of firm, Defendants No. 6 and 7 had sent letter dated 27.03.91 to Indian Bank stating that they are canceling the collateral security and asked for the return of title documents. The bank however, despite their reservation, .. 5 ..
disburse the loan in favour of Defendant No. 1. Defendant No. 4 had also closed all his concerns / relations with Defendants No. 1, 2 and 3 on coming to know about their ill intentions , prior to the disbursement of loan, he is therefore, not responsible for acts of other parties of the firm. Although the Plaintiff was fully aware of this background yet impleaded Defendant No. 4 in the suit in order to make illegal gain. Defendant No. 4 has sought to rely upon the assertions of Defendant No. 6 and 7 to the extent that the same are not contrary to his interests.
In their separate Written statement Defendant No. 6 and 7 claimed that they had withdrawn their guarantee furnished to the bank vide letter dated 27.03.99 and had asked for return of documents of their property. The fact that bank proceeded to disburse the loan to Defendants No. 1-4 despite that , do not make Defendants No. 6 and 7 liable. The least bank could have done is to seek clarification from the Defendants No. 6 and 7 but there was no communication. It is denied that Defendants No. 6 and 7 are liable to reimburse the Plaintiff or their property is liable to be sold to recover the dues. It has been contended that Defendants could not participate in proceedings before the Debt Recovery Tribunal as the newspaper in which .. 6 ..
proclamation was published was not in vide circulation in their vicinity. The recovery officer of the bank had visited the mortgaged property for putting it to sale but it was found to be in custody of a receiver appointed by the Sub Court Pallakadu. It is contended that no cause of action had arisen in favour of the Plaintiff therefore, the suit is liable to be dismissed.
In replication the contents of Written statements of Defendants have been refuted and those of plaint reiterated. According to Plaintiff no guarantor can withdraw their guarantee in the manner stated by Defendants No. 6 and 7 . They never got their guarantee discharged from the bank nor requested for return of title deeds. Since, the bank has subrogate their right to recover the dues from Defendants , in favour of Plaintiff, Plaintiff is entitled to realize the same even by sale of mortgaged property.
Right of the parties to file documents was closed on 26.02.07 as they did not produce further documents despite repeated directions.
Defendants No. 6 and 7 were proceeded exparte on 03.04.07. Defendant No. 4 was proceeded exparte on 22.08.07. an attempt to get the exparte proceedings against these Defendants set aside was made on 30.08.07 by Sh.
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Rajiv Rofous V Advocate but his application was dismissed.
In evidence Plaintiff has examined only himself by way of affidavit which was tendered in the court on 24.05.07. He has proved the copy of plaint filed by Indian Bank Ex. PW 1/1, amended plaint Ex. PW ½, List of documents Ex. PW 1/3, GPA in fvour of their officer Ex. PW ¼, Statement of account Ex. PW 1/5, Demand pronote Ex. PW 1/6, packing credit advance dated 18.02.99 Ex. PW 1/7, deed of hypothecation Ex. PW 1/8, partnership letter of Defendant No. 1 Ex. PW 1/9, copy of letter dated 12.09.91 of Defendant No. 1 Ex. PW 1/10, Guarantee agreements Ex. PW 1/11 to Ex. PW 1/14 , Memorandum of deposit of title deeds by Defendants No. 6 and 7 Ex. PW 1/15, copy of sale deed Ex. PW 1/16, Power of Attorney Ex. PW 1/17, possession certificate Ex. PW 1/18, surrender / lease deed Ex. PW 1/19, final order dated 01.12.98 of DRT Ex. PW 1/20, recovery certificate Ex. PW 1/21, affidavit on behalf of Indian Bank Ex. PW 1/22, compromise letter Ex. PW 1/23, order dated 06.08.04 of DRT Ex. PW 1/24, Legal notice Ex. PW 1/25, postal receipt Ex. PW 1/26 to Ex. PW 1/32 , returned envelopes Ex. PW 1/33 to Ex. PW 1/35 and statement of account Ex. PW 1/36. I have heard Sh. M C Kochhar Advocate Ld. Counsel for the Plaintiff and carefully perused the file. Only defence of Defendant No. 4 is that .. 8 ..
since he had recused himself from the activities of Defendants No. 1,2 and 3, he should not be held liable in this case. The plea is absolutely devoid of merits. He did not ask Indian bank in writing to stop disbursal of loan to the Defendant No. 1. He did not call upon Defendants No. 2 and 3 to desist from their alleged illegal activities and to utilize the loan for achieving the purpose and objectors of partnership firm. He also could not give notice for dissolution of the firm in protest of availing loan from the bank. No document whatsoever has been filed by him to discern his conduct as is being put forth in the Written statement. On such cursory and vague assertions Defendant No. 4 cannot expect to be absolved of his liabilities particularly when there is nothing to show that he had not enjoyed the benefit of partnership.
Defendants No. 6 and 7 have filed a copy of letter dated 27.03.91 along with their Written statement. The letter had apparently been given to the bank by hand. The competent official of bank had there and then endorsed on its body ''so long is the facility in existence -----, it is not the banks practice to relieve the banks guarantors and part with any security already mortgaged/given to us''. The Defendants did not take out any legal proceedings for .. 9 ..
prohibiting the bank to extend credit limit to Defendant No. 1 on the strength of their guarantee. In fact the endorsement of bank reflects that the bank had already extended the limit to Defendant No. 1 by the time Defendants No. 6 and 7 had given letter dated 27.03.91 proposing to cancel their guarantee. Strangely enough Defendants No. 6 and 7 thereafter never again asked the bank for return of their title documents. The averments of Defendants thus to thwart the liability towards Plaintiff, is misconceived.
None of the Defendants has disputed the execution of financial papers in favour of Indian Bank Shanti Niketan, New Delhi. They also do not dispute that Defendant No. 1 had actually availed the packing credit limit of Rs. 10 lacs . The balance standing to be debit of Defendant No. 1 on the date of filing of suit by the bank as per the agreed terms and conditions, has also not been disputed. The recovery suit of bank having been decreed on 01.12.98 is also not in contest. None of the Defendants and for that matter the Plaintiff have challenged the exparte decree by filing application U/o. 9 Rule 13 CPC or other similar provisions nor had filed any appeal. The decree being joint and several against all the Defendants in OA No. 740/96 was executable .. 10 ..
against all or any of them. It cannot be said that compromise of the decree arrived at by the Plaintiff, who was a guarantor and coobligant, with the bank and payment of Rs. 15,08,000/- to the bank under the RBI Scheme was wrongful or that the same was not made on behalf of Defendants in these proceedings.
Although the final order was passed on 01.12.98, recovery certificate was issued on 29.02.00. The payment of settlement amount was made by Plaintiff to the bank sometime in the year 2004. The suit having been filed in September 2000 is within limitation.
Defendant No. 1 being the partnership firm comprising Defendants No. 2-4 are liable to reimburse the Plaintiff which he had owned on their behalf in terms of section 43 of the Indian Contract Act. Since property of Defendants No. 6 and 7 had been mortgaged with the bank and it was coextensive with the liability of firm, the bank having subrogated their rights in the property in favour of Plaintiff, he is entitled to realize the dues by putting the subrogated immovable property to sale.
So far as Defendants No. 5 to 7 personally are concerned, they are obliged to pay to the Plaintiff U/s. 145 of the Indian Contract Act. It has been held in (1988) 1 Andhra Law Times 132 that a surety is obliged to pay the decreetal .. 11 ..
amount under threat of coercive process in execution of decree and such payment cannot be labelled as wrongful payment. The concept of coextensive liability does not lend other to the right of surety for reimbursement provided U/s. 145 of Contract Act.
So far as the entitlement of Plaintiff to recover interest on the amount paid by him to the bank, from Defendants is concerned Plaintiff cannot claim it at the rate of prevalent market usage. He has not shown to have taken loan to discharge the liability of bank. He had willingly become a guarantor of Defendants No. 1-4 and co-obligant with Defendants No. 5-7. Since the settlement amount was paid to the bank in installments starting from April 2003 completed around June 2004, award of interest @ 12 % per annum w.e.f. 01.01.04 will be equitable and meet the ends of justice.
In view of the above discussion suit of Plaintiff is decreed in his favour in the sum of Rs. 15,08,000/- with interest @ 12 % per annum from 01.01.04 till the filing of suit, pendentalite and future till realization, jointly and severally against Defendants No. 1-4. The decree besides the properties of Defendants No. 1-4, shall be executable by sale of subrogated mortgaged property in Village Muthalmada, District Palkadu, Kerala. Simultaneously decree in the sum of .. 12 ..
Rs. 3,77,000/- against each of Defendants No. 5,6 and 7 along with interest @ 12 % per annum w.e.f 01.01.04 till realization is passed. Decree sheet be accordingly prepared. It is hereby clarified that amount realized from any of the Defendants shall be adjusted against the decree comprising principal amount .
ANNOUNCED IN THE OPEN (SUNIL KR AGGARWAL) COURT ON DATED: 05.09.07 ADDL. DISTRICT JUDGE DELHI