Delhi High Court
State Bank Of India vs The Rachna Consumer Co. Op. Store Ltd. ... on 21 August, 2001
JUDGMENT V.S. Aggarwal, J.
1. State Bank of india has preferred the present suit for recovery of Rs.6,69,188.12 against the defendants.
2. The facts alleged are that defendants No. 1 is a registered cooperative society registered under the Delhi Cooperative Societies Act. Defendant 2 to 10 are members of the executive body of defendant No. 1. Defendant No. 1 is engaged in the business of trading in confiscated goods as per name and style of Rachna Consumer Cooperative Store Ltd.
3. Defendant 1 through its authorised representative approached the plaintiff bank on 2nd February, 1991 for grant of credit facilities for smooth running of the business. The plaintiff bank scrutinised the proposal and sanctioned, lent and released a cash credit limit of Rs.5 lakhs to defendant no.2 on 22nd March, 1991. In consideration of granting of the said credit facility, defendant no.1 and defendant 2 in his personal capacity executed and delivered in DP Note of Rs. 5 lakhs, DP Note delivery letter executed by defendant 1 and 2; Agreement of Hypothecation executed by defendant no.1 agreeing to hypothecate entire stocks of goods, an agreement of guarantee executed by defendant no.2 that his guarantee will be continuing in nature.
4. Defendants agreed to submit that stock statements regularly to the plaintiff bank and also agreed to route their sales through the plaintiff bank. The defendants agreed that the amount availed under the said cash credit limit will be paid by the defendant on demand with interest. As a security for proper repayment defendant no.1 hypothecated its entire stock with the plaintiff and defendant no.2 stood as the guarantor. As collateral security for proper adherence defendant no.2 mortgaged his immovable property with the plaintiff with an intention to create a charge of the bank over the said property. The details of the property have been given in the plaint to be northern portion of property measuring 123-1/2 sq yds bearing No. B-6/1 Krishna Nagar, Delhi The title deeds were deposited.
5. It is asserted that defendants failed to maintain financial discipline and they neither submitted the stock statement to the plaintiff nor routed their sales through the plaintiff bank. Thus they committed breach of these conditions. The amount had ben released. In this process the plaintiff claims Rs.6,69,188.12 including interest.
6. Notice had bene issued to the defendants and on 9th March, 1999 the defendants were proceeded ex parte.
7. In support of its case the plaintiff have led the evidence by filing the affidavit. The affidavit has been filed by the Chief Manager and Principal Officer, State Bank of India, Clock Tower, Delhi. He has sworn to the effect that earlier he was chief Manager and Principal Officer of Krishna Nagar Branch and that he was authorised by the bank to sign and verify plaints and file suits on behalf of the bank. Defendant no.1 is stated to be a cooperative society with defendant 2 to 10 as its members. He proved the DP note executed by defendants, which is Exhibit P1 and defendant no.2 stood as the guarantor. He also has proved the endorsement on the back of the DP note which is Exhibit P2. Defendant no.2 is stated to have mortgaged his property referred to above by deposit of the title deeds. Defendants are alleged to have failed to maintain the financial discipline and not repaid the amount despite notice.
8. The evidence on the record clearly show that so far as defendant no.3 to 10 are concerned they were simply members of the executive body of defendant no.1. They had not executed any document in favor of the plaintiff bank to make them personally liable. Therefore, in the absence of any other material as against defendants 3 to 10 the suit must fail.
9. However as regards defendants 1 and 2 , it is patent that defendant no.1 has taken the loan. Defendant no.2 has stood as the guarantor and even has created a mortgage with respect to his property by deposit of title deeds. The amount as such has not been paid and therefore the plaintiff is entitled to the preliminary decree at the rate of 18.75% per annum with quarterly rests from the date of the suit till actual payment. Defendant nos 1 and 2 are granted six months time to make the said payment. If within six months payment is not made, the plaintiff would be at liberty to seek a final decree in terms of Order 34 of the Code of Civil Procedure and that sale of the properly that had been mortgaged.