Delhi District Court
Ashish Singhal vs Icici Bank on 21 May, 2024
Ashish Singhal vs. ICICI Bank
DLCT010100782023
IN THE COURT OF SH. DEEPAK GARG,
DISTRICT JUDGE-COMMERCIAL COURT-09
(CENTRAL DISTRICT), TIS HAZARI COURTS, DELHI.
CIVIL SUIT (COMMERCIAL) NO.:- 1093/2023
IN THE MATTER OF :-
M/S Singhal Traders
Through its proprietor
Mr. Ashish Singhal,
3979, Naya Bazar,
Delhi 110006
Processing unit at Kh. No. 37/6,
Ground Floor,
Village Prahladpur Banger,
Delhi 110039
....Plaintiff
Versus
ICICI Bank Ltd.
Through its Chairman/Managing Director/
Manager/ Authorised Representative,
Registered/Corporate Office Address:
ICICI Bank Towers,
Bandra Kurla Complex, Mumbai
Regional Office in Delhi:
NBCC Place, Bhishma Pitamah MG,
Lodhi Road, Delhi 110003
Branch Address: Branch Manager,
1820 Chandni Chowk, Delhi 110006
....Defendant
CS (Comm) 1093/2023 Page 1 of 11
Ashish Singhal vs. ICICI Bank
Date of institution of the Suit : 27/07/2023
Date on which Judgment was reserved : 09/05/2024
Date of Judgment : 21/05/2024
::- J U D G M E N T -::
1.By way of present judgment, this court shall adjudicate upon this suit filed by the plaintiff against the defendant for recovery of Rs.17,32,520/- along with pendentelite and future interest w.e.f. 01/06/2023 till its realisation.
PLAINTIFF'S CASE
2. The brief facts of the case as per the case of the plaintiff are as under:
i. M/S Singhal Traders is the proprietorship firm and Sh. Ashish Singhal is its proprietor. The firm is Micro Small & Medium Enterprise (MSME) and registered under Udyog aadhar dated 21/06/2019.
ii. That defendant is registered bank with Reserve Bank of India and carrying out Banking activities. iii. Plaintiff had approached for working capital facilities from the defendant branch at Chandni Chowk, Delhi and a cash credit facility of Rs.3.1 crore was sanctioned on 20/02/2016 and thereafter it was renewed periodically. iv. That the said facility was closed in the system and 'no dues certificate' has been provided along with all property CS (Comm) 1093/2023 Page 2 of 11 Ashish Singhal vs. ICICI Bank papers which were deposited in original with the defen- dant.
v. That the defendant has charged foreclosure charges of Rs.12,40,000/-, Rs.1,11,600 UGST and Rs 1,11,600/- GST on dated 17/08/2021.
vi. That the working capital facility was last renewed in March, 2020 and the defendant has mentioned that fore- closure charges were not applicable on MSME registered firm as per Renewal Sanction Letter provided by ICICI Bank.
vii. That being aggrieved by levy of these illegal foreclo- sure charges, plaintiff made several communications via mails, telephonic conversation and physical visits to the bank.
viii. That the plaintiff is engaged in the processing of food items and comes under Agri Ancillary (Agri PSL) and quoting RBI circular on PSL classification FBI/FIDD/ 2020-21/72 Master Directions FIDD.CO.Plan.BC.5/ 04.09.01/2020-21. Agri Ancillary units do not need to fur-
nish URC for PSL Classification and the plaintiff is enti- tled for reversal of 100% foreclosure charges reversal along with GST on same.
ix. The plaintiff issued legal notice dated 09/05/2020 to seek reversal of foreclosure charges and after receiving of the same legal notice, the defendant sent reply through e.- mail dated 11/06/2022 thereby accepted the demand of CS (Comm) 1093/2023 Page 3 of 11 Ashish Singhal vs. ICICI Bank plaintiff and agreed to pay 50% of the demanded amount, but the defendant did not pay the same.
x. The plaintiff has filed the pre-institution mediation ap- plication before DLSA but none has appeared on behalf fo defendant and hence the DLSA issued non starter report dated 06/05/2023. Hence, the plaintiff has filed the present suit for recovery against the defendant bank.
3. Summons of the suit were issued to the defendant Bank.
The defendant appeared through his counsel. However the de- fendant bank did not file the written statement within 120 days of service as stipulated under Commercial Courts Act, 2015 and hence the right of the defendant to file written state- ment was closed by the court on 16.01.2024. Since there was no written statement on record, hence vide order dated 16.01.2024, this court directed that there was no need to frame the issues and case was directly listed for plaintiff's evidence.
PLAINTIFF'S EVIDENCE
4. Plaintiff has examined Sh. Ashish Singhal, proprietor of plaintiff company as PW1 who filed his evidence by way of affidavit ExPW1/A and relied upon documents as under:
i. Copy of GST registration certificate of the plaintiff firm bearing registration no. 07AAHPK7739D1ZM downloaded from Goods and Services Website of Government of India is Ex.PW1/1 (colly. 3 pages).
ii. The copy of registration certificate of the plaintiff firm as Micro small & Medium Enterprises under Udyog Aadhar dated CS (Comm) 1093/2023 Page 4 of 11 Ashish Singhal vs. ICICI Bank 21.06.2019 bearing Udyog Aadhar No. DLO4D0008630 with NIC 2 Digit No. 10 and 56 (Manufacturer of Food Products & Food and Beverage Service Activities) downloaded from the Website of eudyog aadhar of Government of India is Ex.PW1/2.
iii. Copy of registration certificate of the plaintiff firm under Udyam bearing Reg. No. UDYAMDL060006430 downloaded from the website of Udyam Registration of Government of India is Ex.PW1/3.
iv. Copy of Master Directions FIDD.CO.Plan.BC.5/04.09.01/ 202021 downloaded from the website of Reserve Bank of India of Government of India is Ex.PW1/4 (Colly. 8 pages). v. Screenshot of email vide which reply given by the defendant qua complaint made by the plaintiff to the Banking Ombudsman vide complaint No. 202122022004809 and 202122022005141 is Ex.PW1/5.
vi. The copies of speed post receipts vide which legal notice has been sent to the defendant is Ex.PW1/6.
vii. The legal notice dated 09.05.2022 sent to the defendant is Ex.PW1/7 (colly. 6 pages).
viii. Copy of my Aadhar Card is Ex.PW1/8 (OSR), of my PAN Card is Ex.PW1/9 (OSR).
ix. Copy of bank statement of CCA Account of ICICI bank is Ex.PW1/10 (colly. 2 pages).
x. Copy of the letter BLG/NEW/P/21428 dated 12.03.2020 vide which cash credit facility was lastly renewed by the defendant bank is Ex.PW1/11 (colly. 10 pages).
xi. Nonstarter report dated 06.05.23 is Ex.PW1/12.
CS (Comm) 1093/2023 Page 5 of 11Ashish Singhal vs. ICICI Bank xii. Certificate U/s 65-B of Indian Evidence Act is Ex.PW1/13.
5. The witness was cross examined by ld. Counsel for the defendant.
6. Since there is no written statement on record, the defen-
dant has not led any evidence.
7. I have heard Ld. Counsels from both the sides and care-
fully perused the record.
8. In order to prove its case, Sh. Ashish Singhal, plaintiff has examined himself as PW1 who has deposed that plaintiff is proprietor of M/S Singhal Traders having its GST registration no. 07AAHPK7739D1ZM and this firm is MSME registered un- der Udyog Aadhar dated 21/06/2019 and under Udyam as well on 06.11.2020. He has proved the certificate of GST registra- tion certificate, copy of registration certificate of plaintiff un- der Udyog Aadhar and registration certificate of plaintiff un- der Udyam as ExPW1/1, ExPW1/2 and ExPW1/3 respec- tively. Copy of Bank statement of CCA account of defendant bank is ExPW1/10 reflecting the deductions in question.
9. The PW-1 has also deposed that prior to filing of the suit, a legal notice dated 09.05.2022 i.e. ExPW1/7 was issued to defendant, however, the defendant failed to pay the said amount. He has proved speed post receipts regarding sending of legal notice ExPW1/6.
CS (Comm) 1093/2023 Page 6 of 1110. It is admitted fact that plaintiff had approached the defen- dant bank for cash credit facility for his business through its proprietorship firm M/S Singhal Traders and the said facility was sanctioned by the defendant bank for Rs.3.10 crores on 20.02.2016.
11. It is not denied by the defendant bank that the said facil- ity was last renewed in March, 2020 vide letter BLG/NEW/P/21428 dated 12/03/2020, which has been exhib- ited as ExPW1/11.
12. It is further not denied by the defendant bank that in the month of August, 2021, at the request of the plaintiff, the said facility was closed in the system and 'No Due Certificate' was issued by the bank.
13. It is further not denied by the defendant bank that on 17/08/2021 the bank had charged foreclosure charges of Rs.12,40,000/- along with Rs.1,11,600/- as UGST and Rs. 1,11,600/- as CGST from plaintiff.
14. As per the case of the plaintiff it was registered as MSME with Ministry of Micro, Small and medium enterprises and Udyam Registration Certificate (URC) was issued to the plaintiff on 06/11/2020 and since the account was closed in August, 2021 i.e. much after the issuance of the date of URC in favour of plaintiff, the plaintiff is entitled for reversal of CS (Comm) 1093/2023 Page 7 of 11 Ashish Singhal vs. ICICI Bank 100% foreclosure charges along with the GST paid on the same.
15. On the other hand, it is argued by ld. Counsel for the de- fendant bank that at the time of limit closer i.e. in August, 2021 the plaintiff did not submit the said URC to the defen- dant bank and hence the defendant bank was under no obliga- tion to waive the said foreclosure charges.
16. The onus was on the plaintiff to prove that it had fur- nished URC to the defendant bank before the closure of the account in question. However, the plaintiff has not filed any such document in this case to show as to when, if any, the said URC was furnished to the defendant bank. PW1 Sh.Ashish Singhal admitted in his cross examination that he did not re- member how he had informed the bank that the plaintiff firm was registered under MSME. He further admitted that he had not filed any document with the plaint in this regard and nor he had brought any such document on the date of his examina- tion in court. He further admitted that the firms which are not registered under MSME are required to pay pre-payment and cancellation charges.
17. It is argued by ld. Counsel for the plaintiff that the plain- tiff is engaged in the processing of food items and comes un- der Agri Ancillary (Agri PSL) and RBI circular on PSL classi- fication RBI/FIDD/2020-21/72 Master Directions FIDD.CO.-
CS (Comm) 1093/2023 Page 8 of 11Ashish Singhal vs. ICICI Bank Plan.BC.5/04.09.01/2020-21 provides that Agri Ancillary Units do not need to furnish URC for PSL classification.
18. It is admitted by the defendant that the plaintiff was en- gaged in the processing of food items and hence it was enti- tled to PSL classification but that in itself does not mean that it was also entitled to exemption from foreclosure charges etc. and for the same URC was required and the plaintiff did not furnish it to the bank.
19. The RBI circular relied upon by the plaintiff does not any- where provides that Agri Ancillary Units do not need to fur- nish URC for PSL classification or for claiming exemption from foreclosure charges.
20. The renewal credit arrangement letter ExPW1/11 relied upon by the plaintiff mentions the plaintiff as a priority sector but that in itself would not be sufficient for the plaintiff to claim the exemption from the foreclosure charges. There is merit in the contention of ld. Counsel for the defendant that under the RBI guidelines, certain benefits are to be given to the priority sector for example priority for lending loan etc. to such sector but for claiming the exemption from foreclosure charges, the plaintiff had to furnish URC to the bank and the plaintiff has failed to prove the same.
CS (Comm) 1093/2023 Page 9 of 1121. There is no serious contest from the side of the plaintiff that URC was not the criteria for the bank to grant exemption for foreclosure charges.
22. Although the plaintiff had got registered as MSME and was issued URC dated 06.11.2020 but it appears that it did not furnish the said document to the defendant bank at any time prior to the closure of the said limit/account. In the absence of the said document to be handed over to the defendant bank, the defendant was under no obligation to give the said exemp- tion as sought.
23. In support of his contention Ld. Counsel for the plaintiff has relied upon two authorities titled Raj Kumar Kohli and anr. vs. RBI and anr. Indiankanoon.org/doc/93940139/ and Devendra Surana vs. Bank of Baroda and ors. Indi- ankanoon.org/doc/71594179/. In my view the facts of the said cases are clearly distinguishable as both the said cases deal with "term loans" sanctioned to the petitioner therein, whereas present case is the case of "cash credit facility" which is completely different from the "term loans." Hence, the said authorities are of no help to the plaintiff.
24. Having said that it is also relevant here to state that in re- sponse to the mail of the plaintiff, the defendant bank sent a reply e.mail (ExPW1/5) to the plaintiff stating that at the time of limit closure URC was the only criteria for classification of CS (Comm) 1093/2023 Page 10 of 11 Ashish Singhal vs. ICICI Bank the said limit account under PSL (Priority Sector Lending) or MSME and URC submission was mandatory as per govern- ment norms with effect from July 01, 2020 and the plaintiff submitted URC on November 2nd, 2021 which was post clo- sure of the facility and notwithstanding the above, the bank offered to proceed with the reversal of 50% of the foreclosure charges and it sought the acceptance of the plaintiff in that re- gard. It appears that plaintiff did not accept this offer.
25. In totality of the facts and circumstances discussed above, it would be expedient to allow the present suit to the extent of the said offer of the defendant bank as contained in their e.- mail ExPW1/5 and direct the defendant bank to refund 50% of the foreclosure charges and appropriate amount towards UGST and CGST charges as per rules. The suit is allowed in these terms. Let refund in question be made within eight weeks failing which defendant bank shall be liable to pay in- terest @12% per annum on the requisite amount after said eight weeks.
26. Suit is decreed accordingly with costs.
27. File be consigned to Record Room after due compliance.
Digitally signedDEEPAK by DEEPAK GARG GARG Date: 2024.05.21 16:21:07 +0530 Announced in the open Court on (Deepak Garg) st this 21 Day of May., 2024 Distt. Judge, (Comm. Court)-09, Central District, THC : Delhi CS (Comm) 1093/2023 Page 11 of 11