Bangalore District Court
5. Based On The Above Pleadings Of The ... vs For Disbursement Of The Term Loan ... on 16 January, 2023
19 COM.O.S.494/2022
IN THE COURT OF LXXXII ADDL.CITY CIVIL & SESSIONS
JUDGE, AT BENGALURU (CCH.83)
THIS THE 16th DAY OF JANUARY 2023
PRESENT:
SMT. SUMANGALA S BASAVANNOUR.,B.COM,L.L.M.,
LXXXII ADDL.CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.O.S.No.494/2022
BETWEEN:
Canara Bank,
Sahakaranagar - Branch,
No. 48/12, Kodegehalli
Main Road, Near
Kodigehalli Circle,
Bangalore - 560 092,
represented by its
Manager, Mr. Raja
Sekhar M, aged about 33
years, S/o Mr. Murali
Mareedu.
: PLAINTIFF
(Represented by Sri. S.
Chandrashekar -
Advocate)
AND
Mr. Golal Varun Krishna,
aged about 26 years, S/o
G.K. Jagadish, Pro of
19 COM.O.S.494/2022
Cafe Cantina, 83/1, Near
White Peacock, Railway
Parallel Road,
Bytryanapura,
Bangalore - 560 092.
: DEFENDANT
(Defendant is placed
exparte as 07.11.2022)
Date of Institution of the
28.03.2022
suit
Nature of the suit (suit on
pronote, suit for
Suit for recovery of money
declaration & Possession,
Suit for injunction etc.)
Date of commencement of
07.01.2023
recording of evidence
Date on which judgment
16.01.2023
was pronounced
Total Duration Year/s Month/s Day/s
00 09 19
(SUMANGALA S BASAVANNOUR),
LXXXII Addl.City Civil & Sessions Judge,
Bengaluru.
19 COM.O.S.494/2022
JUDGMENT
This suit is filed by the Plaintiff for recovery of Rs.10,88,660/- with future interest at the rate of 18.00% per annum compounded monthly over the decreetal amount from the date of filing the suit till the date of realization.
2. The Brief facts of the Plaint are as follows:-
The Defendant approached the Syndicate Bank- Kodegehalli Branch with an application dated 06.09.2019 for granting of credit facilities for the purpose of establishment of restaurant/hotel in the name and style of Cafecanteen in which the Defendant is the proprietor and the hotel is situated at Bangalore. The loan application dated 06.09.2016 and self attested copy of the GST registration certificate bearing GST registration No. 29DCHPK6383J1Zy and the firm addressed recorded as D. No. 83/1, Near White peacock, Rly parallel road, Bytryanapura, Bangalore - 560 092 and registration certificate of establishment. The Defendant also submitted self attested copy of his Aadhar Card bearing No. 735 8189 1890, where in the address of the Defendant is recorded as Old No. 488A, New No. 617/681, Srivastha nivas, Chikkamaramma Temple Street, Tigalarapet, Malur, Karnataka - 563 130, Pan Card Copy bearing 19 COM.O.S.494/2022 No. DCHPK 6383 J and Voter ID Card bearing No. AKB2814770, in which the address of the Defendant is recorded as No. ¼, Ply parallel road, Near Gandhi Bhavan, Kumar Park East, Bangalore
- 560 001. The Defendant has produced the Business projection, Assets and liabilities statement, Deed of sub rent for processing of the loan application. The Defendant along with other documents was processed and examined by the Plaintiff bank and sanctioned the term loan of Rs. 8,00,000/- under MSME Scheme. The Term loan of Rs. 8,00,000/- sanctioned is for the purpose of establishment of new canteen/hotel and for acquiring equipments/furniture/interior decorations. The Defendants for disbursement of the term loan executed a composite hypothecation agreement dated 30.09.2019, hypothecating all the stock in trade, furniture and fixtures, equipments and interior decorations. The Defendant had agreed to pay an interest of 9.60% per annum which is MCLR 8.35% + 1.25% compounded monthly and also penal interest of 2% on the overdue amount. The loan was agreed to be repaid in 60 equated monthly installments at Rs. 16,743 per month commencing from 31.10.2019 with one month repayment holiday. The sanction of the loan is duly acknowledged by the Defendant accepting the terms and conditions of the sanction.
The Defendant had requested the Plaintiff bank to disburse the loan component for acquiring equipments, furniture and for 19 COM.O.S.494/2022 interior decorations to this current account bearing No. 06901010000627 maintained with the Plaintiff Bank and directly remit the amount to the vendors for purchase of equipments, furniture and fixtures, interiors works by debiting his current account.
The Bank released Rs. 5841/- on 30.09.2019 and Rs. 794159/- on 05.10.2019 from the loan account opened bearing No.0690991000121 and credit the amount to the current account N. 0690100000627 maintained by the Defendant with the Plaintiff Bank and that based on the quotations produced by the Defendant, the following amounts was paid for the purchase of Assets directly to the vendors from the current account statement of the term loan account.
1. Sum of Rs. 4,85,545/- was released to M/s Mahesh Distributors Hotel Ware vide Bankers Cheque bearing No. 988038 dated 05.10.2019 for the purchase of Hotel ware as per quotation dated 26.08.2019.
2. Sum of Rs. 1,35,000/- to m/s New Karnataka Steel vide instrument No. 988037 dated 05.10.2019 for the purchase of chairs and tables as per quotation dated 18.09.2021.
3. Sum of Rs. 75,500/- vide instruments No. 988036 to m/s A.G. Industries towards purchase of Ledcrlic Signage as per proforma invoice dated 16.09.2019.
19 COM.O.S.494/20224. Sum of Rs. 85,500/- instrument No. 988038 dated 05.10.2019 to Multi IT junction for the purchase of Computer, printer, speaker box etc as per quotation dated 16.09.2019.
5. Sum of Rs. 58,800/- 988035 dated 05.10.2019 to Shivam Hardware and Plywood for purchase of plywood and laminates etc as per quotation dated 15.09.2019.
6. Sum of Rs. 79,700/- vide instrument bearing No. 988040 dated 05.10.2019 to Gururaj Aluminum Company for the purchase of aluminum sliding windows and doors.
The Defendant has confirmed having received the equipments purchased out of the loan proceeds in good and condition. The Defendant after the equipments furnitures and fixtures were bought and installed and interiors works were completed and after opening the hotel restaurant, made an request for release of working capital requirements of Rs. 2,00,000/-. The Plaintiff bank sanctioned overdraft facility of Rs. 2,00,000/- to meet the working capital requirements. The Defendant for disbursement and availment of the overdraft facility, executed A.S.D. 2 letter of overdraft facility, Demand promissory note for Rs. 2,00,000/- and a composite hypothecation agreement on 16.11.2019. The Plaintiff agreed to pay for the overdraft facility interest at the rate of 9.5% i.e., 1.25% over and above the MCLR and hypothecated the entire 19 COM.O.S.494/2022 stocks of the firm. Till march 2020, the hotel was functioning and due to covid - 19 pandemic, the hotel was closed for few months and reopened later. The overdraft facility was renewed till 29.12.2020 at the request of the Defendant vide their letter dated 17.10.2021 along with stock statement. Notice by the Bank dated 05.10.2021. The Defendant has failed to comply with the terms and conditions of sanction. The Plaintiff bank made several requests with the Defendant to pay the installments (EMI) and regularise the account, but in spite of all the attempts made by the Plaintiff Bank, the Defendant has made some stray payments but failed to repay the stipulated monthly installments and also did not renew the overdraft facility by submitting the required financial statements and not responding. When the installments were not being paid and the defendant did not produced the requested document for renewal of the loan, on inspection of the unit, the Plaintiff Bank found that the Defendant has closed the restaurant without informing the bank and sold off all the assets which are hypothecated to the bank and the defendant has siphoned off the funds received from the sale proceeds of the assets and has defrauded the Bank. In view of the same, the loan account of the Defendant was classified as NPA in respect of term loan account as on 31.01.2021 and overdraft facility on 31.03.2021 as per RBI guidelines. Internal note for irregular and stressed 19 COM.O.S.494/2022 assets - Form No. 607 in respect of term loan and also overdraft facility. The present outstanding in the term loan account No. 06909910000121 is Rs. 8,14,349.80/- and in loan account No. 06901400001204 is Rs. 2,11,975.52/-. The Plaintiff bank submits that the interest for the loan accounts have been debited up to 31.07.2021. The demand notice recalling and demanding the entire loan amount was issued to the Defendant vide letter dated 15.05.2021. The said letter was sent by Registered post Acknowledged due. The letters addressed to the Defendant have been returned Un delivered by the postal authorities. The Defendant deliberately did not receive the demand notice and has remained unmoved to repay the outstanding loan amount. As such the Plaintiff Bank had to issue legal notice under the hand of appointed Advocate Mr. s. Chandrashekar dated 25.05.2021. The notice sent to the address as mentioned in voter id has been served on the Defendant. The legal notices addressed to the Defendants have been returned un delivered by the postal authorities. The Defendant has to pay the Plaintiff Bank in total a sum of Rs. 10,88,660/-. Hence, the Plaintiff has filed this suit for the above- mentioned reliefs.
3. Inspite of paper publication, the Defendant has not appeared before this court, after waiting for 30 days, i.e., the 19 COM.O.S.494/2022 time limit for filing written statement, he was placed ex-parte on 07.11.2022.
4. The Plaintiff has examined PW-1 and got marked Ex.P.1 to Ex.P.25. I have heard the arguments of the Advocate for the Plaintiff.
5. Based on the above pleadings of the Plaintiff, the following points arise for my consideration :-
1. Whether the Plaintiff is entitled for the Suit Claim from the Defendant ?
2. What Order ?
6. My findings on the above Points are as under:
1. Point No.1 :- In the Partly Affirmative.
2. Point No.2 :- As per the final Order for the following reasons.
REASONS
7. Point No.1 :- The Plaintiff Bank substantiate of this case examined its Manager Perugu Vinnela as PW.1. PW.1 in his evidence reiterated averments of the Plaint, and got marked Ex.P.1 to Ex.P.25.
19 COM.O.S.494/20228. In the decision reported in A.I.R. - 2000 - Karnataka - 234 (Syed Ismail vs. Smt. Shamshia Begum), the Hon'ble High Court of Karnataka has held as follows :-
"3. The impugned order does not disclose the nature of pleading placed by the plaintiff and whether there is prima facie material to grant a decree in his favour. A judgement in favour of the plaintiff is not automatic. The Court has to consider the case of the plaintiff and grant a decree in his favour. The learned trial Judge has not referred to the pleadings of the plaintiff and the documents produced by him to substantiate even a prima facie case for grant of a decree in his favour. Therefore, the judgement and decree in favour of the plaintiff is not automatic on failure of the opposite party to put his defence. The Court can grant a judgement in favour of the party only upon consideration of the case of the plaintiff including appreciation of pleadings and evidence."
9. The averments of the Plaint, evidence of PW.1 and Ex.P.1 to Ex.P.13 discloses that the Defendant approached the Syndicate Bank- Kodegehalli Branch with an application dated 06.09.2019 for granting of credit facilities for the purpose of establishment of restaurant/hotel in the name and style of Cafecanteen in which the Defendant is the proprietor and the 19 COM.O.S.494/2022 hotel is situated at Bangalore.
10. The Defendant has produced the Business projection, Assets and liabilities statement, Deed of sub rent for processing of the loan application. The Defendant along with other documents was processed and examined by the Plaintiff bank and sanctioned the term loan of Rs. 8,00,000/- under MSME Scheme. The Term loan of Rs. 8,00,000/- sanctioned is for the purpose of establishment of new canteen/hotel and for acquiring equipments/furniture/interior decorations. The Defendants for disbursement of the term loan executed a composite hypothecation agreement dated 30.09.2019 at Ex.P.4 and Ex.P.6, hypothecating all the stock in trade, furniture and fixtures, equipments and interior decorations.
11. The Defendant has confirmed having received the equipments purchased out of the loan proceeds in good and condition. The Defendant after the equipments furniture and fixtures were bought and installed and interiors works were completed and after opening the hotel restaurant, made an request for release of working capital requirements of Rs. 2,00,000/-. The Plaintiff bank sanctioned overdraft facility of Rs. 2,00,000/- to meet the working capital requirements. The Defendant for disbursement and availment of the overdraft facility, executed A.S.D. 2 letter of overdraft facility, Demand promissory note for Rs. 2,00,000/- and a composite 19 COM.O.S.494/2022 hypothecation agreement on 16.11.2019.
12. The Plaintiff agreed to pay for the overdraft facility interest at the rate of 9.5% i.e., 1.25% over and above the MCLR and hypothecated the entire stocks of the firm. Till march 2020, the hotel was functioning and due to covid - 19 pandemic, the hotel was closed for few months and reopened later. The overdraft facility was renewed till 29.12.2020 at the request of the Defendant vide their letter dated 17.10.2021 along with stock statement. Notice by the Bank dated 05.10.2021.
13. The loan account of the Defendant was classified as NPA in respect of term loan account as on 31.01.2021 and overdraft facility on 31.03.2021 as per RBI guidelines. Internal note for irregular and stressed assets - Form No. 607 in respect of term loan and also overdraft facility. The present outstanding in the term loan account No. 06909910000121 is Rs. 8,14,349.80/- and in loan account No. 06901400001204 is Rs. 2,11,975.52/-.
14. The Plaintiff bank submits that the interest for the loan accounts have been debited up to 31.07.2021. The demand notice recalling and demanding the entire loan amount was issued to the Defendant vide letter dated 15.05.2021 at Ex.P.19 to Ex.P.21. As such the Plaintiff Bank had to issue legal notice under the hand of appointed Advocate Mr. s. Chandrashekar dated 25.05.2021 at Ex.P.22 calling upon the Defendant to 19 COM.O.S.494/2022 repay the entire loan amount.
15. From Ex.P.15 and Ex.P.16 the statement of account extract speaks to the effect that total amount payable includes the interest accrued and therefore, Plaintiff has successfully proved that the Defendants have availed loan and have not repaid the same and are liable to pay the suit claim amount as on the date of suit. The Plaintiff has prayed interest on the suit claim amount at 18% per annum from the date of suit till realization. However by considering the interest prevailing, it is proper to award interest @ 10% per annum from the date of suit.
16. The above mentioned transactions commenced from 31.01.2021 and the suit filed on 28.03.2022 is within the limitation period.
17. In this case in spite of paper publication, the Defendant is not appeared and denied the claim of the Plaintiff Hence, it shows the Defendants admitted the case of the Plaintiff. The evidence of PW.1 and Ex.P.1 to Ex.P.25 are remained unchallenged. Therefore, the Plaintiff is entitle for recovery of the suit claim amount of Rs. 6,76,860.18 with current and future interest @ 10% per annum from the date of suit till payment of the entire amount. Hence, I answer this Point in " Partly 19 COM.O.S.494/2022 Affirmative".
18. Point No.2 : -Therefore, I proceed to pass the following Order.
ORDER The Suit of the Plaintiff is decreed in part with cost.
The Defendant is hereby directed to pay Rs. 10,88,660/- to the Plaintiff, with interest at the rate of 10% per annum compounded monthly from the date of suit till realization.
Draw Decree accordingly.
The Office is directed to send copy of this Judgment to Plaintiff and Defendant to their email ID as required under Order XX Rule 1 of the Civil Procedure Code as amended under Section 16 of the Commercial Courts Act.
( Dictated to the Stenographer, typed by her directly on computer, verified and then pronounced by me in open Court on this the 16th day of January, 2023).
(SUMANGALA S BASAVANNOUR), LXXXII Addl.City Civil & Sessions Judge, Bengaluru.
19 COM.O.S.494/2022ANNEXURE LIST OF WITNESSES EXAMINED ON BEHALF OF THE PLAINTIFF PW-1 Perugu Vineela LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE PLAINTIFF Ex.P.1 Letter of authority Ex.P.2 Loan application Ex.P.3 Process note /Sanction letter dt 27.09.2019 Ex.P.4 Composite hypothecation agreement Ex.P.5 Letter of acknowledgment Ex.P.6 Loan disbursement letter Ex.P.7 Confirmation of delivery of machinery/vehicles Ex.P.8 Request for OD facility letter Ex.P.9 Demand promissory note Ex.P.10 Hypothecation agreement Ex.P.11 Stock declaration Ex.P.12 Extension letter dt 17.10.2020 Ex.P.13 Stocks statement dt 17.10.2020 Ex.P.14 Term loan Statement (subject to production of certificate) Ex.P.15 OD statement of account(subject to production of certificate) Ex.P.16 Current account statement (subject to production of certificate) 19 COM.O.S.494/2022 Ex.P.17 Particulars of irregular accounts of term loan Ex.P.18 Particulars of irregular accounts of OD account Ex.P.19 Recall notice dt 15.05.2021 Ex.P.20 Recall notice dt 15.05.2021 Ex.P.21 Recall notice dt 15.05.2021 Ex.P.22 Office copy of the legal notice dt 25.05.2020, 26.05.2020 Ex.P.23 Unserved RPAD (opened in the open court) RPAD marked at Ex.P23 and notice as Ex.P23(a).
Ex.P.24 Self attested GST Certificate
Ex.P.25 Registration certificate of Establishment
of defendant
LIST OF WITNESSES EXAMINED ON BEHALF OF THE DEFENDANT NIL LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE DEFENDANT NIL (SUMANGALA S BASAVANNOUR), LXXXII Addl.City Civil & Sessions Judge, Bengaluru.