Delhi District Court
Kotak Mahindra Bank vs Balbir Singh on 7 May, 2015
IN THE COURT OF MS. PREETI AGRAWAL GUPTA: ADDL.
DISTRICT JUDGE (CENTRAL)10: DELHI
Civil Suit No. 123/12
KOTAK MAHINDRA BANK
Registered office at
3638A, Nariman Bhawan
227, Nariman Point, Mumbai400021
Regional office at
G9, Vikas Puri,
New Delhi110018. .....Plaintiff
VERSUS
BALBIR SINGH
Son of Sh. Sunehri Lal
D2/8 Dayalpur, Karawal Nagar,
Delhi110094. .....Defendant
Date of institution of suit : 18.07.2012
Reserved for judgment on : 05.05.2015
Date on judgment announced : 07.05.2015
J U D G M E N T:
1. Vide this judgment, the suit of the plaintiff for recovery of Rs. 3,39,649/, filed against the defendant shall be adjudicated upon. At the outset, the suit was filed by the plaintiff U/o 37 CPC which was treated as ORDINARY SUIT vide orders of the court upon which summons for settlement of issues were issued upon the defendant. After service, a detailed written statement has been filed by the defendant. Respective parties have led their evidence on the issues of the suit. The concise facts of each of the parties shall be first considered.
Suit No. 123 of 2012 Page No. 1 of 292. Plaintiff is a registered bank under Indian Companies' Act, 1956 having its regional office at Delhi. As per the case of the plaintiff bank, defendant is the borrower of ICICI Bank Ltd. in respect of purchase of a vehicle MARUTI OMNI/8 SEATER. It is claimed that the plaintiff had taken over the assets and liabilities of ICICI Bank Ltd., unconditionally and absolutely of financial instruments and debts as per Deed of Assignment dated 31.12.2009 in its favour which included the accounts of the defendant with ICICI Bank. Accordingly, the plaintiff bank claims entitlement to sue the defendant against the loan account in question. The suit is filed through its duly authorized AR, as claimed.
3. As regards the dispute in the suit, as per the plaintiff's averment the defendant approached the plaintiff bank for a loan under LoancumHypothecation Scheme of the ICICI Bank Ltd. (hereinafter referred to as erstwhile bank) for purchase of a vehicle namely OMNI/8 seater. On request of the defendant, a loan of Rs. 1,58,000/ was sanctioned by the erstwhile bank on 06.07.2007 which was repayable by the defendant in 47 equated monthly installments of Rs. 4446/ each. The defendant is stated to have executed credit facility application form referred to as loan agreement dated 06.07.2007 in favour of the erstwhile bank which was accepted and a Loan Agreement No. LADEL00010818590 dated 06.07.2007 between erstwhile bank and its lender and defendant as its borrower. The vehicle in question was stated to have been hypothecated which was also entered in the RC of the vehicle vide registration no. DL2C AG8692.
Suit No. 123 of 2012 Page No. 2 of 294. It is the case of the plaintiff that after availing the aforesaid loan, herein after referred to loan in question, defendant failed to adhere to the terms and conditions of the loan agreement regarding repayment amount, despite repeated requests and demands. A demand notice dated 28.06.2012 demanding an amount of Rs. 3,39,649/ stated to be outstanding as on 31.10.2009 alongwith interest @ 2% p.m. was issued against the defendant after foreclosing the loan account in question by the erstwhile bank, w.e.f. 31.10.2009.
5. By way of this suit, plaintiff has claimed entitlement to repossess the hypothecated vehicle for selling the same for adjustment of amount of sale proceeds against the outstanding amount. The legal notice of the plaintiff is stated to have not been replied, nor the vehicle in question, has been returned. It is averred that defendant has also not clear the outstanding dues of the plaintiff. It is claimed by the plaintiff that the defendant is liable to pay a sum of Rs. 2,07,547/ as per the foreclosed statement dated 31.10.2009 against the loan in question and further demanded a sum of Rs. 1,32,102/ towards the interest thereby putting forth a claim of Rs. 3,39,649/, as on the date of filing of the suit. However, interest @ 24% p.a. is also claimed. It is the case of the plaintiff that the plaintiff has a good cause of action against the defendant within the jurisdiction of this court for which adequate court fee has been paid and that the suit has been filed within limitation.
6. Written statement has been filed by the defendant Suit No. 123 of 2012 Page No. 3 of 29 taking the preliminary objections that there was no right to recover in favour of the plaintiff bank, though admitted, that he had taken a loan against the vehicle in question from ICICI Bank. It is the case of the defendant that he took a loan of Rs. 88,000/ from ICICI Bank on 22.06.2007. It is the case put forth by the defendant that on the night of 10.07.2007, the vehicle in question was snatched away by two unknown persons for which he registered a police complaint vide FIR No. 449/07 dated 11.07.2007.
7. The suit of the plaintiff is opposed by way of preliminary objections that the representative of the erstwhile bank failed to produce the Insurance policy of the vehicle in question, on demand by the defendant and it was informed to the defendant that no insurance policy was issued against the vehicle in question. It is the case that a cover notice dated 29.07.2007 was thereafter issued by one agent with assurance for a back date in issuance of Insurance policy. It is the case of the defendant that a police complaint was lodged against the alleged agent of the erstwhile bank. Suit is also opposed on the ground that the same is barred by limitation as the loan agreement with the plaintiff bank was held in July, 2007. On merits, the rights of the plaintiff are denied on the ground of absence of privity of contract between the plaintiff and the defendant. The contents of the plaint are denied. The defendant has resisted the suit on the ground that he has no liability towards the plaintiff bank and also that the fault and non payment is occurred due to the fraud played by the erstwhile bank by issuing finance against the vehicle in question to the defendant without a valid insurance Suit No. 123 of 2012 Page No. 4 of 29 cover. Defendant has denied his liability outrightly on various accounts, including the bar of Limitation, absence of cause of action against him, fraud and immaterial concealment of facts.
8. Rejoinder has been filed on behalf of the plaintiff to the written statement of defendant wherein the allegations in the written statement are outrightly denied. Plaintiff has reiterated its claim and denied any liability towards the loot, theft of the hypothecated vehicle in question. Plaintiff has denied any liability of the erstwhile bank for getting the vehicle insured prior to the finance of the same in favour of the defendant on the material aspect of the objection on Limitation raised by the defendant. It is the case of the plaintiff that the erstwhile bank has transferred its portfolio to the plaintiff bank vide valid Deed of Assignment dated 30.06.2008 to ARCIL who thereupon executed a valid Deed of Assignment in favour of the plaintiff bank on 31.12.2009. Plaintiff has claimed entitlement to recover an outstanding debt of ARCIL from a list of customers on 31.12.2009 claiming that the suit is well within limitation. The right to recover from defendant against the loan in question has been reiterated and reaffirmed.
9. On the pleadings of the parties, following issues were framed on 02.01.2013:
1. Whether there is privity of contract between the plaintiff and defendant?
OPP.
2. Whether the defendant had paid a sum of Rs. 88,000/ to Sh. Sarjeet and Sh. Manmohan Kashyap as stated in preliminary objection? If so, to what effect?
OPD.
Suit No. 123 of 2012 Page No. 5 of 293. Whether the predecessorininterest of the plaintiff was liable to get the vehicle purchased by the defendant, insured? OPD.
4. Whether the plaintiff is entitled to recover the suit amount with interest from the defendant? OPP.
5. Relief.
10. Plaintiff to support its case has examined its Assistant Manager Sh. Vipin Goswami as PW1 who has tendered his affidavit and besides narrating the facts has proved Copy of Board Resolution as Ex. PW1/1, Deed of Assignment as Ex. PW1/2, Loan Agreement along with Loan application Form Ex. PW1/3, Deed of hypothecation and irrevocable Power of Attorney as Ex. PW1/4 and Ex. PW1/5 respectively. Demand notice and postal receipts are Ex. PW1/6 and Ex. PW1/7. Statement of accounts is Ex. PW1/8 (colly) and interest calculated sheet is Ex. PW1/9. PW1 was cross examined wherein he explained that the vehicle in question was financed to the defendant on 06.07.2007 in the sum of Rs. 1,58,000/ and defendant agreed to repay the same in monthly installments of Rs. 4,400/. PW1 submits that he has no knowledge about the vehicle being snatched on 10.07.2007 and alleged FIR dated 11.07.2007 bearing no. 449/07 was lodged in this regard at P.S. Highway Narholi, Mathura, U.P. Thereafter, plaintiff has closed its evidence.
11. To prove his defence, defendant has examined only himself as DW1 on 09.02.2015 and tendered his affidavit for chief examination. He had relied upon documents Ex. DW1/A to Ex. DW1/B which are copy of FIR dated 11.07.2007 as Ex. DW1/A, copy of cover note dated 29.07.2007 as Ex.DW1/B, Copy of police complaint as Ex. DW1/C and Certified copy of the order of the Suit No. 123 of 2012 Page No. 6 of 29 Hon'ble High court as Ex. DW1/D. In his crossexamination, DW1 who is defendant himself, admits that he had taken a loan of Rs 1,58,000/ from ICICI Bank for purchase of Maruti Omvi Van. DW1 further admits that he had not paid any EMI against the loan in question. DW1, however, deposed that the vehicle was stolen within 20 days of his possession. DW1 has informed that he was asked to pay a sum of Rs. 7,000/ in addition to down payment against the loan amount as insurance premium but no receipt of the said amount i.e. Rs. 7,000/ was given to him by the plaintiff. DW1 deposed that he had the copy of the insurance cover note which is Ex. DW1/B as the original of the cover note was kept in the vehicle only which was stolen. DW1 admitted that the date of the insurance cover note Ex. DW1/B is 29.07.2007 which is after the date 10.07.2007, on which date the vehicle was stolen. DW1 has denied the fact that he got the cover note Mark DW1/B after the date of theft of the vehicle in question. DW1 has testified that he made a police complaint of the theft of the vehicle which is Ex. DW1/C but no action was taken on the said complaint. Thereafter DW1 has closed his evidence.
12. I have heard Sh. Sunny Arora, counsel for the plaintiff and Sh. Mohd. Ahmed, counsel for the defendant and carefully perused the record . Issue wise findings of the court are recorded hereunder:
13. Issue no. 1:
Whether there is privity of contract between the plaintiff and defendant? OPP.
The onus to prove this issue is upon the plaintiff. The suit has been filed by the plaintiff bank based upon the Deed of Suit No. 123 of 2012 Page No. 7 of 29 Assignment Ex. PW1/2. The Plaintiff's witness PW1 has duly tendered and proved Ex. PW1/2 which is the agreement between the plaintiff bank and ARCIL dated 31.12.2009. In this regard the Assignment Agreement dated 30.06.2008 is also relevant which is filed on record and shows the agreement to transfer of rights and liabilities in respect of certain loan portfolio between the ICICI Bank and ARCIL.
14. It is the case of the plaintiff that the plaintiff bank acquired right, title and interest and all accruing benefits and liabilities in respect of certain loan and liabilities by way of a valid and subsequent Deed of Assignment dated 31.12.2009 in its favour which is proved as Ex. PW1/3. It is also the case of the plaintiff that ICICI bank transferred its rights and liabilities in favour of ARCIL vide Deed of Assignment dated 30.06.2008. It is the further case of the plaintiff that the loan account of defendant was part of Asset and Liabilities that were transferred from ICICI Bank to ARCIL on 31.12.2009 and thereafter from ARCIL to plaintiff banks on date 30.06.2008. The Board of Resolution is proved as Ex. PW1/2.
15. PW1 has specifically supported the case of the plaintiff as regard to the status of plaintiff bank qua the defendant in respect of loan account in question. There is nothing material in crossexamination that could show any legal embargo or anomality in the said Transfer of Assets and Liabilities from the ICICI bank to ARCIL who in their turn transferred the same to the plaintiff bank. It is not the case before the court where any of the financial institution or bank having predecessorininterest in Suit No. 123 of 2012 Page No. 8 of 29 respect of the loan account of the defendant have claimed any entitlement or challenged the rights of the plaintiff bank. The plaintiff has discharged the onus in its favour. The issue is decided in favour of the plaintiff.
16. Issue no. 2:
Whether the defendant had paid a sum of Rs. 88,000/ to Sh. Sarjeet and Sh. Manmohan Kashyap as stated in preliminary objection? If so, to what effect? OPD.
The onus to prove this issue is upon the defendant. It is the case of the defendant that he purchased the vehicle Maruti Omni Van car on 22.06.2007 under finance from ICICI Bank and he had paid a sum of Rs. 88,000/ as down payment to one Sarjeet as representative of ICICI bank. To support his averment, DW1 who is defendant himself had deposed in this regard vide his affidavit Ex. DW1/1. However, he has failed to tender any documentary evidence to support his claim of payment of Rs. 88,000/ to the plaintiff through its agent said Sarjeet. Defendant has not duly explained or given any believable evidence, either documentary or otherwise to elucidate as to why alleged sum of Rs. 88,000/ was paid by him to the representative of ICICI Bank, at the time of disbursement of the loan in question. Defendant has also not clarified as on what account, the said amount was paid by him. Admittedly, defendant does not have any written document, receipt or any bank transaction of the alleged payment of Rs. 88,000/ towards his loan account in question. Neither of the said persons namely Sarjeet nor Manmohan Kashyap have been brought to the witness box to confront them about payment of Rs. 88,000/. Even otherwise it is duly considered that as per the case of the plaintiff, defendant was given a credit facility of Suit No. 123 of 2012 Page No. 9 of 29 loan of Rs. 1,58,000/ which was lesser than the market value of the vehicle in question. Therefore, any amount paid by defendant may be the difference of loan amount and market price of the vehicle. In view of the aforesaid facts and circumstances, defendant has failed to discharge the onus in his favour which is decided against him and in favour of the plaintiff.
17. Issue no. 3: Whether the predecessorininterest of the plaintiff was liable to get the vehicle purchased by the defendant, insured? OPD.
The onus to prove this issue is upon the defendant. The relevant evidence of the case to understand the issues are that it is an admitted case between the parties that a loan of Rs. 1,58,000/ was disbursed by ICICI, Predecessorininterest of the loan agreement no. LADEL00010818590 of the defendant. It is an admitted fact before the court that the defendant had applied for a loan with ICICI for a purchase of vehicle Model Maruti Omni Van8 seater which was purchased by the defendant and the relevant hypothecation endorsed in the RC vide registration no. DL2CAG8692.
18. It is the case of the defendant that the vehicle in question was snatched from him after about 20 days i.e. in the night of 10.07.2007 when two unknown persons took away his car for which a FIR bearing no. 449/07 dated 11.07.2007 was lodged at PS Highway Narholi, Mathura, U.P. A copy of the FIR has been tendered on record as Mark DW1/A. It is the case of the defendant that the plaintiff bank failed to comply with its Suit No. 123 of 2012 Page No. 10 of 29 responsibilities and liability to insure that the vehicle financier by the bank was duly insured before possession of the same was handed over to the defendant. It is also the case of the defendant that he had believed the representation on behalf of the financee bank that his vehicle would be duly ensured by the bank. A copy of cover note dated 29.07.2007 has been filed and relied upon as Mark DW1/B which is w.e.f. 29.07.2007.
19. The plaintiff bank who is the bank with successorin interest had denied the allegations and claim that the plaintiff bank who at the relevant time was ICICI bank was under any duty to get the vehicle insured, for and on behalf of the defendant. It is averred, in the rejoinder on behalf of the plaintiff, that it was the duty of the defendant himself to get his vehicle insured before driving the same and that defendant was negligent in getting his vehicle insured. In regard to the insurance cover note of 29.07.2007, the genuineness and relevance of the cover note has been questioned.
20. The court has carefully considered the entire documents relied upon by the parties relevant to assess the question of liability of insurance of the vehicle in question. Even marked documents by the defendant have been considered for the purpose of taking an academic view and to throw light upon the real facts and applicable law. The plaintiff has duly proved the loan agreement vide Ex. PW1/3 and the hypothecation agreement Ex. PW1/4. These documents are not challenged by the defendant and are admitted. As per Clause 2(a) (b) of Deed of Hypothecation Ex. PW1/4 reads as under: Suit No. 123 of 2012 Page No. 11 of 29 "The Borrower shall at its expenses keep the Assets in good and marketable condition and, if stipulated by the Bank under the Loan Terms, insure such of the Assets which are of insurable nature, in the joint names of the Borrower and the Bank against any loss of damage by theft, fire, lightning, earthquake, explosion, riot, strike, civil commotion, storm, tempest, floor, erection risk, war risk and such other risks as may be determined by the Bank and including, wherever applicable, all marine, transit and other hazards incidental to the acquisition, transportation and delivery of the relevant Assets to the place of use or installation. The Borrower shall deliver to the Bank the relevant policies of insurance and maintain such insurance throughout the continuance of the security of these presents an deliver to the Bank the renewal receipts/endorsements/renewed policies therefor and till such insurance policies/renewal receipts/endorsements are delivered to the Bank, the same shall beheld by the Borrower in trust for the Bank. The Borrower shall duly and punctually pay all premia and shall not do or suffer to be done or omit to do or be done any act, which may invalidate or avoid such insurance. In default the Bank may (but shall not be bound to) keep in good condition and render marketable the relevant Assets and takeout/renew such insurance. Any premium paid by the Bank and any costs, charges and expenses incurred by the Bank shall forthwith on receipt of a notice of demand from the Bank be reimbursed by the Borrower to the Bank together with interest thereon at the rate for further interest as specified under the Loan Terms, from the date of payment till reimbursement thereof and untill such reimbursement by the Borrower, the same shall be a charge on the Assets. The Borrower further expressly agrees that the Bank shall be entitled, at its sole discretion, (i) to adjust, settle, compromise or refer to arbitration any dispute arising under or in connection with any insurance and such adjustment, settlement, compromise and any award made on such arbitration shall be valid and binding on the Borrower and (ii) to receive all monies payable under any such insurance or under any claim made thereunder and to give a valid receipt therefor, and that the amount so received shall be adjusted towards repayment/payment of amounts in respect of the Facilities and the Borrower shall not raise any question that a larger sum might or ought to have been received or be entitled to dispute liability of the Borrower for the balance remaining due after such adjustment;"
"The Bank shall not be under any liability whatsoever towards the Borrower or any other person for any loss or damage to the Assets from or in whatever cause or manner arising whether such Assets shall be in the possession of the Bank or not at the time of such loss or damage or the happening of the cause thereof. The Borrower shall at all times indemnify and keep indemnified the Bank from and against all suits, proceedings, costs, charges, claims and demands whatsoever that may at any time arise or be brought or made by any person against the Bank in respect of any acts, matters and things Suit No. 123 of 2012 Page No. 12 of 29 lawfully done or caused to be done by the Bank in connection with the Assets or in pursuance of the rights and power of the Bank under this Deed, Loan Terms and / or the other Transaction Documents."
21. Clause VI 9 of Credit Facility Application Form of Ex.PW1/3 read as under: "I/We acknowledge and agree that the grant of the Facility by ICICI Bank to me/us shall be subject to compliance by me/us of the Standard Terms and the terms and conditions set out under this Application Form (collectively, the "Loan Terms") as well as the Transaction Documents; (ii) All the terms and conditions set out in the Loan Terms shall govern and apply to the Facility and all my/our obligation (as well as ICICI Bank's rights and remedies) in relation thereto, if the Facility applied for by me/us herein is sanctioned and granted by ICICI Bank based on my/our application. I/We have fully understood and acknowledge the consequences of an Event of Default, as well ICICI Bank's rights and remedies thereupon, as set out under the Loan Terms."
22. Clause VI 16 of Credit Facility Application Form of Ex.PW1/3 read as under: "I/We acknowledge and confirm that all the Loan Terms shall be fully and completely binding on (and strictly complied with by) me/us in the event of this Application Form being accepted by ICICI Bank and /or the Facility (or any part thereof) applied for by me/us being sanctioned /granted/disbursed by ICICI Bank and/or the Product(s) being delivered to me/us pursuant to instructions/confirmation given by ICICI Bank to the manufacturer/dealer/seller specified hereinabove, without any requirement of any further/specific confirmation from ICICI Bank to me/us of such sanction/disbursement and that, in such event, the Loan Terms shall take effect and be binding with effect from the date of this Application Form. I/We further acknowledge and confirm that any delivery order or instructions or confirmation given by ICICI Bank to the manufacture/dealer/seller of the Product(s) of having approved the Facility and to deliver the Product(s) to me/us shall, where ICICI Bank has provided credit or has some other financial arrangement to/with such manufacturer/dealer/seller and notwithstanding that no monies have actually been paid to such manufacturer/dealer/seller, also constitute and be deemed as a disbursement of the Facility pursuant to this application submitted by me/us and that the Loan Terms shall be fully and completely binding on (and strictly complied with by) me/us upon such even also. Disbursement(s) made, at my/our request/instructions and behalf, to any person(s) shall be binding on Suit No. 123 of 2012 Page No. 13 of 29 me/us."
23. Now we shall examine the testimony of plaintiff witness PW1. In cross examination, PW1 has categorically denied the suggestion that the cover note dated 29.07.2007 Mark DW1/D was issued in respect of the vehicle in question, after loot/theft on the representation from Predecessorininterest that there would be an insurance policy, issued from bank. Further more the defendant as DW1 has been cross examined wherein he has deposed that he paid the insurance premium of Rs. 7,000/ at the instance of erstwhile bank ICICI. DW1 admitted that he was not given any receipt of the payment of Rs. 7,000/. He had also admitted that the date of insurance of cover note DW1/B is 29.07.2007 which is after the date 10.07.2007 of which the vehicle in question was stolen. He denied the suggestion that he got the cover notice Ex. DW1/B after the date of theft of vehicle in question and alleged manipulation upon issuance of duplicate cover note.
24. After duly considered the binding clauses of loan agreement in respect of the loan account of the defendant, the testimonies of the witness and the legal aspects, the court is of the considered view and there could not be issuance of any insurance policy which is claimed as Mark DW1/B on 29.07.2007 in respect of the vehicle in question. It is the case of the defendant himself that the vehicle in question was looted/stolen on 10.07.2007 and he had got the FIR of the same registered on 11.07.2007, copy of which is placed on record mark DW1/A. The claim about the insurance policy, prior to the date of theft or on the date of purchase of the vehicle which is 22.06.2007 is not proved. It is not Suit No. 123 of 2012 Page No. 14 of 29 shown or proved that mark DW1/B dated 29.07.2007 is only a duplicate cover note which was issued prior to theft of the vehicle in question. The deposition of DW1 that the original cover note was kept in the vehicle is not substantial by any reliable material or evidence. In any case, the defendant has not claimed any insurance cover from the alleged insurance company on the basis of alleged insurance policy. On the other hand, the defendant has tried to fasten the responsibility or liability of the insurance cover upon the creditor bank.
25. The claim and defence of the defendant is not proved or substantiated by evidence of the case or any applicable law. The reproduced terms of the loan agreement and hypothecation agreement in respect of the loan transaction in question clearly reflect the stipulation that active and constructive responsibility has been fastened upon the debtor/defendant to ensure the necessary insurance premium payment for safe and better keep of the care and custody of the vehicle in question. The defendant has not been able to pass on the liability upon the predecessorin interest of the plaintiff bank as regards the insurance of the vehicle, as a condition appended to or necessary for the finance of the vehicle in question in favour of the defendant. On the contrary, the convenience and clauses of the loan agreement pointed out towards the liability and responsibility of the defendant for getting the vehicle in question insured, not only for the first time but for every subsequent passing year. The issue is accordingly adjudicated against the defendant.
26. Issue no. 4: Whether the plaintiff is entitled to recover the suit Suit No. 123 of 2012 Page No. 15 of 29 amount with interest from the defendant?
OPP.
The present issue is the primary issue wherein the entitlement of the plaintiff for claimed recovery of money against the defendant shall be determined. The related concise evidence have been detailed hereinabove in the judgment and are only been repeated herein briefly for the purpose of clarity. It is stated that the plaintiff bank has the legal capacity to sue the defendant in respect of the loan account in question, on acquiring the rights, title and interest of the loan account of the defendant.
27. It is an admitted fact that defendant applied for a sum of Rs. 1,58,000/ on 06.07.007 with the erstwhile bank which was accepted that a loan agreement no. LADEL00010818590 dt. 06.07.2007 was entered upon between the predecessorin interest of plaintiff bank and the defendant. It is also duly brought on record, an admitted case as well as proved by reliable material in evidence that the vehicle Maruti Omni Van was purchased by the defendant vide registration no. DL2CAG8692, for which the loan was taken. Unfortunately, before expiration of even the first month of the purchase of the vehicle in question by the defendant, the same was stolen and the FIR in this regard at PS Highway Narholi, Mathura, U.P., is brought on record as Mark DW1/A and is not a challenged document. It is now the case of any of the parties that the vehicle in question was recovered at any point of time.
28. Admittedly again, the defendant has not paid any EMI which was payable in the sum of Rs. 4,446/ in 47 equated Suit No. 123 of 2012 Page No. 16 of 29 monthly installments w.e.f. 10.08.2007. It is the case put forth by the defendant that, on the date of due installment itself, his vehicle was stolen. The defendant has putforth a case that the vehicle in question was insured and the adjudication upon issue no. 3, hereinabove has dealt with by the court. Defendant has not been able to prove the liability of the plaintiff bank or its predecessorininterest to get the vehicle purchased by the defendant, insured. The cover note relied upon by the defendant claiming it to be a duplicate copy dated 29.07.2009 is not only an unproved document but does not stand on any legs as admittedly the vehicle in question was already stolen prior to 25.07.2007. The allegations of fraud, if any, against the alleged agents etc. do not form part of relevant pleadings for the purpose of this case. Therefore, as on record, the vehicle in question was uninsured and stolen within the first month of the acquisition of the defendant. It is now the case of the defendant that any installment of loan amount was ever paid by him after disbursement of the loan in his favour.
29. Amongst various preliminary objections in the written statement of defendant, the relevant and most important legal objection is pertaining to the applicability of 'Law of Limitation' on the claim of the plaintiff. The loan has been disbursed vide loan agreement dated 06.07.207 in the sum of Rs. 1,58,000/ for the purpose of the vehicle in question. Therefore, though it is the case of the defendant vide averments in the written statement and his evidence of affidavit Ex. DW1/A that he purchased the Omni Van in question on 22.06.2007 it could not be comprehended as to why he took the possession of the vehicle Suit No. 123 of 2012 Page No. 17 of 29 prior to 06.07.2007 when the substantial amount of loan was sanctioned by the erstwhile bank/ICICI Bank. Therefore, as per record the vehicle in question was released to the defendant on or after 06.07.2007, as far as physical possession thereof is concerned. It is the case of the plaintiff bank itself that the defendant was liable to pay the equated monthly installments in pursuance of the loan agreement dated 06.07.2007 w.e.f. 10.08.2007 for which the statement of account is tendered as Ex.PW1/8. As per the case of the plaintiff and supported by its witness, PW1, legal notice dated 28.06.2012 was issued upon the defendant, thereby informing about the foreclosure of the loan amount in question and placing a demand of Rs. 2,07,547/ vide notice dated 31.10.2009 tendered on record as Ex. PW1/8. Plaintiff has further proved that there was issuance of the loan account of the defendant from ICICI bank to ARCIL on 30.10.2008 and from ARCIL to the plaintiff bank on 31.12.2009. Deed of assignment in favour of the plaintiff bank is tendered as Ex. PW1/2. Thereafter demand notice has been issued by the plaintiff bank upon the defendant vide demand notice dated 28.06.2012 which is Ex. PW1/6 and this postal receipt is Ex. PW1/7. Thereafter the present suit has been filed against the defendant on 18.07.2012. This is the chronological series of relevant date for consideration of the aspect of applicable limitation on the claim of the plaintiff. After appreciating the entirety of facts of the case, contentions of the counsels and after appreciating the Law of Limitation to the facts of the case, the law that emerges as applicable and relevant is being discussed as under:
30. Let us understand the statutory provisions and their Suit No. 123 of 2012 Page No. 18 of 29 implications vizaviz Law of Limitation Act, 1963 by which it could be determined if the rights and claims of the plaintiff are legally claimable by operation of Law of Limitation. The Limitation Act prescribes the period within which existing rights can be enforced in a court of law. In other words, it believes that no unlimited period is to remain for any rights, title or interest for its adjudication by courts. In fact, the Act was passed with the intention of avoiding any uncertainty or anomaly with respect to limitation. The prescription is that a right, not exercised for a long time, is to be presumed a nonexistent right. The basic idea is that the law favours the diligent and not the indolent. Limitation is associated with litigation. It limits the time after which a suit or other proceeding cannot be maintained in a court of law. The act prescribes the period within which the proceedings are to be initiated and lays down the rules for computation of such period.
31. Let us examine the relevant provisions of the Limitation Act, 1963 by which it further lend clarity to the legal provisions in respect of the filing the suit and importance of the filing of the suit within the 'Prescribed Limitation': The statute does not create an obligation or a right to sue where none existed. It simply imposes a time limit to litigation. Section 3 of the act states "that every suit instituted, appeal preferred and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence".
However, under Section 5 of the Act, "an appeal or an application under any of the provisions of Order 21 of the CPC 1908 may be admitted after the prescribed period, if the applicant or the appellant satisfies the court that he had sufficient cause for Suit No. 123 of 2012 Page No. 19 of 29 not preferring the appeal or making the application within such period." The parties cannot, by agreement, extend or alter the period of limitation as laid down by law. Similarly, they also cannot waive limitation by agreement.
32. The effect of Period of Limitation on Documents Obtained by Banks can be understood as : "There is a legal relation between a document obtained by a banker and the Limitation Act. Once the period of limitation for a document has expired, the banker will have no legal recourse against the defaulting borrowers to recover his dues. In short, the period of limitation bars the legal remedy by way of a suit. It is, therefore, of paramount importance for bankers to keep the documents alive".
33. Section 9 of the Limitation Act, 1963 prescribes the Period of Limitation based upon the documents. It states: "It begins to run from the date of the document. Once the period of limitation has begun to run, no subsequent disability or inability to institute a suit or make an application stops it".
Example:
Suppose a DP Note was executed on 1.1.1996. The period of three years for initiating a suit on the note commenced to run from the date of the note and would expire on 1.1.1999.
34. The applicability of the statutory provisions of The Limitation Act, 1963 have been dealt with in detail by Hon'ble High Court of Karnataka in State Bank of India, Super Market Vs. Ravindra, 1999 (5) KarLJ 108. In the above cited case, a revision petition was filed by the bank against the judgment and decree of the court of Principal Civil Judge, Gulbarga wherein the Suit No. 123 of 2012 Page No. 20 of 29 suit of the plaintiff for recovery was dismissed/rejected, as barred by Limitation.
35. The law of Limitation was discussed at length specifically in regard to the loan agreement which are repayable by way of installments. It was the Hon'ble High Court examined the law of Limitation to consider the applicable law. It held that 'It would be appropriate to examine Articles 36 and 37 of the Limitation Act, 1963 and similar Articles i.e., Articles 74 and 75 of the Limitation Act, 1908. Article 36 of the Limitation Act, 1963 reads as under':
Article 36: On a promissory note or bond payable by installments.
Period of limitation Three years Time from which period begins to run The expiration of the first term of payment as to the part then payable; and for the other parts, the expiration of the respective terms of payment Article 74 of the Limitation Act, 1908 corresponds with Article 36, it reads as under:
Article 74: On a promissory note or bond payable by installments.
Period of limitation Three years Time from which period begins to run The expiration of the first term of payment as to the part then payable; and for the other parts, the expiration of the respective terms of payment. Article 37 of the Limitation Act, 1963 reads as under:
Article 37: On promissory note or bond payable by installments, which provides that; if default be made in payment of one or more installments the whole shall be due.
Period of limitation Three years Time from which period begins to run When the default is made, unless where the payee or obligee waives the benefit Suit No. 123 of 2012 Page No. 21 of 29 of the provision and then when fresh default is made in respect of which there is no such waiver.
Article 75 of the Limitation Act, 1908 corresponds with Article 37, it reads as under:
On a promissory note or bond payable by installments, which provides that, if a default be made in payment of one or more installments, the whole shall be due. Period of limitation Three years Time from which period begins to run When the default is made, unless where the payee or obligee waives the benefit of the provision, and then when fresh default is made in payment of which there is no such waiver.
The Hon'ble High Court duly considered various precedents applicable to the facts of that case and held that:
Articles 36 and 37 of the Limitation Act, 1963 bear the same distinctive position as do from Articles 74 and 75 of the Limitation Act, 1908. In other words, a case or suit based on promissory note or bond payable by installments simplicitor may be covered by Article 36 of the Limitation Act, 1963, but where the case is one, based on promissory note or bond payable by installments which promissory note or bond further provides that in case of default being made in the payment of one or more installments, the whole amount shall become due to such cases. Limitation of three years has to be counted as mentioned in column 3 to Article 37 viz., when the default is first made of the installment or installments as provided in the agreement, except in a case where obligee i.e., creditor has waived or waives his right to sue for whole amount, but in a case where the case is based on promissory note or bond payable in installments with no default clause no doubt Article 36 may apply and the creditor file the suit on default of payment of one or more installments, for money under those installments or installment of which default is committed.Suit No. 123 of 2012 Page No. 22 of 29
36. The remaining facts and outcome of the cited evidence is not applicable to the present case as in the cited case there was a clause that 'on default' of one or more installments, the entire amount shall become due on default. Hence, the dismissal/rejection of the whole suit of the bank was upheld and the revision petition is dismissed. We shall accordingly apply "ratio" of the case to understand the applicable law to the facts of the present case. After careful apprehension of the terms and conditions of the loan agreement Ex. PW1/3 and Ex. PW1/4, it is clear that it was stipulated by the said agreement dated 06.07.2007 that a loan of Rs. 1,58,000/ was disbursed to the defendant which was payable in the 47 equated monthly installments of Rs. 4446/, first beginning w.e.f. 10.08.2008. The statement of accounts relied upon by the plaintiff bank is a copy of digital statement and the extent of proof of the same, though not admitted, is only relevant to appreciate that the defendant has not paid even a single installment against the loan in question. Therefore, it is imperative and crystal clear that the defendant continued to default the repayment of the installments w.e.f. 10.08.2008 and never paid any installment. The erstwhile bank is the predecessorininterest of the plaintiff bank continued to sleep over the liability by mere maintaining an account upto 10.10.2009 and apparently woke up to foreclose the loan account by alleged demand notice dated 31.10.2009 which is placed on record Ex. PW1/8 but is proved to have been served upon the defendant. There is no stipulation in the loan agreement in question about the foreclosure of the account after any specific number of defaults and the plaintiff bank only reserved its rights to enforce the remedied available to it, as set out under the loan terms. As Suit No. 123 of 2012 Page No. 23 of 29 already discussed, there is no stipulated term under the loan agreement upon which the bank was required to foreclose the amount.
37. The name and terms "foreclosure charges" probably have been only broughtforth to give an impression that the Limitation in the present case would run according to the "Law of Foreclosure or mortgaged". However Part V of the Limitation Act, 1963 only deals that suit relating to immovable properties and shall not cover the present case.
38. It is a proved case that there is no demand or claim by the predecessorininterest of the plaintiff bank within the period of 3 years from the date of first default which was on 10.07.2008. The present suit has been filed on 18.07.20012 which is clearly beyond the stipulated period of 3 years of Limitation from the defaulted installment. The computation of period of 3 years from the date of filing the suit on 18.07.20012 will relate back to un paid equated monthly installments, as on 10.08.2009. All installments payable by the defendant under the loan agreement in question which are prior to 18.07.2009 shall be "barred by limitation". As discussed, hereinabove, the present suit is based upon the loan amount agreement wherein the amount was repayable by installments and such case shall be covered within the meaning and purpose of Article 36 of Limitation Act, 1963. The period of limitation stipulated under Article 36 of Limitation Act, 1963 is "3 yrs" and the time from which the Limitation period begins to run is The expiration of the first term of payment as to the part then payable; and for the other parts, the expiration of the Suit No. 123 of 2012 Page No. 24 of 29 respective terms of payment.
39. Now, let us examine the entitlement of the plaintiff to recover all or some of the installments, due and payable by the defendant under the loan agreement in question. It has already been determined that the defendant was absolutely liable to ensure that the vehicle in question was duly ensured and kept in his proper care and custody as the same was the bread earner for the defendant and the loan thereof was entirely at the risk and costs of the defendant. As is the case of the defendant, the vehicle in question was stolen on 10.07.2008. Thereafter the question of repossession of the vehicle in question in favour of the plaintiff did not arise and was not pressed upon as the alleged stolen vehicle was never recovered, as is the case before the court. Therefore, the only option available with the plaintiff bank was to press over the recovery of money in the loan agreement in question.
40. As per law discussed above, the demand note Ex. PW1/A dated 31.10.2009 issued by erstwhile bank or subsequent legal notice dated 28.06.2012 Ex. PW1/6 by plaintiff bank upon the defendant shall not entitled the plaintiff to recover what was subsequently "barred by limitation". Accordingly, the relevance of loan account statement of the plaintiff also looses its value as only part of the relief claimed as recoverable against the defendant, as per law.
41. The defendant has not whether denied his liability against the loan agreement in question and has not claimed Suit No. 123 of 2012 Page No. 25 of 29 repayment of any of the installments. The plaintiff has been able to discharge the onus about its entitlement to recover the loan amount disbursed through the defendant albeit subject to liability of limitation. It is already determined that the plaintiff bank has acquired the right to sue against the defendant by way of legal deeds of assignment in its favour which are complete in its chain pleadings upto discharging erstwhile ICICI Bank.
42. In view of the aforegoing reasons, facts and circumstances, the plaintiff bank is entitled to recover the equated monthly installments of Rs. 4,446/ each w.e.f. 10.08.2009 till the last due installment for a sum of Rs. 4,446/ which is recoverable, as per law of limitation became due and payable by the defendant on 10.08.2009. There were only 23 unpaid installments thereafter including the monthly installment that fell due and payable upon the defendant on 10.08.2009. The remaining 24 monthly installments from 10.08.2007 to 10.07.2009 are not recoverable against the defendant, due to expiration of the limitation of period of recovery of 3 years as per Article 36 of the Limitation Act, 1963, which has been discussed at length in this issue. Therefore, the plaintiff shall have right to recover an amount equivalent to 23 monthly installments which were payable by the defendant from 10.08.2009. Accordingly, plaintiff is entitled to recover a sum of Rs. 1,02,258/ which is computed after calculating 23 equated monthly installments @ Rs. 4,446/. It is pertinent to observe that the recoverable outstanding dues against the defendant are inclusive to the interest component, as per the mutual agreement and terms and conditions of the loan account of the defendant. Hence, plaintiff shall be entitled to Suit No. 123 of 2012 Page No. 26 of 29 recover a sum of Rs. 1,02,258/ from the defendant along with interest @ 9% p.a. from the date of filing the suit till the date of realization. As such, plaintiff is entitled to recover a sum of Rs. 1,02,258/ (Rs. 4,446 X 23) from the defendant which is the (Principal component and the interest component), as per norms and rules followed in Banking business and practices.
43. Relief.
In view of the aforesaid facts and law, suit of the plaintiff is decreed for a sum of Rs. 1,02,258/ against the defendant. Plaintiff shall also be entitled to recover interest @ 9% from the date of filing the suit till date of realization.
Plaintiff shall also be entitled to half costs from the defendant.
Decreesheet be prepared accordingly.
File be consigned to Record Room.
Announced in the open court on 07th May, 2015 (Preeti Agrawal Gupta) Addl. District Judge (Central)10 Delhi Suit No. 123 of 2012 Page No. 27 of 29