Bangalore District Court
Bank Of Baroda A Body Corporate vs M/S. Banashri Creative on 29 September, 2022
1
Com. O.S.No.840/2022
IN THE COURT OF THE LXXXVIII ADDL. CITY CIVIL &
SESSIONS JUDGE (EXCLUSIVE COMMERCIAL COURT):
BENGALURU CITY. (CCH-89)
Present: Sri. P.J. SOMASHEKARA, B.A.,LL.M,
LXXXVIII Addl.City Civil & Sessions Judge
Bengaluru City.
Dated this the 29th day of September 2022
Com.O.S.No.840/2022
Plaintiff: Bank of Baroda A Body Corporate
constituted and under the Banking
Companies (Acquisition & Transfer of
Undertakings) Act -V of 1970, having
Its Head Office at Mandvi, Baroda
In Gujarat State and one of its Branch
Offices amongst other places at
Banashankari Branch, No.6 & 7, 80
Feet Road, Opp. Srinivasanagar
Bus Stop, BSK I Stage,
Bengaluru-560 050,
Represented by its Chief Manager,
Mrs. Meera S.N., W/o. Anantharam,
Aged about 49 years.
(By Sri.R.R.M., Advocate)
-vs-
Defendant: 1. M/s. Banashri Creative
Software Pvt. Ltd.,
A Company registered Under
Companies Act, Represented
By its directors, Mr. Krishna Hiriyur
2
Com. O.S.No.840/2022
& Mrs. Jayashri Shankar
Having its office at
Flat No. T-3, 3rd Floor,
'Varaha Residency',
Nar Nargund International School,
Hosakerehalli, Banashankari 3rd
Stage, Bengaluru-560 085.
2. Mr. Krishna Hiriyur,
S/o. Mr. Uma Shankar,
Aged about 39 years,
Director of M/s. Banashri Creative
Software Pvt.Ltd., No. 383, 24th 'B'
Cross, 9th Main Road,
Banashankari 2nd Stage,
Bengaluru-560 070
3. Mrs. Jayashri Shankar,
W/o. Mr.Uma Shankar,
Aged about 72 years,
Director of M/s. Banashri Creative
Software Pvt. Ltd., No.383, 24th 'B'
Cross, 9th Main Road, Banashankari
2nd Stage, Bengaluru-560 070
(Exparte)
Nature of the suit Money suit
Date of institution of the 14.06.2022
suit
Date of commencement of 12.09.2022
recording of the evidence
Date on which the 29.09.2022
judgment was pronounced
Total duration Year/s Month/s Day/s
00 03 25
3
Com. O.S.No.840/2022
JUDGMENT
This is a suit filed by the plaintiff bank against the defendants for recovery of Rs.5,89,530/- along with interest at the rate of 14.50% p.a. with monthly rest from the date of the suit till its realization.
2. Nutshell of the plaintiff case are as under:
The plaintiff bank in its plaint has alleged that the defendant No.1 is the borrower, a private limited company registered under the companies Act, represented by its Directoors, Mr.Krishna Hiriyur and Mrs. Jayashri Shankar. The defendant No.2 and 3 who are the guarantors. The defendant No.1 approached with a request to sanction facility for availing a cash credit facility for doing its business for Rs.3,00,000/-.
considering the request which made by the defendant No.1, sanctioned a cash credit facility for Rs.3,00,000/- and other facility mentioned therein. The sanctioned terms and conditions has been duly executed by the defendants. The defendant No.1 had availed cash credit facility of Rs.3,00,000/- and agreed to repay the loan with interest @ 12% p.a. with monthly rest in its favour and executed DP note, letter of continuing security, composite hypothecation agreement and declaration cum 4 Com. O.S.No.840/2022 undertaking cum authority on 26.10.2010. The defendant No.2 and 3 were stood as guarantors for the loan which availed by the defendant No.1 by agreeing to repay the cash credit facility. The defendant No.2 and 3 have executed a general form of guarantee on 26.10.2010 in its favour guaranteeing the due repayment and discharge of demand of amounts due and payable by the defendant No.1. The defendant No.1 was permitted to utilize the cash credit for its business towards working capital to show turnover in the account with regular servicing as interest. The facilities has been sanctioned subject to annual review through the cash credit account. But the defendants had not regularized by paying the interest, thereafter failed to repay cash credit loan amount which borrowed, at the request of the defendant No.1 sanctioned and extended cash credit facility of Rs.2,00,000/- on 08.09.2011 through the cash credit account. The defendant No.1 had availed a cash credit facility for Rs.2,00,000/- and agreed to repay the said loan with interest @ 14.25% p.a. with monthly rest.
The plaintiff bank in its plaint has further alleged the defendant No.1 has executed DP note, letter of continuing security, composite hypothecation agreement declaration cum undertaking cum authority on 08.09.2011. In spite of repeated 5 Com. O.S.No.840/2022 request demand and personal approaches by its officers, the defendants failed to clear off the entire dues and defendant No.2 and 3 were approached on 02.12.2013, 25.11.2016 and 13.09.2019 and executed letter of acknowledgment of debt dated 02.12.2013, 25.11.2016 and 13.09.2019 and acknowledged their loiabilities towards the cash credit amount. The defendants in spite of repeated request and demand they did not come forward to pay the due amount. Thereby, cash credit account of the defendants has been classified as NPA as the defendants are defaulters, thus legal notice got issued on 08.11.2021 calling upon the defendants to pay the entire outstanding due amount with interest and the legal notice has been served on the defendants but they did not come forward to clear the due amount. Now, the defendants are due a sum of Rs.5,89,530/-. The defendants were also liable to pay 2% penal interest p.a.. When the defendants did not pay the due amount thereby, proceedings has been initiated against the defendants before the DLSA Urban, notice has been issued but the matter has not been settled. Thus non starter report has been issued on 15.03.2022. The cause of action for the suit which arose on 21.10.2010 when the defendants got sanctioned on 26.10.2020 had availed and 6 Com. O.S.No.840/2022 cash credit facility and executed the necessary documents in its favour on 05.09.2011 when the defendants got sanctioned extended and on 08.09.2011, on 02.12.2013, 25.11.2016 and 13.09.2019 when the defendant executed a letter of acknowledgment of debt and when the notice got issued to the defendants on 08.11.2021 and on 29.01.2022 when the non starter report has been issued by the DLSA within the jurisdiction of this court and prays for decree the suit.
3. In response of the suit summons the defendants did not appear nor filed their written statement as they were placed exparte.
4. The plaintiff bank in order to prove the plaint averments has examined its Assistant Manager as PW.1 and got marked the documents as Ex.P.1 to Ex.P.21 and the plaintiff bank has not examined any witness in its favour.
5. Heard the arguments on the plaintiff side.
6. The points that arise for court consideration are as under:
1. Whether the plaintiff bank is entitled for the relief as prayed for?
2. What order or decree?
7. My answer to the above points are as under: 7
Com. O.S.No.840/2022 Point No.1: In the Affirmative;
Point No.2: As per final order, for the following;
REASONS
8. POINT NO.1: The plaintiff bank has approached the court on the ground that the defendant No.1 being the company represented by its director approached the bank and availed cash credit facility of Rs.3,00,000/- on 21.10.2010 by agreeing to repay the loan amount of Rs.3,00,000/- with interest @ 12% on monthly installment and also availed a cash credit facility of Rs.2,00,000/- on 05.09.2011 by agreeing to repay the said loan amount with interest @ 14.25% p.a. with monthly rest and defendant No.2 and 3 were stood as guarantors to the loan which availed by the defendant No.1 and executed the documents but they did not repay the loan amount with interest as agreed in spite of repeated request and demand. Thereby the plaintiff bank has filed the instant suit against the defendants.
9. The plaintiff bank in-order to prove the plaint averments has examined its Assistant Manager as PW.1 who filed his affidavit as his chief-examination by reiterating the plaint averments stating that the defendant No.1 was approached the bank for financial assistance of Rs.3,00,000/- under cash credit facilities for its business purpose and loan of Rs.3,00,000/- has 8 Com. O.S.No.840/2022 been sanctioned. Same was intimated to the defendant No.1 and defendant No.2 and 3 were stood as guarantors and executed the documents and defendant No.1 again availed cash credit facility of Rs.2,00,000/- for its business purpose and defendant No.2 and 3 were stood as guarantors and executed the documents by agreeing to repay the loan amount with interest but they did not keep up their promise as agreed in spite of repeated request and demand, thereby, legal notice has been issued to the defendants to calling upon them to repay the loan amount with interest but they did not do so. Thereby, loan account of the defendant No.1 has been classified as NPA and proceedings has been initiated against the defendants before the DLSA Urban but the matter has not been settled, non starter report has been issued. Now, the defendants are due a sum of Rs.5,89,530/- with 9 Com. O.S.No.840/2022 interest. Thereby, the plaintiff bank is filed the instant suit against the defendants.
10. It is an admitted fact the plaintiff bank has filed the instant suit against the defendants for recovery of Rs.5,89,530/- with interest @ 14.50% p.a. with monthly rest on the ground that the defendant No.1 availed the loan for its business purpose but did not keep up the promise as agreed. Now, the question arises whether this court having the jurisdiction to adjudicate the matter which is dispute and whether this court having the pecuniary jurisdiction, though there is no dispute on these aspects. But, before considering the other aspects it is necessary to consider these aspects. Thus, this court drawn its attention on Sec.2(i)(c) of Commercial Courts Act, 2015 which reads like this:
(c) "commercial dispute" means a dispute arising out of-
(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, 10 Com. O.S.No.840/2022 aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or commerce;
(viii) franchising agreements;
(ix) distribution and licensing agreements; (x) management and consultancy agreements; (xi) joint venture agreements; (xii) shareholders agreements; (xiii) subscription and investment
agreements pertaining to the services industry including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage;
(xv) partnership agreements;
(xvi) technology development agreements;
(xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications 11 Com. O.S.No.840/2022 and semiconductor integrated circuits; (xviii) agreements for sale of goods or provision of services;
(xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;
(xx) insurance and re-insurance; (xxi) contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.
11. The provision under Sec.2(c)(i) which referred above is very much clear the first category which referred above, includes disputes of ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents including enforcement and interpretation of such documents. The definition naturally will cover the dispute of all kinds of ordinary transactions of merchants, bankers, financiers and traders. The banks are established under Banking Regulation Act for the purpose of business and commerce, naturally all transaction of bank about giving of loans, recovery thereof, deposits in banks etc., should fall within the category of commercial dispute. If the specified value there of is more than 12 Com. O.S.No.840/2022 Rs.3,00,000/-. So the facts which pleaded in the plaint comes under the commercial dispute.
12. Now the question is whether the dispute which stated supra comes under the jurisdiction of commercial court. Thus, this court drawn its attention on Sec.6 of Commercial Courts Act, 2015 which reads like this:
Section 6: Jurisdiction of Commercial Court.
6. The Commercial Court shall have jurisdiction to try all suits and applications relating to a commercial dispute of a Specified Value arising out of the entire territory of the State over which it has been vested territorial jurisdiction.
Explanation.-For the purposes of this section, a commercial dispute shall be considered to arise out of the entire territory of the State over which a Commercial Court has been vested jurisdiction, if the suit or application relating to such commercial dispute has been instituted as per the provisions of sections 16 to 20 of the Code of Civil Procedure, 1908 (5 of 1908).
The above provision is very much clear that the commercial court shall have the jurisdiction to try all suits and applications relating to commercial dispute.
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Com. O.S.No.840/2022
13. Now, the question is whether this court having the pecuniary jurisdiction to adjudicate the matter which is in dispute. Thus, this court drawn its attention on Sec.3 of Commercial Courts Act, 2015 which reads like this:
Section 3: Constitution of Commercial Courts.
3. (1) The State Government, may after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under this Act:
2[Provided that with respect to the High Courts having ordinary original civil jurisdiction, the State Government may, after consultation with the concerned High Court, by notification, constitute Commercial Courts at the District Judge level:
Provided further that with respect to a territory over which the High Courts have ordinary original civil jurisdiction, the State Government may, by notification, specify such pecuniary value which shall not be less than three lakh rupees and not more than the pecuniary jurisdiction exercisable by the District Courts, as it may consider necessary.] 14 Com. O.S.No.840/2022 3[(1A) Notwithstanding anything contained in this Act, the State Government may, after consultation with the concerned High Court, by notification, specify such pecuniary value which shall not be less than three lakh rupees or such higher value, for whole or part of the State, as it may consider necessary.] The above provision is very much clear that by virtue of the notification specified the pecuniary value of this court which shall not be less than Rs.3,00,000/- Admittedly, the plaintiff in the plaint itself has stated that the defendants are due a sum of Rs.5,89,530/- with interest and the plaintiff bank has filed the instant suit against the defendant on 14.06.2022 i.e. after the amendment of Commercial Courts Act, 2018. Prior to the amendment, the pecuniary jurisdiction of the commercial court is of Rs.1 Crore and above, but by virtue of the amendment of Commercial Courts Act, the pecuniary jurisdiction of the commercial court shall not be less than Rs.3,00,000/-. So this court having the pecuniary jurisdiction to adjudicate the matter which is in dispute by virtue of the provisions which stated supra.
14. The plaintiff bank in support of the oral evidence has produced the documents which are marked as Ex.P.1 to Ex.P.21. 15
Com. O.S.No.840/2022 Ex.P.1 is the sanction letter reflects the plaintiff bank sanctioned cash credit loan of Rs.3,00,000/- and term loan of Rs. 6,50,000/- in total 9,50,000/-. Ex.P.2 is on demand promissory note reflects the plaintiff bank sanctioned the loan of Rs.3,00,000/- for which the defendant No. , 2 and 3 have executed the DP note in favour of the plaintiff bank. Ex.P.3 is the letter of continuing security towards cash credit loan of Rs.3,00,000 which executed by the defendant No.2 and 3. Ex.P.4 is the composite hypothecation agreement which executed by the defendant No.2 and 3 in favour of the plaintiff bank. Ex.P.5 is the declaration cum undertaking cum authority which executed by the defendant No.2 and 3 in favour of the plaintiff bank. Ex.P.7 is the sanction letter relating to cash credit limit of Rs.2,00,000/- which sanctioned by the plaintiff bank. Ex.P.8 is the DP note which executed by the defendant No.2 and 3 in favour of the plaintiff bank towards cash credit facility of Rs.2,00,000/-. Ex.P.9 is the letter of continuing security which executed by the defendant No.2 and 3 in favour of the plaintiff bank. Ex.P.10 is the composite hypothecation agreement relating to Rs.2,00,000/- which sanctioned by the plaintiff bank. Ex.P.11 is the declaration cum undertaking cum authority which executed by the defendant No.2 and 3 in favouu 16 Com. O.S.No.840/2022 of the plaintiff bank. Ex.P.12 is the letter of acknowledgment on debt dated 02.12.2013 and 25.11.2016 which reflects the defendants were admitted their liability and the debt. Ex.P.14 is the letter of acknowledgment on debt dated 13.09.2019 reflects the defendant No.2 and 3 have executed the acknowledgment of debt in favour of the plaintiff bank. Ex.P.15 to Ex.P.19(a) are reflects the plaintiff bank got issued the legal notice through RPAD calling upon the defendants for payment of the due amount with interest. Ex.P.20 and 21 are reflects the defendants are due to the plaintiff bank as on the date of filing of the suit of Rs.5,89,530/-. So, the documents which are marked as Ex.P.1 to Ex.P.21 are coupled with oral evidence of the PW.1.
15. If at all the defendant No.1 was not approached the bank nor availed the loan of Rs.3,00,000/- and 2,00,000/- under cash credit facility for its business purpose and defendant No.2 and 3 were not stood as guarantors for the loan which availed by the defendant No.1 nor executed the documents in favour of the plaintiff bank in response of the suit summons, the defendants would have appeared and resisted the claim of the plaintiff bank. But the reasons best known to the defendants in spite of service of summons they did not appeared nor resisted the claim of the 17 Com. O.S.No.840/2022 plaintiff bank. So, the contents of the plaint and documents which are marked as Ex.P.1 to Ex.P.21 are remained unchallenged. Hence, I am of the opinion that the point No.1 is answered in the Affirmative.
16. POINT NO.2: In view of my answer to point No.1 as stated above, I proceed to pass the following;
ORDER The suit of the plaintiff bank is decreed with costs.
The defendants are hereby directed to pay a decreetal amount of Rs.5,89,530/- with interest @ 14.50% p.a. with monthly rest from the date of the suit till its realization.
Draw decree accordingly.
(Dictated to the Stenographer, transcript thereof corrected by me and then pronounced in the open court on this the 29th day of September, 2022) (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City 18 Com. O.S.No.840/2022 List of witnesses examined on behalf of plaintiff:
P.W.1 Sri.Surya Kiran List of witnesses examined on behalf of defendant:
Nil List of documents exhibited on behalf of plaintiff:
Ex.P.1 Sanction letter dt:21.10.2010 Ex.P.2 DP note dt:26.10.2010 Ex.P.3 Letter of continuing security dt:26.10.2010 Ex.P.4 Composite hypothecation agreement dt:26.10.2010 Ex.P.5 Declaration cum undertaking cum authority dt:26.10.2010 Ex.P.6 General form of guarantee dt:26.10.2010 Ex.P.7 Sanction letter dt:05.09.2011 Ex.P.8 DP note dt:08.09.2011 Ex.P.9 Letter of continuing security dt:08.09.2011 Ex.P.10 Composite hypothecation agreement dt:08.09.2011 Ex.P.11 Declaration cum undertaking cum authority dt:08.09.2011 Ex.P.12 Letter of acknowledgment of debt 19 Com. O.S.No.840/2022 dt:02.12.2013 Ex.P.13 Letter of acknowledgment of debt dt:25.11.2016 Ex.P.14 Letter of acknowledgment of debt dt:13.09.2019 Ex.P.15 Copy of the legal notice dt:08.11.2021 Ex.P.16 Postal receipts in 3 Nos. Ex.P.17 Postal track consignment containing 3 pages Ex.P.18 Unserved envelope cover(opened in the open Court) Ex.P.18(a) Copy of the notice Ex.P.19 Unserved envelope cover(opened in the open Court) Ex.P.19(a) Copy of the notice Ex.P.20 Statement of accounts with certificate Ex.P.21 Affidavit filed U/Sec.65(B)(IV) of Evidence Act List of documents exhibited on behalf of defendant:
Nil (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City 20 Com. O.S.No.840/2022 Judgment pronounced in the open court, vide separate;
ORDER The suit of the plaintiff bank is decreed with costs.
The defendants are hereby directed to pay a decreetal amount of Rs.5,89,530/-
with interest @ 14.50% p.a. with monthly rest from the date of the suit till its realization.
Draw decree accordingly.
(P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City