Delhi District Court
Bank Of Baroda vs Mrs. Saroj Rani on 9 July, 2024
IN THE COURT OF MR. ANIL KUMAR SISODIA: DISTRICT
JUDGE (COMMERCIAL COURT)-04,CENTRAL, TIS
HAZARI COURTS, DELHI
CS (Comm.) No. 1281/2022
BANK OF BARODA
Head Office at:
Baroda Bhavan, R.C. Dutt Road,
Alkapuri, Baroda-390007
Branch Office at:
3631, Netaji Subhash Marg,
Daryaganj, New Delhi-110002 ....PLAINTIFF
Versus
1. MRS. SAROJ RANI
W/o Mr. Raj Kumar
2. MR. VIVEK
S/o Mr. Raj Kumar
Both Residents of:
T-13, Mool Chand Colony,
Adarsh Nagar,
Delhi-110033
CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 1/30
Also at:
1433, Second floor,
Shora Kothi, Subzi Mandi,
Delhi-110007
Also At:
1381/A, Gali no.5,
Jain Nagar, Delhi-110085
Also At:
A-6, Christian Colony,
Patel Chest, Delhi-110007
Also At:
H.NO. 2507, 3rd floor,
Punjabi Basti, Malka Ganj,
Delhi-110007 ....DEFENDANTS
Date of filing of the suit : 20.05.2022
Date of reserving judgment : 08.07.2024
Date of judgment : 09.07.2024
JUDGMENT
1. This is a suit for recovery of Rs.15,37,889.97/- along with pendente lite & future interest against the defendants.
CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 2/30Plaintiff's case
2. The plaintiff is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970. It is stated that erstwhile Dena Bank was amalgamated with Bank of Baroda w.e.f. 01.04.2019 vide amalgamation scheme dated 02.01.2019 and all the liabilities and assets of Dena Bank were acquired by Bank of Baroda, hence, the present suit is filed by the plaintiff i.e. Bank of Baroda.
3. It is averred in the plaint that on 23.05.2015 the defendants approached the plaintiff bank for Housing Loan and applied under Dena Niwas Housing Finance Scheme. On 13.08.2015 the plaintiff bank accepted the request and sanctioned term loan of Rs.48,00,000/- under Dena Niwas Scheme. The residential property consisting entire 3 rd floor (with roof rights) situated at Municipal no.7823/5, Abdul Hassan Mola Baksh Building, Roshnara Road, Delhi-110007, ad measuring 97 sq.yards was mortgaged by the defendants with the plaintiff bank as primary security of the said housing loan. The rate of interest was agreed at 10% per annum and additional interest @ 2% on the amount in default from the date of default. Defendants duly accepted all the terms and CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 3/30 conditions of sanction letter dated 13.08.2015 and executed various loan documents on 14.08.2015. The housing loan was disbursed by the plaintiff bank on 24.08.2015 and the residential property situated at Municipal No.7823/5, Abdul Hassan Mola Baksh Building, Roshnara Road, Delhi was purchased by defendant no.1 on 24.08.2015 which was mortgaged with the plaintiff bank as primary security of the said Housing loan. After execution of sale deed, defendants executed the documents in favour of the plaintiff bank i.e. declaration creating equitable mortgage by deposit of title deed, indemnity bond, power of attorney, undertaking and affidavit all dated 01.09.2015. Defendants also executed acknowledgment of debt dated 13.08.2018 in favour of the plaintiff bank.
4. It is stated that the plaintiff bank was maintaining the books of accounts of defendants in due course and initially defendants were regular in maintaining their loan account but thereafter they grossly violated the terms and conditions and huge outstanding amount became due and payable by them. Finally the said account bearing no.08240600011488 (old No.016051021427) became NPA on 01.12.2019. Therefore, plaintiff bank was constrained to initiate legal action against the defendants under SARFAESI Act and duly sent notice u/s CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 4/30 13(2) of SARFAESI Act on 06.12.2019 by post.
5. It is stated that on 19.02.2020 the brother of the defendant no.1 approached the plaintiff and deposited a sum of Rs.10,000/- in loan account of defendants and assured to make the remaining payment by 24.02.2020 but despite assurances, no outstanding amount was deposited by the defendants. In these circumstances, the plaintiff was constrained to take further action against the defendants under SARFAESI Act and got the possession notice dated 18.12.2020 published in two newspapers dated 20.12.2020 and possession of the mortgaged property was taken on 02.03.2021. The inventory and punchnama was prepared on 02.03.2021 in the presence of brother of defendant no.1. Thereafter sale notice dated 22.03.2021 was got published in two newspaper dated 23.03.2021 and after publishing the corrigendum dated 24.03.2021 of sale notice, the plaintiff bank sold the mortgaged property to one Mrs. Harmeet Kaur in auction for Rs.30,10,000/- and issued possession receipt and sale certificate both dated 25.05.2021 in favour of Mrs. Harmeet Kaur.
6. It is further stated that the defendants were regularly reminded by the plaintiff bank to clear their outstanding dues CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 5/30 but when the defendants failed to clear the outstanding amount, the plaintiff approached DLSA Mediation Centre and filed pre institution mediation application but defendants did not attend the mediation proceedings even after service of notice. It is further stated that defendants are liable to pay sum of Rs.15,37,889.97 along with pendente lite and future interest @ 8.40% per annum besides penal interest @ 2% till the date of payment of the entire sum. Finding no other alternative, the plaintiff has filed the present suit against the defendants.
Defendants' case
7. In the written statement the defendants have taken preliminary objections that the present suit is not in accordance with the provisions of Commercial Courts Act. There is no cause of action for filing the present suit. Sh. A.K.Pathak, Chief Manager has no valid authorization in his favour to file and verify the present suit. Plaintiff has suppressed material facts and the suit is liable to be dismissed. The plaintiff bank auctioned the mortgage property illegally at a very lower rate in collusion with the bidder of auction property. It is stated that the defendants were sanctioned loan of Rs.48,00,000/- and the defendants have already paid Rs.38,00,000/- to the plaintiff and plaintiff further auctioned the mortgaged property for a sum of CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 6/30 Rs.30,00,000/- and thus plaintiff bank has received Rs.68,00,000/- on account of sanctioned loan of Rs.48,00,000/- and the present suit for recovery of Rs.15,37,889.97/- is malafide.
8. Defendants also made preliminary submissions that defendant no.1 is a government employee and due to marriage of her daughter and her illness, she was in severe financial hardship and was unable to pay the EMIs to the plaintiff bank. Defendant no.2 had an Ertiga car which was running on contract but after completion of the contract, defendant no.2 could not earn any thing constantly and defendant no.2 informed the officials of plaintiff bank and sought time but bank officials declined the same. It was further stated that the account statement shows that defendants had paid EMIs to the tune of Rs. 34,08,703/- out of the loan amount of Rs.48,00,000/-. The plaintiff bank malafidely started NPA proceedings and the loan account of defendants was classified as NPA on 31.03.2018. It is stated that after the account was declared NPA, defendant made payment of Rs. 1 lakh on 27.06.2018, Rs. 4,12,874/- was transferred as per MOC in the loan account and on 16.07.2018 defendant again made payment of Rs. 70,000/- to the plaintiff bank. The plaintiff bank charged higher rate of interest instead of contractual interest. It was CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 7/30 further stated that defendant was never served with the notice u/s 13 (2) SARFAESI Act nor any other notice for taking possession of the premises except notice dated 14.09.2018 which was affixed on the premises and came to the knowledge of defendant through her tenant. It is further stated that due to her illness plaintiff was not able to visit the bank and she sent her brother Joginder Singh to inquire about the notice dated 14.09.2018 but the bank officials refused to help him. It is further stated that defendant submitted Rs. 8 lakhs to the plaintiff in Darya Ganj Branch on 05.10.2018 and requested the Branch Manager to stop the illegal proceedings of taking possession of mortgaged property and selling out the same but the plaintiff bank never considered the request of the defendant. It is further stated that the auction of the mortgaged property was also illegal and arbitrary whereas the rate of property was around Rs. 80 lakhs. It is further stated that mere breach of EMIs due to financial constraint the defendant was not merely forced to loose her dream of residence despite paying major part of the loan. It was also stated that plaintiff bank did not serve any notice u/s 13 (2) and 13(4) of SARFAESI Act and defendant bank was not authorized to initiate any proceeding u/s 14 of the Act. It was further stated that defendants are not willful defaulters and the plaintiff bank has malafidely sold the property of the defendant which was more than Rs. 80 lakhs.
CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 8/30The suit of the plaintiff is barred u/s 53 A of the Transfer of Property Act. It is further stated that the plaintiff bank officials cheated, manipulated and breached the trust of defendant on various occasions.
9. On merits the contents of the plaint have been denied and it has been submitted that defendants were made to sign on blank pages and the said contract is void. All other contents of the plaint has been denied and a prayer has been made for dismissal of the plaint with cost.
10. Plaintiff has filed replication to the written statement of the defendants wherein the contents of the WS has been denied and the facts stated in the plaint have been reiterated.
Issues
11. After completion of pleadings, the following issues were framed on 02.01.2023 :-
1. Whether the plaintiff has concealed the material facts and not approached the court with clean hands as alleged by the defendant?
(OPD) CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 9/30
2. Whether the plaintiff is entitled for recovery of the decreetal amount, as prayed for ?(OPP)
3. Whether the plaintiff is entitled for the interest, if any. If so, at what rate and for which period?(OPP)
4. Relief.
Plaintiff's Evidence
12. Plaintiff examined Sh. A.K. Pathak, Chief Manager as PW-1. PW-1 filed affidavit by way of evidence Ex.PW-1/A and relied upon the following documents Ex.PW-1/1 to PW-1/12.
DOCUMENTS RELIED UPON BY THE PLAINTIFF:
Sr. No. Document Exhibit
1 Printout of Amalgamation Scheme of Mark A
Dena Bank
2 General Power of attorney PW-1/1
(OSR)
3 Loan application dated 23.05.2015 PW-1/2
4 KYC documents of the defendants Mark B
5 Sanction letter PW-1/3
6 Loan documents i.e. request for PW-1/4
disbursement of house loan, Dena
CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 10/30
Niwas Loan agreement, letter of
general lien and set off for borrowing
arrangements from the borrowers,
demand promissory note,
authorization letter for deduction of
monthly interest/EMI and declaration
in respect of the pending court cases.
7 Sale deed dated 24.08.2015 Mark C
8 Declaration creating equitable PW-1/5
mortgage by deposit of title deed,
indemnity bond, power of attorney,
undertaking and affidavit.
9 Acknowledgment of debt PW-1/6
10 Copy of notice u/s 13(2) of the PW-1/7
SARFAESI Act along with postal
receipts
11 Request letter dated 19.02.2020 PW-1/8
12 Copy of possession notice dated PW-1/9
18.12.2020, original paper
publication of possession notice
dated 20.12.2020, inventory and
panchnama dated 02.03.2021, paper
publication of sale notice dated
23.03.2021, corrigendum dated
24.03.2021 of sale notice, possession
receipt dated 25.05.2021 and sale
certificate dated 25.05.2021
13 Non starter report PW-1/10
14 Statement of account and NPA sheet PW-1/11
15 Certificate u/s 2A(b) and 2A(c ) of PW-1/12
the Bankers's books of Evidence Act
read with section 65B of Indian
Evidence Act.
CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 11/30
PW-1 was cross examined by counsel for the
defendant. PW-1 in his cross examination deposed that he has been authorized by Regional Manager of East Delhi Region to pursue the court cases on behalf of the plaintiff. He had admitted that no minutes of meeting has been filed on record. He further deposed that the delay in sanctioning of the loan was due to non submission of relevant papers by the borrowers. He further admitted that defendants had taken a loan of Rs. 48 lakhs from Dena Bank which has since merged with Bank of Baroda and loan was to be repaid in 300 installments. He further deposed that defendants defaulted in the repayment of installments in the year 2019 and it was declared NPA on 01.12.2019. He also deposed that mortgaged property was auctioned for Rs. 30,10,000/- and even after setting off the auction price an amount of Rs. 14,60,534.44 remained due and outstanding besides Rs. 77,355.53 paisa was outstanding towards unapplied interest. He further deposed that the auction was conducted online from the Regional Office, Recovery Department at Ram Nagar Branch but he was not aware of the number of bidders. He denied the suggestion that the plaintiff bank had not given the repayment schedule to the defendant or that the plaintiff bank had intentionally CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 12/30 concealed that property was sold through e-auction or that it was intentionally sold at a lower price to the relative of the bank officials.
Thereafter PE was closed.
13. Defendants filed affidavits by way of evidence of defendant no. 1 and 2 and Sh. Joginder Singh. However, on 05.04.2024 counsel for the defendants submitted that defendants will examine only Sh. Joginder Singh as DW-1 and they will not examine defendant no. 1 Saroj Rani and defendant no. 2 Vivek. Accordingly, they were dropped from the list of witnesses and their affidavits were taken off the record.
DW-1 Sh. Joginder Singh tendered his affidavit by way of evidence as Ex.DW1/A and relied upon the letter dated 05.10.2018 which bears his signature at point A and same is Ex.DW-1/1. In the cross examination, DW-1 admitted that he had not taken any loan from the erstwhile Dena Bank and he was not a guarantor in the said loan. He also deposed that he had not signed any documents either as a witness or as a co- borrower or guarantor, although he was present at a time of obtaining of loan by the defendants. He also admitted that he had not visited the plaintiff bank prior to 14.09.2018 and had no dealing with the officials of the bank prior to 14.09.2018. He also admitted that he had deposited Rs. 8 lakh on CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 13/30 05.10.2018 on behalf of defendants and Rs. 44,000/- on 31.10.2019 and these entries have been refelcted in the ledger Ex. PW-1/11 at points A and B. He also admitted that there is no document to show the deposit of money between 05.10.2018and 31.10.2019. He further admitted his signature on inventory and panchnama Ex. PW-1/9. He also admitted that he had received notice u/s 13 (2) of SARFAESI Act on 14.09.2018 and possession notice. He also admitted that he and defendants were aware about the proceedings under SARFAESI Act. DW-1 also deposed that they had not participated in the auction proceedings conducted by the bank as they were not aware of the dates of auction. He deposed that no written communication given to the Bank Manager for purchasing the property by him or by the proposed buyer. He deposed that he had proceeded in DRT against the bank and the said petition had been finally disposed of. He deposed that he can file the final order of DRT. He denied the suggestion that bank had sold the mortgaged property after due care and valuation and there was no defect in the action taken by the bank. He also denied the suggestion that defendants intentionally did not clear the dues of the bank despite having sufficient means and knowledge of the actions taken by the bank. He denied the suggestion that defendants are liable to pay the suit amount along with interest.
CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 14/30Thereafter, DE was closed.
14. I have heard Ld. counsel Ms. Geetanjali for the plaintiff and Ld. counsel Mr. Akash Kumar for the defendants and perused the record carefully including the written submission filed on behalf of defendants.
FINDINGS Issue no.1:
Whether the plaintiff has concealed the material facts and not approached the court with clean hands as alleged by the defendant?(OPD)
15. The onus of proving this issue has been placed on the defendants.
Counsel for the defendants has argued that the plaintiff bank has not approached the bank with clean hands and has concealed the material facts. It was argued that the plaintiff bank had no cause of action to file the present suit as the defendants had already paid Rs. 38 lakhs out of the loan amount of Rs. 48 lakhs to the plaintiff bank. The plaintiff bank deliberately and malafidely auctioned the mortgaged property illegally and at a very low rate. It was further argued that the loan account was declared NPA on 31.03.2018 but the plaintiff bank accepted the payment even thereafter and charged higher CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 15/30 rate of interest in arbitrary manner. Ld. Counsel further argued that defendants were never served with the notice u/s 13 (2) of SARFAESI Act and any other notice for taking possession of the mortgaged property from the bank.
16. Per Contra, Counsel for plaintiff has denied the allegations of the defendants and it has been submitted that the defendants failed to repay the EMIs despite repeated demands by the bank. It was also argued that the mortgaged property was sold in e-auction when defendants failed to regularize their account. It was denied that the property was sold at a lower price.
17. At the outset, it is pertinent to mention here that none of the defendants have entered the witness box to prove their defence. Perusal of testimony of DW-1 would show that all the payments made by the defendants have been reflected in the ledger Ex. PW-1/11. DW-1 has admitted that he had received the notice u/s 13 (2) of the SARFAESI Act which was addressed to the defendants and he had also received the possession notice addressed to the defendants. DW-1 has also admitted that he and defendants were aware about the proceedings under SARFAESI Act. Hence, the defence taken by the defendants that plaintiff bank had concealed the material CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 16/30 facts and had not informed the plaintiff about the proceedings under SARFAESI Act appears to be only an afterthought. It is also pertinent to mention here that plaintiff has proved on record that the notice u/s 13 (2) of SARFAESI Act as Ex. PW- 1/7 which clearly mentions that the loan account of the defendants was classified NPA on 30.11.2019. Defendants have not proved any document to show that their loan account was classified as NPA on 31.03.2018 as stated in para 5 of the preliminary submissions of their WS. The defendants have also not produced any evidence on record to show that the auction of the mortgaged property by the plaintiff bank was malafide or in collusion with the proposed buyer. Once the defendants had received the notice u/s 13 (2) of SARFAESI Act and possession notice through DW-1, they were well aware of the fact that the plaintiff bank shall be proceeding further to realize the loan amount and it cannot be said that they were taken by surprise by the action of the plaintiff bank or that the plaintiff bank had concealed its action from the defendants.
18. Hence, in view of the aforesaid discussion, I am of the considered opinion that defendants have failed to discharge the onus cast on them. Accordingly, the issue is decided in favour of the plaintiff and against the defendants.
CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 17/30Issue no.2:
Whether the plaintiff is entitled for recovery of the decreetal amount, as prayed for ?(OPP)
19. The onus of proving this issue has been placed on the plaintiff.
To prove its case, plaintiff has examined its Chief Manager Sh. A.K. Pathak who has filed his evidence by way of affidavit Ex. PW-1/A. This witness has reiterated the facts stated in the plaint and has proved on record the loan application as Ex. PW-1/2, sanction letter as Ex. PW-1/3, letter for disbursement of house loan, loan agreement, letter of general lien and set off, demand promissory note authorization of deduction of EMIs executed by the defendants and declaration in respect of pending cases as Ex. PW-1/4 (colly). PW-1 also proved declaration creating equitable mortgage by deposit of title deed, indemnity bond, power of attorney, undertaking and affidavit as Ex. PW-1/5 (colly). The letter of acknowledgment of debt by the borrowers dated 13.08.2018 has been proved as Ex.PW-1/6, notice u/s 13 (2) of SARFAESI Act along with postal receipt has been proved as Ex. PW-1/7, letter of request by Jogender Singh is proved as Ex.PW-1/8 and possession notice along with original newspaper containing CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 18/30 publication of possession dated 20.12.2020, inventory and panchnama, newspaper dated 23.03.2021 showing publication of sale notice, possession receipt and sale certificate has been proved as Ex. PW-1/9 (colly). The statement of account has been proved as Ex. PW-1/11 and certificate u/s 2 (A) of Banker Books of Evidence Act r/w Section 65 B of Evidence Act has been proved as Ex. PW-1/12.
20. Perusal of the WS shows that defendants have not disputed that they had taken loan of Rs. 48 lakhs from the plaintiff (erstwhile DENA Bank, which has amalgamated with the plaintiff bank). It is also not disputed that the defendants had executed various loan documents in favour of the bank and had also mortgaged the house i.e. residential property consisting of entire third floor (with roof rights), situated at Municipal No. 7823/5, Abdul Hassan Mola Baksh Building, Roshana Road, Delhi admeasuring 97 sq. yds with the plaintiff bank. Defendants in their WS have also admitted that they had failed to repay the EMIs as per the schedule and had committed default in the re-payment of the loan citing various reasons.
21. Counsel for the defendants has argued that the agreement between the parties were one sided and there was no scope for CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 19/30 the defendants to make an amendment and it completely prejudice the right of the defendants. It was argued that incorporation of one sided clauses in an agreement constitutes unfair practices and such clauses do not bind a party. Reliance was placed on the judgment of Hon'ble Supreme Court in Pioneer Urban Land & Infrastructure Limited VS Govindan Raghavan, C.A. NO. 12238 of 2018.
Per Contra, Counsel for plaintiff has argued that once the defendants have signed the loan agreement and have availed the loan facility from the bank, they cannot turn around to challenge the loan agreement that too after they had failed to repay the EMIs and adhere to the financial discipline.
22. No doubt, the agreements such as the loan agreement in the present case are standard form agreement and there is no scope for the defendants to make any amendment or changes in such agreement but defendants always have an option to go through the terms and conditions of such agreement before signing on the dotted lines. Defendants could have refused to accept such an agreement if the terms and conditions were prejudicial to their interests. However, once the defendants have accepted the loan agreement by signing the same and have availed benefits under such loan agreements, law presumes that they must have read, understood and accepted CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 20/30 the terms and conditions of the agreement. Hence, they cannot be permitted to resile from such agreement on the ground that the same was prejudicial to their interests or that they had not read the terms and conditions of the agreement before signing the same.
23. Counsel for the defendants has further argued that the suit has not been filed by duly authorized person on behalf of the plaintiff bank and therefore, the suit of the plaintiff is not maintainable as he was not having valid authorization in his favour. It was argued that PW-1 A.K. Pathak in his cross examination admitted that no minutes of meeting has been filed on record to prove that he was duly authorized by the plaintiff bank.
24. Perusal of the record shows that PW-1 A.K. Pathak has proved on record general power of attorney executed in his favour as Ex. PW-1/1. The witness had also produced the original power of attorney at the time of evidence. Perusal of the said power of attorney shows that PW-1 has been authorized by Sh. Atul Kumar Karan, Assistant General Manager and Regional Manager, East Delhi Region, New Delhi. The said power of attorney has been duly authenticated by a notary public. Section 85 of the Indian Evidence Act CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 21/30 raises a legal presumption that a document purporting to be a power of attorney executed before and authenticated by a notary public, was so executed and authenticated. No doubt, such a presumption is rebuttable and the other party is legally entitled to disprove such a presumption. Hon'ble Delhi High Court in City Bank N.A. Vs Juggi Lal Kamlapat Jute Mills Company Limited, AIR 1982 Delhi 487, relying upon the judgment of National & Grindlays Bank Vs Radio Electronics Corporation Pvt. Ltd. (1978) RLR 217 held that Section 85 of Indian Evidence Act does not draw any distinction between the kind of documents viz:power of attorney executed by an individual and the one executed on behalf of the company. Authentication of any of these instruments by notary public raised a legal presumption that the same has been duly executed and the person or persons, who had executed, had the authority to do so. The reason to incorporate such a provision is to obviate the production of evidence as is otherwise enjoined to prove the execution of the documents.
25. In the present case, defendants have not led any evidence or shown any such circumstances which may create a doubt in the execution of the power of attorney Ex. PW-1/1. Hence, it cannot be said that Sh. A.K. Pathak was not authorized person CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 22/30 to file and prosecute the present suit against the defendants.
26. Counsel for the defendants has further argued that the defendants were not served with the notice under Section 13 (2) SARFAESI Act, possession notice and NPA sheet which is illegal and bad in law as per SARFAESI Act. However, these arguments by the counsel for the defendants are contrary to the records of the case. It is pertinent to mention here that the inventory and panchnama (part of Ex.PW-1/9) bear the signature of DW-1 Joginder Singh i.e. the brother of the defendant no. 1 Saroj Rani. DW-1 in his cross examination has also admitted his signature on the inventory and panchnama dated 02.03.2021. He has also admitted that he had received notice u/s 13 (2) of SARFAESI Act and possession notice which was addressed to the defendants. He further admitted that he and defendants were aware about the proceedings under SARFAESI Act. Once the defendants were aware about notice under SARFAESI Act and possession of the property taken by the bank in the presence of DW-1, it does not lie in the mouth of the defendants to argue that they were not served with the notices under SARFAESI Act or that they were not given a fair chance to repay the loan amount before the mortgaged property was sold by the bank to recover its dues. It is also pertinent to note here that both the defendants CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 23/30 have not appeared in the witness box and an adverse inference has to be drawn against them.
27. It was further argued by the counsel for the defendants that defendants had paid Rs. 46,91,577/- out of the loan amount of Rs. 48 lakhs. It was further argued that plaintiff had sold the mortgaged property for Rs. 30 lakhs and thus they had recovered Rs. 76,91,577/- and have further filed the suit for recovery of Rs. 15 lakhs with interest which is a bizarre amount to be recovered from the defendants. He further argued that the mortgaged property was sold for a sum of Rs. 30 lakhs whereas the actual value of the property was Rs. 60 lakhs as per the sale deed executed in favour of defendant no. 1. He further argued that the auction was done in one day.
28. Counsel for plaintiff, on the other hand, has argued that all the payments made by the defendants have been reflected in the statement of account Ex.PW-1/11 and DW-1 Joginder Singh in his cross examination has admitted that the payment made by him on behalf of the defendants are reflected at point A and B in the ledger Ex.PW-1/11. He also admitted that there was no document on record to show the deposit of money between 05.10.2018 and 31.10.2019. Counsel for the plaintiff has further argued that the property was sold in auction at Rs.
CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 24/3030 lakhs it did not fetch more value in the auction as no bidder came forward and therefore, the reserve price had to be reduced. He has relied on the sale notice published in Financial Express and Jansatta dated 23.03.2021 wherein the reserve price was reduced to Rs. 30 lakhs due to non availability of the buyers and the corrigendum notice dated 25.03.2021 published in Financial Express and Jansatta in support of his arguments and argued that the property was sold to the highest bidder through e-auction. Counsel for the plaintiff denied any collusion with the plaintiff bank and purchaser of the property.
29. At the outset, it may be noted that as per the sanction letter Ex. PW-1/3 dated 13.08.2015 the defendants were required to repay the loan in 300 EMIs. The amount of EMIs for first four year was Rs. 49,406/-; the amount of EMIs of next fifteen years was Rs. 49,980/- and the amount of EMIs for last six years was Rs. 28,170/-. As per the admitted case of the defendants, defendants paid EMIs regularly only till 17.11.2016 and thereafter, defendants defaulted in the regular payments of the EMIs. Defendants paid some amount in between which are also reflected in the statement of account Ex.PW-1/11 filed by the plaintiff. The statement of account duly reflects the payment of Rs. 1 lakh and Rs. 4,12,874/- on 27.06.2018; payment of Rs. 70,000/- on 16.07.2018; payment CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 25/30 of Rs. 8 lakh on 05.10.2018 and payment of Rs. 44,000/- on 22.11.2019. Defendants have failed to point out any missing entry or any wrong entry in the statement of account Ex.PW- 1/11. Hence, the same has to be accepted as correct.
30. The defendants have further argued that plaintiff bank has malafidely sold the mortgaged property by under valuing it and that there was collusion between the plaintiff bank and the purchaser of the mortgaged property.
The plaintiff has proved on record the valuation of the mortgaged property prepared by Perfect Valuer as Ex. PW- 1/13. This valuation report has not been challenged by the defendants by producing the report of any other valuer or any other material or witness before the court. Hence, the same has to be accepted as correct. Similarly, defendants have not led any evidence to substantiate their allegation of collusion between the plaintiff bank and purchaser of the mortgaged property. Hence, these allegations against the plaintiff bank are liable to be rejected.
31. The argument of the defendants that they had paid Rs. 46,91,577/- out of the loan amount of Rs. 48 lakhs is also fallacious and devoid of any merits. The defendants have not taken into consideration the payment of interest on the loan CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 26/30 amount nor have explained as to how much principal amount has been paid by them. The EMIs consist of principal component and interest component. The entire amount paid by the defendants cannot be adjusted against the principal loan amount and only a part of it is adjusted against the principal amount and the remaining portion of the EMIs is adjusted against the interest. As already noted above, defendants have failed to point out any discrepancy or ambiguity in the statement of account Ex. PW-1/11 filed by the plaintiff. The statement of account Ex. PW-1/11 filed by the plaintiff shows that a sum of Rs. 14,60,534/- was due and outstanding as on 12.05.2022 after adjusting the sale proceeds of the mortgaged property. Hence, in my considered opinion the plaintiff is entitled for recovery of Rs. 14,60,534/- from the defendants. The issue is accordingly decided in favour of the plaintiff and against the defendants.
Issue no.3:
Whether the plaintiff is entitled for the interest, if any. If so, at what rate and for which period?(OPP)
32. The onus of proving this issue has been placed on the plaintiff.
Counsel for plaintiff has submitted that plaintiff has CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 27/30 claimed interest @ 8.4% p.a and penal interest @ 2% p.a from the date of its falling due till its realization. It has been submitted that the loan was granted to the defendants on interest rate @ 10% p.a and in case of default the defendants were also required to pay penal interest @ 2% p.a over and above the normal rate of interest. It was submitted that the rate of interest was subject to change from time to time as per the HO/RBI guidelines. Counsel for plaintiff submitted that PW-1 proved the sanction letter dated 13.08.2015 Ex.PW-1/3 and the defendants had also not disputed the same. The plaintiff has claimed the prevailing rate of interest at the time of filing of the suit which was 8.4% p.a and the plaintiff is entitled for the same.
33. At the outset, it may be mentioned that defendants have admitted the sanction letter dated 13.08.2015 in their admission /denial of documents filed on 16.11.2022. Thus, the defendants are liable to pay interest on the loan amount at the admitted rate of interest.
34. Although, the plaintiff has claimed penal interest @ 2% p.a on the outstanding amount but keeping in view the fact that defendants were unable to pay the loan amount due to their financial difficulties. I am not inclined to award any pre suit CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 28/30 and penal interest to the plaintiff bank.
35. In Central Bank of India Vs Ravindra & Ors., (2002) 1 SCC 367, it was held that award of interest, pendente lite and post decree is discretionary with the courts as it is essentially governed by Section 34 of the CPC de-hors the contract.
36. Having regard to the lending rate of interest of the bank, this court is of the view that interest @8.4% per annum is reasonable and would serve the ends of restitutive justice. In the circumstances, plaintiff is held entitled to interest @ 8.4% per annum from the date of filing of the suit till its realization.
In view of the above discussion, issue is accordingly decided in favour of plaintiff and against the defendants.
Relief
37. In view of my findings on the aforesaid issues, the suit is decreed in favour of the plaintiff and against the defendants. A decree of Rs. 14,60,534/- is passed in favour of the plaintiff and against the defendants. The plaintiff shall also be entitled for simple interest on the aforesaid amount @ 8.4% p.a from the date of filing of the suit till its realization. The plaintiff shall CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 29/30 also be entitled to the cost of the suit. Defendants shall be jointly as well as severally liable to pay the decreetal amount.
Decree sheet be prepared accordingly.
File be consigned to record room after due compliance.
ANIL Digitally signed
by ANIL KUMAR
KUMAR SISODIA
Date: 2024.07.09
SISODIA 15:22:12 +0530
(ANIL KUMAR SISODIA)
District Judge (Commercial Court-04)
Central District, Tis Hazari Courts
Announced in open court
on 09th July, 2024
CS(COMM)1281/2022 Bank of Baroda Vs. Saroj Rani & Anr Page No. 30/30