Delhi District Court
State Bank Of India vs Sh. Ram Dal on 5 August, 2013
IN THE COURT OF Ms. POOJA GUPTA : CIVIL JUDGE03: SOUTH DISTRICT: SAKET COURT COMPLEX: NEW DELHI Suit no.592/10 Unique ID no. 02406C0774652010 IN THE MATTER OF: State Bank of India, A Corporation constituted under the State Bank of India Act, 1955 having its Central Office/Corporate Centre At State Bank Bhavan, Madame Cama Road, Mumbai440024, one of its local head offices at at 11, Sansad Marg, New Delhi110001. An at stressed Assets Resolution Centre (SARC) At 23, First Floor, Najafgarh Road, New Delhi. .....Plaintiff Versus 1. Sh. Ram Dal, S/o Sh. Bishamber Nath, 237, Sector7, M.B. Road, Pushp Vihar, New Delhi. Also at: Sh. Ram Dal, S/o Sh. Bishamber Nath, Village: Budhai Purwa, P.O. Parsa Gondari, District: Gonda (U.P.) Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 1 of 21 2. Sh. Radhika Prasad Jaiswal, S/o.: Late Sh. Narayan Jaiswal, 259, Sector3, Pushp Vihar, New Delhi110062. .....Defendants DATE OF INSTITUTION : 23.04.2009 DATE OF RESERVING THE ORDER : 31.07.2013 DATE OF DECISION : 05.08.2013 JUDGMENT
1. The plaintiff bank has filed the present suit against the defendants for recovery of Rs.94,707/ (Rs. Ninety Four Thousand Seven Hundred and Seven Only) alongwith pendente lite and future interest alongwith costs of the suit.
Facts as per plaint
2. The plaintiff is a Corporate Body constituted under State Bank of India Act, 1955 xand is engaged in banking business. The suit has been instituted through Sh. Mohan Singh, the then Deputy Manager of the Stressed Assets Resolution Centre, Najafgarh and fully conversant with the facts of the case and duly authorised as per State Bank of India General Regulations.
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3. A personal loan of Rs.70,000/ was sanctioned and released by the plaintiff bank to the defendant no.1 on 29.04.2006 on application of the defendant no.1 and on the guarantee of defendant no.2 upon execution of various documents including personal loan agreement dated 29.04.2006 and deed of guarantee executed by defendant no.2 on 29.04.2006. The defendant no.1 agreed to repay the loan amount with interest in 48 equated monthly installments of Rs.1,925/ each the number of which was subject to change depending upon the changes in the rate of interest and other debits with the first installment being payable on 29.05.2006. The interest on the amount was to be applied at rate of @2.25% above the State Bank Advance Rate(SBAR) raising and falling therewith, calculated at the daily balance of the loan amount provided that the Bank could at any time or from time to time change the rate of interest depending on the change in SBAR which would be construed as agreed to be paid by the borrower, the defendant no.1, and the current rate of interest is @14.50%.
4. The documents were signed by the parties after they were duly filled, read over and explained to the defendants. The defendant no.1 and 2 being jointly and severally liable to repay the loan amount failed to Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 3 of 21 adhere to financial discipline and started making defaults in the repayment. Despite repeated requests, the defendants did not make the repayment. A legal demand notice dated 27.03.2009 was also sent but to no avail. Thus the defendants are liable to pay Rs.94,707/ i.e Rs.79,575/ as amount including interest upto 31.01.2008 and Rs.19,132/ as accrued interests from 01.02.2008 to 15.04.2009. The account of the defendant was declared as a Non Performing Asset in 30.06.2007 Hence this suit.
5. The summons of the suit were issued to both the defendants. Initially the defendant no.1 was served by way of publication in the newspaper "Veer Arjun" dated 21.04.2011 but as the publication was not proper fresh summons were issued to the defendant no.1 who was again served by way of publication on 18.03.2013 at the Delhi address and on 17.03.2013 in the Lucknow edition of Rashtriya Sahara. None appeared on behalf of defendant no.1 despite summons and he was proceeded ex parte on 26.03.2013. Summons issued to the defendant no.2 were received back served and the defendant no.2 filed his written statement. Facts as per written statement.
6. Preliminary objection was raised by the defendant no.2 that he was informed by both by the defendant No.1 as well as plaintiff bank Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 4 of 21 to act only as witness to the loan agreement but was subsequently made to sign the guarantee deed, though he was not aware that he had affixed his signature on the deed of guarantee and the plaintiff in collusion with the defendant no.1 had misrepresented that defendant no.2 would be liable to repay the loan amount in case of default by defendant no.1. Preliminary objection has also been raised that the plaintiff did not inform defendant no.1 of consequences of non payment and also ignored the letters of the defendant no.1 written by his son Bachhe Lal stating that the defendant no.1 has been diagnosed with mental problem and due to illhealth was unable to repay the loan and also requested the plaintiff not to recover the loan from the defendant no.2. No attempts were made by the plaintiff to find the defendant no.1.
7. On merits the defendant no.2 did not deny that he was the guarantor but reiterated that he was made to believe that he would sign as a witness and not a guarantor. The defendant no.2 has denied that conditions of the deed of guarantee were read out to him and has averred that it was misrepresented to him that he would be acting as witness not a guarantor. The deed of guarantee is invalid as the same has not been attested as required by law. The receipt of the legal notice has also been Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 5 of 21 denied. Rest of the averments have been denied on merits. Replication
8. In its replication the plaintiff denied the averments made by the defendant and reiterated the contents of the plaint. Issues
9. From the pleading of the parties following issues were framed by the Ld. Predecessor of this court on 14.07.2011.
(1) Whether signature of defendant no.1 was obtained on the deed of guarantee by misrepresentation and cheating?OPD (2) Whether the plaintiff is entitled to decree of recovery? OPP (3)Whether the plaintiff is entitled to interest, if so at what rate. OPP (4) Whether the deed of the guarantee is invalid as it is not duly attested as per law?OPD (5) Relief, if any.
10. To prove its case the plaintiff examined only one witness i.e Sh. Dinesh Kalra, Assistant Manager (City Case Officer) as PW1 who tendered his evidence by way of affidavit (Ex.PW1/A) and relied upon the following documents: ● Personal loan application (Ex.PW1/1) sanctioned on 29.04.2006 Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 6 of 21 (Ex.PW1/2), ● Arrangement letter dated 30.04.2006(Ex.PW1/3), ● Personal Loan agreement dated 29.04.2006 (Ex.PW1/4), ● Deed of Guarantee dated 29.04.2006 (Ex.PW1/5), ● Demand Promissory Note dated 30.04.2006 (Ex.PW1/6), ● D.P. Note delivery letter dated 30.04.2006 (Ex.PW1/7), ● Attested copy of the certificate dated 03.03.2006 (Mark A), ● Copy of election ICard (Mark B), ● Copy Identity Card (Mark C), ● Certified copy of the statement of account (Ex.PW1/8), ● A legal notice dated 27.03.2009 (Ex.PW1/9), ● Registry receipts (Ex.PW1/10 to Ex.PW1/12), ● UPC receipt (Ex.PW1/13).
PW1 was duly cross examined and Ex.PW1/5 was objected to.
11. To prove his defence the defendant no.2 examined only himself as DW2 and tendered his evidence by way of affidavit Ex.DW2/A and relied upon following documents: ● Undated letter of son of defendant no.1 to the President (Mark A), ● Undated letter of son of defendant no.1 to Prime Minister (Mark B), ● Undated letter of defendant no.1 to Bank Manager (Mark C), ● Undated letter from son of defendant no.1 to Manager with postal receipt dated 15.09.2008 and 17.10.2008 (Mark D), ● Undated letter from son of defendant no.1 to the Bank Manager in respect of mental disorder (Mark E), ● Letter dated 14.01.2007 from son of the defendant to the Bank Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 7 of 21 Manager which (Mark F), ● Copy of driving licence and election I card of the son of defendant no. 1 (Mark G), ● Scanned copy of medical prescription of defendant no. 1 (Mark H), ● Photocopy of the OPD card (Mark I) The witness was duly cross examined by plaintiff.
12. Final arguments were advanced on behalf of both the parties and the written arguments were also filed on behalf of the plaintiff.
13. I have carefully considered the submissions made on behalf of the parties and carefully perused the evidence on record. From the evidence on record my issue wise findings are as under:
Issue No.1 Whether signature of defendant no.1 was obtained on the deed of guarantee by misrepresentation and cheating?
14. The onus to prove this issue was on the defendant. In his evidence by way of affidavit Ex.DW2/A, the defendant no.2 as DW2 has deposed that he was asked by the defendant no.1 and the bank to sign as a witness for the loan in question and his signatures were obtained on the documents. The defendant no.2 further deposed that his signature were obtained by fraud due to collusion between the plaintiff and the defendant Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 8 of 21 no.1. DW2 has further deposed that he was not given correct information by the plaintiff as well as defendant no.1 as to on which papers his signatures were being taken or that he would be liable to repay the amount in case the defendant no.1 did not do so. DW2 has further deposed that the plaintiff/Bank Manager obtained the signatures of the defendant no.2 on blank papers without telling what the documents were. DW2 has further deposed that the plaintiff/Bank Manager called the defendant no.1 and defendant no.2 for signing on the documents written in English without explaining the contents in Hindi even though they knew that the defendant no.2 had only studied till class V. DW2 has further deposed that his documents like ID proof, payslip etc. were not taken by the plaintiff as his signatures were not taken as a guarantor but only as a witness.
15. During the cross examination of DW2 the plaintiff was not able to elicit any admission from him nor was the plaintiff able to shake the credibility or veracity of oral testimony of the defendant no.2. DW2 denied the suggestion that he had been read over the contents of the guarantee documents and that they were also written in Hindi. DW2 also denied the suggestion that the bank officials had read over and explained Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 9 of 21 the documents to him and his signatures were taken only on the filled form. DW2 also denied the suggestion that he had signed as a guarantor. No suggestion was put to DW2 during his crossexamination in respect of absence of collusion between the plaintiff and the defendant no.1 or in respect of absence of fraud.
16. On the other hand, PW1 has deposed in Ex. PW1/A that the documents were duly filled, read over and explained to the defendants and they put their respective signatures on the documents voluntarily and consciously after undertaking their implications and delivered the same to the plaintiff bank and are thus bound by the terms and conditions of the documents. However, as per Ex. PW1/A, PW1 has deposed on the basis of information made available to him on the basis of the record maintained during the course of regular business and day to day affairs of the plaintiff bank. Further PW1 has admitted that the loan documents were not executed in his presence and the same were executed in Pushp Bhawan Branch. Thus, PW1 has not deposed on the basis of any personal knowledge and his testimony in respect of reading over of the documents remains uncoroborrated by any document or record maintained by the plaintiff bank.
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17. The defendant no.2 was unable to elicit any admissions from the oral testimony of the PW1 as PW1 denied the suggestion that Ex.PW1/5 is not a proper guarantee deed and that the bank official has obtained signatures of defendant no.2 on the said deed by way of fraud as defendant no.2 is illiterate. PW1 also denied the suggestion that the signatures of defendant no.2 were taken on the blank page on the sides of the page as well as on the bottom and that the print has been taken later on or that due to above mentioned reason, it does not bear signatures/stamp of the bank officials. PW1 also denied the suggestion that Ex.PW1/5 had been executed with the connivance of bank officials and defendant no.1 and that defendant no.2 was told that he was signing as a witness.
18. For the reasons best known to the defendant no.2, it did not take any steps to examine the bank official who had asked him to sign as a witness nor led any evidence to coroborrate his oral testimony. The defendant has also not been able to prove its defence to the extent that DW2 has deposed that his signatures were obtained on blank papers without telling what the documents were whereas DW2 has also deposed that the plaintiff/Bank Manager called the defendant no.1 and defendant Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 11 of 21 no.2 for signing on the documents written in English without explaining the contents in Hindi. Thus, the oral testimony of the DW1 is itself inconsistent in respect of whether the signatures were obtained on blank papers or on papers written in English.
19. Defendant no.2 has also contended that no documents of defendant no.2 to prove his income and identity are on the record in the present suit as defendant no.2 was told that he is signing only as a witness. During the crossexamination, the defendant was able to elicit from PW1 that there is no document of the guarantor in the present loan in question and denied the suggestion that no documents of defendant no. 2 is on the record as defendant no.2 was told that he is signing only as a witness and if he was asked for the document he would had a suspicion that he is not signing as a witness. No evidence has been led by the defendant no.2 to show that the documents in respect of the income and identity of the guarantor are essential and accordingly no adverse inference can be drawn in respect of the validity of the agreement merely because the documents in respect of the income and identity of the guarantor are not sought.
20. The defendant no.1 relied upon the documents i.e. Mark A to Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 12 of 21 Mark I but failed to prove them as per law as neither the executant thereof have been examined nor their original documents have been produced and hence they cannot be looked into being not proved. The judgment of the Hon'ble Madras High Court in "Appanna vs. Jami Venkattapaddu"
cited as AIR 1953 Mad 611, relied upon by the defendant no.2 though reiterates the proposition of law that when a deed of one character is executed on a representation that it is of a different character, then it is wholly void and inoperative, is not of much assistance to the defendant no.2 as the judgment is on the point of limitation and also because the defendant no.2 has not been able to prove the misrepresentation by the defendant no.1 and the plaintiff bank.
21. Further the judgment of the Hon'ble Madras High Court in "The Secretary of State for India Vs. Nilamekam Pillai" cited as (1883) ILR 6 Mad 406 reiterates the proposition that silence, amounting to a fraudulent misrepresentation of circumstances, which would affect the willingness of the proposed surety to contract, invalidates the contract but is not applicable to the facts of the case as in the case at hand, as per the defendant there was no silence as to the circumstances but there was active misrepresentation.
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22. Thus merely on the basis of the oral testimonies of the PW1 and DW2 the misrepresentation and cheating as alleged by the defendant no.2 remains unproved, and accordingly this issue is decided against the defendant no.2 and in favour of the plaintiff.
Issue No.2 Whether the plaintiff is entitled to decree of recovery?
23. The onus to prove this issue was on the plaintiff. PW1 has relied upon the personal loan application dated 29.04.2006 (Ex.PW1/1), Personal Loan agreement dated 29.04.2006 (Ex.PW1/4), Demand Promissory Note dated 30.04.2006 (Ex.PW1/6), D.P. Note delivery letter dated 30.04.2006 (Ex.PW1/7) all bearing the signatures of defendant no.1 and the arrangement letter dated 30.04.2006 (Ex.PW1/3) bearing the signatures of the defendants, Certified copy of the statement of account (Ex.PW1/8), and legal notice dated 27.03.2009 (Ex.PW1/9) with receipts (Ex.PW1/10 to Ex.PW1/13) to prove the liability of the defendant no.1 to repay the loan amount with interest. As the defendant no.1 is exparte no rebuttal has come to the oral and documentary evidence led by the PW1 and the documents remain untraversed in so far as they concern the defendant no.1.
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24. The loan having been advanced on 29.04.2006 and the suit having been filed on 23.04.2009 is within the period of limitation from the date of the advancement of the loan. Further the loan was sanctioned and disbursed from the Pushpa Vihar Branch and hence the court has the territorial jurisdiction to try and adjudicate the present suit.
25. To prove the joint and several liability of the defendant no.2, the plaintiff has relied upon the guarantee deed Ex. PW1/5. During his cross examination DW2 admitted his signatures on Ex.PW1/5 at pages 27, 29 and 30. Perusal of Ex.PW1/5 reveals that on the last page of guarantee agreement the signatures of the defendant no.2 are conspicuous by absence. Thus the signatures have been admitted by the defendant no. 2 not on the entire document but only on part thereof. Hence, it is for the plaintiff to prove the due execution of the deed of guarantee which resulted in a concluded contract between the parties.
26. As has already been discussed the defence of the defendant is that he was asked to sign merely as a witness and not as a Guarantor. As per Ex. PW1/5, the signatures of the defendant no.2 though appears on Pg 27,29 and 30 they are on the margins and the signatures are not affixed at any place designated to be signed by the Guarantor so as to Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 15 of 21 signify that the person signing was signing or was accepting the liability as a Guarantor. This aspect assumes importance for the reason that the signatures of the guarantor and witness on the guarantee deed do not appear on the last page of Ex.PW1/5 wherein the party executing the document is required to put their signatures in acceptance of the terms and conditions ennumerated in the document. No explanation has been put forth by the plaintiff by producing any evidence on record either oral or documentary for the absence of the signatures of the defendant no.2 on the last page of the guarantee deed.
27. Further the defendant no.2 has claimed to be less conversant in English. Though no documentary evidence has been led by the defendant no.2 to prove the same, defendant no.2 has deposed in his evidence by way of affidavit that he has studied English only till class V. No rebuttal has come to the testimony of the defendant no.2 in this respect and plaintiff has accepted the same as the PW1 has deposed that the defendants had put their signatures after being read over and explained the contents of the documents meaning thereby that even as per the version of the plaintiff someone had explained the contents of the documents to the defendants. However, the plaintiff has not been able to Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 16 of 21 prove that the contents of Ex.PW1/5 were read over and explained to the defendant no.2 prior to obtaining his signatures on the guarantee deed as no witness was produced by the plaintiff who had read over and explained the contents of the loan documents to the defendant no.2. It is also not the case of the plaintiff that there was any oral agreement between the plaintiff and defendant no.2 in respect of the guarantee.
28. Thus, in the absence of the signatures of the defendant no.2 on the last page of the guarantee deed read in conjunction with the absence of any deposition based on personal knowledge in respect of reading over and explaining of the contents of the loan documents to the defendant as well as keeping in view that the testimony of defendant no.2 of being illiterate only till class V going unrebutted and the signatures of the defendant no.2 being in Hindi, the plaintiff has not been able to prove the due execution of the Deed of Guarantee in so much as the party signing as a Guarantor is required to agree as to the terms and signify its assent either by affixing its signatures or by doing any act consistent with such terms neither of which has been proved by the plaintiff in respect of defendant no.2 and thus upon appreciation of the evidence on record, the plaintiff has failed to prove the liability of the defendant no.2 as a Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 17 of 21 Guarantor.
29. Thus, in view of the unrebutted testimony of the PW1 qua the defendant no.1, the court finds the plaintiff entitled to the relief of recovery against the defendant no.1 only. This issue is accordingly decided in favour of the plaintiff and against the defendant no.1 only. Issue No 3:Whether the plaintiff is entitled to interest? If so at what rate?
30. The onus to prove this issue was on the plaintiff. As per Ex. PW1/3, the defendant no.1 had agreed to interest at 13.25% per annum on the highest monthly reducing balance at quarterly rests and in the event of default in payment of irregularity in account the bank reserved its right to levy a higher rate of interest. In Ex. PW1/4 no rate of interest has either been filled nor deleted. No other document relied upon by the plaintiff specifies the rate of interest.
31. However PW1 has deposed in Ex.PW1/A that the interest on the amount was to be applied at rate of @2.25% above the State Bank Advance Rate(SBAR) raising and falling therewith, calculated at the daily balance of the loan amount provided that the Bank could at any time or Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 18 of 21 from time to time change the rate of interest depending on the change in SBAR which would be construed as agreed to be paid by the borrower, the defendant no.1, and further deposed that the current rate of interest is @14.50%. The oral testimony of PW1 is not in consonance with the documentary evidence in the form of Ex.PW1/3 as per which no floating rate of interest had been agreed upon by the defendant no.1.
32. In these circumstances the plaintiff has failed to prove its entitlement to the interest @14.50% per annum as claimed. Further even as per Ex.PW1/3 and Ex.PW1/4 no specified rate of penal interest has been agreed upon between the parties. However as per Ex.PW1/8 i.e. the statement of accounts relied upon by the plaintiff interest has been charged @12.5% to 14.75%. No evidence has been led by the plaintiff to corroborate the imposition of interest 12.5% to 14.75%. Thus, as the entries in Ex.PW1/8 are not corroborated with the documentary evidence in the form of Ex.PW1/3 and Ex.PW1/4, the plaintiff has failed to prove its entitlement to the interest as claimed. Accordingly, this issue is accordingly decided against the plaintiff and in favour of the defendant. Issue No. 4: Whether the deed of the guarantee is invalid as it is not Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 19 of 21 duly attested as per law?
33. The onus to prove this issue is on the defendant as an objection was raised in the written statement in respect of the same. During the course of the arguments no law was cited by the defendant as per which attestation of deed of guarantee is mandatory. A deed of guarantee is an contract whereby the guarantor undertakes to be bound to repay the amount borrowed by the principal borrower. As per the law of the land, a deed of guarantee is not required by any law to be compulsorily attested by two witnesses. In view of the same this issue is decided against the defendant no.2 and in favour of the plaintiff. Relief:
34. In view of my findings on issue no.1, 2 and 3, the plaintiff has been able to prove its entitlement only qua the defendant no.1. As per Ex. PW1/8 as relied upon and thus deemed to be admitted by the plaintiff, the defendant no.1 has made part payments amounting to Rs. 25,702/.Accordingly the suit of the plaintiff is decreed against the defendant no.1 only for Rs. 44,298/ (Rs. Forty Four Thousand Two Hundred and Ninety Eight only) alaongwith pendentelite interest @ 10% Civil Suit no.592/10 State Bank of India Vs. Ram Dal & Anr. 20 of 21 per annum and future interest @6% per annum till realisation. The plaintiff is also awarded the cost of the suit against the defendant no.1.
35. Decree Sheet be prepared accordingly.
36. File be consigned to the Record Room after necessary compliance.
Announced in Open Court
on 05.08.2013 (Pooja Gupta)
Civil Judge03(South District)
New Delhi
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