Bangalore District Court
State Bank Of India vs M/S. Truly Fashions on 1 September, 2016
IN THE COURT OF THE LIX ADDL.CITY CIVIL &
SESSIONS JUDGE, BANGALORE CITY
Dated this the 1st day of September 2016
PRESENT : Sri B. B. Jakati, B.A., LL.B., (Spl.)
LIX ADDL.CITY CIVIL & SESSIONS JUDGE
BANGALORE CITY
O.S.No.9325/2015
PLAINTIFF: State Bank of India,
Small and Medium
Enterprises Centre (SMEC),
No.20, Badaga Nadu
Sangha Building,
Girl's High School Street,
Sheshadripuram,
Kumar Park,
Bangalore - 20.
Rep. by its Chief Manager,
P.N. Bhaskar
S/o P. Narismulu,
Aged 56 years.
(By Sri.N.P.S., Advocate)
DEFENDANT/S 1. M/s. Truly Fashions,
Rep.by its Prop: Sri S.R. Guruswamy
S/o Rangaswamy
Age : Major
No.6, Chikkappaiah Layout,
Near Nagashettihali Bus Stand,
Nagashettihalli,
Bangalore - 94.
2. Sri S.R. Guruswamy
S/o Sri Rangaswamy,
Age :Major,
Prop: M/s. Truly Fashions,
2 O.S.No.9325/2015
No.10/B, RMV 2nd Stage,
Nagashettihalli,
Bangalore - 94.
Also at:
Sri S.R. Guruswamy
S/o Sri Rangaswamy,
Age :Major, No.55, Bharathi Park,
7th Cross road, S.B. Colony,
Coimbatore - 641 011.
(By Sri.B.V.P., Advocate)
Date of institution of the : 16.11.2015
suit
Nature of the suit : Money Suit
Date of commencement of : 21.07.2016
recording of the evidence
Date on which the : 01.09.2016
Judgment was
pronounced.
: Year/s Month/s Day/s
Total duration
00 09 14
(B.B. Jakati)
LIX ACC & SJ: B'LORE.
JUDGMENT
The plaintiff bank has filed this suit for recovery of a sum of Rs.6,46,550/- along with interest @ 12.55% p.a. 3 O.S.No.9325/2015 from the date of the suit till realization from the defendants.
2. It is the case of the plaintiff that the defendant no.1 is proprietaryship Firm and the defendant no.2 is the Proprietor of defendant No.1 Firm. The defendants availed credit facility of Rs.5,00,000/- on 31.07.2009 which was enhanced to Rs.10,00,000/- on 09.12.2013. The loan was to be repaid within 12 months and the first loan interest was 8% p.a. for first two years and thereafter, the rate fixed by the SBI. The rate of interest when the first loan was advanced was 12.55% p.a. and when the 2nd loan was advanced, the rate of interest was 13.25% p.a. The defendants while taking the loan under credit facility executed all the necessary documents in favour of the plaintiff bank. The defendants were not regular in payment of loan and therefore, the defendants executed revival letters on 11.02.2010 and 01.02.2013 and balance confirmation letter on 26.03.2013. The loan was sanctioned for working capital of the business of the defendants. The plaintiff called upon the defendants to 4 O.S.No.9325/2015 repay the loan orally and even issued legal notice on 31.10.2015. Such notice was not served on the ground that the defendants left the address. Thereafter, also the defendants not paid the loan. The outstanding as on 31.10.2015 was Rs.5,98,350/- and the interest was Rs.47,200/-. By including the cost of legal notice of Rs.1,000/-, the plaintiff has claimed a sum of Rs.6,46,550/- from the defendants along with interest.
3. After service of summons, the defendants appeared and filed written statement. The defendants have contended that the first defendant is carrying small scale industry started in the year 2009 to manufacture readymade garments on job work basis to other exporters in and around Bangalore. The SBI sanctioned a working capital of Rs.10,00,000/- secured by the receivables of the company under Smart Score Scheme covered under Credit Guarantee Corporation for Micro, Medium and Small Enterprises (CGTMSE). The CGTMSE is the guarantor for the loan advanced to the defendants. The plaintiff bank not impleaded CGTMSE and therefore, the 5 O.S.No.9325/2015 suit is bad for non-joinder of necessary parties. The defendants have denied the rate of interest contended by the plaintiff. They have pleaded that till March 2015 the defendants paid a sum of Rs.4,00,000/- towards interest and principal amount. The plaintiff bank is required to claim the amount under CGTMSE insurance and not from the defendants. Alternatively, the defendants have pleaded that one of the customers who were giving orders for job work not paid bills and even not remitted the I.T. deducted at source for more than one year. Therefore, the defendant withhold the garments after manufacturing and inspection. The defendants insisted the Company to pay and collect their materials. But the Company without making payment filed false complaint before Sanjayanagar P.S. The police locked the Company by force. Later on the police opened the unit and found no shortage or sale of goods. The police after registration of the FIR taken the control of the goods and delivered it to the Company. Due to fraudulent action taken by the police, the unit of the defendants closed permanently. 6 O.S.No.9325/2015 Because of this reason, the defendants unable to repay the loan. On these main grounds, the defendants denied the claim of the plaintiff and prayed to dismiss the suit.
4. On the rival pleadings of the parties, the following issues have been framed:
(1) Whether the plaintiff Bank proves the advancement of credit facility of Rs.5,00,000/- on 31.07.2009 and another Rs.5,00,000/- on 09.12.2013 to the defendant including the rate of interest pleaded?
(2) Whether the suit is bad for non joinder of necessary parties?
(3) Whether the plaintiff is entitled for suit claim?
(4) What Order or Decree?
5. In order to prove the claim, the Chief Manager of the plaintiff bank examined as PW.1 and got marked documents at Ex.P.1 to P.15. The defendants have not cross-examined the PW.1 and even not adduced any evidence in their defence.
6. Heard the arguments of learned counsel appearing for the plaintiff bank. The defendants not 7 O.S.No.9325/2015 advanced the arguments in spite of sufficient opportunity.
7. My findings on the above issues are as under:
Issue No.1 : In the Affirmative
Issue No.2 : In the Negative
Issue No.3 : In the Affirmative
Issue No.4 : As per final order,
for the following:
REASONS
8. ISSUE NOs.1 & 4 : The PW.1 has stated and
reiterated the fact of advancement of loan of
Rs.5,00,000/- on 31.07.2009 and enhancement of credit facility of Rs.10,00,000/- on 09.12.2013. He has also spoken about the rate of interest of both loan including terms of repayment which has been pleaded. The defendants in the written statement categorically admitted the receipt of rent under credit facility of Rs.5,00,000/- on 31.07.2009 and Rs.10,000/- on 09.12.2013. The defendants have denied the rate of interest and other terms of the loan. Therefore, the bank 8 O.S.No.9325/2015 is required to prove the rate of interest and other terms of loan pleaded in the plaint.
9. In order to prove such disputed fact, the plaintiff bank has produced loan sanctioned letter at Ex.P.1, letter of agreement at Ex.P.2 and agreement of Hypothecation at Ex.P.3. These records pertaining to sanction of loan of Rs.5,00,000/- on 31.07.2009 under credit facility. The terms and conditions of the loan have been incorporated in these documents including the rate of interest and duration of payment. In Ex.P.1 the rate of interest was 8% p.a. from 01.05.2009 for a period of two years and later interest was 11.75% p.a. with monthly rests. The validity of the loan was for two years and review shall be made after 12 months. These documents support the statement of PW.1 regarding rate of interest and also other terms of the loan.
10. Ex.P.5 is the sanction letter, Ex.P.6 is the letter of agreement and Ex.P.7 is supplementary agreement of loan-cum-hypothecation executed by the defendants at the time of availing credit facility of 9 O.S.No.9325/2015 Rs.10,00,000/- on 09.12.2013. Under this agreement also the rate of interest, duration of the loan etc., has been written. These documents show that the defendants agreed to repay the loan of Rs.10,00,000/- along with interest @ 13.25% p.a. The defendants have admitted the execution of Ex.P.1 to P.3 and Ex.P.5 to P.7. Now the defendants are contending contrary in respect of rate of interest. Therefore, the onus shifts on the defendants to prove that they had not agreed for the rate of interest shown in these documents. To discharge such onus, the defendants not entered into witness-box and even not produced contrary documentary evidence. Therefore, the defendants have failed to discharge the onus. Thus, I hold that the plaintiff has proved through Ex.P.1 to P.3 and Ex.P.5 to P.7 that the defendants have agreed for the rate of interest and terms of the loan which are embodied in the deeds and spoken by PW.1.
11. The plaintiff bank has produced revival letter at Ex.P.4 dated 16.11.2015. The execution of revival letter has not been disputed by the defendants. Even to 10 O.S.No.9325/2015 prove the revival letter at Ex.P.4, the bank examined its Chief Manager who has spoken to the effect that the defendant has executed the revival letter by acknowledging the balance standing in their account. Therefore, the suit filed in the year 2015 is in time prescribed under Limitation Act.
12. The plaintiff produced office copy of the legal notice dated 31.10.2015 at Ex.P.8, postal receipts at Ex.P.9 to P.11 and postal covers at Ex.P.12 to P.14. These records show that the plaintiff bank called upon the defendants to repay the outstanding loan with interest and sent the notice through registered post. Those notices have been returned with an endorsement that the defendants have left the address. It appears that the defendants have not furnished any other address to the plaintiff bank after closing their unit. From these documents and the evidence of PW.1 it can be gathered that the plaintiff bank has demanded the outstanding and defendants not paid the outstanding before filing of the suit.
11 O.S.No.9325/2015
13. In order to establish the present balance standing in the name of the defendants, the plaintiff bank has produced the ledger extract at Ex.P.15 which shows the transaction in the account of the defendants from the date of the loan till filing of the suit. According to this extract an amount of Rs.5,98,349/- was outstanding on 08.10.2015. Further an amount of Rs.47,198.87 was due from the defendants towards interest. Therefore, the total outstanding comes to Rs.6,45,548.32. This extract is sufficient to hold that the defendants are liable for suit claim. Apart from that, the defendants have not disputed the entries in Ex.P.15. Ex.P.15 is the computer output which has been certified to be true and therefore it is admissible in evidence. Accordingly, Ex.P.15 is accepted. From these records, it is very clear that the plaintiff bank has established that an amount of Rs.6,46,550/- is due from the defendants.
14. In order to deny the claim, the defendants have taken the defence that main guarantor for the loan is CGTMSE and the bank is required to enforce the loan 12 O.S.No.9325/2015 against such Corporation. In order to prove such contention, the defendants have not entered into the witness-box and even not produced any documents having the Clause to enforce the claim against CGTMSE. The Chief Manager has specifically stated that the defendants are liable to repay the loan amount which has not been challenged by way of cross-examination. Even the documents produced by the plaintiff bank do not disclose the liability of CGTMSE for repayment of loan of the defendants. It appears that loan was advanced under Smart Score Scheme covered under CGTMSE. That was the scheme under which the loan was advanced and it does not mean that the loan has to be repaid by CGTMSE. For these reasons I hold that the presence of CGTMSE in this suit is not necessary. Entire liability has to be fasten on the defendants.
15. The plaintiff bank has claimed interest @ 12.55% p.a. from the date of the suit till realization. Admittedly, the loan has been sanctioned as working capital for the business of the defendants. Therefore, 13 O.S.No.9325/2015 loan was advanced for commercial transaction. Thus, as per the proviso to Section 34 of C.P.C., the agreed rate of interest has to be granted till realization of the decreetal amount. Therefore, these issues are answered accordingly.
16. ISSUE NO.4 : In view of the above discussions and my findings on issue Nos.1 to 3, I proceed to pass the following:
ORDER The suit of the plaintiff is decreed with costs.
The defendants are hereby directed to pay a sum of Rs.6,46,550/- along with interest @ 12.55% p.a. from the date of the suit till its complete realization. In default, the plaintiff bank is at liberty to recover suit claim from the defendants in accordance with law.
Draw decree accordingly.
[Dictated to the Judgment Writer, transcribed by her, corrected, signed and then pronounced by me, in the Open Court on this the 1st day of September 2016].
[B.B. Jakati) LIX Additional City Civil & Sessions Judge.
BANGALORE.
14 O.S.No.9325/2015ANNEXURE
1. List of witnesses examined on behalf of the Plaintiff/s:
PW.1 - Sri P.N. Bhaskar
2. List of witnesses examined on behalf of the Defendant/s:
NIL
3. List of documents marked on behalf of the Plaintiff/s:
Ex.P.1 Loan sanction letter
Ex.P.2 Letter of agreement
Ex.P.3 Hypothecation deed
Ex.P.4 Revival letter
Ex.P.5 Another sanction letter
Ex.P.6 Letter of agreement
Ex.P.7 Letter of hypothecation
Ex.P.8 Copy of legal notice
Ex.P.9 to 11 Postal receipts
Ex.P.12 to 14 Postal covers
Ex.P.15 Statement of account
4. List of documents marked on behalf of the defendant/s:
NIL [B.B. Jakati) LIX Additional City Civil & Sessions Judge.
BANGALORE.15 O.S.No.9325/2015
The defendants and their counsel are absent. No representation is made.
The defendants not
advanced the argument.
For judgment by
11.08.2016.
LIX ACC&SJ, Bangalore.
Further argument is
required. Hence, posted for
further argument.
Call on 30.08.2016.
LIX ACC&SJ, Bangalore.
16 O.S.No.9325/2015
01.09.2016:
Judgment pronounced in the Open Court (Vide separate detailed judgment) ORDER The suit of the plaintiff is decreed with costs.
The defendants are hereby
directed to pay a sum of
Rs.6,46,550/- along with interest @ 12.55% p.a. from the date of the suit till its complete realization. In default, the plaintiff bank is at liberty to recover suit claim from the defendants in accordance with law.
Draw decree accordingly.
[B.B. Jakati) LIX Additional City Civil & Sessions Judge.
BANGALORE.
17 O.S.No.9325/2015