Delhi District Court
Bansal Credit Ltd vs Royal Sundaram General Insurance Co ... on 21 May, 2025
IN THE COURT OF ANURAG SAIN, DISTRICT JUDGE
(COMMERCIAL COURT-01), PATIALA HOUSE COURTS, NEW
DELHI
CS (COMM.) 181/2019
Bansal Credits Limited
1, Ansari Road,
(2nd Floor, Above Allahabad Bank),
Daryaganj, New Delhi-110002
........Plaintiff
Versus
1. Royal Sundaram General Insurance Co. Limited,
108/109 & 111, 1st Floor,
Ambadeep, 14 K.G. Marg,
New Delhi-110001
Also At:-
Royal Sundaram General Insurance Co. Limited,
605, 6th Floor Ashoka Estate,
Barakhamba Road,
Connaught Place,
New Delhi-110001
2. Sajid S/o Rahimuddin
Abbu Hanifa Masjidward No.25,
Gali No.1, Naayi Aabadi Dadri,
Gautam Budh Nagar,
Uttar Pradesh-203207
.......Defendants
Date of Institution : 08.08.2019
Conclusion of arguments : 03.05.2025
Date of Judgment : 21.05.2025 Digitally
signed by
ANURAG
ANURAG SAIN
SAIN Date:
2025.05.21
16:56:49
+0530
CS (COMM.) 181/2019 Page 1 of 30
JUDGMENT
1. The present suit for recovery of Rs.4,13,631/- dues as on 27.03.2019 has been filed by the plaintiff against the defendants.
2. Briefly stated the facts of the case are that the plaintiff is a company incorporated under Companies Act, 1956 and is a non-banking finance company duly registered with the Reserve Bank of India. Mr. Ishwar Singh is the Manager working with the plaintiff company and has been duly authorized vide Power of Attorney to file the present suit against the defendants and to sign, verify and attest the affidavits and other pleadings in relation to the suit.
3. Defendant no.1 too is an incorporated body under the Companies Act, 1956 and is engaged in general insurance business and undertakes insurance inter alia of property including motor vehicles. The defendant company covers the motor vehicles against various risk of fire, accident, theft and burglary. The activities of defendant no.1 are governed by the Insurance Act 1939 and the IRDA Act 1999. The Insurance Regulatory & Development Authority, is the Government Regulator for defendant no.1 company. Defendant no.1 is bound by the regulations made by the IRDA and any act contrary to directions of IRDA is illegal.
4. Defendant no.2 is a driver by profession.
CS (COMM.) 181/2019 Page 2 of 305. In the month of August 2016, defendant no.2 approached the plaintiff for finance to purchase a vehicle which he wanted to run as taxi and the plaintiff, after preliminary scrutiny, agreed to extend the same. In accordance with loan agreement dated 07.09.2016, the plaintiff extended a loan of Rs. 3,90,000/- to defendant no.2 and the EMI for the loan was fixed at Rs. 13,154/- for the first installment and Rs. 11,154/- for all the remaining 47 installments. The EMI was computed after adding the periodical interest payable by defendant no.2. The said defendant purchased vehicle No.UP 16 DT 9307, a New CNG/Maruti Wagon R Green LXI and defendant no.2 signed and executed the vehicle loan cum hypothecation agreement. Article 4 of the Vehicle Loan Cum Hypothecation agreement mandated that defendant no.2 will keep his vehicle insured all the time and in compliance of the said condition, defendant no.2 had insured the above vehicle from defendant no.1 against the Package Policy (Commercial Vehicle - Passenger Carrying) and defendant no.1 had issued policy bearing no. MOQ1103617 to defendant no.2 for the sum assure (IDV) of Rs. 4,42,849/-. Defendant no.2 paid the premium for the insurance cover as demanded by defendant no.1 and as required under the loan agreement. The insurance cover was valid for one year from 30.08.2016 until 29.08.2017.
6. It has been further averred that the policy issued by defendant no.1 was subject inter alia to IMT-7. As per the directions CS (COMM.) 181/2019 Page 3 of 30 issued by IRDA, all rules and regulations contained in India Motor Tariff are binding on all Insurers including defendant no.1. IMT-7 to which the policy was made subject, is prescribed in the Indian Motor Tariff to protect interests of the bankers and finance companies in the event of any mishap with vehicle which has been obtained in finance.
7. It has been further averred that on 16.08.2017, unfortunately, the above vehicle of defendant no.2 met with a serious accident. The loss was duly reported by defendant no.2 to defendant no.1 i.e. Insurance Company. The damage to the vehicle was quite extensive. Accordingly, surveyor recommended statement of the claim on total loss basis. The claim was processed by defendant no.1 and was authorized for payment. In view of the Hypothecation Clause i.e. IMT-7, defendant no.1 was obliged to make payment of the claim to the plaintiff.
8. It has been further averred that while the claim was being processed, the plaintiff was in touch with defendant no.1 to ensure that the statement of the claim is carried out with plaintiff and not with defendant no.2. Vide email dated 02.01.2018, the plaintiff annexed a copy of the letter from defendant no.2. In the said letter, defendant no.2 had clearly addressed to defendant no.1 that the claim be paid to the plaintiff. A reminder was sent by email on 17.01.2018.
9. It has been further averred that in response to emails sent by the plaintiff to defendant no.1, a reply was received vide email CS (COMM.) 181/2019 Page 4 of 30 dated 19.01.2018. In the said email, defendant no.2 required the plaintiff to send to them the form No. 35 and NOC to obtain RC Cancellation which according to them, was pre-condition to the payment of claim. The plaintiff accordingly sent form 35 and NOC to the defendant as required by them.
10.It has been further averred that on 29.10.2018, the plaintiff was informed by defendant no.1 that they had released the payment to defendant no.2 on 21.05.2018. This was illegal and contrary to the regulations of insurance applicable to defendant no.1. The NOC and form 35 was given to defendant no.1 only since they wanted the same for cancellation of RC but they mischievously used the same to release the payment to defendant no.2 who was not entitled to it and who had still a sizable amount of loan outstanding against him for the vehicle.
11.It has been further averred that according to the regulatory provisions and in particular according to IMT-7 and Vehicle Loan Hypothecation Agreement, the claim amount in case of a total loss claim, is required to be paid to financier in whose favour hypothecation has been effected. By releasing the money to defendant no.2, defendant no.1 has violated law, regulations and terms of the contract of its own. The said defendant is therefore, liable to make payment of the claim to the plaintiff. Thus, the plaintiff has a valid cause of action against defendant no.2 also.
12. It has been further averred that defendants no.1 and 2 are both CS (COMM.) 181/2019 Page 5 of 30 liable to the plaintiff for recovery of plaintiff's lawful dues. The plaintiff wishes to maintain his claim to the extent only of the outstanding vehicle loan amount due from defendant no.2, which as on 27.03.2019, comes to Rs. 4,13,631/- which is including interest and incidentals charges. Both the defendants are liable to pay the same in their respective capacity as envisaged by law and by contract. On these premise, the present suit for recovery has been filed by the plaintiff against the defendants.
13. Summons of the suit was issued to the defendants. Defendant no.1 appeared before the court and filed written statement.
14. In the written statement, defendant no.1 has averred that the amount of Rs. 4,32,349/- was paid to insured in full and final settlement of the claim, only on receipt of NOC and on receipt of Form 35 from the financier/plaintiff. Further both these original documents were submitted to the RTO who on receipt of these original documents cancelled the registration of the vehicle since the vehicle was a total loss. It has been further averred that in view of this settlement, the plaintiff is not entitled to any further amount from defendant no.1 and the present suit is liable to be dismissed and hence the reference to IMT 7 regulation is not relevant to the issue at hand. It has been further averred that in fact it was the financier himself who gave the No Objection certificate and Form 35 to settle the claim in favour of the insurer. On these premise, defendant no.1 has CS (COMM.) 181/2019 Page 6 of 30 prayed for dismissal of the present suit.
15. Rejoinder was filed by the plaintiff to the written statement of defendant no.1 wherein the plaintiff has controverted the preliminary objections as not sustainable and further denying and controverting the averments of the written statement on its merits. The plaintiff has reiterated its averments contained in the plaint.
16. None appeared on behalf of defendant no.2 despite service of summons on 25.10.2019 and the court vide order dated 12.01.2021 forfeited the right of defendant no.2 to file written statement and also vide order dated 02.09.2021, defendant no.2 was proceeded exparte.
17. From the pleadings and the material on record, vide order dated 18.03.2021, following issues were framed by the court:-
1. Whether the IMT-7 in respect of the insurance policy is applicable in this case and if so, its effect? OPP.
2. Whether plaintiff is entitled for the recovery of the suit amount, if so to what extent and against which defendant? OPP.
3. Whether plaintiff is entitled for interest, if so, at what rate and for which period? OPP.
4. Relief, if any.
18. In the present case, case management hearing the drawn by the court on 22.03.2022 and the matter was listed for plaintiff's evidence on 04.05.2022, 07.05.2022, 11.05.2022 and CS (COMM.) 181/2019 Page 7 of 30 18.05.2022. On 04.05.2022 no plaintiff's witness was present.
On 07.05.2022, two witnesses of the plaintiff namely Sh. Ishwar Singh and Ms Poonam Saini were present and they were examined by the plaintiff as PW-1 and PW-2 respectively however, no one was present on behalf of the defendants and on the said date, defendant no.1 was also proceeded exparte by the court. On 11.05.2022, the plaintiff examined other witness namely Ms Pooja Chopra as PW-3 however, none appeared on behalf of the defendants to cross examine this witness. On 18.05.2022, no plaintiff's witness was present and considering the facts and circumstances of the case, the court granted opportunity to the plaintiff to lead further evidence. On the said date, Sh. Ved Vyas Tripathi, Ld. Counsel for defendant no.1 appeared and filed his memorandum of appearance though defendant no.1 was already exparte. On 13.07.2022, the plaintiff examined other witness Sh. Rahul Kumar Agrawal as PW-4 who was cross examined on behalf of defendant no.1 and discharged. On the said date i.e. 13.07.2022, plaintiff's evidence was closed and the matter was listed for defendant's evidence.
19. PW1 Sh. Ishwar Singh tendered his evidence by way of affidavit exhibited as Ex. PW1/A and relied upon certain documents as under:-
Sl. No. Documents Exhibit/Mark
number
CS (COMM.) 181/2019 Page 8 of 30
1 General Power of Attorney dated Ex. PW1/1
07.01.2015 (OSR)
2 Original Vehicle Loan cum Ex. PW1/2
hypothecation agreement
3 True copy of the package policy Ex. PW1/3
4 The true copy of form 23 (form of Ex. PW1/4
certificate of registration)
5 Original carbon copy of letter dated Ex. PW1/5
19.12.2017
6 Attested copy of email dated Ex. PW1/6
02.01.2018
7 True attested copy of email dated Ex. PW1/7
17.01.2018
8 True attested copy of email dated Ex. PW1/8
19.01.2018
9 True attested copy of email dated Ex. PW1/9
01.06.2018
10 True attested copy of email dated Ex. PW1/10
30.10.2018 and 08.11.2018 (Collectively)
11 Attested copy of downloaded extract Ex. PW1/11
of IMT-7
12 Statement of account in respect of Ex. PW1/12
defendant no.2
13 Certificate u/s 65-B of the Indian Ex. PW1/13
Evidence Act
20. As stated above, this witness was not cross examined on behalf of the defendants as the defendants were exparte and none was present on behalf of the defendants to cross examine this CS (COMM.) 181/2019 Page 9 of 30 witness.
21. PW-2 Ms Poonam Saini also tendered her evidence by way of affidavit exhibited as Ex. PW2/A and deposed that she is working as Handwriting and Fingerprint Expert and she has examined disputed signatures and compared with standard signature of 'Sajid' and proved her report in this regard as Ex. PW2/1 which was accompanied with certificate under Section 65B of the Indian Evidence Act exhibited as Ex. PW2/2.
22. As stated above, this witness was also not cross examined on behalf of the defendants as the defendants were exparte and none was present on behalf of the defendants to cross examine this witness.
23. PW-3 Ms Pooja Chopra also tendered her evidence by way of affidavit exhibited as Ex. PW3/A and placed on record the certificate under Section 65B of Indian Evidence Act exhibited as Ex. PW3/1.
24. As stated above, this witness was also not cross examined on behalf of the defendants as the defendants were exparte and none was present on behalf of the defendants to cross examine this witness.
25. The plaintiff also examined Sh. Rahul Kumar Agrawal as PW-4 who deposed that he was an Officer on Special Duty in Insurance Regulatory and Development Authority of India (IRDAI) and duly authorized to appear and depose before the court vide authority letter dated 11.07.2022 exhibited as Ex.
CS (COMM.) 181/2019 Page 10 of 30PW4/1. He further deposed that he has brought the relevant summoned record of Rule IMT 7 which has been issued by Tariff Advisory Committee with respect to Vehicles hypothecated under an agreement. He further deposed that this particular Rule has been downloaded from the system and filed its copy duly certified by him exhibited as Ex. PW4/2 bearing his signatures and certification at point A. He further deposed that it is a public document.
26. This witness was cross examined on behalf of defendant no.1.
27. In the present case, defendant no.1 examined one witness Sh.
Yogesh Kumar Goel as D1W1 who was cross examined on behalf of the plaintiff and vide separate statement, defendant no.1 closed its evidence on 30.11.2022.
28. D1W1 Sh. Yogesh Kumar Goel deposed that he was Assistant Manager in defendant no.1 company and was authorized to depose as witness vide authorization letter dated 25.07.2022 exhibited as Ex. D1W1/A issued by Assistant Manager-OD of defendant no.1. D1W1 Sh. Yogesh Kumar Goel tendered his evidence by way of affidavit exhibited as Ex. D1W1/C and relied upon following documents:-
Sl. Documents Exhibit/Mark No. number CS (COMM.) 181/2019 Page 11 of 30 1 True copy of the motor vehicle insurance Ex. D1W1/D policy dated 30.08.2016 issued in the name of Sajid bearing signatures of one Mr Prashant Pratap singh and stamp of the defendant no.1 company 2 True copy of No-Objection Certificate Ex. D1W1/E dated 07.02.2018 regarding vehicle no.
UP-16DT-9307 bearing signatures of one Mr. Prashant Pratap Singh and stamp of the defendant no.1 company 3 True copy of Form 35 dated 07.02.2018 Ex. D1W1/F regarding cancellation of agreement of hire-purchase/lease/hypothecation entered into between plaintiff and defendant no.2 bearing signatures of one Mr. Prashant Pratap Singh and stamp of the defendant no.1 company
29. This witness was cross examined on behalf of the plaintiff. The cross examination of this witness shall be discussed during findings.
30. I have heard Sh. Prince Jain, Ld. Counsel for the plaintiff and Ms Deepa Chacko and Sh. Pramod Shah, Ld. Counsel for defendant no.1 and carefully perused the record. I have also gone through the entire records of the case including pleadings of the parties, evidence led by the parties and documents proved by the parties during trial. I have also gone through the written submissions filed by the Ld. Counsels for the parties.
31. My issue-wise findings in the present matter are as under:
CS (COMM.) 181/2019 Page 12 of 3032. Issue no.1:-
Whether the IMT-7 in respect of the insurance policy is applicable in this case and if so, its effect? OPP.
33. Onus to prove this issue was on the plaintiff. PW-1 Sh. Ishwar Singh in his affidavit in evidence Ex. PW1/A deposed that the plaintiff is a non-banking finance company and defendant no.1 too is an incorporated body under the Companies Act, 1956 and is engaged in general insurance business and undertakes insurance inter alia of property including motor vehicles which covers the motor vehicles against various risk of fire, accident, theft and burglary. He further deposed that the activities of defendant no.1 are governed by the Insurance Act 1939 and the IRDA Act 1999 and the Insurance Regulatory & Development Authority, is the Government Regulator for defendant no.1 company and defendant no.1 is bound by the regulations made by the IRDA and any act contrary to directions of IRDA is illegal. He further deposed that defendant no.2 is a driver by profession and in the month of August 2016, defendant no.2 approached the plaintiff for finance to purchase a vehicle which he wanted to run as taxi and the plaintiff, after preliminary scrutiny, agreed to extend the same and in accordance with loan agreement dated 07.09.2016, the plaintiff extended a loan of Rs. 3,90,000/- to defendant no.2 and the EMI for the loan was fixed at Rs. 13,154/- for the first installment and Rs. 11,154/- for all CS (COMM.) 181/2019 Page 13 of 30 the remaining 47 installments. He further deposed that the EMI was computed after adding the periodical interest payable by defendant no.2 and the said defendant purchased vehicle No.UP 16 DT 9307, a New CNG/Maruti Wagon R Green LXI and signed and executed the vehicle loan cum hypothecation agreement exhibited as Ex. PW1/2. He further deposed that Article 4 of the Vehicle Loan Cum Hypothecation agreement mandated that defendant no.2 will keep his vehicle insured all the time and in compliance of the said condition, defendant no.2 had insured the above vehicle from defendant no.1 against the Package Policy (Commercial Vehicle-Passenger Carrying) and defendant no.1 had issued policy bearing no. MOQ1103617 to defendant no.2 for the sum assure (IDV) of Rs. 4,42,849/-, true copy has been exhibited as Ex. PW1/3. He further deposed that defendant no.2 paid the premium for the insurance cover as demanded by defendant no.1 and as required under the loan agreement and the insurance cover was valid for one year from 30.08.2016 until 29.08.2017. The true attested copy of Form 23 for registration of the aforesaid vehicle has been exhibited as Ex. PW1/4.
34. He further deposed that the policy issued by defendant no.1 was subject inter alia to IMT-7 and as per the directions issued by IRDA, all rules and regulations contained in India Motor Tariff are binding on all Insurers including defendant no.1 and IMT-7 to which the policy was made subject, is prescribed in the CS (COMM.) 181/2019 Page 14 of 30 Indian Motor Tariff to protect interests of the bankers and finance companies in the event of any mishap with vehicle which has been obtained in finance.
35.It has been further deposed that on 16.08.2017, unfortunately, the above vehicle of defendant no.2 met with a serious accident and the loss was duly reported by defendant no.2 to defendant no.1 i.e. Insurance Company. He further deposed that the damage to the vehicle was quite extensive. Accordingly, surveyor recommended statement of the claim on total loss basis. He further deposed that the claim was processed by defendant no.1 and was authorized for payment and in view of the Hypothecation Clause i.e. IMT-7, defendant no.1 was obliged to make payment of the claim to the plaintiff.
36.He further deposed that while the claim was being processed, the plaintiff was in touch with defendant no.1 to ensure that the statement of the claim is carried out with plaintiff and not with defendant no.2. He further deposed that vide email dated 02.01.2018, the plaintiff annexed a copy of the letter from defendant no.2 and in the said letter, defendant no.2 had clearly addressed to defendant no.1 that the claim be paid to the plaintiff and a reminder was sent by email on 17.01.2018. Original carbon copy of letter dated 19.12.2017, attested copy of email dated 02.01.2018 and true attested copy of email dated 17.01.2018 have been exhibited as Ex. PW1/5 to Ex.PW1/7 respectively.
CS (COMM.) 181/2019 Page 15 of 3037. It has been further deposed that in response to emails sent by the plaintiff to defendant no.1, a reply was received vide email dated 19.01.2018 exhibited as Ex. PW1/8 and in the said email, defendant no.2 required the plaintiff to send to them the form No. 35 and NOC to obtain RC Cancellation which according to them, was pre-condition to the payment of claim and the plaintiff accordingly sent form 35 and NOC to the defendants as required by them. He further deposed that the plaintiff company was in regular follow up with defendant no.1 for the status of the settlement of the claim and also marked another email dated 01.06.2018 exhibited as Ex. PW1/9 for getting the status of the payment of claim.
38. It has been further deposed that on 29.10.2018, the plaintiff was informed by defendant no.1 that they had released the payment to defendant no.2 on 21.05.2018 which was illegal and contrary to the regulations of insurance applicable to defendant no.1. He further deposed that the NOC and form 35 was given to defendant no.1 only since they wanted the same for cancellation of RC but they mischievously used the same to release the payment to defendant no.2 who was not entitled to it and who had still a sizable amount of loan outstanding against him for the vehicle. True attested copy of email dated 30.10.2018 and 08.11.2018 have been exhibited as Ex. PW1/10 (collectively).
39.It has been further deposed that according to the regulatory provisions and in particular according to IMT-7 and Vehicle CS (COMM.) 181/2019 Page 16 of 30 Loan Hypothecation Agreement, the claim amount in case of a total loss claim is required to be paid to financier in whose favour hypothecation has been effected and by releasing the money to defendant no.2, defendant no.1 has violated law, regulations and terms of the contract of its own. The said defendant is therefore, liable to make payment of the claim to the plaintiff. The attested copy of downloaded extract of IMT-7 of Indian Motor Tariff has been exhibited as Ex. PW1/11. He further deposed that the plaintiff has a valid cause of action against defendant no.2 also.
40. It has been further deposed that defendants no.1 and 2 are both liable to the plaintiff for recovery of plaintiff's lawful dues. The plaintiff wishes to maintain his claim to the extent only of the outstanding vehicle loan amount due from defendant no.2, which as on 27.03.2019, comes to Rs. 4,13,631/- which is including interest and incidentals charges and both the defendants are liable to pay the same in their respective capacity as envisaged by law and by contract. The statement of account of defendant no.2 has been exhibited as Ex. PW1/12 and certificate under Section 65B of the Indian Evidence Act has been exhibited as Ex. PW1/13.
41. This witness was not cross examined on behalf of the defendants, as stated above, as the defendants were exparte and none was present on behalf of the defendants to cross examine this witness.
CS (COMM.) 181/2019 Page 17 of 3042. In the present case, issue no.1 revolves around document exhibited as Ex. PW/11 i.e. IMT-7 pertaining to Vehicles subject to Hypothecation Agreement and in order to prove this document, the plaintiff, besides examining PW-1 Sh. Ishwar Singh, has also examined Sh. Rahul Kumar Agrawal as PW-4 who has brought the relevant summoned record of Rule IMT 7 exhibited as Ex. PW4/2. It has been come in the deposition of this witness that the same has been issued by Tariff Advisory Committee with respect to Vehicles hypothecated under an agreement and this particular Rule has been downloaded from the system and further deposed that it is a public document.
43. On the other hand, defendant no.1 also examined Sh. Yogesh Kumar as D1W1 who tendered his evidence by way of affidavit exhibited as Ex. D1W1/C. In his affidavit in evidence, D1W1 Sh. Yoeosh Kumar has deposed that amount of Rs. 4,32,349/- was paid to the insured i.e. defendant no.2 towards the full and final settlement of the claim only on receipt of NOC as well as on receipt of Form 35 from the financier/plaintiff and the same were submitted to the RTO who, on receipt of the same, cancelled the registration of the vehicle since the vehicle was total loss. He has further deposed that the reference of IMT 7 regulation is completely irrelevant and immaterial to the issue in hand and the same have been wrongly contemplated with sole intention to mislead the facts in hand. He further deposed that they have solely relied upon the NOC as well as the Form CS (COMM.) 181/2019 Page 18 of 30 35 as furnished by the plaintiff in the instant case. In his affidavit in evidence, D1W1 Sh. Yogesh Kumar has relied upon the copy of the motor vehicle insurance policy dated 30.08.2016 exhibited as Ex. D1W1/D issued by defendant no.1 in the name of defendant no.2 along with copy of Commercial Vehicles Package Policy. In the Commercial Vehicles Package Policy, the provisions of IMT have also been mentioned and IMT.7 is reproduced as under:-
"IMT.7. VEHICLES SUBJECT TO HYPOTHECATION AGREEMENT It is hereby declared and agreed that the vehicle insured is pledged to/hypothecated with as specified in the Schedule (hereinafter referred to as the "Pledgee") and it is further understood and agreed that the Pledgee is interested in any monies which but for this Endorsement would be payable to the Insured under this Policy in respect of such loss or damage to the vehicle Insured as cannot be made good by repair and/or replacement of parts and such monies shall be paid to the Pledgee as long as they are in the Pledgee of the Vehicle insured and their receipt shall be a full and final discharge to the Company in respect of such loss or damage It is further declared and agreed that for the purpose of the Personal Accident cover for the owner-driver granted under the Policy, the Insured named in the Policy will continue to be deemed as the owner-driver subject to compliance of provisions of the Policy relating to this cover. Save as by this Endorsement expressly agreed that nothing CS (COMM.) 181/2019 Page 19 of 30 herein shall modify or affect the rights or liabilities of the Insured or the Company respectively under or in connection with this Policy or any term, provision or condition thereof. Subject otherwise to the Terms Exceptions Conditions and limitation of this Policy."
44. The plaintiff has also proved IMT.7 in the testimony of PW-1 Sh. Ishwar Singh which has been exhibited as Ex. PW1/11 and proved the same exhibited as Ex. PW4/2 by examining PW-4 Sh. Rahul Kumar Agrawal. Though in the cross examination of PW-1 Sh. Rahul Kumar Agrawal, defendant no.1 has put the question to this witness that this witness did not file any certificate under Section 65B of Indian Evidence Act in support of document Ex. PW4/2 and during cross examination, this witness admitted that he has not file any certificate under Section 65B of Indian Evidence Act in support of document Ex. PW4/2 but voluntarily deposed that it is a public document and already in the public domain which can be accessed by anyone however, at the same time, defendant no.1 has also relied upon the same along with motor vehicle insurance policy dated 30.08.2016 exhibited as Ex. D1W1/D. Moreover, in the affidavit of admission and denial of the documents so filed by defendant no.1 before the court, defendant no.1 has admitted the copy of Package Policy (commercial vehicle passenger carrying) no. MOQ1103617. Once defendant no.1 has also place reliance upon this document and it is an admitted CS (COMM.) 181/2019 Page 20 of 30 document by defendant no.1, the cross examination of PW-4 Sh. Rahul Kumar Agrawal on this point lost its significance.
45. The plaintiff cross examined D1W1 Sh. Yogesh Kumar Goel on the point as to whether this witness knows about the guidelines pertaining to IMT.7 and in reply to the same, this witness admitted that he is aware of the same and deposed that IMT.7 pertains to hypothecation of Financier in the registration certificate of the vehicle and further admitted that in the event of any loss, such as total loss/constructive total loss, the financier has a lien over the claim amount and in that event, the amount is payable as per the terms of the policy. Further question was put by the plaintiff to D1W1 Sh. Yogesh Kumar Goel, whether defendant no.1 had informed the plaintiff before releasing the claim amount in favour of defendant no.2 and in reply to the same, this witness has categorically deposed that defendant no.2 had provided the NOC and Form No. 35 from the plaintiff and thereafter, the claim was released in favour of defendant no.2 and thus, it was not required to give information to the plaintiff and hence defendant no.1 did not give any prior information to the plaintiff in this regard. Further question was put by the plaintiff to D1W1 Sh. Yogesh Kumar Goel that as per IMT.7, the plaintiff having the lien/HP over the insured vehicle has to be given first priority to the lien holder and in reply to the same, this witness deposed that in case the claimant produces the NOC from the financier, in that eventuality, the amount is CS (COMM.) 181/2019 Page 21 of 30 released to the claimant however, in case no NOC is produced from the financier and in that eventuality, the amount is released to the financier on the basis of loan statement.
46. In the present case, the plaintiff itself has issued No Objection on 07.02.2018 to the Registration Authority, Noida qua vehicle no. UP16DT9307 exhibited as Ex. D1W1/E in the evidence of D1W1 Sh. Yogesh Kumar Goel. Perusal of No Objection Ex. D1W1/E so issued by the plaintiff shows that vide this letter, the plaintiff itself informed the Registering Authority, Noida that they have 'No Objection' if their name as Hire Purchase/Hypthecation/Lease Financiers in the Registration Certificate of Vehicle No. UP16DT9307 is deleted from its Registration Certificate as they have issued Hire Purchase/Hypothecation/Lease Termination Form (Form 35) dated 07.02.2018 in respect thereof.
47. Further the plaintiff itself has issued Form 35 to the Registration Authority, Noida exhibited by D1W1 Sh. Yogesh Kumar Goel as Ex. D1W1/F which is with respect to Notice of Termination of an Agreement of Hire Purchase/Lease/Hypothecation whereby it was declared by the plaintiff itself that agreement of hire-purchase/lease/hypothecation entered into between the plaintiff and defendant no.2 has been terminated and the plaintiff itself has requested that the note endorsed in the Certificate of Registration of Vehicle No. UP16DT9307 in CS (COMM.) 181/2019 Page 22 of 30 respect of the said Agreement between the plaintiff and defendant no.2, be cancelled and the certificate of Registration together with the fee was also enclosed.
48. It is apparent from the language of IMT. 7 that the plaintiff was entitled for the insured amount till the time the vehicle was pledged with the plaintiff. However, in the present case, as stated above, the plaintiff itself has terminated the agreement of Hire Purchase/Lease/Hypothecation executed between the plaintiff and defendant no.2 by issuing Form 35 dated 07.02.2018 Ex. D1W1/1 to the Registration Authority, Noida requesting therein that the note endorsed in the Certificate of Registration of Vehicle No. UP16DT9307 in respect of the said Agreement between the plaintiff and defendant no.2, be cancelled. Also, the plaintiff itself issued a No Objection Ex. D1W1/E thereby informing the Registering Authority, Noida that they have 'No Objection' if the name of the plaintiff in the Registration Certificate of Vehicle No. UP16DT9307 as Hire Purchase/Hypthecation/Lease Financiers is deleted from the Registration Certificate of the said vehicle.
49. It is the case of the plaintiff that vide email dated 02.01.2018 exhibited as Ex. PW1/6 requested defendant no.1 to make the payment of 'Total Loss Claim' of Vehicle No. UP16DT9307 to the plaintiff as the said vehicle was subject to hypothecation with the plaintiff and in the said email, the plaintiff has also mentioned that the said insurance policy was subject to IMT.7 CS (COMM.) 181/2019 Page 23 of 30 wherein the plaintiff has also reproduced the provisions of IMT.7.
50. It is further the case of the plaintiff that vide email dated 19.01.2018 exhibited as Ex. PW1/8, defendant no.1 had asked the plaintiff to provide RC Cancellation letter, NOC Form-35, OV RC (or) RC extract for processing the claim. The plaintiff has averred that it was the pre-condition to the payment of claim and the plaintiff accordingly, sent Form 35 and NOC to the defendant as required by them.
51. Perusal of email dated 19.01.2018 exhibited as Ex. PW1/8 shows that though vide this email, defendant no.1 had asked the plaintiff to provide RC Cancellation letter, NOC Form-35, OV RC (or) RC extract for processing the claim however, it is nowhere mentioned in the said email that the same was the pre- condition to the payment of claim. Though it admitted case of defendant no.1 that defendant no.1 has been provided with Form 35 for termination of the Agreement of Hire Purchase/Lease/Hypothecation and No Objection qua deletion of the name of the plaintiff as Hire Purchase/Hypothecation/Lease Financier however, the plaintiff nowhere has mentioned that the same were provided to defendant no.1 by the plaintiff in terms of email dated 19.01.2018 exhibited as Ex. PW1/8 and in the pleadings of the case as well as in the affidavit in evidence of PW-1 Sh. Ishwar CS (COMM.) 181/2019 Page 24 of 30 Singh, the plaintiff has stated that the plaintiff sent Form 35 and NOC to the defendant as required by them but nowhere mentioned that the same were sent to defendant no.1 to the plaintiff in terms of email dated 19.01.2018 exhibited as Ex. PW1/8.
52. The plaintiff is a non-banking finance company and it is assumed that the plaintiff was well aware of its rights how to get the claim from the insurance company in case the vehicle is under hypothecation with the plaintiff. Perusal of email dated 02.01.2018 Ex. PW1/6 sent by the plaintiff to defendant no.1 wherein the plaintiff has specifically mentioned that the insurance policy is subject to IMT.7, clearly shows that the plaintiff was well aware of the provisions of IMT. 7 as the language of which clearly shows that the plaintiff was entitled for the insured amount as long as the vehicle is under the hypothecation with the plaintiff. The said email Ex. PW1/6 sent by the plaintiff to defendant no.1 is dated 02.01.2018. However, despite knowing fully well the provisions of IMT.7, on 07.02.2018, the plaintiff has issued Form 35 thereby terminating the Agreement of Hire Purchase/Lease/Hypothecation executed between the plaintiff and defendant no.2 and issued No Objection for deletion of its name as Hire Purchase/Hypothecation/Lease Financier in the registration certificate of vehicle No. UP16DT9307. Thus, the CS (COMM.) 181/2019 Page 25 of 30 averments of the plaintiff in this regard are without any base.
53. Since the plaintiff itself has issued No Objection Ex. D1W1/E and Form 35 Ex. D1W1/F in favour of the Registering Authority, Noida with respect to deletion of their name as Hire Purchase/Hypthecation/Lease Financiers in the registration certificate of vehicle No. UP16DT9307 and has terminated the said agreement executed between the plaintiff and defendant no.2, the provisions of IMT.7 are not applicable to the facts of this case inasmuch as the same were applicable till the time, vehicle No. UP16DT9307 was under the hypothecation with the plaintiff.
54. In view of my aforesaid discussion, the plaintiff has failed to prove issue no.1 and accordingly, issue no.1 is decided against the plaintiff and in favour of defendant no.1.
55. Issue no.2:-
Whether plaintiff is entitled for the recovery of the suit amount, if so to what extent and against which defendant? OPP.
56. Onus to prove this issue was upon the plaintiff. In the present case, the plaintiff has prayed for the recovery of Rs. 4,13,631/- dues as on 27.03.2019 from the defendants. The testimony of PW-1 Sh. Ishwar Singh as well as the documents relied upon by this witness, has been discussed above. The court has decided issue no.1 against the plaintiff and in favour of defendant no.1 CS (COMM.) 181/2019 Page 26 of 30 while observing that the provisions of IMT.7 are not applicable to the facts of this case and accordingly, in view of the discussions made while deciding issue no.1, the plaintiff is not entitled for recovery of the suit amount from defendant no.1.
57. As regards defendant no.2, PW-1 Sh. Ishwar Singh in his affidavit in evidence Ex. PW1/A (The evidence of this witness has been discussed above in detailed) has relied upon the statement of account in respect of defendant no.2 exhibited as Ex. PW1/12 which has been accompanied with certificate under Section 65B of the Indian Evidence Act exhibited as Ex. PW1/13. Perusal of Ex. PW1/12 shows that the plaintiff has advanced total loan amount of Rs. 3,90,000/- to defendant no.2 for financing of vehicle no. UP16DT9307 along with interest/HP charges of Rs. 1,47,392/- total amounting to Rs. 5,37,392/-. Perusal of the statement of account exhibited as Ex. PW1/12 and proved by PW-1 Sh. Ishwar Singh shows that as per the same, defendant no.2 has paid the installments to the plaintiff and after 23.10.2017, the receivable amount from defendant no.2 has been shown in the statement of account as '0' i.e. Zero and only incidentals delayed payment & cheque returned charges of Rs.1,64,587/- as on 27.03.2019 have been shown to be due and outstanding from defendant no.2. From the testimony of PW-1 Sh. Ishwar Singh and the statement of account Ex. PW1/12, it is established that as on 27.03.2019 an amount of Rs. 1,64,587/- towards incidentals delayed payment CS (COMM.) 181/2019 Page 27 of 30 & cheque returned charges was due and outstanding against defendant no.2 and failure to pay the same has been proved by the deposition of PW-1 Sh. Ishwar Singh, which has been corroborated by the document proved by the witness. There is nothing on record to disbelieve the testimony of this witness or to doubt the credibility of the documentary evidence. In the present case, defendant no.2 chose not to contest the suit and remained exparte. The averments of the plaintiff in the plaint as well as deposition of PW-1 Sh. Ishwar Singh remained unrebutted and uncontroverted. Accordingly, as on 27.03.2019, the plaintiff is entitled for incidentals delayed payment & cheque returned charges of Rs.1,64,587/- from defendant no.2. In view of my aforesaid discussion, issue no.2 is decided in favour of the plaintiff and against defendant no.2.
58. Issue no. 3:-
Whether plaintiff is entitled for interest, if so, at what rate and for which period? OPP.
59.In the present case, the plaintiff has claimed interest as per the terms and conditions of Vehicle Loan cum Hypothecation agreement.
60. Rule 2A was added in Order VII of Civil Procedure (CPC) by way of amendment in respect of the requirements of pleadings where interest is claimed in a commercial dispute by the plaintiff.
CS (COMM.) 181/2019 Page 28 of 30Further, as per Section 34 CPC, where the liability in relation to the sum so adjudged had arisen out of commercial transaction, the rate of further interest from the date of decree to the date of payment, may exceed 6% per annum but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which money is lent or advanced by nationalized banks in relation to the commercial transactions.
61.Considering the facts and circumstances of the case, it is deemed just and proper to allow pendente-lite and future interest @ 10 % per annum, prevalent rate of interest given by the nationalized banks.
62.The plaintiff has also claimed the cost of the suit. Defendant No.2 failed to appear in the pre-institution mediation and chosen not to appear before the Court during trial, despite service of summons. Hence, defendant no.2 is responsible for burdening the plaintiff with this litigation and so defendant no.2 is liable to bear the cost to the extent of Court fee and lawyers fee etc. as per rules. The plaintiff is therefore, entitled for the cost of litigation.
63.Issue no.4:-
Relief, if any.
64. In view of the above observations, discussions and findings, the present suit for recovery is decreed in favour of the plaintiff and against defendant no.2 for a sum of Rs.1,64,587/- w.e.f.
CS (COMM.) 181/2019 Page 29 of 3027.03.2019 payable along with pendente-lite and future interest @ 10% per annum till the realization of the decreetal amount. Cost is also awarded in favour of the plaintiff and against defendant no.2 to the extent of Court fee and fees of the Advocate as per rules. Advocate's Fee certificate be filed by the plaintiff within ten days failing which notional fee of Rs.10,000/- be allowed in the decree sheet.
65.Decree sheet be prepared accordingly.
66.File be consigned to record room after necessary compliance.
Digitally signed(Announced in the Open Court ANURAG by ANURAG SAIN today on 21.05.2025) SAIN Date: 2025.05.21 16:57:18 +0530 (Anurag Sain) District Judge (Commercial Court-01), Patiala House Courts Complex, New Delhi CS (COMM.) 181/2019 Page 30 of 30 CS (COMM.) 181/19 BANSAL CREDIT LTD. Vs. ROYAL SUNDARAM GENERAL INSURANCE CO LIMITED 21.05.2025 Present:- None.
Earlier Sh. Pramod K. Sah, Ld. Counsel for defendant no.1 has appeared through video conferencing.
Vide separate judgment announced in the open court today, the present suit for recovery is decreed in favour of the plaintiff and against defendant no.2 only for a sum of Rs.1,64,587/- w.e.f. 27.03.2019 payable along with pendente-lite and future interest @ 10% per annum till the realization of the decreetal amount. Cost is also awarded in favour of the plaintiff and against defendant no.2 to the extent of Court fee and fees of the Advocate as per rules. Advocate's Fee certificate be filed by the plaintiff within ten days failing which notional fee of Rs.10,000/- be allowed in the decree sheet. Decree sheet be prepared accordingly. File be consigned to record room after necessary compliance.
Digitally signed by ANURAGANURAG SAIN SAIN Date:
2025.05.21 16:57:31 +0530 (Anurag Sain) District Judge (Commercial Court-01), Patiala House Courts Complex, New Delhi/21.05.2025 CS (COMM.) 181/2019 Page 31 of 30