Delhi District Court
Bank Of Baroda vs Mahender Kumar on 15 January, 2026
BEFORE THE COURT OF SH. S S RATHI, DISTRICT JUDGE
(COMM.)-11 CENTRAL, THC, DELHI
CS (Comm.) No. 652/2025
Bank of Baroda
Head Office:
Baroda Bhawan, RC Dutta Road
Alkapuri, Baroda-390007
Branch Office:
Asaf Ali Road Branch
30/31A, Jeewan Vikas Building
Asaf Ali Road
New Delhi-110002 ..........Plaintiff
Vs.
Mahender Kumar
S/o Sh. Chaman Lal
R/o H. No. 2353, Gali Jaal Wali
Sita Ram Bazar, Delhi
G.P.O. North Delhi, Delhi-110006 .............Defendant
Date of Institution : 03.06.2025
Date of Final Arguments : 15.01.2026
Date of Judgment : 15.01.2026
Decision : Decreed
Judgment
1.This suit is filed by plaintiff bank for recovery of Rs.16,95,814/- alongwith interest @ 11.90% per annum apart from penal interest of 2% per annum as unpaid dues of loan granted.
CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 1/15Plaintiff's Case:
2. Case of the plaintiff as per plaint and the documents filed is that it is a nationalized bank having a branch at Asaf Ali Road, Delhi. Defendant Mahender Kumar, resident of Sita Ram Bazar, approached the above branch of the palintiff on 22.03.2023 for availing a personal loan. Upon due processing, a loan of Rs.4,50,000/- was sanctioned on the same date. The loan was repayable in 72 EMIs of Rs.8,774/- each. The plaint does not disclose as to when the 1st EMI was payable.
3. As per plaint on 24.08.2023, another personal loan of Rs.14,00,000/- was sanctioned to the defendant which was payable in 72 EMIs of Rs.27,298/-
each. It is pleaded that defendant did not adhere to financial discipline and consequently both the loans were declared Non-Performing Assets (NPA) on 03.12.2024. However, last payment of Rs.10,794/- and Rs.43,215/- were made on 04.12.2024 in both the accounts respectively. No legal demand notice was isssued. When the dues were not clear, the plaintiff approached Central DLSA where defendant did not appear despite due service and Non-Starter Report dated 16.04.2025 was issued. Debit balance stood as Rs.16,95,814/-. In this backdrop the suit was filed in the following reliefs.:
Prayer:
i. A sum of Rs.16,95,814/- Rupees Sixteen Lakh Ninety Five Thousand Eight Hundred Fourteen only) alongwith pendente-lite and future interest @ 11.90% per annum on both the Loan Accounts and alongwith penal interest @ 2% per annum from the date of filing the suit till its realization;
ii. The cost of the suit may also be awarded to the plaintiff bank and;
iii. Any other order which this Hon'ble Court may deem fit and proper may kindly be passed, in favour of the Plaintiff Bank and against the Defendant, in the interest of justice.
4. Summons of the suit was served upon the defendant on 08.07.2025. Defendant entered appearance through Sh. Abhishek, Advocate and filed detailed written statement.
CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 2/15Case of Defendant No. 3:
5. In his written statement, the defendant prayed for dismissal of the suit on the grounds that the plaintiff has supressed material facts and has not approached this Court with clean hands. Rejection of suit under Order 7 Rule 11 CPC is also sought on the ground that there is no cause of action against the defendant. An objection qua valuation of payment of Court fees is also raised. It is also pleaded that no legal notice was issued before filing of the suit.
6. In his reply on merits, the defendant has not denied that he approached the plantiff's bank on 22.03.2023 alongwith his MCD Employee Card, salary slip and another documents for availing loan of Rs.4,50,000/- which was repayable in 72 EMIs of Rs.8,774 /- each.
7. Likewise, he has also not denied that he has availed the loan of Rs.14,00,000/-
on 24.08.2023 which was payable in 72 EMIs of Rs.27,298/- each. He rather contended that he has paid the entire second loan through cash collection agents and that such these agents of the bank did not issue any acknowledgment receipts to him. The defendant did not dispute that his loan was declared NPA on 03.12.2024. He, however, denied that he did not pick up the calls made by the bank for payment of due amount. The plea of the bank that last payments were made on 04.12.2024 is also not denied. Defendant did not deny that the plaintiff approached Central DLSA where he did not appear despite due service and Non-Starter Report dated 16.04.2025 was issued.
8. In another unrelated case of this Court "Krishan Kumar Gupta Vs. Municipal Corporation of Delhi" bearing CS (Comm.) No. 936/2024, this Court had imposed a cost of Rs.1 lakh on the MCD and had issued directions to the MCD Commissioner to issue a circular by pressing his officials to comply with the mandatory law as interpreted by Hon'ble Supreme Court and start participating in Pre-Institution Mediation proceedings in District Legal Services Authority (DLSA) in District Courts so that eligible commercial CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 3/15 disputes can be compromised and necessity to file a suit in Court is minimized by using this ADR. The cost of Rs.1 lakhs was imposed on the MCD with a rider in case the Commissioner, MCD issues a circular within one month i.e. by 31.01.2025, the cost of Rs.1 lakh would be waived. The relevant paras of judgment of this Court dated 10.12.2024 are reproduced hereunder:
58. Despite the statutory promulgation and strict interpretation of the same by Hon'ble Supreme Court it is surprising to observe that defendant MCD and its officials appears to be having scant regard for the law as promulgated by the Parliament or the judgment passed by Hon'ble Supreme Court which is itself a law under Article 141 of Constitution of India. The above legal position mandates every citizen and corporation to strictly follow the same. Defendant which is itself a creation of law too has no option but to participate in the same in all sincerity and conviction.
59. Upon being asked no cogent reason is stated as to why the MCD or its officials did not participate in the Pre-Institution Mediation proceedings. Mediation is one of the pivotal alternate Dispute Resolution Mechanism which finds recognition in Section 89 CPC as it was reintroduced in the 2002 Amendment. Gauging the success of its inclusion the Parliament decided to make it mandatory for Commercial Courts at a pre-institution stage with an aim to elevate India's position in the Ease of Doing Business, a report prepared by World Bank for ranking investment friendly countries. Out of the 10 components of Ease of Doing Business one of the component is time taken by the countries in "enforcement of contracts". While India's dismal ranking of 161 in 2014 has now reached a somewhat respectable position at 63 rank but in the enforcement of contract component which pertains to time taken by the country in resolving commercial disputes our country still ranks at poorly 171 out of 191 countries.
60. Outlook of a country depends on the endeavours put in by the citizenary and the state machinery in such cases. While all the functionaries of Central and State Departments are endeavouring and doing their best in improving India's ranking in this regard but here is a Department which absolutely, as it seems exfacie, has no interest in doing its bit. All that the defendant MCD was supposed to do is to participate in the Pre-Institution Mediation but the blunt stand that they did not participate despite receipt of notice of Secretary, Central DLSA shows that they are doing lot of disservice not only to the mechanism of mediation as a process but is also disregarding the law in its totality..........
62. In the light of the above, let a cost of Rs.1 lakhs be imposed on the defendant MCD to be deposited with Advocates' Welfare Fund, Delhi Bar Association. Copy of this order be sent to Commissioner MCD so that he can look into the matter and ascertain the reasons as to why the employees of the Corporation are not participating in mandatory Pre-Institution Mediation despite binding nature of the statutory provisions and relevance of its bindingness by Hon'ble Supreme Court in Patil Automation case supra.
63. The above cost of Rs. 1 lakhs can be waived in case Office of Commissioner MCD issues a circular on or by 31.01.2025 to all concerned Departments and Gazetted officers directing and mandating to the effect that the MCD would henceforth participate in all Pre-Institution Mediation hearings and all endeavour to settle the disputes by carrying out sincere deliberations under the aegis of District Legal Services Authorities. The Commissioner MCD is at liberty to move an appropriate application before this Court alongwith copy of such circular for waiver of the above conditional imposition of cost.
Copy of the judgment be sent to President/Secretary, Delhi Bar Association.
Record reveals that neither any circular was issued by the Commissioner, MCD as directed nor the cost of Rs. 1 lakh imposed on the MCD was deposited with Advocate's Welfare CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 4/15 Fund, Delhi Bar Association. Rather the MCD chose to challenge this direction of this Court in RFA (Comm.) No. 220/2025. However, Commercial Appellate Division Bench of Hon'ble High Court of Delhi vide order dated 13.05.2025 has upheld the directions issued by this Court to the Commissioner, MCD. Hon'ble Division Bench not only directed the Commissioner, MCD to issue the circular as directed by this Court but also directed the MCD to deposit the cost with Advocates' Welfare Fund, Delhi Bar Association. The relevant paras are reproduced as under:
10. At the same time, we do not find any merit in the submission of the learned counsel for the appellant with respect to the cost of Rs.1,00,000/- that has been imposed on the appellant for not participating in the pre-institution mediation process. Section 12A of the Commercial Courts Act, 2015, has been inserted in the Commercial Courts Act with a specific object and intent of expediting the process of resolution of commercial disputes. The object and purpose of the Act is also explained by the Supreme Court in Patil Automation Private Limited v. Rakheja Engineers Private Limited, (2022) 10 SCC 1..........
12. We, therefore, find no merit in the challenge of the appellant to the cost of Rs.1,00,000/- that has been imposed on the appellant by the learned Trial Court. In fact, the learned Trial Court by the Impugned Order, has been lenient by stating that in case the Commissioner, MCD issues necessary directions to its officers to participate in such pre-institution mediation process in the right spirit, the cost can be waived. The appellant cannot take a regressive approach and insist on continuing to defeat the object of the Act. We cannot countenance such an approach on the part of the appellant.
13. .........However, the cost imposed on the appellant for not participating in the preinstitution mediation process, must be deposited by the appellant within a period of two weeks from today.
We also expect the appellant to ensure that necessary instructions are issued in terms of what has been observed by the learned Trial Court in the Impugned Order with respect to pre- institutiopn mediation.
9. In view of the above, the defendant is burdened with cost of Rs.25,000/- to be deposited with Advocates' Welfare Fund, Delhi Bar Association as penalty for not appearing in Central DLSA despite due service. Copy of the judgment be sent to President/Secretary of Delhi Bar Assosication for filing of execution in cash payment is not deposited by the defendant within 60 days.
10.Defendant do not specifically deny that the outstanding debit balance was Rs.16,95,814/-. The affidavit of admission/denial filed to plaintiff's documents is not as per format provided under Order 11 Rule 4 (2) CPC as amended for Commercial Courts. Even though plaintiff has filed 21 documents but the affidavit of admission/denial filed to plaintiff's documents pertains to only 6 documents and apart from Aadhar Card he has denied all the bank documents for 'want of knowledge'.
CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 5/1511.Separate replication was filed by the plaintiff bank wherein it reiteated its pleaded case and denied the contentions of the defendant.
12.Upon completion of pleadings, following issues were identified on 12.08.2025:
Issues:
i. Whether the plaintiff is entitled to recovery of Rs.16,95,814/- alongwith interest @ 11.90% per annum? OPP ii. Relief.
13.Evidence in this case was ordered to be recorded before Ms. Sanyukta Gupta, Advocate Ld. LC as per protocol created by this Court under Order 18 Rule 4 CPC read with Order 15A Rule 6 (i) and (o) CPC as applicable to Commercial suits for the sake of timely disposal of this case.
14.To prove its case, plaintiff bank examined its Chief Manager PW-1 Sh. Manoj Kumar. Vide affidavit Ex.PW1/A, he deposed on the lines of plaint and exhibited following documents:
i. Copy of Power of Attorney in favour of Ghanshyam Verma is Mark A; ii. True copy of Board Resolution dated 14.11.2017 is Ex.PW1/1; iii. Loan Application dated 22.03.2023 is Ex.PW1/2;
iv. Copy of Pan Card, Aadhar Card, Employee Id Card, Salary Slip of defendant is Mark B; v. Sanction Letter dated 22.03.2023 is Ex.PW1/3;
vi. DP Note dated 22.03.2023 is Ex.PW1/4;
vii. Letter of Installment with acceleration clause dated 22.03.2023 is Ex.PW1/5; viii.Declaration cum Undertakings cum Authority dated 22.03.2023 is Ex.PW1/6; ix. Letter of authority by the borrower inf avour fo the employer to deduct the EMI from salary dated 22.03.2023 is Ex.PW1/7;
x. Loan application dated 22.08.2023 with form 135 is Ex.PW1/8; xi. Sanction Letter dated 24.08.2023 is Ex.PW1/9;
xii. Letter of authority by the borrower in favour of the employer to deduct the EMI from salary dated 24.08.2023 is Ex.PW1/10;
xiii.Loans Agreement dated 24.08.2023 is Ex.PW1/11.
xiv. Original Non-Starter Report dated 16.04.2025 is Ex.PW1/12; xv. Statement of Accounts with UPGACC sheets is Ex.PW1/13; xvi.Certificate under Section 63 of BSA is Ex.PW1/14;
15. Ld. Counsel for defendant Sh. Abhishek did not cross-examine the witness. No other witness has examined by the plaintiff.
16. Defendant did not step into the witness box.
17. I have heard arguments of Ms. Geetanjali Sharma and Ms. Shivani Tripathi, Ld. Counsels for the plaintiff and have perused the case file.
CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 6/1518. None appeared on behalf of the defendant to argue the matter.
19.Now I shall dispose of issues framed in this case.
Issue No. 1:
i. Whether the plaintiff is entitled to recovery of Rs.16,95,814/- alongwith interest @ 11.90% per annum? OPP
20. In order to discharge the onus of proving the above issue, perusal of documents filed and proved by the plaintiff on record shows that no loan agreement was executed by the bank with the defendant borrower to qua the 1st loan of Rs.4,50,000/-. Upon being asked, no cogent reply is stated by Ld. Counsel for the plaintiff except a plea that initially Bank of Baroda had a practice of not executing loan agreements and used to grant loans without execution of loan agreements. It is submitted that the practice of execution of loan agreemens was started in the year May, 2023. This plea is fallacious in so far as all the banks be it nationalised or private, in the country, have to work under Banking Regulation Act, 1949 as also guidelines issued by Reserve Bank of India, Statutory Body consituted under RBI Act. In this regard, Reserve Bank of India has already issued guidelins on Fair Practices Code for Lenders dated 05.05.2003. Same is reproduced hereunder for ready reference:
"Extract of relevant provision which indicate that loan agreements cannot be oral and has to necessarily involve "Execution of Loan Contracts for Banks" vide circular May 5, 2003 bearing no. DBOD. Leg. No.BC. 104 /09.07.007/2002-03 for All Scheduled Commercial Banks / All India Financial Institutions (Excluding RRBs and LABs) as under:
RBI's Guidelines on Fair Practices Code for Lenders On the basis of the recommendations of the Working Group on Lenders' Liability Laws constituted by the Government of India, we have examined, in consultation with Government, select banks and financial institutions, the feasibility of introducing the Fair Practices Code for Lenders. The guidelines have since been finalised and banks/ all India Financial Institutions are advised to adopt the following broad guidelines and frame the Fair Practices Code duly approved by their Board of Directors.
2. Guidelines
(i) Applications for loans and their processing
(a) Loan application forms in respect of priority sector advances up to Rs.2.00 lakhs should be comprehensive. It should include information about the fees/charges, if any, payable for processing, the amount of such fees refundable in the case of non acceptance of application, pre-payment options and any other matter which affects the interest of the borrower, so that a meaningful comparison with that of other banks can be made and informed decision can be taken by the borrower.CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 7/15
(b) Banks and financial institutions should devise a system of giving acknowledgement for receipt of all loan applications. Time frame within which loan applications up to Rs.2 lakhs will be disposed of should also be indicated in acknowledgement of such applications.
(c) Banks / financial institutions should verify the loan applications within a reasonable period of time. If additional details / documents are required, they should intimate the borrowers immediately
(d) In the case of small borrowers seeking loans up to Rs. 2 lakhs the lenders should convey in writing, the main reason/reasons which, in the opinion of the bank after due consideration, have led to rejection of the loan applications within stipulated time.
(ii) Loan appraisal and terms/conditions
a) Lenders should ensure that there is proper assessment of credit application by borrowers. They should not use margin and security stipulation as a substitute for due diligence on credit worthiness of the borrower.
b) The lender should convey to the borrower the credit limit along with the terms and conditions thereof and keep the borrower's acceptance of these terms and conditions given with his full knowledge on record.
c) Terms and conditions and other caveats governing credit facilities given by banks/financial institutions arrived at after negotiation by lending institution and the borrower should be reduced in writing and duly certified by the authorised official. A copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement should be furnished to the borrower.
d) As far as possible, the loan agreement should clearly stipulate credit facilities that are solely at the discretion of lenders. These may include approval or disallowance of facilities, such as, drawings beyond the sanctioned limits, honouring cheques issued for the purpose other than specifically agreed to in the credit sanction, and disallowing drawing on a borrowal account on its classification as a non-performing asset or on account of non-compliance with the terms of sanction. It may also be specifically stated that the lender does not have an obligation to meet further requirements of the borrowers on account of growth in business etc. without proper review of credit limits.
e) In the case of lending under consortium arrangement, the participating lenders should evolve procedures to complete appraisal of proposals in the time bound manner to the extent feasible, and communicate their decisions on financing or otherwise within a reasonable time.
(iii) Disbursement of loans including changes in terms and conditions Lenders should ensure timely disbursement of loans sanctioned in conformity with the terms and conditions governing such sanction. Lenders should give notice of any change in th terms and conditions including interest rates, service charges etc. Lenders should also ensure that changes in interest rates and charges are effected only prospectively.
(iv) Post disbursement supervision
a) Post disbursement supervision by lenders, particularly in respect of loans upto Rs.2 Lakhs, should be constructive with a view to taking care of any" lender-related" genuine difficulty that the borrower may face.
b) Before taking a decision to recall / accelerate payment or performance under the Agreement or seeking additional securities, lenders should give notice to borrowers, as specified in the loan agreement or a reasonable period, if no such condition exits in the loan agreement.
c) Lenders should release all securities on receiving payment of loan or realisation of loan subject to any legitimate right or lien for any other claim lenders may have against borrowers. If such right of set off is to be exercised, borrowers shall be given notice about the same with full particulars about the remaining claims and the documents under which lenders are entitled to retain the securities till the relevant claim is settled/paid.
CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 8/15(v) General
a) Lenders should restrain from interference in the affairs of the borrowers except for What is provided in the terms and conditions of the loan sanction documents (unless new information, not earlier disclosed by the borrower, has come to the notice of the lender).
b) Lenders must not discriminate on grounds of sex, caste and religion in the matter of Lending. However, this does not preclude lenders from participating in credit-linked schemes framed for weaker sections of the society.
c) In the matter of recovery of loans, the lenders should not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc.
d) In case of receipt of request for transfer of borrowal account, either from the borrower or from a bank/financial institution, which proposes to take- over the account, the consent or otherwise i.e, objection of the lender, if any, should be conveyed within 21 days from the date of receipt of request.
3. Fair Practices Code based on the guidelines outlined in the paragraph 2 above should be put in place in respect of all lending prospectively, but not later than 01 August 2003. Banks and financial institutions will have the freedom of drafting the Fair Practices Code, enhancing the scope of the guidelines but in no way sacrificing the spirit underlying the above guidelines. For this purpose, the Boards of banks and financial institutions should lay down a clear policy.
4. The Board of Directors should also lay down the appropriate grievance redressal mechanism within the organization to resolve disputes arising in this regard. Such a mechanism should ensure that all disputes arising out of the decisions of lending institutions' functionaries are heard and disposed of at least at the next higher level. The Board of Directors should also provide for periodical review of the compliance of the Fair Practices Code and the functioning of the grievances redressal mechanism at various levels of controlling offices. A consolidated report of such reviews may be submitted to the Board at regular intervals, as may be prescribed by it.
5. The adoption of the Code, printing of necessary loan application forms and circulation thereof among the branches and controlling offices should also be completed latest by end of June 2003. The Fair Practices Code, which may be adopted by banks and financial institutions, should also be put on their website and given wide publicity. A copy may also be forwarded to the Reserve Bank of India.
Likewise, A master circular containing guidelines issued by the RBI titled as "Guidelines for Fair Practices Code for NBFCs" which was issued on 28.09.2006 and was notified for a mandatory compliance. It is updated periodically, including update dated 01.07.2015. Lastly a RBI's Fair Practice Code for lenders was issued on 29.04.2024 which was applicable to both Banks and NBFCs qua interest charged by them. Extract of relevant provision which indicate that loan agreements cannot be oral and has to necessarily involve "Execution of Loan Contracts for NBFCs" vide circular bearing no. DNBR (PD) CC No.054/03.10.119/2015-16 dated 01.07.2015 are reproduced hereunder:
2. RBI's Guidelines on Fair Practices Code for NBFCs A. (i) Applications for loans and their processing
a) All communications to the borrower shall be in the vernacular language or a language as understood by the borrower.
b) Loan application forms should include necessary information which affects the interest of the borrower, so that a meaningful comparison with the terms and conditions offered by other NBFCs can be made and informed decision can be taken by the borrower. The loan application form may indicate the documents required to be submitted with the application form.
CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 9/15The NBFCs should devise a system of giving acknowledgement for receipt of all loan applications. Preferably, the time frame within which loan applications will be disposed of should also be indicated in the acknowledgement.
(ii) Loan appraisal and terms/conditions The NBFCs should convey in writing to the borrower in the vernacular language as understood by the borrower by means of sanction letter or otherwise, the amount of loan sanctioned along with the terms and conditions including annualised rate of interest and method of application thereof and keep the acceptance of these terms and conditions by the borrower on its record. As complaints received against NBFCs generally pertain to charging of high interest / penal interest, NBFCs shall mention the penal interest charged for late repayment in bold in the loan agreement.
It is understood that in a few cases, borrowers are not fully aware of the terms and conditions of the loans including rate of interest at the time of sanction of loans, either because the NBFC does not provide details of the same or the borrower has no time to look into detailed agreement. Not furnishing a copy of the loan agreement or enclosures quoted in the loan agreement is an unfair practice and this could lead to disputes between the NBFC and the borrower with regard to the terms and conditions. NBFCs are, therefore, advised to furnish a copy of the loan agreement as understood by the borrower along with a copy each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans.
B. NBFC-MFIs
(i) General
g) The KYC Guidelines of RBI shall be complied with. Due diligence shall be carried out to ensure the repayment capacity of the borrowers,
(ii) Disclosures in loan agreement / loan card
(a) All NBFC-MFIs shall have a Board approved, standard form of loan agreement. The loan agreement shall preferably be in vernacular language.
(b) In the loan agreement the following shall be disclosed:
(i) all the terms and conditions of the loan,Extract of relevant provision which indicate that loan agreements cannot be oral and has to necessarily involve "Execution of Loan Contracts for Banks" vide circular May 5, 2003 bearing no. DBOD. Leg. No.BC. 104 /09.07.007/2002-03 for All Scheduled Commercial Banks / All India Financial Institutions (Excluding RRBs and LABs) as under:
(c) The loan card should reflect the following details as specified in the Non-Banking Financial Company - Micro Finance Institutions (Reserve Bank) Directions, 2011:
(i) the effective rate of interest charged,
(ii) all other terms and conditions attached to the loan,
(iii) information which adequately identifies the borrower and acknowledgements by the NBFC-MFI of all repayments including installments received and the final discharge,
(iv) The loan card should prominently mention the grievance redressal system set up by the MFI and also the name and contact number of the nodal officer,
(v) Non-credit products issued shall be with full consent of the borrowers and fee structure shall be communicated in the loan card itself,
(vi) All entries in the Loan Card should be in the vernacular language.
Combined reading of the above statutory provisions on the Guidelines laid by Reserve Bank of India shows that the objective behind the Fair Practices Code issued by the RBI is to implement the letter and spirit of the statutorily binding laws and to focus on transparency, fairness, and accountability in lending by banks and NBFCs to protect borrower interests. Below is a summary of the essential provisions:
Key RBI Fair Practices Code Provisions CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 10/15 Transparency in Loan Terms: Clear disclosure of all loan terms and conditions at the time of sanction, including interest rates (fixed or floating), processing fees, repayment schedule, prepayment options, and penalties.
Explanation of the rationale for interest rate changes during the loan tenure.
Fair and Ethical Lending Practices: Conduct thorough assessment of the borrower's repayment capacity before sanction.
Avoid undue influence or coercion to compel borrowers to take loans.
Documentation and Communication: Provide borrowers a copy of the loan agreement, sanction letter, or key fact statement.
Use plain language for all documentation to ensure borrower understanding.
Timely and Responsive Grievance Redressal: Designate a nodal officer for grievance handling.
Respond promptly and transparently to borrower complaints.
Privacy and Confidentiality: Maintain confidentiality of borrower information except as required by law or for credit reporting.
Secure borrower data and seek consent for sharing information.
No Harassment in Recovery: Prohibit coercive, intimidating, or deceptive methods of loan recovery.
Follow legal processes and guidelines for loan default cases.
Reasonable Charges and Refunds: No hidden or excessive fees. Refund of any excess interest or charges where applicable.
Digital Lending Transparency (Recent Emphasis): Disclose all charges and terms clearly in digital loan disbursals.
Ensure borrowers receive key fact statements digitally.
Responsible Lending and Recovery Practices: Avoid over-lending and ensure loans are affordable for borrowers.
Use amicable, non-coercive recovery methods.
These provisions collectively foster fair treatment, transparency, and ethical conduct in lending practices, enhancing borrower protection and trust in financial institutions."
21. Plain reading of the above guidelines categorically shows that every Scheduled Commercial Bank And Financial Institution is supposed to execute a loan agreement containing all the terms and conditions and copy of such loan agreement is supposed to be shared with the borrower. The stand taken by the bank that till May, 2003 as a matter of practice they never executed loan agreements is ex-facie violation and act of flouting of mandatory RBI's CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 11/15 Guidelines. As such, a letter of Show Cause Notice be issued to the Chairman of Bank of Baroda as to why the RBI's guidelines on Fair Practices Code for Lenders, 2003 are not being followed by the Bank. The response shall be filed on an affidavit by an officer not below the rank of Chief General Manager upon due approval of the office of the Chairperson within two weeks from today.
22. At this juncture, request is made by Ld. Counsel for the plaintiff is that all the documents available on record stands a Loan Agreement qua the 1 st loan may be collectively treated as a Loan Agreement. It is submitted that the documents executed between the parties quat the 1st loan include Loan Application Ex.PW1/2, Santion Letter Ex.PW1/3, Demand Promissory Note Ex.PW1/4, Letter of Installment Ex.PW1/5, Declaration-cum-Undertakings-Cum-
Authority Letter Ex.PW1/6 and Letter of Authority by Borrower in favour of Employer to deduct the EMI from salary Ex.PW1/7.
23. Court is apprised that out of these documents stamp duty of Rs.100/- each has been paid on Declaration-cum-Undertakings-Cum-Authority Letter Ex.PW1/6 and Letter of Authority by Borrower in favour of Employer to deduct the EMI from salary Ex.PW1/7.
24. As per legal research carried out by this Court, a document, even if created post sanction and disbursement of loan amount, do constitute a loan document and attracts applicable Stamp Duty akin to loan documents/agreement created prior to disbursement of loan. In case titled "Chief Controlling Revenue Authority Vs. Costal Gujarat Power Ltd. & Ors." 2015 Latest Caselaw 516 SC, Hon'ble Supreme Court dealt with a case where a single mortgage deed was applied to multiple loans without execution of a specific individual deeds for each loan. While discussing the scope and object of the Indian Stamp Act, 1899 it was ruled that the Indian Stamp Act is a fiscal statute and it deserves to be interpreted in a narrow and strict sense. Consequently, the collectors of Stamp Duty and the Civil Court are expected to be remain on guard so as to CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 12/15 ensure that there is no evasion of Stamp Duty. While citing Section 5 of Indian Stamp Act, 1899 the Apex Court has held that when an instrument is created showing distinct matter/transaction, aggregate amount of Stamp Duty shall be paid. Meaning thereby if no separate/distinct/stand alone document is created for each individual transaction, Stamp Duty shall be levied as per applicable rate as per schedule.
25. Accordingly, this Court has no hesitation in concluding that no Stamp Duty was paid by the borrower at the time of grant of loan since no loan document was created. However, post-disbursement of loan, when the plaintiff bank created a series of document to substantiate the factum of grant of loan to satisfy this Court in this regard by executing documents like At this juncture, request is made by Ld. Counsel for the plaintiff is that all the documents available on record stands a Loan Agreement qua the 1 st loan may be collectively treated as a Loan Agreement. It is submitted that the documents executed between the parties quat the 1st loan include Loan Application Ex.PW1/2, Santion Letter Ex.PW1/3, Demand Promissory Note Ex.PW1/4, Letter of Installment Ex.PW1/5, Declaration-cum-Undertakings-Cum- Authority Letter Ex.PW1/6 and Letter of Authority by Borrower in favour of Employer to deduct the EMI from salary Ex.PW1/7, they collectively constitutes a Loan Agreement and as such attracts payment of Stamp Duty as per Schedule attached to Indian Stamp Act, 1899.
26. When the documents qua the 2nd loan are perused, formal Loan Agreement is also available in the form of Ex.PW1/11.
27.The pleadings in the plaint and annexed documents have remained unrebutted, unchallenged and uncontroverted. In the absence of any plausible denial on behalf of defendant, case of the plaintiff is deemed to be admitted. On the basis of pleadings, evidence led and the documents exhibited plaintiff has discharged the onus of proving its case.
CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 13/1528.All the documents are admitted by the defendant pre-dominantly in the pleadings as well as in the affidavit. Witness was not cross-examined.
29.Defendant had taken a plea that he had paid Rs.14,00,000/- by way of cash. This plea has remained unsubstantiated as the onus of proving the same was vested on the defendant in terms of Section 105 of Bhartiya Sakshya Adhiniyam, 2023 (Section 102 of Indian Evidence Act). In the light of the above, this Court is of the considered view that the plaintiff has discharged the onus of proving this issue. Accordingly, this issue is answered in favour of the plaintiff and against the defendant.
Interest
30.Plaintiff claimed interest @12% per annum. The interest is payable under Section 34 CPC. For ready reference Section 34 CPC is held as under:
Section 34 CPC : Interest
(i)"Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding 6% per annum as the Court deems reasonable on such principal sum from the date of the decree to the date of payment, or to such earlier date as the court thinks fit.
(ii).Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed 6% per annum but shall not exceed the contractual rate or interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to commercial transactions.
Explanation (i) In this sub-section, "nationalized bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970. Explanation (ii) For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability. Where such a decree is silent with respect to the payment of further interest (on such principal sum) from the date of the decree to the date of the payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefore shall not lie.
31.Section 34 CPC provides that plaintiff will be entitled the interest at the rate at which Court finds reasonable. For a general suit, the rate of interest prescribed is 6% and for commercial suit, the Parliament promulgates that rate of interest may increase from 6% to a rate which is found reasonable. Plaintiff is accordingly entitled to only the rate at which RBI has issued Circular for Commercial suits.
CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 14/1532.As per RBI notification dated 30.08.2022 issued vide Press Release no.2022-2023/794 whereby advisory issued by RBI to Schedule Commercial banks of adopting, deposit rates @ 9.05% per annum, Plaintiff is entitled to interest @ 9% per annum on the suit amount.
Relief:
33.In view of the above, suit of plaintiff is accordingly decreed with cost against the defendant for the principal amount of Rs.16,95,814/- alongwith interest @ 9% pendente lite and till actual realization. Lawyer's fees is assessed as Rs.25,000/-.
34. Decree sheet be prepared accordingly only after receiving the satisfactory reply and assurance from the office of the Chairman, Bank of Baroda qua non- compliance of mandatory guidelines of the RBI, as detailed supra.
35.File be consigned to Record Room after due compliance.
Digitally signed by SURINDER SURINDER S RATHI S RATHI Date:
2026.01.19 17:17:36 +0530 (S S RATHI) District Judge, Commercial Court-11 Central District, THC Delhi/15.01.2026 CS Comm No. 652/2025 Bank of Baroda Vs. Mahender Kumar Page No. 15/15