Delhi District Court
Surender Kumar Yadav And Ors vs Punjab National Bank on 10 March, 2026
IN THE COURT OF SH. DEVENDER KUMAR JANGALA,
DISTRICT JUDGE (COMMERCIAL COURT)-01,
NORTH WEST, ROHINI, NEW DELHI
CS (COMM) No. 24/18
CNR NO.DLNW010122152018
1. SH. SURENDER KUMAR YADAV
R/O: H. NO. 49, RITHALA ROAD,
VILLAGE BADLI, DELHI
2. SMT. PARWATI
W/O LATE SH. JAI SINGH
(SINCE DECEASED THROUGH LEGAL HEIRS)
A. SH. SURENDER KUMAR YADAV
R/O: H. NO. 49, RITHALA ROAD,
VILLAGE BADLI, DELHI
(ALREADY PARTY AS PLAINTIFF NO.1)
B. SMT. LEELA
W/O LATE SH. BHUPINDER SINGH
R/O: VILLAGE BADLI, DELHI
(ALREADY PARTY AS PLAINTIFF NO. 3)
C. SH. NITIN
S/O LATE SH. BHUPINDER SINGH
R/O: VILLAGE BADLI, DELHI
(ALREADY PARTY AS PLAINTIFF NO. 4)
D. SH. JATIN
S/O LATE SH. BHUPINDER SINGH
R/O: VILLAGE BADLI, DELHI
(ALREADY PARTY AS PLAINTIFF NO. 5)
E. SMT. PUSHΡΑ
R/O: H. NO. 1396,
SECTOR-15, FARIDABAD,
HARYANA
CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 1/29
(ALREADY PARTY AS PLAINTIFF NO. 6)
F. SH. JOGINDER SINGH @PAPPU
R/O: VILLAGE BADLI, DELHI
G. SH. SATISH @ KOKI
R/O: VILLAGE BADLI, DELHI
3. SMT. LEELA
W/O LATE SH. BHUPINDER SINGH
R/O: VILLAGE BADLI, DELHI
4. SH. NITIN
S/O LATE SH. BHUPINDER SINGH
R/O: VILLAGE BADLI, DELHI
5. SH. JATIN
S/O LATE SH. BHUPINDER SINGH
R/O: VILLAGE BADLI, DELHI
6. SMT. PUSHΡΑ
R/O: H. NO. 1396,
SECTOR-15, FARIDABAD, HARYANA
...PLAINTIFFS
VERSUS
PUNJAB NATIONAL BANK
THROUGH ITS MANAGER
B-23, GROUND FLOOR,
ASHOK VIHAR, PHASE-1,
DELHI-110052
ALSO AT
PLOT NO.4, SECTOR-10,
DWARKA, NEW DELHI.
........DEFENDANT
SUIT FOR RECOVERY OF RS.11,10,681.91/- (RUPEES ELEVEN
LACS TEN THOUSANND SIX HUNDRED EIGHTY ONE AND
NINETY ONE PAISA ONLY)
Date of institution of Suit : 13.11.2018
Date of hearing of final argument : 29.01.2026
Date of Judgment : 10.03.2026
CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 2/29
JUDGMENT
1. The present commercial suit under order XXXVII CPC for recovery of Rs.11,10,681.91/- was filed by the plaintiffs against the defendant Oriental Bank of Commerce. On first date of hearing i.e. on 13.11.2018, Ld. Counsel for the plaintiffs requested for treating the case as ordinary commercial suit and not the summary suit under order XXXVII CPC. In view of submissions, the case was treated as ordinary suit. Thereafter on 30.04.2019, amended plaint was filed on behalf of plaintiffs.
2. The perusal of record reveals that vide order dated 23.03.2022, the application under order XXII Rule 10 CPC for substitution of Punjab National Bank in place of Oriental Bank of Commerce, in view of amalgamation of Oriental Bank of Commerce with Punjab National Bank was allowed and the defendant was substituted as Punjab National Bank.
3.1 Brief facts: The present suit has been instituted by the Plaintiffs, who are the legal heirs of Late Sh. Jai Singh, against the Defendant Bank seeking recovery of money on account of alleged wrongful calculation of interest and unauthorized handling of a court- directed fixed deposit. It is stated that the land belonging to the predecessor-in-interest of the Plaintiffs was acquired by the Land Acquisition Collector. That a dispute arose between Sh. Jai Singh and one Sh. Kurey regarding apportionment of the compensation amount. That the Ld. LAC Court apportioned the land and compensation between them in specified shares.
3.2 It is stated that being dissatisfied with the said CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 3/29 apportionment, Sh. Kurey preferred an appeal before the Hon'ble High Court of Delhi, being RFA No. 31 of 1987 titled as Sh. Kurey Vs. UOI & Anr.. The Hon'ble High Court admitted the appeal and stayed the operation of the judgment, directing that the compensation shall not be disbursed. Subsequently, by order dated 20.02.1987, the Hon'ble High Court permitted Sh. Kurey to withdraw 46% of the compensation and allowed Sh. Jai Singh to withdraw 54% of the compensation subject to furnishing security to the satisfaction of the Ld. Additional District Judge, Delhi.
3.3 It is stated that in compliance with the said order, Sh. Jai Singh executed a surety bond in favour of the Court through the Defendant Bank on 26.10.1987 for an amount of Rs. 99,080.74/-, and the said amount was deposited in the form of a Fixed Deposit Receipt under the directions of the Court. That the surety bond recorded that the said amount would not be paid to anyone without permission of the learned ADJ. That during the pendency of the appeal, Sh. Jai Singh expired, leaving behind his legal heirs, who are now the Plaintiffs in the present suit.
3.4 It is stated that on 09.05.2012, the appeal filed by Sh. Kurey was dismissed by the Hon'ble High Court. Thereafter, the Plaintiffs applied for release and refund of the bank guarantee amount. That vide order dated 09.04.2015, the Ld. ADJ discharged the bank guarantee and directed the Defendant Bank to release the amount in question to the legal heirs.
3.5 It is stated that the defendant bank, however, stated before the Court that the bank guarantee was in the shape of an FDR CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 4/29 and that after ten years the amount had been shifted to the DEAF Fund Account of the Reserve Bank of India, on which only savings bank interest was payable. That the Court observed that such transfer could not have been effected without prior permission of the Court. That thereafter, on 17.12.2015, the Defendant Bank issued a cheque for Rs. 3,65,379/- to the plaintiff/legal heirs of Late Sh. Jai Singh. The Plaintiffs, while depositing the said cheque without prejudice, disputed the correctness of the calculation and on 22.02.2016 wrote a letter to the concerned bank. The Bank explained that the original deposit of Rs. 99,080.74/- was issued for 24 months at 10% interest and matured at Rs. 1,20,720.74/-, and that thereafter interest was calculated at 10% for 304 months, allegedly on simple interest basis, and 20% TDS was deducted on account of non-submission of PAN, resulting in the net payment made to the legal heirs.
3.6 It is stated by the plaintiffs that the interest ought to have been calculated at the contractual rate of 10% compounded quarterly, as was applied during the initial period of the FDR, and that the Bank had no authority to unilaterally change the mode of calculation from compound interest to simple interest without seeking permission of the Court. It is further alleged that the Bank illegally transferred the amount to the DEAF Fund without court approval and failed to properly explain the method and period of interest calculation. The Plaintiffs also disputed the deduction of TDS on the ground that no demand for PAN details was ever made. The Plaintiffs approached the Ld. LAC Court by way of an application challenging the Bank's action; however, by order dated 02.04.2018, the Ld. LAC Court held that the dispute was essentially between the Bank and the legal heirs and that the proceedings before it were misconceived, thereby CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 5/29 dismissing the application with costs and observing that the Plaintiffs were required to pursue an independent remedy against the Bank.
3.7 With the aforesaid submissions, the Plaintiffs have instituted the present suit claiming that the Bank is liable to pay the differential amount calculated on the basis of compound interest at 10% quarterly from 30.06.1988 till the date of payment and thereafter till realization, after adjusting the amount already paid. The Plaintiffs further claim litigation expenses and damages for harassment, along with pendente lite and future interest. It is stated that that the cause of action first arose on 17.12.2015 when the allegedly incorrect amount was released and continues to subsist even today. It is prayed that the decree for recovery of Rs.10,05,681.91/- alongwith pendentelite and future interest @18% per annum from the date of accruel till the date of realization may kindly be passed. The plaintiffs have also prayed for damages of Rs.1,05,000/- i.e., Rs.55,000/- as litigation charges and Rs.50,000/- for harassment. The plaintiffs have also prayed for awarding the cost of litigation.
4 Vide order dated 13.11.2018 the summons of the suit were issued to the defendant. The defendant on being served put the appearance through counsel. The defendant failed to file written statement within the stipulated period of 30 days or within the outer limit of 120 days. The written statement on behalf of defendant was filed after 131 days. Vide order dated 11.12.2019 passed by Ld. Predecessor of this court, the application for condonation of delay under Section 5 of the Limitation Act filed by the defendant was dismissed and the written statement of the defendant was taken off the record.
CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 6/29
5. Vide order dated 08.02.2023 the matter was fixed for PE. In support of their case, the plaintiffs have examined Sh. Surender Kumar Yadav, plaintiff no.1 as PW-1. After the examination of PW1, in view of submissions made by Ld. counsel for parties, following issues were framed:-
1. Whether the plaintiff is entitled to a decree for recovery in the sum of Rs.11,10,681.91/- or any other amount, against the defendant? OPP.
2. Whether the plaintiff is entitled to any interest on the decreetal amount? If yes, at what rate and for which period? OPP
3. Relief.
PLAINTIFF EVIDENCE
6. The plaintiffs in support of their case have examined Plaintiff No. 1 Sh. Surender Kumar Yadav as PW-1. He tendered his evidence by way of affidavit Ex. PW1/A. In his affidavit Ex. PW1/A, the PW-1 has reiterated the averments made in the plaint and relied upon the following documents:-
1. The certified copy of order dated 15.01.1987 of Hon'ble High Court Ex. PW1/1,
2. The certified copy of order dated 20.02.1987 of Ld. ADJ Ex.
PW1/2,
3. Certified copy of surety bond alongwith the statement of Manager dated 26.10.1987 Ex. PW1/3, 4 The certified copy of order dated 24.11.1987 of Ld. ADJ regarding surety bond Ex. PW1/4, CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 7/29 5 Certified copy of application for refund of bank guarantee Ex. PW1/5,
6. Certified copy of order dated 09.04.2015 Ex. PW1/6, 7 Certified copy of order dated 20.11.2015 Ex. PW1/7, 8 Duly received copy of letter dated 22.02.2016 Ex. PW1/8, 9 Letter dated 02.03.2016 sent by Bank Ex. PW1/9, 10 Copy of application for necessary directions Ex. PW1/10, 11 Copy of reply to application for necessary directions Ex. PW1/11, 12 Copy of rejoinder to the reply to the application for necessary directions Ex. PW1/12, 13 Application filed by bank u/s 151 CPC Ex. PW1/13, 14 Certified copy of order dated 02.04.2018 Ex. PW1/14.
7. PW-1 was cross-examined at length by Ld. Counsel for defendant. In his detailed cross-examination the PW-1 deposed that the present case pertains to the compensation amount awarded to his father, Late Sh. Jai Singh. He deposed that Late Sh. Jai Singh was survived by his wife, four sons and one daughter. That the his elder brother Sh. Bhupinder Singh, had expired, leaving behind his widow and two sons. That the present suit has not been filed by all the legal heirs of Late Sh. Jai Singh. He further deposed that in the earlier suit, all the brothers, sister and mother were parties; however, in the present suit, the plaintiffs are the mother, the sister, the legal heirs of deceased Sh. Bhupinder Singh and the sons of the witness.
CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 8/29
8. He further deposed that the earlier suit titled "Union of India v. Sh. Jai Singh" was pending before Court No. 312 of Sh. Neeraj Gaur, Ld. ADJ, Rohini Courts, Delhi. The witness was unable to recall the exact details regarding the filing and decision of the earlier suit and does not remember the date of the order. He deposed that the said suit was disposed of with a cost of Rs. 20,000/- imposed upon the plaintiffs. He further deposed that in the earlier proceedings, the plaintiffs had prayed for release of the FDR amount along with full interest but they were only given FDR amount and not the full interest amount. He further deposed that the FDR amount was approximately Rs. 99,000/- and the remaining amount was towards interest. He further deposed that the total amount received from Oriental Bank of Commerce, Ashok Vihar (Wazirpur) Branch, Delhi in the year 2015 was approximately Rs. 3,60,000/-. However, he could not tell the date and month when the said amount was released.
9. PW-1 further deposed that the present suit has been filed to recover the full interest allegedly due on the FDR. He deposed that they wanted to have interest on the FDR amount of Rs.99,000/-. He admitted that they had received the additional interest of Rs.2,40,000/-. He denied the suggestion that that his two brothers did not join in the present suit as they were fully satisfied with the amount received from Oriental Bank of Commerce, Ashok Vihar. He also deposed that their main reason for filing the present suit was to receive the compound rate of interest whereas they were awarded only simple rate of interest. He deposed that he could not give the exact date as to when his father had got prepared said FDR and deposed that it was somewhere in the year 1987 when the FDR was got prepared but he cannot give the exact details including the year of CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 9/29 preparation of FDR. He deposed that he has placed on record the said FDR which was got prepared by his father. Again said, he is not sure if the same has been placed on record. He deposed that the said FDR was got prepared by the order of the Court of Sh. Mahender Singh/Sh.Mahinder Pal Singh, Ld. ADJ. He also deposed that he is not aware about exact date of order but same was passed sometime in the year 1987.
10. PW-1 further deposed that he has not brought any FD. Again said, the FD may be in possession of the defendant Bank or Court. He deposed that he has seen the FDR which was lying on Court Record of the LAC case. Thereafter he again said that he has never seen any FDR lying in the Court record of the LAC Case, but the same was found mentioned in that Court case. Thereafter he voluntarily stated that the defendant bank admitted about existence of the said FDR. He denied the suggestion that there was no FDR in existence as claimed or that the defendant bank never admitted about existence of any such FDR.
11. PW-1 further deposed that the interest of the said FD has been calculated by him with his Counsel. He denied the suggestion that financial guideline has been followed in computation of the claimed interest. He further denied the suggestion that the claimed interest computation is imaginary or baseless or the bank has released the interest as per RBI guidelines as mentioned in Circular RBI/2013- 14/665, DBOD.NO.DEAF Cell. BC 126/30.01.002/2013-14 dated 26.06.2014, relied upon as Ex.PW1/D1. He denied the suggestion that the FDR of Rs.99,000/- prepared as Conditional Security CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 10/29 pertaining to the LAC Claim before the Competent Court, was for a duration of 2 years. He voluntarily stated that the amount was Rs.99,088/-approximately. He denied the suggestion that that said FDR was not a fixed deposit or that the amount of Rs.99,000/- deposited by his father was in form of a Surety Bond. He admitted that his father had approached the Bank for making a Surety Bond which was required conditionally vide orders of the LAC Court. He denied the suggestion that the defendant bank has released the entire amount against the said Surety Bond or that there is no other valid claim against the Surety Bond in question, against the defendant bank. He denied the suggestion that there was no court direction of the Competent Court, to the defendant bank directly.
12. No other witness was examined on behalf of plaintiffs and PE was closed vide order dated 06.05.2024.
13. On the other hand the written statement of the defendant was taken off the record vide order dated 11.12.2019. The defence of the defendant is struck off. Therefore, the defendant was not allowed to put his defence and the matter was fixed for final arguments.
14. I have already heard the arguments at length advanced by Sh. Digvijay Singh, Ld.counsel for plaintiffs and Sh. Mahesh Kumar Chaudhary, Ld.counsel for defendant. Written submissions on behalf of parties also filed.
15. It is argued on behalf of plaintiffs that the action of the CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 11/29 defendant is completely illegal, in view of specific directions of the court. That the defendant was not allowed to withdraw the said amount without the permission of the court or deposit in DEAF account, which provide lesser interest rate. That the defendant bank is liable to pay the difference. That the defendant has incorrectly deducted 20% due to non submission of PAN Card, particularly no such demand was ever made. That in view of material on record the decree as prayed may kindly be passed.
16. On the other hand it is argued on behalf of defendant that the amount in DEAF account was kept in terms of guidelines of Reserve Bank of India and simple interest was already paid to the plaintiffs. That the FDR amount remain unclaimed over a period of more than 10 years therefore, the same was transferred to DEAF account and as per guidelines of RBI, no interest is payable on such amount. It is prayed that the suit may kindly be dismissed.
17. I have considered the submissions made by Ld.counsel for plaintiffs and perused the entire material on record.
18. It is pertinent to mention that during the course of trial plaintiff no.2 Smt. Parwati has expired and vide order dated 02.12.2025 the application under order XXII Rule 3 CPC moved on behalf of petitioners was allowed and the Lrs of deceased plaintiff no.2 were substituted in the array of parties.
19. After careful perusal of the record, my issue wise findings are CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 12/29 as under:
ISSUE NO.1
1. Whether the plaintiff is entitled to a decree for recovery in the sum of Rs.11,10,681.91/- or any other amount, against the defendant?
OPP.
20. It is well-settled law that the case of the plaintiffs must stand on its own legs, and the mere striking off of the defence does not automatically entitle the plaintiffs to a decree. The weakness of the defendant does not give ipso facto right to the plaintiffs to get the relief from the court of law. Reliance in this regard is placed upon the judgment of Hon'ble High Court of Delhi titled as Harish Mansukhani vs. Ashok Jain reported as 2009(109) DRJ (DB) wherein the Hon'ble High Court has held that the plaintiff has to prove his own case in accordance with the law and has to stand on his own legs. The Hon'ble Delhi High Court in another judgment titled as Sunil Dang vs. RL Gupta reported as CS(OS) 1617/2007 decided on 13.01.2009 has held that when the defendant is contesting the matter, the fact, which are not disputed are deemed to be proved and need not to be proved. Further when the defendant fails to appear, there can be no admission and the plaintiff has to prove the entire case in accordance with law.
21. It may be relevant now to consider the law pertaining to discharge of burden of proof of the issues as relevant and applicable to the Civil Jurisdiction. In the binding authority of the Hon'ble Supreme Court of India, in M/s. Gian Chand & Brothers and Another v. Rattan Lal @ Rattan Singh: [2013] 3 S.C.R. 601; it has been laid CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 13/29 down:-
1.3. It is well settled principle of law that a person who asserts a particular fact is required to affirmatively establish it. The burden of proving the facts rests on the party who substantially asserts the affirmative issues and not the party who denies it but the said principle may not be universal in its application and there may be an exception thereto.
22. The various aspects of proving the facts of a case and exceptions, if any, have been duly considered by Hon'ble Supreme Court of India in Anil Rishi vs Gurbaksh Singh in Appeal (civil) 2413 of 2006 on 2 May, 2006, wherein the binding legal position has been reinforced as under :-
"Pleading is not evidence, far less proof. Issues are raised on the basis of the pleadings. Indisputably, the relationship between the parties itself would be an issue. The suit will fail if both the parties do not adduce any evidence, in view of Section 102 of the Evidence Act. Thus, ordinarily, the burden of proof would be on the party who asserts the affirmative of the issue and it rests, after evidence is gone into, upon the party against whom, at the time the question arises, judgment would be given, if no further evidence were to be adduced by either side."
It has been further laid down (supra) :-
"A distinction exists between a burden of proof and onus of proof. The right to begin follows onus probandi. It assumes importance in the early stage of a case. The question of onus of proof has greater force, where the question is which party is to begin. Burden of proof is used in three ways : (i) to indicate the duty of bringing forward evidence in support of a proposition at the beginning or later; (ii) to make that of establishing a proposition as against all counter evidence; and (iii) an indiscriminate use in which it may mean either or both of the others. The elementary rule is Section 101 is inflexible. In terms of Section 102 the initial onus is always on the plaintiff and if he discharges that onus and makes out a case which entitles him to a relief, the onus shifts to the defendant to prove those circumstances, if any, which would disentitle the plaintiff to the same.".
23. The burden of proving Issue No. 1 lies on the Plaintiffs. As per the law of the land, as affirmed by the Hon'ble Supreme Court in Anil CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 14/29 Rishi vs. Gurbaksh Singh (supra), the onus to prove is upon the Plaintiff and if the Plaintiff discharges that onus and makes out a case to entitle him to the relief asserted, in these circumstances, the onus shifts upon the Defendant to prove such circumstances which may disentitle the Plaintiff to the relief claimed.
24. At the first instance, the Plaintiff is required to prove the jurisdiction of this Court. The present suit has been instituted before this Court on the ground that the FDR in question was executed and deposited through the Defendant Bank's branch within Delhi, the surety bond was executed before the Ld. ADJ in this jurisdiction, and the cause of action in its entirety arose within the territorial limits of this Court. As per Section 20(c) of the Code of Civil Procedure, 1908, a suit can be instituted in a court within whose jurisdiction the cause of action wholly or in part arises. In the present case, execution of the surety bond, creation of the alleged FDR, and subsequent disbursement of amounts by the Bank etc. all took place within the territorial jurisdiction of this Court. Accordingly, this Court has territorial jurisdiction to try and entertain the present suit.
25. As regards limitation, the cause of action first arose on 17.12.2015, when the Defendant Bank issued the cheque for Rs. 3,65,379/- with an allegedly incorrect calculation of interest, which was accepted by the Plaintiffs without prejudice. The present suit was filed on 13.11.2018, well within three years from the date of accrual of the cause of action. Hence the suit is accordingly within limitation.
CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 15/29 Issue of whether an FDR was Created or a Surety Bond was Executed:
26. At the outset, it is necessary to examine the concept of guarantee as well as liability of guarantor or surety under the Indian Contract Act, 1872. Under Sections 126 and 128 of the Indian Contract Act, 1872, a contract of guarantee is defined as a contract to perform the promise or discharge the liability of a third person in case of his default. The surety's liability is co-extensive with that of the principal debtor. The Hon'ble Supreme Court in State Bank of India vs. M/s. Indexport Registered & Ors., decided on 30.04.1992, reported as (1992) 3 SCC 159, while dealing with the obligations of a bank under a surety bond observed on liability of principle debtor vis-a-vis surety. While citing Hukumchand Insurance Co. Ltd. v. Bank of Baroda, AIR 1977 Kant 204, Jagannath Ganeshram Agarwala v. Shivnarayan Bhagirath, AIR 1940 Bom 247, the Hon'ble Court observed as follows:
"13. In the present case before us the decree does not postpone the execution. The decree is simultaneous and it is jointly and severally against all the defendants including the guarantor. It is the right of the decree-holder to proceed with it in a way he likes. Section 128 of the Indian Contract Act itself provides that "the liability of the surety is coextensive with that of the principal debtor, unless it is otherwise provided by the contract".
14. In Pollock & Mulla on Indian Contract and Specific Relief Act, Tenth Edition, at page 728 it is observed thus:
"Coextensive.-- Surety's liability is coextensive with that of the principal debtor.
A surety's liability to pay the debt is not removed by reason of the creditor's omission to sue the principal debtor. The creditor is not bound to exhaust his remedy against the principal CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 16/29 before suing the surety, and a suit may be maintained against the surety though the principal has not been sued."
15. In Chitty on Contracts, 24th Edition, Volume 2 at page 1031 paragraph 4831 it is stated as under:
"Conditions precedent to surety.-- Prima facie the surety may be proceeded against without demand against him, and without first proceeding against the principal debtor."
16. In Halsbury's Laws of England, Fourth Edition, Vol. 20, paragraph 159 at page 87 it has been observed that "it is not necessary for the creditor, before proceeding against the surety, to request the principal debtor to pay, or to sue him, although solvent, unless this is expressly stipulated for".
17. In Hukumchand Insurance Co. Ltd. v. Bank of Baroda [AIR 1977 Kant 204 : (1977) 2 Kant LJ 194 : ILR (1977) 2 Kant 980] a Division Bench of the High Court of Karnataka had an occasion to consider the question of liability of the surety vis-a-vis the principal debtor. Venkatachaliah, J. (as His Lordship then was) observed:
"The question as to the liability of the surety, its extent and the manner of its enforcement have to be decided on first principles as to the nature and incidents of suretyship. The liability of a principal debtor and the liability of a surety which is coextensive with that of the former are really separate liabilities, although arising out of the same transaction. Notwithstanding the fact that they may stem from the same transaction, the two liabilities are distinct. The liability of the surety does not also, in all cases, arise simultaneously."
18. It will be noticed that the guarantor alone could have been sued, without even suing the principal debtor, so long as the creditor satisfies the court that the principal debtor is in default.
CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 17/29
19. In Jagannath Ganeshram Agarwala v. Shivnarayan Bhagirath [AIR 1940 Bom 247 : 42 BLR 451 : 190 IC 73] a Division Bench of the Bombay High Court (Kania and Wassoodew, JJ.) held that the liability of the surety is coextensive, but is not in the alternative. Both the principal debtor and the surety are liable at the same time to the creditors."
27. Thus, as laid down by State Bank of India v.
Indexport (supra), the law provides that a surety is discharged if, without the surety's consent, there is any variance in the terms of the contract between the creditor and the principal debtor with respect to transactions subsequent to such variance. Similarly, if the principal debtor is released by a contract between the creditor and the principal debtor, or if by any act or omission of the creditor the principal debtor stands legally discharged, the surety is also discharged. A surety is further discharged where the creditor enters into a contract with the principal debtor to make a composition, promises to give time, or agrees not to sue the principal debtor without the surety's assent; however, where the creditor contracts with a third party to give time to the principal debtor and the principal debtor is not a party to such arrangement, the surety is not discharged. At the same time, the liability of the surety remains co-extensive with that of the principal debtor unless the contract provides otherwise, and the creditor is not required to first proceed against the principal debtor or exhaust remedies against him before initiating action against the surety. (See also BRS Ventures Investments Ltd. vs. SREI Infrastructure Finance Ltd. & Anr., decided on 23.07.2024, reported as 2024 INSC 548).
28. Keeping the above legal position in view, it becomes CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 18/29 necessary to examine whether the security furnished in the present case was in fact a Fixed Deposit Receipt as claimed by the Plaintiffs or merely a Surety Bond / Bank Guarantee furnished through the Defendant Bank pursuant to the directions of the Court.
29. The entire claim of the Plaintiffs rests upon the premise that the defendant bank had created a Fixed Deposit Receipt bearing compound interest at 10% quarterly in the sum of Rs. 99,080.74/-. However, the evidence on record completely belies this foundation. The document in question, Ex. PW1/3, is titled and described throughout the record as a "Surety Bond" or "Bank Guarantee". The order of the Ld. ADJ dated 24.11.1987 Ex. PW1/4 describes it as a Bank Guarantee furnished to satisfy the security requirement of the Hon'ble High Court. The order dated 09.04.2015 Ex. PW1/6 discharges the bank guarantee furnished at Oriental Bank of Commerce, Wazirpur. The Ld. ADJ's order dated 02.04.2018 Ex. PW1/14 repeatedly refers to it as a surety bond or bank guarantee. The PW-1 himself, during his cross-examination on 18.08.2023, after going through the court file, admitted that there is no FDR on record. In his further cross-examination on 07.02.2024, PW-1 stated that he has not brought any FDR as the same is not in his possession. He further stated in his cross examination that he has never seen any FDR lying in the Court record of the LAC Case. He admitted that his father had approached the Bank for making a Surety Bond which was required conditionally vide orders of the LAC Court. This is a completely differently case from the Plaintiffs' pleaded case that an FDR was created by the Bank. The Defendant Bank, through its Written Submissions specifically contended that no FDR was ever issued by the Bank and that this was a Surety Bond issued by the CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 19/29 Defendant Bank, and the Plaintiff has not filed or proved the existence of such an FDR. Moreover, the Bank's letter dated 02.03.2016 Ex. PW1/9 does use the terminology "Term Deposit" in describing the computation, but this is the Bank's own characterisation of what was later used as an internal accounting entry and does not establish that an independent FDR was executed in favour of the Plaintiff or his father. No FDR document has been produced in evidence.
30. It is a settled principle of evidence that where a party asserts the existence of a document creating a financial liability, the best evidence rule requires production of the primary document itself. In the present case, despite claiming that an FDR bearing compound interest existed, the Plaintiffs have failed to produce the said FDR or any documentary proof establishing its issuance by the Defendant Bank. At this stage, the relevant provisions of the Indian Evidence Act, 1872 (hereinafter referred to as "IEA") which is now Bharatiya Sakshya Adhiniyam, 2023, (hereinafter referred to as "BSA") become necessary to be examined. Section 114(g) IEA (now Section 119(g) BSA) empowers the Court to presume that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it. The Hon'ble Supreme Court in Union of India v. Ibrahim Uddin, (2012) 8 SCC 148 explained that the issue of drawing adverse inference is to be decided by taking into consideration the pleadings and by deciding whether the document withheld has any relevance and whether its omission would directly establish the case of the other side. The relevant portion of Ibrahim Uddin (supra) is provided as under:
"24. Thus, in view of the above, the law on the issue can be CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 20/29 summarised to the effect that the issue of drawing adverse inference is required to be decided by the court taking into consideration the pleadings of the parties and by deciding whether any document/evidence, withheld, has any relevance at all or omission of its production would directly establish the case of the other side. The court cannot lose sight of the fact that burden of proof is on the party which makes a factual averment. The court has to consider further as to whether the other side could file interrogatories or apply for inspection and production of the documents, etc. as is required under Order 11 CPC. Conduct and diligence of the other party is also of paramount importance. Presumption of adverse inference for non-production of evidence is always optional and a relevant factor to be considered in the background of facts involved in the case. Existence of some other circumstances may justify non-production of such documents on some reasonable grounds. In case one party has asked the court to direct the other side to produce the document and the other side failed to comply with the court's order, the court may be justified in drawing the adverse inference. All the pros and cons must be examined before the adverse inference is drawn. Such presumption is permissible, if other larger evidence is shown to the contrary."
31. Recently, Hon'ble High Court of Delhi in 63v.
MAJ (RETD) Sukesh Behl, decided on 20.02.2025, reported as 2025 SCC OnLine Del 1121 while restating the settled position of law has held that facts which lie within the special knowledge of a party must be proved by that party in terms of Section 106 of the Evidence Act. The Court further observed that under Section 114 of the Evidence Act, particularly Illustration (g), an adverse inference may be drawn where a party deliberately withholds material evidence which, if produced, would be unfavourable to its case. Relying upon the judgments of the Hon'ble Supreme Court in Ibrahim Uddin (supra) and National Insurance Co. Ltd. v. Jugal Kishore (1988) 1 SCC 626, the Hon'ble High Court in Koninklijke Philips N.V. (supra) emphasized that a party in possession of relevant documents cannot CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 21/29 avoid its obligation to place the same before the Court under the guise of technical burden of proof. It was further held that deliberate suppression of material records and evasive conduct during cross- examination justify drawing an adverse inference against the defaulting party, and the law does not permit any litigant to derive benefit from its own failure to disclose relevant evidence. The relevant portion is reproduced as follows;
"VI.II.IV. Effect of the Defendants' wilful withholding of information
255. In Rajnesh v. Neha (2021) 2 SCC 324, the Supreme Court held that details regarding a party's income, assets, and liabilities fall within special knowledge. Consequently, under Section 106 of the Evidence Act, the burden of proving such facts shifts to the party possessing this special knowledge. This principle was also affirmed in by this Court in Kusum Sharma v. Kumar Mahinder Sharma, 2020 SCC OnLine Del 931. However, the question as to whether the burden to prove a particular matter is on the Plaintiff or the Defendant would depend upon the nature of the dispute. Under Section 114 of the Evidence Act, the Court is empowered to presume the existence of facts based on the natural course of business conduct. Specifically, Section 114(g) allows the Court to draw an adverse inference when a party withholds evidence that, if produced, would likely be unfavourable to them. In Union of India v. Ibrahim Uddin, (2012) 8 SCC 148, the Supreme Court affirmed that adverse inference may be drawn against a party that deliberately suppresses documents or evidence crucial to the opposing party's case. The Court further emphasized that when a party defies a court's order to produce relevant documents, the Court can draw an adverse inference against them. In National Insurance Co. Ltd., New Delhi v. Jugal Kishore, (1988) 1 SCC 626, the Supreme Court emphasized that it is the duty of the party which is in possession of a document that would be helpful in doing justice in the cause to produce the said document, and such party should not be permitted to take shelter behind the abstract doctrine of burden of proof.
CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 22/29
258. Thus, while the absence of precise sales data constrains the Court from quantifying damages strictly based on actual losses, the legal principles discussed above warrant a different approach. The Defendants' deliberate failure to disclose critical sales and revenue data, despite specific directions, constitutes a wilful attempt to suppress material evidence and obstruct the Plaintiff's claim. The Defendants' non-disclosure, compounded by evasive responses in cross-examination, leaves no doubt that an adverse inference must be drawn against them. The law does not permit an infringer to benefit from its own suppression of evidence. Since precise financial records have been withheld, this Court is entitled to proceed with an approximate, but fair damages calculation based on the best available evidence. The Defendants cannot now evade liability by asserting the absence of exact sales figures, when this omission is of their own making. Accordingly, the Court shall determine the damages through a combination of reasonable estimation, adverse inference, and extrapolation from the limited disclosed figures. In doing so, reliance shall also be placed on industry benchmarks, comparable licensing arrangements, and the Plaintiff's licensing history to ensure a just, equitable, and rational assessment of the damages owed."
32. Thus, after observing the principles as laid down in Ibrahim Uddin (supra) as well as Koninklijke Philips N.V. (supra), and applying them to the facts of the present case, the Plaintiffs have asserted the existence of an FDR carrying compound interest but have failed to produce the said FDR or any documentary proof showing that such an instrument was issued by the Defendant Bank. The alleged document was clearly within the knowledge and possession of the Plaintiffs, and its production would constitute the best evidence of the claimed financial liability. In the absence of such primary evidence, and in light of the settled principle that a party cannot benefit from withholding material documents, the Court is justified in drawing an adverse inference against the Plaintiffs that CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 23/29 the withheld document, if produced, would not support their case. Consequently, the Plaintiffs' claim based on the alleged FDR remains unsubstantiated.
Non filing of Statement of Truth:
33. The Defendant has also raised the issue of non-filing of Statement of Truth as required under Section 12A of the Commercial Courts Act, 2015. While the requirement of pre-institution mediation was dispensed with vide order dated 13.11.2018, the Plaintiff was directed to file Statement of Truth as per the prescribed proforma. No such Statement of Truth has been filed on record.
34. Recently, the Hon'ble High Court of Delhi in ICAR National Research Center of Plant Biotechnology v. Azad Singh Dagar Prop M/S Servitor Intelligence, decided on 10.09.2025, reported as 2025 LiveLaw (Del) 1088 has held that while procedure is the handmaiden of justice, but it cannot be defeated in the name of substantive rights. The relevant paragraphs are reproduced as under:
"6. Of course, procedure is handmaid of justice and technicalities must not be allowed to infringe upon substantive rights of parties. But even the substantive rights have to be claimed and granted following procedure prescribed by law. In the name of substantive rights, the procedural requirements cannot be trashed. The entire purpose of codification of the civil procedure would be rendered otiose if not adhered to. "
(Emphasis supplied)
35. After express orders dated 13.11.2018 of Ld. Predecessor of this Hon'ble Court, the Plaintiff did not take even a single curative step to ensure the compliance of orders of Ld. Predecessor of this Court which shows the negligent conduct of the Plaintiff as regards the prosecution of the present case. Therefore the CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 24/29 suit filed by the plaintiff is liable to be dismissed on this ground of non compliance despite opportunity to file the statement of truth as per provisions of Commercial Courts Act.
36. Thus, considering the entire facts and circumstances of the case and the documents/evidence relied upon by the plaintiff, the plaintiff has failed to explain and establish its entitlement for recovery against the defendant and has not been able to discharge its onus to prove its case by way of the standard of proof required in Civil cases i.e. proving its case by way of by preponderance of probabilities. Accordingly, the present issue is liable to be held against the Plaintiff and in favour of the Defendants.
In view of the above, Issue No. 1 is decided in favour of the defendant and against the plaintiff.
ISSUE NO. 22. Whether the Plaintiff is entitled to any interest on the decretal amount?
37. In view of the finding on Issue No. 1 that the Plaintiffs are not entitled to any decree for recovery, Issue No. 2 does not survive for consideration. In the absence of a decretal amount, the question of interest thereon is rendered infructuous. However, for academic clarity, post-suit interest cannot be awarded on the interest component of a decretal amount.
38. The ancient Rule of Damdupat prevalent in Hindu common law, recognised by the Hon'ble Supreme Court provides that the interest recoverable at any one time cannot exceed the CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 25/29 principal amount. This rule acts as a check on the accumulation of interest beyond equitable limits. It is a fundamental principle that the right to claim compound interest must be founded on a contract expressly stipulating compound interest or on a usage/custom of trade. The Hon'ble Supreme Court in M/s D. Khosla and Company vs. Union of India, decided on 07.08.2024, reported as 2024 INSC 587 while observing on the term interest on interest or compound interest under Section 3(3) of the Interest Act, 1978 held that the courts are not empowered to grant compound interest unless specifically provided in a contract or a statute. The Court observed that:
"17. Section 34 of the CPC provides that where the decree is for payment of money, the court may order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged. Again, the reading of the aforesaid Sub-Section (1) of Section 34 CPC would reveal that the interest is payable on the principal sum adjudged and not on interest part of the award.
18. The Interest Act, 1978 vide Sub-Section (3) of Section 3 specifically lays down that nothing in Section 3 which permits the court to award interest shall empower the court to award interest upon interest. It means that ordinarily the courts are not entitled to award interest upon interest unless specifically provided either under any statute or under the terms and conditions of the contract.
19. In Oil and Natural Gas Commission vs. M.C. Clelland Engineers S.A., (1999) 4 SCC 327, which was also a case under the Act, this Court observed that there cannot be any doubt that the Arbitrators have power to grant interest akin to Section 34 CPC and it is clear that interest is not permissible upon interest awarded but only upon the claim made. In the aforesaid case, the claim made was in two parts, and in the second part, interest on delayed payment was also claimed. In that situation, the court held that the interest awarded would form part of the damages or compensation for delayed payment and would become part of the principal amount and thus, in CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 26/29 that circumstances, Arbitrator has the power to grant interest on interest which partakes the compensation awarded.
20. In State of Haryana and Others vs. S.L. Arora and Company, (2010) 3 SCC 690, it was observed that interest, unless otherwise specified, refers to simple interest and that interest is payable only on principal amount and not on any accrued interest. It was further held that the compound interest can be awarded if there is a specific provision under the statute or in the contract for compounding of interest but no general discretion lies with the courts or tribunals to award compound interest or interest upon interest.
21. In Hyder Consulting (UK) Limited vs. Governor, State of Orissa, (2015) 2 SCC 189, this Court was dealing with Section 31(7) of the Arbitration and Conciliation Act, 1996, wherein for the purposes of payment of post-award interest, the phrase 'sum directed to be paid by award' was used and it was held that it includes the pre-award interest and, therefore, post- award interest is payable on the sum awarded which includes pre-award interest. However, a distinction was made between Section 31(7) which simply uses the word 'sum' and Section 34 CPC wherein the phrase 'on principal sum adjudged' has been used. The departure in the use of the language in the two provisions was held to be of great significance which clearly showed that the term 'sum' under Section 31(7) refers to aggregate amount of the award and the pre-award interest whereas 'principal sum adjudged' under Section 34 CPC refers only to the amount awarded.
22. The case of UHL Power Company Limited vs. State of Himachal Pradesh, (2022) 4 SCC 116, is again in relation to interpretation of Section 31(7) of the Arbitration and Conciliation Act, 1996, wherein the principal laid down in Hyder Consulting (UK) Limited (supra) has been accepted.
23. In the light of the above legal provisions and the case law on the subject, it is evident that ordinarily courts are not supposed to grant interest on interest except where it has been specifically provided under the statute or where there is specific stipulation to that effect under the terms and conditions of the contract. There is no dispute as to the power of the courts to award interest on interest or compound interest in a given case subject to the power conferred under the statutes or under the terms and conditions of the contract but CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 27/29 where no such power is conferred ordinarily, the courts do not award interest on interest."
39. Section 34 CPC provides that in a decree for payment of money, the court may award interest at a reasonable rate only on the "principal sum adjudged" and not on the accrued interest component. Similarly, Section 3(3) of the Interest Act, 1978 clarifies that courts are ordinarily not empowered to grant "interest upon interest", unless such compounding is expressly provided by statute or agreed upon in the contract. The Hon'ble Supreme Court has consistently reiterated this position, holding that interest is generally payable only on the principal amount and not on accumulated interest, and that compound interest cannot be awarded in the absence of a statutory or contractual provision (See Oil and Natural Gas Commission (supra)). While a limited departure was recognized in the context of arbitral awards where the statutory language refers to the "sum awarded," thereby permitting post-award interest on the aggregate amount including pre-award interest (See Hyder Consulting (UK) Ltd. (supra); UHL Power Company Ltd (supra), the distinction between the expression "sum awarded" and "principal sum adjudged" makes it clear that under Section 34 CPC courts ordinarily cannot award interest on interest unless specifically authorized by statute or contractual terms.
40. After clearing the academic confusion regarding compound interest, coming back to the facts of the present case, as the findings on Issue No. 1 have been decided in favour of the defendants and against the plaintiff discussed hereinabove, Issue No. 2 is rendered infructuous.
CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 28/29 ISSUE NO. 3
3. Relief
41. In view of the findings on Issue no. 1 and 2, the present case CS (Comm.) No. 24/2018 titled as Sh. Surender Kumar Yadav & Ors. vs. Punjab National Bank is hereby dismissed.
Decree sheet be drawn accordingly.
File be consigned to record room, after due compliance.
Announced in the open Court today on this 10th day of March, 2026 (DEVENDER KUMAR JANGALA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
Digitally signed DEVENDER by DEVENDER KUMAR KUMAR JANGALA JANGALA Date: 2026.03.17 17:04:22 +0530 CS (Comm.) No.24/18 Surender Kumar Yadav & Ors. Vs. Punjab National Bank 29/29