Meena V. Gomber, Presiding Officer:— The applicant Bank filed this claim against defendants named hereinabove on 20th December, 2001 for recovery of a sum of Rs. 19,59,223.78 along with costs, pendente lite and future interest @ 17.75% per annum with quarterly rests in O.C.C account and @ 16% per annum in CANMOBILE loan account with quarterly rests.
2. Briefly stated facts of the case as mentioned in the Original Application are that defendant No. 1, a sole proprietorship concern of defendant No. 2, had, at the request of defendant Nos. 1 and 2, been sanctioned cash credit facility on 21st November, 1995. In consideration thereof, necessary loaning and security documents detained in paras 5(C)(i) to (viii) were executed on 21st November, 1995 and thereafter on 31st October, 1996 at his request a CANMOBILE loan of Rs. 1.79 lacs was sanctioned for purchase of new Maruti car. The said loan was to be repaid in 60 monthly instalments starting from November, 1996. In consideration thereof necessary documents as detailed in paras 5(D)(i) to (vi) were executed. On 8th November, 1996 again the O.C.C facility was enhanced from Rs. 2.00 lacs to Rs.,. 3.50 lacs and necessary documents in this regard as detailed in paras 5(E)(i) to (viii) were executed. At this time the acknowledgement of debt dated 8th November, 1996 for Rs. 2,97,627.57 had also been executed by defendant No. 2. Defendant No. 3 stood surety by executing guarantee deed on 8th November, 1996. Thereafter, O.C.C limit was again enhanced from 3.50 lacs to 6.00 lacs on 13th October, 1997 and from Rs. 6.00 lacs to Rs. 8.00 lacs on 14th February, 1999 and from Rs. 8,00 lacs to 12.00 lacs on 21st September, 1999 and the necessary documents in this regard as detailed in paras 5(G)(i) to (viii), 5(I)(i) to (ix) and 5(J)(i) to (vi) were executed on 13th October, 1997, 14th February, 1999 and 21st September, 1999 respectively. Additional ad hoc O.C.C limit of Rs. 75,000/- on 11th April, 1997, of Rs. 2.00 lacs on 5th October, 1999 and of Rs. 2.00 lacs on 23rd January, 2000 had also been sanctioned for which also necessary documents as detailed in para 5(K)(i) to (xi) were executed at relevant time. Defendant Nos. 3 to 7 stood surety by executing their continuing guarantees on 14th February, 1997 and 21st September 1999 for all the facilities. In order to further secure repayment initially defendant No. 3 created equitable mortgage of her property on 8th November, 1996 whereafter said mortgage was extended by executing necessary documents on 8th October, 1999. In the same manner, defendant No. 7 also mortgaged her property on 8th October, 1999 to secure repayment. The interest agreed to be payable was to vary as per R.B.I guidelines and was @ 14.5% per annum with quarterly rests in C.C account and @ 18.75%) per annum with quarterly rests in CANMOBILE loan account at the time of sanction/disbursement. However, at the time of filing of Original Application the prevalent rate of interest was @ 15.75% and @ 14% per annum with quarterly rests respectively. Besides, defendants also obligated to pay additional penal interest @ 2% per annum in case of default. Thus, according to Bank the interest payable comes to @ 17.75% per annum with quarterly rests in O.C.C account and @ 16% per annum in CANMOBILE loan account with quarterly rests. Defendants availed the facilities but did not maintain financial discipline. Defendant No. 2, however, confirmed debit balance of Rs. 86,812/- in CANMOBILE account on 26th April, 1999. Despite repeated requests and reminders and even despite legal notice dated 14th September, 2000, defendants did not regularize the accounts and the accounts were classified as N.P.A w.e.f 1st October, 2000 and interest although accrued was not applied. According to Bank it maintains regular books of account in the ordinary course of business wherein a total sum of Rs. 19,59,223.78 along with accrued and applied interest as per breakup shown in para 5(W) was outstanding in both the accounts. The Bank has prayed for issuance of recovery certificate for the said sum of Rs. 19,59,223.78 (Rs. 19,05,897.78 in C.C account with interest @ 17.75% p.a and Rs. 53,326/- in CANMOBILE account with interest @ 16% per annum) with quarterly rests and the said sum has been prayed to be realized by the sale of mortgaged properties of defendant Nos. 3 and 7 detailed in paras 5(M) and 5(N) and also from sale of personal properties of defendant Nos. 5 and 6 as detailed in para 5(S) and in case of shortfall from hypothecated assets and personal assets of defendants.
3. Defendant Nos. 1 and 2 filed their joint written statement whereas defendant Nos. 4 and 5 filed their separate written statements. Defendant Nos. 3, 6 and 7 however chose to remain ex parte.
4. Defendant Nos. 1 and 2 in their written statement raised the preliminary objections of filing of Original Application by incompetent person, of charging exorbitant rate of interest, of claim being based on wrong statement of facts, of Bank being guilty of commission and omission in letting the stocks go out of control. In parawise reply on merits, they raised the plea of limitation with regard to CANMOBILE account but admitted their approaching the Bank and availing the facilities. According to them Bank did not disburse the loan in time and on account of general slump in the market, they had to borrow from the market for the firm's expenses on day to day basis but Bank did not cooperate. They did not deny execution of alleged documents but alleged rate of interest being exorbitant, statement of account being incorrect and even creation of equitable mortgage of properties by defendant Nos. 3 and 7 was also denied. In the end they prayed for dismissal of Original Application with no costs against them.
5. Replication to the written statement was filed by the Bank and the allegations were refuted.
6. Defendant No. 4 in his written statement also raised preliminary objections of filing of Original Application by incompetent person, of misjoinder of parties, of being vague and not maintainable and denied execution of any guarantee by him. The plea of limitation was also raised. In parawise reply on merits besides repeating preliminary objections of misjoinder of parties, of limitation, of filing of Original Application by incompetent person of claim being based on blank documents he admitted approaching the Bank and availing of loan facilities. But according to him the documents executed were blank and that they have been misused. He denied having executed any guarantee on 13th October, 1997 and on 21st September, 1999. According to him the applicant Bank disposed of the hypothecated assets and realized its dues. The signatures on the guarantee deed are forged and fabricated. He further alleged interest rate being exorbitant, the statement of account being incorrect and in the end prayed for dismissal of Original Application with exemplary cost.
7. Replication to the written statement of defendant No. 4 was also filed by Bank wherein it has reiterated and reaffirmed all the averments made in the Original Application. As regards defendant Nos. 3 to 6 and 7 they chose to remain ex parte and thus there is no pleading on record.
8. In order to prove its claim, the applicant Bank filed three affidavits in evidence of Ms. Latha Vinod (AW 1), Shri R.K Dawar (AW 2) and Shri Ramesh Kumar (AW 3). These witnesses proved documents exhibited as AW1/1 to AW1/7, AW2/1 to AW2/85 and AW3/1 to AW3/6 respectively. The Bank also filed affidavit of Shri Banwari Lal, Officer of the Bank dated 5th June, 2006 in compliance of the directions of this Tribunal with regard to revised statement of account wherein the Bank has claimed an amount of Rs. 19,55,960.78 instead of Rs. 19,59,223.78 after subtracting capitalization effect of penal interest and other incidental charges in two accounts. Besides this the Bank also filed original letter dated 23rd September, 1999 of defendant No. 5 seeking withdrawal of guarantee and reply dated 23rd September,-1999 of defendant No. 5 seeking withdrawal of guarantee and reply dated 23rd September, 1999 of the Bank refusing the said request. On the other hand defendant No. 2 filed his own affidavit in evidence on behalf of defendant Nos. 1 and 2 and defendant No. 4 also filed his separate affidavit in evidence. They however did not file any document in evidence and their affidavits are almost repetition of averments made in their written statements.
9. Defendant No. 5 filed his own affidavit in evidence along with copies of documents proved as Exhibits D.W 5/1 to D.W 5/5 showing that he had prayed for withdrawal of his guarantee and substitution of the guarantee of defendant No. 6 in his place. It is in the rebuttal of these documents in evidence, that Bank filed letter dated 23rd September, 1999 sent by defendant No. 5 and also its reply sent by Bank showing its inability to discharge the guarantee.
10. I have heard the learned Counsel for both the parties and perused the entire record.
11. First witness of the applicant Bank Ms. Latha Vinod (AW1) who is an Officer of the Bank and was posted in the branch in question from September, 1991 to May 1996 deposed on the basis of her personal knowledge acquired during her tenure. She has proved the documents executed in her presence for grant of OX.C facility which included letter of proprietorship, letter of O.D facility, D.P note for Rs. 2.0 lacs, cash credit agreement, letter of value of investment, hypothecation agreement and letter of pledge of L.I.C policies all dated 21st November, 1995.
12. Second witness of the Bank Shri R.K Dawar, Manager (AW2) who was posted in the branch in question from June 1996 to May 2000 as an Officer has deposed on the basis of his personal knowledge acquired during his tenure. This witness proved the documents executed on 31st October, 1996, 8th November 1996, 13th October 1997, 14th February, 1999 and 21st September, 1999 pertaining to O.C.C limit and its enhancement from time-to-time. The documents executed on 31st October, 1996 for grant of CANMOBILE loan of Rs. 1.79 lacs have been proved as Exhibits AW2/1 to AW2/6 which included D.P note, D.P.N delivery letter, letter of undertaking, deed of hypothecation, letter of authorization and letter of particulars of vehicle hypothecated. The documents executed at the time of enhancement of O.C.C limit from Rs. 2.00 lacs to Rs. 3.50 lacs on 8th November, 1996 have been proved as Exhibits AW2/7 to AW2/16 which included request for O.D facility, D.P note for Rs. 1.50 lacs, supplemental agreement, link letter in respect of enhancement, letter of renewal, hypothecation agreement, acknowledgement of debt of Rs. 2,97,627.57, letter of valuation of investment, letter of guarantee deed with covering letter all dated 8th November, 1996 signed in the presence of the witness. He has further proved the documents executed on 13th October, 1997 at the time of enhancement of O.C.C limit from Rs. 3.50 lacs to Rs. 6.00 lacs as Exhibits AW2/17 to AW2/30 which included DP note for Rs. 2.50 lacs, link letter in respect of enhancement, hypothecation agreement, supplement agreement, letter of proprietorship, letter of acknowledgement of debt, letter of renewal, letter of pledge and guarantee deed along with the covering letter executed by defendant Nos. 3 to 5 respectively. These documents are also stated to be executed in his presence. In the same manner, documents executed on 14th February, 1999 at the time of enhancement of O.C.C limit from Rs. 6.00 lacs to Rs. 8.00 lacs have been proved as Exhibits AW2/31 to AW2/39 which include D.P note for Rs. 2.00 lacs, link letter in respect of enhancement, letter of renewal, supplemental agreement, letter of pledge, hypothecation agreement, agreement regarding advance against book debt,. letter of acknowledgement of debt and general power of attorney all dated 14th February, 1999. These documents claimed to be executed in his presence. Further, documents at the time of enhancement of O.C.C limit from Rs. 8.00 lacs to 12.00 lacs were also executed in his presence which also included same documents i.e D.P note for Rs. 4.00 lacs, supplemental agreement, proprietorship letter, link letter in respect of enhancement, renewal letter and letter or acknowledgement of debt proved as Exhibits AW2/40 to AW2/45 respectively. The documents dated 11th April 1997, 14th February 1999, 5th October 1999 and 23rd January, 2000 for ad hoc O.C.C limit of Rs. 75,000/-, Rs. 2.00 lacs, Rs. 2.00 lacs and again of Rs. 2.00 lacs respectively have been proved as Exhibits AW2/46 to AW2/56. Guarantee deeds executed by defendant Nos. 4, 5 and 7 on 14th February, 1999 have been proved as Exhibits AW2/57 to AW2/61 and guarantee deeds executed by defendant Nos. 3, 4, 6 and 7 on 21st September, 1999 have been proved as Exhibits AW2/62 to AW2/69, letter of defendant No. 5 dated 23rd September, 1999 seeking withdrawal of his guarantee and refusal letter of Bank showing its inability to relieve him from his guarantee proved as Exhibit AW2/70. Execution letter of deposit of title deed of property of defendant No. 3 as Exhibit AW2/71 and letter of deposit of title deeds of property of defendant No. 3 as Exhibit AW2/73 along with schedule proved as Exhibit AW2/74, Photocopy of title deed proved as Exhibit AW 2/72. In the same manner, documents with regard to property of defendant No. 7 which include letter dated 8th October, 1999 of deposit of title deed and schedule as Exhibits AW2/75 and AW2/76 have been proved. Photocopy of title deed proved as Exhibit AW2/77. Further the witness also proved invoice, receipt and registration of Maruti car bearing No. DL-2CJ-1362 as Exhibit AW2/78 collectively. Acknowledgement of debt in CANMOBILE account has been proved as Exhibit AW2/79. Letters dated 5th November, 1998 of defendant Nos. 5 and 6 as Exhibits AW2/80 and AW2/81 and the letter of defendant Nos. 1 and 2 admitting their liability in two accounts proved as Exhibits AW2/82 to AW2/85 respectively.
13. Third witness of the applicant Bank Shri Ramesh Kumar, Manager (AW3) with whose signatures Original Application has been filed proved his power of attorney as Exhibit AW3/1 and copy of legal notice dated 14th September, 2000 as Exhibit AW3/2. Statements of account duly certified under Bankers' Books Evidence Act along with memorandum of interest have been proved as Exhibits AW3/3 to AW3/6 respectively.
14. As per affidavit dated 5th June, 2006 of Shri Banwari Lal, Officer of the applicant Bank filed along with revised statement of account, the Bank now claims Rs. 19,55,960.78 instead of Rs. 19,59,223.78 as claimed earlier.
15. As a counter to affidavit of defendant Nos. 4 and 5, Bank also filed documents dated 23rd September, 1999 sent in response to letter of defendant No. 5 seeking withdrawal of his guarantee whereby Bank refused to discharge his guarantee. Although defendant Nos. 2 to 4 filed their affidavits, the same are more or less repetition of the averments made in their written statements. As regards defendant No. 5 he had filed certain documents along with his affidavit. His main contention is that he had withdrawn his guarantee vide his letter dated 23rd September, 1999 proved as Exhibit D.W 5/1. This letter was admitted by Bank in its evidence, He proved letter dated 12th October, 1999 also making same request as Exhibit D.W 5/2. Further according to him the guarantee executed by him was got substituted by the guarantee of defendant No. 6 executed along with defendant Nos. 3, 4 and 7. The request letter by the principal borrower dated 7th March, 2002 to discharge defendant No. 5 proved as Exhibit D.W 5/3. Another letter dated 4th September, 2000 sent by defendant No. 5 seeking discharge on account of the fact that guarantee of defendant No. 6 was substituted in his place has been proved as Exhibit D.W 5/4. In reply to legal notice dated 14th September, 2000 replied on 16th October, 2000 by defendant No. 5 requesting again for withdrawal of his guarantee and its substitution by the guarantee of defendant No. 6 proved as Exhibit D.W 5/5. Further, he was not a party at the time of enhancement of the limit nor did he acknowledge any liability. Therefore, his case is that claim against him should be dismissed.
16. Thus, the applicant Bank has tried to prove its claim on the basis of oral and documentary evidence as against which with the exception of copy of documents proved as Exhibits D.W 5/1 to D.W 5/5 there is no other document filed in rebuttal by any of the defendants.
17. The written statement filed by defendant Nos. 1 and 2 and 4. Defendant No. 4 claims to have signed the documents as witness and also that on account of mortgage of property of defendant No. 7 at the time of last enhancement his guarantee got automatically discharged, as he was not a party at the time of enhancement.
18. Defendant Nos. 1 and 2 talk of non-cooperative attitude of Bank and also of limitation. According to them Original Application filed on 20th December, 2001 is barred by limitation. So far as the issue of the limitation is concerned, the claim filed on 20th December, 2001 is very much within limitation from the date of last documents executed on 21 st September, 1999. The claim is also proved to have been filed by competent person. The power of attorney of AW3 is duly proved as Exhibit AW3/1. The guarantee deed executed by defendant Nos. 4, 5 and 7 for a sum of Rs. 10 lacs on 14th February, 1999 make their liabilities co-extensive with that of principal borrower. During the continuation and validity of guarantee deed of defendant Nos. 4, 5 and 7 dated 14th February, 1999, the defendants, however, executed the guarantee of defendant Nos. 3, 4 and 6 also on 21 st September, 1999 for an enhanced amount of Rs. 25.00 lacs and the request of defendant No. 5 made on 23rd September, 1999 was refused by Bank letter dated 23rd September, 1999 which has been proved as Exhibit AW2/71. In these circumstances the guarantee of defendant No. 5 was continuing and therefore he continued to be liable as guarantor until discharged because of terms and conditions of agreement proved as Exhibit AW2/59. Admittedly his liability remains limited to the extent of Rs. 10.00 lacs and interest as mentioned in Exhibit AW2/59 and not beyond.
19. In these circumstances and on the basis of discussion made hereinabove the liabilities of defendant Nos. 3 to 7 to their respective extent mentioned hereinabove is co-extensive with that of principal borrower. As regards creation of equitable mortgage of properties of defendant Nos. 3 and 7 and the memorandum of deposit of title deeds in this regard and its extension thereof have been duly proved as Exhibits AW2/71 to AW2/76 along with original title deeds and schedule thereof dated 8th October, 1999. As per statements of account along with memorandum of interest duly proved as Exhibits AW3/3 to AW3/6, the total amount outstanding was Rs. 19,59,223.78. However, as per revised statement of account Rs. 19,55,960.78 was outstanding after subtraction capitalization effect of penal interest and other charges
20. There is no reason to disbelieve the oral and documentary evidence of the Bank. Thus, the claim of the applicant Bank is duly proved against all the defendant Nos. 1 to 7 jointly and severally. However, liability of defendant No. 5 shall remain limited to the extent of sum of Rs. 10.00 lacs and interest thereon.
21. The Bank has also prayed for pendente lite and future interest @ 17.75% per annum with quarterly rests in O.C.C account and @ 16% per annum in CANMOBILE loan account with quarterly rests. No extraordinary circumstances have been brought on record, which could justify grant of reduced rates of interest than the contractual rates. Therefore, in my opinion, the Bank is entitled to receive the pendente lite and future interest as prayed for. In the facts and circumstances of the case, the cost of suit also deserves to be allowed.
22 I allow the Original Application of the applicant Bank and direct all the defendant Nos. 1 to 7 jointly and severally to pay a sum of Rs. 19,55,960.78 along with costs, pendente lite and future interest @ 17.75% per annum with quarterly rests in O.C.C account and @ 16% per annum in CANMOBILE loan account with quarterly rests w.e.f 20th December, 2001 (i.e the date of filing of Original Application) till its realization in full within 30 days failing which the same shall be recovered from the sale of hypothecated assets/stocks, etc. and by sale of mortgaged properties of defendant Nos. 3 and 7 bearing plot No. 14, Block-8, Laxmi Enclave, Loni, Ghaziabad (U.P) and bearing plot No. 142, Block-D, Laxmi Enclave, Loni, Ghaziabad (U.P) respectively and in case of shortfall, the balance amount be recovered from the personal assets of defendants. However, liability of defendant No. 5 shall remain limited to the extent of sum of Rs. 10.00 lacs and interest thereon.
23. Recovery certificate be prepared forthwith and be sent to the Recovery Officer-II, D.R.T-III, Delhi for execution. Copy of final order as well as recovery certificate be sent to both the parties free of cost.
24. Parties are directed to appear before the Recover Officer-II, D.R.T-III, Delhi on 16th August, 2006.
Original Application allowed.