Suit for recovery of Rs.30,60,732/- alongwith interest.

This is a suit for recovery of amount filed by the plaintiff alongwith future interest at the rate of 12.5% from 1.4.1994.

Briefly stated the facts of the case are that defendant No. 1 through its Director, defendant No. 2 applied to plaintiff Corporation for the grant of term loans for construction of factory building, purchase of land and plant and machinery etc. The term loan was sanctioned in favour of defendant No. 1 by the plaintiff Corporation on 11.1.1984 and on other dates and defendants got a sum of Rs.52.54 Lacs. Defendant No. 1 Company agreed to pay interest on the term loan at the rate of 6.5% per annum over the refinance rate as may be notified by the Industrial Development Bank of India from time to time subject to a minimum of 12.5% per annum. It was further alleged that defendants executed loan agreement, hypothecation agreement etc. for repayment of the amount and also created equitable mortgage by deposit of title deeds in favour of the plaintiff Corporation. Defendants No. 2 to 4 also executed a Deed of Guarantee in favour of the plaintiff Corporation for repayment of the principal amount.

It was further alleged that the amount was payable in half yearly instalment commencing from 10.9.1988. However, the defendants failed to pay the instalments and interest as agreed and recall take over notice was issued to defendants and part of the assets were also sold by the plaintiff Corporation and after sale of the assets etc., a sum of Rs.30.60,732/- is due to the plaintiff Corporation from the defendants and as such, they filed the suit for recovery of this amount.

Defendant No. 1 took up the plea of limitation, maintainability etc. and pleaded that they had agreed for payment of 9% simple interest per annum on the alleged loan amount and they pleaded that the plaintiff is not entitled to the amount claimed by it.

Defendants No. 2 to 4 filed written statement denying the execution of documents by them and pleaded that they are not liable.

Replication was filed by the plaintiff. On the pleadings of the parties, the following issues were settled by Court on 21.11.1997 and 18.7.2006:-

1. Whether the suit is within time? OPP

2. Whether the plaintiff is estopped by its act and conduct from filing the present suit as alleged? OPD

3. Whether defendant No.1 has not been sued through a proper person as alleged? OPD

4. Whether the defendant is liable for adjustment for forfeited amount of earnest money, as alleged? OPD

5. At what rate the plaintiff is entitled to interest on the amount due? OP Parties

6. Whether the instalments were released in favour of defendants with considerable delay, as alleged? If so, its effect? OPD

7. To what amount is the plaintiff entitled and if so, from whom? OPP

7-A Whether Shri M.K. Chaudhary is competent to file the present suit on behalf of the plaintiff-Corporation? OPP

8. Relief.

In support of these issues, the plaintiff examined two PWs. Defendants examined DW-1 Deepak Bhandari, defendant No. 2. In rebuttal, the plaintiff examined two witnesses.

I have heard the learned counsel for the parties and have also gone through the record.

My findings on these issues are as under:-

Issue No. 1:

To substantiate his plea that the suit was within time, the learned counsel for the plaintiff had referred to an unreported decision of the Apex Court in H.P. Financial Corpn. Vs. Smt. Pawna and Others, Civil Appeal No. 1971 of 1998, decided on 18.12.2003. A perusal of this decision shows that it was held by their Lordships that the contract of indemnity is an independent contract from then mortgagee. It was also held in favour of the plaintiff/Corporation that right to claim for the balance amount arose only when the sale proceeds were found to be insufficient. According to statement of PW-1 Pawan Kumar Bali, the sale of assets took place in September, 1993. The present suit was filed in this Court on 26.12.1994 and accordingly, the suit having been filed within a period of three years from the date of sale as per the above decision of Apex Court was well within time. This issue is accordingly decided in favour of the plaintiff and as against the defendants.

Issue No. 2:

No arguments were advanced by the learned counsel for the defendants as to how the plaintiff is estopped by its act and conduct from filing the present suit. The issue is accordingly decided in favour of the plaintiff and as against the defendants.

Issue No. 3:

In support of this issue, the only statement made by DW-1 Deepak Bhandari, defendant No. 2 that he was the Director of defendant No.1/Compnay and defendants No. 3 and 4 are also the Directors of the said Company. He stated that they resigned from the Directorship of the Company on 1.9.1990 and did not work as Directors thereafter. Defendant No. 2 admittedly was the Director of the company and it was also admitted that defendants No. 3 and 4 were also earlier the Directors of the Company. Therefore, the suit was rightly filed ass against all the Directors and defendant No.1/Company was also sued through its Director and accordingly, there is nothing to hold that defendant No.1 has not been sued through proper person. No arguments were advanced on this issue. This issue is accordingly decided in favour of the plaintiff and as against the defendants.

Issue No. 4:

There is nothing on record that as to how defendant No.1 is liable for adjustment of forfeited amount of earnest money. There is nothing in the statement of DW-1 Deepak Bhandari in this regard and as such, they are not entitled for any adjustment of the amount as alleged by them since they have failed to prove this issue. This issue is accordingly decided in favour of the plaintiff and as against the defendants.

Issue No. 6:

Defendant No. 2 as DW-1 Deepak Bhandari has only stated that due to delay in release of loan amount, the business of defendant No. 1 suffered. No dates were stated by DW-1 as to when the amount was payable, how there was a delay and in the absence of any particulars having been furnished, it cannot be said that payment of the loan amount was delayed, for which the defendants are not liable. The defendants have failed to prove this issue, which is accordingly decided as against them and in favour of the plaintiff.

Issues No. 5, 7 and 7-A:

In support of these issues, there is statement of PW-1 Pawan Kumar Bali who has proved the necessary documents and has stated all the facts. He has also stated that sum of over Rs.60 Lacs was received by the plaintiff which was credited to the loan amount of defendants. He has also stated that defendants were also granted a rebate of over Rs.38 Lacs towards the liability of interest. The statement of plaintiff clearly proves that sum of Rs.30,60,732/- i.e. the suit amount is due to the plaintiff from the defendants and there was no cross-examination on this point. It was not so rebutted by defendant No. 2 as DW-1 that this figure has been incorrectly stated. The plaintiff has also examined PW2 M.K. Chaudhary, Financial Advisor, who has proved that he was competent to file the suit for and on behalf of the Corporation. This statement of this witness was challenged by the learned counsel for the defendants who raised the plea that the suit has not been filed by a proper person, but this has not been substantiated. The statement of PW-2 M.K. Chaudhary proves that he was competent to file the suit. According to the evidence led by the plaintiff, it is clear that the defendants had agreed to pay interest at the rate of 12.5%. DW-1 Deepak Bhandari, defendant No. 2 in his statement simply took up the plea that they were told that they will be charged the simple rate of interest at the rate of 9% but they never agreed for interest at the rate of 12.5%. However, the documents proved in evidence, namely, Exts. PW1/A to PW1/D executed by the defendants in favour of the plaintiff clearly shows that they had agreed to pay the interest at the rate of 15.5% per annum with a rebate of 3% per annum on the alleged loan amount.

It follows from the above discussion that the plaintiff has proved his case and the plaintiff is entitled to the suit amount Rs. 30,60,732/- claimed by them alongwith interest at the rate of 12.5% from the period i.e. 1.4.1994 onwards till the date of filin

g of the suit. In view of the fact that it was a commercial transaction, the plaintiff is entitled to payment of interest for future also on the same rate. Plaintiff is also held entitled for future interest on the same rate from the date of filing of the suit till the deposit of the amount by the defendants. All these issues are decided in favour of the plaintiff and as against the defendants. Relief: In view of the above findings on Issues No. 1 to 7 being in favour of the plaintiff and as against the defendants, the suit of the plaintiff is decreed for sum of Rs.30,60,732/- alongwith interest mentioned at the rate of 12% from date of suit till today and future interest at the same rate till deposit by defendants. The suit is decreed alongwith costs. Decree sheet be prepared accordingly. In view of the final disposal of the main suit, all the pending Miscellaneous Applications, if any, shall stand disposed of.