IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) PRESENT THE HON’BLE SRI JUSTICE N.RAVI SHANKAR C.C.C.A.NO.38 OF 1998 16-12-2010 Between:- K.Gopinath Nair .. Appellant/Defendant No.2 And State Bank of Hyderabad, rep.by its Manager. ..Respondent/Plaintiff JUDGMENT:- This is a second defendant’s first appeal from a money decree dated 23-04-1997 granted in O.S.No.450 of 1988 on the file of the Court of IV Additional Judge, City Civil Court, Hyderabad (trial Court). 2. The plaintiff bank brought the suit for recovery of a sum of Rs.30,826.50ps stated to be due towards the principal amount and interest on an education loan granted to defendants 1 and 2. The second defendant is the father of first defendant and education loan was taken for the purpose of the education of the first defendant. These facts are not in dispute. 3. The trial Court, after considering the oral and documentary evidence let in by both sides, decreed the suit for the sum of Rs.30,826.50ps and it then granted subsequent interest at 12% p.a. from the date of decree to the date of realization. Aggrieved by the said Judgment and decree, the defendants have come up with this appeal. The first defendant remained exparte in the suit. Only the second defendant contested and this appeal is also filed by the second defendant. 4. In this appeal Sri A.Sarang, learned counsel representing the learned counsel for the appellant, says that there is no dispute regarding the principal amount and the interest. He has however argued that the second defendant, being the father, stood guarantee for the loan and the Life Insurance Corporation (L.I.C.) Policy of the first defendant was with the plaintiff bank as a collateral security and that under certain guidelines issued by the plaintiff bank itself, it was under an obligation to pay the premia on the said L.I.C. policy and that the plaintiff was negligent and it did not pay the said premia and consequently, the policy lapsed and therefore, the plaintiff cannot now make the suit claim. The contention is that if the L.I.C. policy of first defendant had been continued by the bank, its maturity value could have been adjusted against the loan and defendant would not have become liable. It is also argued by the learned counsel for the second defendant that the second defendant was an employee of the plaintiff bank itself and that certain amounts were due to him towards retirement benefits on his retirement but they were withheld by the plaintiff bank and consequently, he could not repay the loan amount to the plaintiff bank. This defence on the face of it cannot be accepted, as delay in obtaining retirement benefits is not a ground to reject the suit claim. 5. Then, coming to the first defence of the second defendant that plaintiff bank was bound to pay the premia on the L.I.C. policy of first defendant assigned by him in favour of the plaintiff bank, the learned counsel for the second defendant relied upon Ex.B-5 document and says that it was issued by the plaintiff bank containing certain guidelines relating to the scheme and under the said guidelines, the plaintiff bank was bound to pay the premia on the L.I.C. policy of the first defendant. I have gone through Ex.B-5 document, which is described as a circular dated 31-12-1976 issued by the General Manager of the State Bank of Hyderabad to all its branches. The said circular shows that a scheme is enclosed with it. Page No.3 of the said circular which contains a para under the heading ‘Insurance’ reads that an insurance policy will be taken on the life of the student borrower for an amount equivalent to the amount of the proposed loan, the policy being assigned in favour of the bank and therefore, the bank should pay the premia and it should debit the said amounts towards premia to the loan account, which are to be realized ultimately from the borrowers. 6. The plea of the second defendant is that a policy was in fact taken in the name of the first defendant by the plaintiff bank but the plaintiff bank failed to pay the premia on the said policy and if the plaintiff bank had paid the premia, the policy would have matured and the plaintiff could have adjusted the said amount towards the loan amount and if that is so, nothing would remain due from the defendants. The trial Court discussed this aspect in Para No.9 of its judgment and negatived the case of the defendants. There is no compelling reason to disagree with the trial Court’s conclusion in the following circumstances. 7. It may be noted that the scheme mentioned in Ex.B-5 does not say that if the plaintiff bank fails to pay the premia on the first defendant’s policy, it would loose its claim over the loan lent to defendants 1 and 2. Added to this, the defendants did not call upon the plaintiff to produce the L.I.C. policy taken in the name of the first defendant and having not taken such steps, the defendants cannot now say that plaintiff should have adjusted the amount realizable from the L.I.C. policy. Further, the scheme enclosed to Ex.B-5 letter, to repeat, does not contain any condition that in the case of plaintiff’s failure to pay the premia, it would loose its claim to the loan amount. It may also be noted that even if the policy is taken in the name of the first defendant and assigned to the plaintiff bank, the defendants did not take any steps to see that the plaintiff bank pays the premia and did not issue any reminders to it. In the above circumstances and having regard to the terms and conditions of the scheme enclosed to Ex.B-5, it cannot be said that plaintiff was at fault and even otherwise if it did not pay the premia, it would loose the claim to the loan lent to the defendants. In these circumstances, the above defence of the defendants cannot also be sustained. No other points have been urged in this appeal. 8. Accordingly, for the aforesaid reasons, it follows that this appeal must fail and the same is accordingly dismissed with costs confirming the Judgment and Decree of the trial Court. ___________________ N.RAVI SHANKAR ,J 16th December 2010 AMD