IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO. 3301 OF 1990 SUIT NO. 3301 OF 1990 SUIT NO. 3301 OF 1990 BANK OF MAHARASHTRA, A body Corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act V of 1970, having its Head Office at Lok Mangal, 1501, Shivaji Nagar, Pune 411 005 and a Branch Office at Mulund Colony, Bombay 400 082. ... Plaintiff. V/s. 1. Krupa Electricals, a firm carrying on business in Block No.1/6, Mulund Colony, Bombay 400 082. 2. Satish Jaswantsingh Vazirani of Bombay, Indian Inhabitant, Sole Proprietor of Krupa Electricals carrying on business at 1/6, Mulund Colony, Bombay 400 082. 3. Satish Chetandas Navani, of Bombay Indian Inhabitant residing at 1302, Mount Apartment, Sea View Co-op.Hsg.Soc.Ltd., J.P.Road, Versova, Andheri (W), Bombay 400 058. ... Defendants. Swapnil Bangar with Trupti Nikam i/b. Vinod Mistry & Co. for the plaintiff. None for the defendants. CORAM: V.C.DAGA, J. CORAM: V.C.DAGA, J. CORAM: V.C.DAGA, J. DATED: 29th February 2008. DATED: 29th February 2008. DATED: 29th February 2008. JUDGMENT : JUDGMENT : JUDGMENT : -------- -------- -------- . The plaintiff- Bank of Maharashtra ("Bank" for short) has filed this suit against the defendants for the recovery of their outstanding dues in the sum of Rs.9,64,577.84 under cash credit account and various loan accounts and also claimed future interest thereon from the date of suit till realisation. 2. The defendant No.1 is a sole proprietary concern owned by defendant No.2 carrying on business, inter alia, as contractors for the International Airport Authority of India, H.A.L. Nasik and Municipal Corporation of Nasik having its place of business at 1/6, blunder Colony, Bombay. The defendant Nos.3, 4 and 5 are sued as guarantors. 3. The plaintiff’s case is that defendant Nos.1 and 2 had dealing with the plaintiff- Bank since he year 1983 and were enjoying overdraft facilities. Plaintiff- Bank also granted cash credit facilities to defendant Nos.1 and 2 and, accordingly, defendant Nos.1 and 2 being borrowers and defendant Nos.3 to 5 being guarantors executed various documents in favour of the plaintiff- Bank. Defendant Nos.1 and 2 availed - 3 - the said financial facilities. At the request of defendant Nos.1 and 2, plaintiff- Bank extended said cash credit facilities to the extent of Rs.1,50,000/- towards their working capital. 4. In pursuance of further request of defendant Nos.1 and 2, plaintiff- Bank granted cash credit facility for the sum of Rs.1,50,000/- towards working capital. The defendant Nos.1 and 2 executed demand promissory note, deed of hypothecation of goods holding them jointly and severally liable to secure cash credit facility, and also executed letter of continuing security and power of attorney in favour of plaintiff- Bank. The defendant No.3 also executed letter of guarantee and guaranteed thereunder repayment of loan amount granted to the defendant Nos.1 and 2. 5. It is further case of the plaintiff that in the month of January, 1985, the plaintiff- Bank granted over draft facility in favour of defendant Nos.1 and 2 in the sum of Rs.1,00,000/- for which they executed letter and demand promissory note in favour of the plaintiff- Bank both dated 7th January, 1985. Plaintiff further states that defendant Nos.1 and 2 signed letter of acknowledgment of liability dated 14th September, 1985 confirming therein, execution of - 4 - loan document holding themselves jointly and severally liable to pay amounts promised under promissory note and the deed of hypothecation. They also executed letter of continuing security. 6. The defendant Nos.1 and 2 also acknowledged and admitted their liability under the loan account in the sum of Rs.3,19,044.49 exclusive of interest and further confirmed the statements furnished by the plaintiff- Bank. 7. The plaintiff has contended that under the aforesaid financial facilities, in the month of September, 1987, a sum of Rs.4,66,333.19 had become due and payable to the plaintiff for which, on 21st September, 1987, defendant Nos.1 and 2 executed letter of proprietorship; deed of hypothecation; and letter of concurrence in favour of the plaintiff- Bank. They also executed writing, inter alia, confirming that they were enjoying said financial facilities and that defendant No.3 had guaranteed repayment of monies due and payable under the said financial facilities. Defendant No.3 also executed deed of guarantee dated 19th October, 1987 in favour of the plaintiff bank guaranteeing the payment due and payable under the said cash credit and overdraft facilities. - 5 - 8. It is further case of the plaintiff that in the month of February, 1988, the representation was made by defendant Nos.1 and 2 concerning the execution of the order of Hindustan Aeronautics Ltd., Nasik for which they requested for loan amounting to Rs.27,500/-. 9. On 5th February, 1988, defendant Nos.1 and 2 executed letter of proprietorship; agreement for term loan and acknowledged receipt of the amount of loan. The defendant Nos.1 and 2, thus, availed of the said loan facility. 10. In the month of November, 1988, defendant Nos.1 and 2 approached the plaintiff- Bank and requested for further loan of Rs.50,000/- for execution of the works order given to them by the International Airport Authority of India. After considering their request, plaintiff granted the said loan facility to defendant Nos.1 and 2 in the sum of Rs.50,000/- for which they executed letter dated 8th November, 1988 and agreement of term loan. Defendant Nos.3 and 5 executed deed of guarantee dated 8th November, 1988 in favour of the plaintiff- Bank guaranteeing repayment of the said loan of Rs.50,000/-. - 6 - 11. It is further case of the plaintiff that defendant Nos.1 and 2 again approached for further loan of Rs.28,000/- for the execution of the works order awarded to them by the Nasik Municipal Corporation. The plaintiff bank after considering their request sanctioned the said loan of Rs.28,000/- to them for which, on 26th November, 1988, they executed in favour of plaintiff letter of proprietorship and agreement of term loan. Defendant Nos.3 and 5 executed deed of guarantee in favour of plaintiff dated 26th November, 1988 concerning the said loan amount of Rs.28,000/-. 12. The plaintiff states that they called upon the defendants to pay the amounts due and payable under the aforesaid financial facilities granted in favour of defendant Nos.1 and 2 but they failed and neglected to do so. 13. The plaintiff has claimed outstandings under the Cash Credit Account in the sum of Rs.8,08,019.14; under first loan account - Rs.44,891.65; Rs.71,934.35 under second loan account; and Rs.39,735.70 under third loan account. That is how the total amount claimed by the plaintiff in the suit is Rs.9,64,577.84. - 7 - 14. The plaintiff has further claimed that the defendants are liable to repay and reimburse to the plaintiff all expenses by way of insurance charges and/or storage charges etc. that have been incurred by the plaintiff from time to time on this count and claimed in suit. The plaintiff has contended that the defendant Nos.1 and 2 have already disposed of security. The plaintiff has, therefore, filed this suit for recovery of their dues due and outstanding from the defendants under the cash credit facility and three loan accounts with future interest. 15. On being summoned defendant Nos.3 and 4 appeared. Vide order dated 28th February, 1994, defendant Nos.3 and 4 were granted leave to defend and further directed to file written statement within six weeks from the date of the order. None of the defendants except defendant No.3 has filed written statement on record wherein defendant No.3 denied his liability. 16. According to defendant No.3, the plaintiff- bank had granted loan to defendant Nos.1 and 2 without obtaining any security from them and continued to advance further loans from time to time without appreciating their past business conduct. That the guarantee was executed in good faith without any - 8 - consideration and was never intended to be acted upon. That his signatures were obtained on blank documents. That no notice of demand was served on him. He also disputed the contents of the deeds of guarantee. He has further pleaded that the plaintiff- Bank went on giving advances to defendant Nos.1 and 2 without his consent and knowledge and thereby allowed defendant Nos.1 and 2 to swallow loan amounts. It is further contention of defendant No.3 that the defendant Nos.1 and 2 were declared as insolvent by this Court and yet the plaintiff did not take any steps against them and went on advancing loans to them. It is the contention of defendant No.3 that he had never given consent for cash credit facility sanctioned in favour of defendant Nos.1 and 2. He denied knowledge of any overdraft facility sanctioned in favour of defendant Nos.1 and 2. He states that the plaintiff got executed the documents from defendant No.3 to play fraud and forgery with him. He has also denied knowledge of further loans advanced by the plaintiff in favour of defendant Nos.1 and 2 which, according to him, were granted without clearing the earlier loans. He has also denied to have executed any bank guarantee in respect of loan account and reiterated that his signatures were obtained on blank papers. He has further contended that the suit is not maintainable under order XXXVII of the Code of Civil Procedure. He - 9 - states that there was no cause of action against him to file the present suit. He has, therefore, prayed for dismissal of the suit with costs. 17. Considering the pleadings of the parties, the issues were framed vide order dated 3rd October, 2007, reading as under: 1. Whether the Plaintiffs prove that the Defendants are liable to pay the amount due and payable as against respective accounts with further interest as set out in particulars of claim Exhibit: M, N, O and P to the Plaint? 2. Whether the Defendant No.3 proves that the Plaintiff and the Defendant Nos.1 and 2 are acting in concert and collusion with each other? 3. Whether the Defendant No.3 proves that the Plaintiffs are guilty of forgery? 4. Whether the Plaintiff proves that the present summary suit is not barred by law of limitation? 5. Whether the defendant No.3 proves that the Plaintiffs have acted in violation of the Banking Principles? 6. Whether the Defendant No.3 proves that the Plaintiffs have no cause of action against him? 7. Whether the Defendant No.3 proves that the present summary suit is not maintainable under order XXXVII of the Code of Civil Procedure? 8. What reliefs & what order? 18. Pursuant to the aforesaid order dated 3rd October, 2007, the plaintiff was directed to file - 10 - affidavit of evidence and documents. Accordingly, The plaintiff has filed affidavit of its Manager Shri Harsh Vinayak Vaithy in lieu of evidence in support of the suit claim together with original documents including extracts of accounts duly certified under the Bankers Books Evidence Act. All the documents were proved by the plaintiff through their affidavit. Nobody was present on behalf of the defendants either to cross-examine the affiant or to challenge the legality or validity of the documents executed by defendant Nos.1 and 2 being borrowers and other defendants being guarantors in favour of the plaintiff- Bank. Under these circumstances, evidence of the plaintiff together with documents went unchallenged. 19. The plaintiff- Bank has proved their claim together with their right to recover the amount with interest thereon. The plaintiff- Bank has also proved existing liability against the defendants and outstanding dues due and recoverable from them on the basis of the extract of accounts duly certified under the Bankers Book Evidence Act. There is no dispute that defendant Nos.1 and 2 had approached the plaintiff- Bank and requested for cash credit facility and loans. It is also proved that the loan documents were executed by the defendants and the amount of loan - 11 - was borrowed by defendant Nos.1 and 2 and cash credit facility was utilised by them. It is also proved that under both accounts the liability of the Bank was acknowledged by defendant Nos.1 and 2 as such the plaintiff- Bank is entitled to recover suit claim as set up in the plaint. The defendant No.3 though filed written statement but did not lead any evidence in order to discharge burden which was placed on him by virtue of issue Nos.2, 3 and 5 to 7. I am, therefore, constrained to hold that the defendant No.3 has failed to prove the said issues. The plaintiff has proved issues Nos.1 to 3. As such, plaintiff- Bank is entitled to a decree in terms of the suit claim with slight modification of rate of future interest on the decretal amount which has to be at the prevailing rate of bank interest. Hence the following order: ORDER (i) The suit is decreed in terms of the prayer clauses incorporated in the plaint. (ii) The defendants do pay jointly and severally Rs.9,64,577.84 with interest thereon @ 10% per annum from the date of suit till payment or part payment thereof with costs. - 12 - (iii) Decree be drawn in terms of this order. (V.C.DAGA, J.) (V.C.DAGA, J.) (V.C.DAGA, J.) IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO. 3301 OF 1990 SUIT NO. 3301 OF 1990 SUIT NO. 3301 OF 1990 BANK OF MAHARASHTRA. ... Plaintiff. V/s. Krupa Electricals & ors.. ... Defendants. Swapnil Bangar with Trupti Nikam i/b. Vinod Mistry & Co. for the plaintiff. None for the defendants. CORAM: V.C.DAGA, J. CORAM: V.C.DAGA, J. CORAM: V.C.DAGA, J. DATED: 29th February 2008. DATED: 29th February 2008. DATED: 29th February 2008. OPERATIVE PART OF THE JUDGMENT : OPERATIVE PART OF THE JUDGMENT : OPERATIVE PART OF THE JUDGMENT : ------------------------------ ------------------------------ ------------------------------ . For the reasons separately recorded in the judgment, the following order is passed: ORDER (i) The suit is decreed in terms of the prayer clauses incorporated in the plaint. (ii) The defendants do pay jointly and severally Rs.9,64,577.84 with interest thereon @ 10% per annum from the date of suit till payment or part payment thereof with costs. (iii) Decree be drawn in terms of this order. Sd/- (V.C.DAGA, J.) (V.C.DAGA, J.) (V.C.DAGA, J.)