- 1 - IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION jmi SUIT NO.678 OF 2000. Bank of Baroda. ..Plaintiffs. vs. Mr.Vijay Pransukhlal Soni & Anr. ..Defendants. .... Ms.J.M.Sidhwa, i/b. Kadwani & Co., for Plaintiffs. None for the Defendants. .... CORAM CORAM CORAM: S.J.KATHAWALLA, J. S.J.KATHAWALLA, J. S.J.KATHAWALLA, J. DATE DATE DATE : 10TH FEBRUARY,2009 : 10TH FEBRUARY,2009 : 10TH FEBRUARY,2009. P.C.: P.C.: P.C.: . This suit is appearing under the caption "For Ex-parte Decree". The plaintiffs have tendered on record the evidence of Mr.Ramesh T. Kale, constituted attorney of the plaintiffs-Bank and Senior Manager of the plaintiffs. The said affidavit of evidence of the plaintiffs dated 20th January 2009 is taken on record and marked ‘X’ for identification. 2. The plaintiffs are a body corporate constituted under the provisions of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, who are inter-alia carrying on the business of banking. The defendant no.1 is sued as principal borrower and defendant no.2 is sued as Guarantor. Defendant no.1 is the Son of defendant no.2. The present suit is filed by the plaintiffs against the defendants for an order and - 2 - decree to jointly and severally pay to the plaintiffs a sum of Rs.9,22,168/- as per particulars of claim Exhibit-K to the plaint, with interest thereon @ 17.81 % p.a. with quarterly rests from the date of the suit till payment and/or realisation. The plaintiffs have further sought a declaration that all the machineries lying at the business premises of the defendant no.1 or any other place, are validly hypothecated in favour of the plaintiffs as security for the due repayment of the amounts and interest mentioned in prayer (a) of the plaint, and that the said hypothecated machineries more particularly described in Exhibit-L to the plaint, be enforced and the same be sold by and under the direction of this Court and the net sale proceeds be handed over to the plaintiffs for appropriating the same towards the plaintiffs claim in the suit. The Court Receiver is appointed in respect of the said machinery by an interim order of this Court dated 30th November 2001. 3. The plaintiffs have stated that pursuant to the request of defendant no.1, the plaintiffs through their Goregaon (East) Branch, granted to defendant no.1 a term loan of Rs.8,50,000/- inter-alia against the guarantee of defendant no.2 and other securities. Defendant no.1 availed from the plaintiffs, Goregaon Branch, the term - 3 - loan of Rs.8,50,000/- and in consideration thereof, defendant no.1 inter-alia executed in favour of the plaintiffs following security documents :- (a) Demand promissory note dated 17th May 1997 whereby defendant no.1 promised to pay to the plaintiffs on demand a sum of Rs.8,50,000/- with interest thereon @ 3.5% over Prime Lending Rate (P.L.R.) minimum 17.5% p.a. plus interest tax with quarterly rest. (b) Letter of instalment dated 17th May 1997 whereunder defendant no.1 agreed to repay the said term loan by monthly instalment of Rs.14,200/- commencing from 19th June 1997. (c) Agreement of hypothecation of machinery dated 17th May 1997 whereby defendant no.1 agreed to hypothecate and hypothecated all the machineries lying at the business premises or at any other premises as security for the due repayment of the amounts due under the said term loan on the terms and conditions mentioned therein. (d) Letter of Undertaking dated 17th May 1997 - 4 - whereby defendant no.1 gave several undertakings as contained therein. (e) Letter of Pledge (for Government securities, shares, documents of title to goods, etc. other than security for immovable property) dated 17th May 1997. (f) Letter of sole proprietorship dated 17th May 1997 by defendant no.1 informed the plaintiffs that he was sole proprietor of the firm and he was solely responsible for the liability thereof and he would be liable to plaintiffs on any obligation which may be standing in the firm’s name in the books of account of the plaintiffs on the date and receipt of such notice and until all such obligation shall have been liquidated. 4. The plaintiffs have stated that defendant no.2 has guaranteed the due repayment of the amounts due and payable by the defendant no.1 under the said term loan and executed in favour of the plaintiffs Irrevocable continuing General Form of Guarantee dated 17th May 1997 for a sum of Rs.8,50,000/- whereby defendant no.2 has agreed that in the event, the defendant no.1 committing - 5 - default, the defendant no.2 shall personally repay to the plaintiffs the outstanding loan amounts with interest, costs, charges and expenses. 5. The plaintiffs have stated that the defendant no.1 by his letter dated 17th May 1997 addressed to the plaintiffs recorded having obtained a term loan of Rs.8,50,000/- and further recorded having deposited with the plaintiffs a fixed deposit receipt of Rs.2,50,000/- issued by the plaintiffs, as security for the due repayment of the said term loan. The defendant no.1 further agreed that if the plaintiffs recalls the loan, the plaintiffs shall be entitled to adjust the loan account by prepayment of the term deposit receipt and in that case, plaintiffs may allow such rate of interest as per the rules of the plaintiffs in case of prepayment. 6. The plaintiffs have stated that they have maintained term loan account in the name of defendant no.1 with their Goregaon branch and at the foot of the said account, a sum of Rs.9,22,168/- has become due and payable by the defendants to the plaintiffs. The plaintiffs have stated that the defendant no.1 committed several breaches of the terms and conditions of the said security documents executed by the defendants and also - 6 - failed to repay the agreed instalments and liquidate his liability under the said term loan to the plaintiffs. The plaintiffs have stated that in respect of the said term deposit receipt of Rs.2,50,000/-dated 16th May 1997 pledged by the defendant no.1, the plaintiffs have exercised their rights as contained in the letter dated 17th May 1997 and appropriated the prepayment proceeds of Rs.3,07,837/- towards the part liquidation of defendants liability to the plaintiffs. The plaintiffs by their Advocate’s letters dated 17th May 1999 and 19th July 1999 addressed to defendant no.1 and defendant no.2 respectively recorded the aforesaid facts and called upon the defendant no.1 as a principal borrower and defendant no.2 as guarantor to pay a sum of Rs.10,93,192/- due and payable by them in respect of the aforesaid term loan with further interest thereon and forwarned the legal action. The defendant nos.1 & 2 have failed and neglected to pay any amounts to the plaintiffs after receiving the respective notices issued by the plaintiffs. The plaintiffs have submitted that there is now due and payable by the plaintiffs a sum of Rs.9,22,168/- as per the particulars of claim Exhibit-K to the plaint with interest thereon @ 17.81% p.a. with quarterly rest from the date of the suit till payment in respect of said term loan. The defendants have sought - 7 - passing of order and decree against the defendants to pay to the plaintiffs a sum of Rs.9,22,168/- with further interest thereon till payment or realisation. 7. The plaintiffs have submitted that all the machineries lying at the premises of defendant no.1 or at any other places are validly hypothecated in favour of the plaintiffs by defendant no.1 for securing the due repayment of the amounts. The plaintiffs have submitted that hypothecated machineries be sold by and under the directions of this Court and the net sale proceeds thereof be handed over to the plaintiffs to the satisfaction of the plaintiffs. 8. I have perused what is stated in the plaint, and in the affidavit of evidence filed by the plaintiffs. I have also perused the documents annexed to the affidavit of evidence. The document at Exhibit-P-1 shows that the defendant no.1 has promised to pay to the plaintiffs on demand a sum of Rs.8,50,000/- with interest thereon @ 3.5% over P.L.R. minimum 17.5% p.a. plus interest with quarterly rest. The document at Exhibit-P-2 shows that the defendant no.1 has acknowledged that he has availed a term loan from the plaintiffs upto a limit of Rs.8,50,000/- and the defendant no.1 has agreed to repay - 8 - the term loan by monthly instalments of Rs.14,200/-, commencing from 19th June 1997. The Document at Exhibit-P-3 shows that the defendant has agreed to hypothecate and hypothecated all the machineries lying at the business premises or at any other premises as security for due repayment of the amounts due under the said term loan on the terms and conditions mentioned therein. The document at Exhibit-P-5 discloses that the defendant no.1 has executed a letter of pledge dated 17th May 1997 whereunder he has pleaded Government securities, shares, documents of title to goods, etc. other than security for immovable property in favour of the plaintiffs. The document at Exhibit-P-7 shows that the defendant no.2 has guaranteed due repayment of the amount due and payable by the defendant no.1 in respect of the said term loan to the plaintiffs and has agreed that in the event of the defendant no.1 committing default, the defendant no.2 shall personally repay the same to the plaintiffs with interest, costs, charges and expenses. The document at Exhibit-P-8 shows that the defendant no.1 has agreed that if the plaintiffs recalls the loan, the plaintiffs shall be entitled to adjust the loan account by prepayment of the loan of Rs.2,50,000/- deposited with the defendant no.2 to the plaintiffs which amount the plaintiffs have appropriated to the - 9 - tune of Rs.3,07,837/-. The document at serial no.9 (Exhibit-P-9) proves that at the foot of the term loan account of the defendant no.1 maintained by the plaintiffs, an amount of Rs.9, 22,168/- is due and payable by the defendants to the plaintiffs, which the defendant nos. 1 and 2 are jointly and severally liable to pay to the plaintiffs alongwith the agreed interest. The document at Exhibit-P-10 and Exhibit-P-11 shows that the defendant nos. 1 & 2 despite having been called upon by the plaintiffs to pay to the plaintiffs the outstandings set out therein, and despite having received the letters, have failed and neglected to make any payments to the plaintiffs. The defendants have not filed their written statement despite being served with the writ of summons. The entire case of the plaintiffs has therefore, gone unchallenged. There is no reason why the case of the plaintiffs’ should not be accepted. 9. In my view, the plaintiffs deserve the reliefs sought by them except for the rate of interest claimed by them from the date of filing of the suit until payment and/or realisation. Hence, I pass the following order :- (a) That the defendants are jointly and severally - 10 - ordered and decreed to pay a sum of Rs.9,22,168/- as per particulars of claim Exhibit-K to the plaint, with simple interest thereon @ 17.81 % p.a. with quarterly rests from the date of the filing of the suit till payment and/or realisation. (b) It is declared that all the machineries, more particularly described in Exhibit-L to the plaint are validly hypothecated in favour of the plaintiffs as security for the due repayment of the amounts payable by the defendants to the plaintiffs as set out in clause (a) above and the Court Receiver, who has already taken possession of the said machinery described in Exhibit-L to the plaint is directed to sell the said machinery and hand over the net sale proceeds to the plaintiffs for appropriating the same towards the amount for which the order and decree is passed in clause (a) above. (c) The Court Receiver after deducting his costs, charges and expenses to hand over to the plaintiffs all the amounts received by the Court Receiver till date as royalty from the defendant - 11 - no.1 for appropriation of the same towards the order and decree passed in favour of the plaintiffs in clause (a) above. (d) The defendant to pay the costs of this suit to the plaintiffs. . In view thereof, the suit stands disposed of. [S.J.KATHAWALLA, [S.J.KATHAWALLA, [S.J.KATHAWALLA, J.] J.] J.]