THE HON’BLE SRI JUSTICE N.R.L. NAGESWARA RAO APPEAL SUIT No. 858 OF 2001 JUDGMENT: The defendants in O.S.No. 1 of 1995 on the file of Senior Civil Judge’s Court, Jangaon, are the appellants herein. 2. The allegations in the plaint go to show that the plaintiff is a Nationalised Bank and the 1st defendant was granted loan for running of the rice business in the year, 1981 in the name of M/s Thawakkal Modern Boiled and Raw Rice Mill at Raghunathpally and subsequently it was changed as M/s Thawakkal Binny Modern Rice Mill in 1987. The 1st defendant was granted three loans. (1) Term loan of Rs.1,75,000/- repayable in 20 quarterly instalments, (2) Cash credit key loan up to a limit of Rs.1,00,000/-, (3) Cash credit open loan up to a limit of Rs.50,000/-. The 1st defendant has not availed the loan No.2 but he has availed the other loans and defendants Nos.2 and 3 stood as sureties and created an equitable mortgage over the schedule properties. Further-more, periodically the 1st defendant has been acknowledging the liability and has given letters of renewal. For legal notice issued by the plaintiff, a reply was also given by the defendants for admitting the liability. Therefore, the suit is filed for recovery of Rs.6,46,045/- due on account. 3. The 1st defendant filed written statement, which was adopted by defendants Nos.2 and 3. The allegations in the plaint with regard to obtaining of the loan and execution of the documents is denied. The defendants have also denied the availment of the loan and execution of the promissory note and the acknowledgement letters and renewal promissory notes as pleaded by the plaintiff-bank. The documents are fabricated one. There was no hypothecation of the properties. There was no valid equitable mortgage created. The interest claimed is excessive. On 10.09.1991 the Bank Manager has taken some signatures on blank papers. The suit is barred by time. The documents were deposited and equitable mortgage was created when a bank guarantee was obtained for beedi leaf contract. The suit was not properly instituted and therefore, the suit is liable to be dismissed. 4. On the basis of the above pleadings, the following issues have been framed by the trial Court, for trial: 1) Whether the suit documents are forged, created by plaintiff bank to have unlawfully gain and binding on defendants? 2) Whether the interest claim is excessive? 3) Whether the statement of account is false? 4) To what relief? On 12.03.1998 the following additional issues have been framed: 1) Whether plaintiff bank is entitled for preliminary decree? 2) Whether there is any cause of action to file the suit? 3) To what relief? Subsequently, on 08.11.1999 the following additional issue has been framed vide I.A.No.179 of 1999. 1) Whether the suit is barred by limitation? 5. On behalf of the plaintiff, PWs.1 to 4 were examined and marked Exs.A-1 to A-97. On behalf of the defendants, DWs.1 and 2 were examined and marked Exs.B.1 and B.2. 6. After considering the evidence on record, the learned Senior Civil Judge, Jangaon, has passed a preliminary decree. Aggrieved by the said judgment and decree, the present appeal is filed. 7. The points that arise for consideration are: 1) Whether the 1st defendant has availed the loan as pleaded by the plaintiff-bank and executed the documents? 2) Whether defendants Nos. 2 and 3 stood as guarantors and equitable mortgage was created for the schedule properties? 3) Whether the suit is properly instituted? 4) Whether the suit claim is true and correct? 5) Whether the judgment and decree passed by the Senior Civil Judge, Jangaon, is legal and sustainable? 8. POINTS: The learned counsel for the appellants strongly contends that there is no proof of the loan transaction and no equitable mortgage was created over the schedule properties and all the documents have fabricated and therefore, the defendants are not liable. It is also further pleaded that the necessary documents of creation of equitable mortgage and also sanction letter were not produced and the lower Court has not properly appreciated the evidence. It was also further pleaded that the loan was taken for the purpose of the rice mill and the suit was filed on individual capacity and therefore, the suit is liable to be dismissed. 9. So far as the contention that the suit is not properly instituted is concerned, it is to be noted that the loan was taken for running of rice mill under the name and style of M/s Tawakkal Modern Boiled and Raw Rice Mill, of which the 1st defendant is the sole proprietor. The defendants have not filed any documents to show that it is a registered partnership firm, where-under there are several partners and the loan was for the benefit of the firm. When the 1st defendant is the sole proprietor of the business firm, it cannot be contended that the suit was not properly instituted when the suit was filed against him for recovery of the suit amount. 10. The next question for consideration is whether the 1st defendant has availed the loan claimed by the plaintiff and whether several documents, which were marked by the plaintiff are false and fabricated. Evidently, the documents are maintained by the bank in regular course of business and they are certified to be true and the evidence was also adduced from the concerned staff and therefore, it cannot be contended that all of them are fabricated documents. It is not in dispute that earlier a bank guarantee was admittedly taken by the defendants by creation of equitable mortgage but the account is said to have been closed. In fact, in the written statement or in the evidence of the defendants, they have not come forward with any specific allegations against the staff of the bank for any motive to fabricate the documents. PW.1 was the Bank Manager, who worked at the plaintiff bank during the years 1981 to 1984, and he spoke about the loan sanctioned by the plaintiff-bank when the defendants have approached and created the equitable mortgage. He has mortgaged Exs.A.1 to A.64 relating to the loan transaction and also with regard to the acknowledgements and renewal of promissory notes. He was also recalled and further documents were marked in support of the suit claim. In fact, Ex.A.1 is the sanction letter, which was given on 14.04.1981 granting the loan for the purpose of the business and Ex.A.2 is the promissory note executed by the 1st defendant and the other documents shows about the guarantee given by defendants Nos.2 and 3. In fact, under Ex.A.6 dated 23.07.1981 a letter was addressed to the plaintiff-bank by the 1st defendant about the creation of the rights over the properties and undertaking not to alienate the same. In fact, Exs.A.39 and A.40 are the letters written by the 1st defendant about the availment of the loans and also creation of the equitable mortgage. Ex.A.41 is the letter addressed to the plaintiff- bank when there is change of the name of the rice mill and for a request to change the account in that name. Further-more, all the documents relating to the title of the property i.e., schedule property in the name of the 1st defendant or with the bank. 11. The contention of the defendants that earlier, they have created an equitable mortgage when bank guarantee was obtained for Beedi Leaf business and that account was closed, but, the documents were not returned cannot be accepted. It is not as though that the defendants have no acquaintance with the process of business and obtaining the loans and when once account has been closed any competent man would have taken return of the documents available with the bank. The contention that the documents were not returned in spite of repeated demands cannot be accepted. The truthfulness of the loan transaction is proved by the factum of the legal notices that have passed between the parties. Ex.A.53 is the legal notice dated 16.03.1991 demanding the defendants to pay the amount due to the bank to a tune of Rs.3,00,000/- and odd under the loan facilities availed on 23.07.1981 and 20.04.1985 and the consequential failure to pay the same. It was specifically stated that the acknowledgment was given by the defendants. Therefore, even in the year, 1991 either made a claim with regard to the amount and the loan transaction to this, evidently, a reply was given under Ex.A.57 on 10.09.1991 by the same Advocate, who was engaged by the defendants in the suit. In the above reply notice, it was specifically admitted that a loan was obtained for the rice mill in the year, 1981 and doing the business, substantial amount was said to have been paid to the bank, but disputed about the renewal letters. It was also further pleaded that the interest calculated is not correct. Further, it was contended that they have paid more than Rs.2,50,000/- and the claim for more than Rs.3,00,000/- on the date of the notice is not correct and after the receipt of the notice, they have gone to the bank and asked for a copy of the loan account. But, it was not given. It was further stated that the defendants are ready to pay the amount due after rendition of the correct accounts and the plaintiff was asked not to take hasty action. The relief as agriculturist was also claimed. In fact, in the evidence the 1st defendant as DW.1 has admitted that the legal notice Ex.A.53 was received and they got issued the reply Ex.A.57 admitting the loan transaction. 12. Therefore, when once the entire transaction has been admitted, the dispute was only with regard to the correctness of the account. The contention of the learned counsel for the appellants in the grounds of appeal that the several factors with regard to loan transaction are not proved and the necessary documents are not produced cannot proved and the necessary documents are not produced cannot be accepted. Furthermore, the evidence of PW.1 clearly goes to show as to how the defendants have dealt with the bank and he is the person, who was the Manager at that time. Therefore, from the conduct of the defendants and their correspondence with the bank, it is quite clear that there was an intention to create equitable mortgage and the letters referred to earlier clearly goes to show that the title deeds were kept with the bank as the loan was obtained for the rice mill business and there is absolutely no need for the plaintiff officials to fabricate the documents. The admission in the evidence of DW.1 and also legal notice clearly estops the defendants from disputing the loan availment and also the liability. 13. So far as the interest is concerned, the lower Court has applied the correct legal position since the Court has no power to negative the claim of the appellants. I therefore, find that there were no laches in the judgment of the lower Court, which has considered all the documents and in view of the specific admissions in the legal notice and the other documents, the defendants cannot deny the liability. There is absolutely no material to show that any payments made by the defendants were not given credit. Since the loan was obtained as a proprietary firm, the suit instituted cannot be said to be not proper. I do not find any grounds to interfere with the judgment and decree of the lower Court and accordingly points are answered. 14. In the result, the appeal is dismissed with costs. ________________________ N.R.L.NAGESWARA RAO, J Date: 15.06.2011. INL