1 s-1703-99 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION jmi SUIT NO. 1703 OF 1999. Syndicate Bank, a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, having its Head Office at Manipal in the State of Karnataka and a Zonal Office at Maker Tower, E Wing, II Floor, Cuffe Parade, Bombay 400 005 and a Branch Office, amongst others, at Malad (East), Mumbai-400 097. ..Plaintiff. vs. 1. Mr. Jayantibhai Nathalal Rami, 401 Rajdeep Co-op. Housing Society, Behind Apna Bandar, Tanaji Nagar, Road No.1, Kurar Village, Malad (East), Mumbai-400 097. 2. Mr. Bipin R. Shah, 30/11, Pushpa Park, Malad (East), Mumbai-400 097. ..Defendants. .... Ms. P.R. Mala, i/b. M.V. Kini & Co., for Plaintiff. None for Defendants. .... CORAM : S.J. KATHAWALLA, J. DATE : 24TH MARCH 2011. JUDGMENT : By this Suit, the Plaintiff prays for an order and decree against the Defendants to jointly and severally pay to the Plaintiff Bank a sum of Rs.66,353/- together with further interest thereon at the rate of 19.89% per annum, compounded quarterly, from the date 2 s-1703-99 of the Suit till payment and or realisation. Though the Writ of Summons is served on the Defendants by substituted service and an Affidavit of Service to this effect dated 7th May 2008 is filed in this Court, the Defendants have not filed their written statement and have also not come forward to defend the Suit. 2. Shri Amitava Sanyal, Senior Manager in the Asset Recovery Management Branch of the Plaintiff Bank has filed his Affidavit in lieu of Evidence dated 21st March 2011. The said Affidavit is taken on record and marked ‘X’ for identification. 3. The case of the Plaintiff in the Plaint as well as in the Affidavit in lieu of the Evidence is as follows : 4. In or about November 1995, the Defendant No.1 had approached the Plaintiff’s Malad (East) Branch with a request to grant to him a loan to the extent of Rs.1,00,000/- against the pledge of shares. The above request was favourably considered by the Plaintiff and thereupon the Plaintiff sanctioned to the Defendant No. 1 the said loan. The application of the Defendants dated 4th November 1995 along with the approval granted thereon by the Plaintiff are produced before this Court. The same are taken on record and marked Exhibit ‘P-1’ and ‘P-2’, respectively. 5. According to the Plaintiff in respect of the said loan against the pledge of shares an Agreement dated 6th November 1995 was executed by the Defendant No.1 as Borrower and Defendant No. 2 as surety inter-alia consenting to the terms and conditions pertaining to the repayment of the loan and payment of interest thereon. Under the said Agreement, the Defendants pledged in 3 s-1703-99 favour of the Plaintiff 350 Grasim shares of the face value of Rs. 3,500/- and market value of Rs.2,10,000/-. Thereafter, the Defendant No.1 – Principal Borrower issued a letter forwarding the shares to the Plaintiff towards the security of the said loan of Rs. 1,00,000/- granted by the Plaintiff Bank to the Defendants against the shares. In the said letter, it is declared that the pledged shares are free from encumbrances. The said Agreement dated 6th November 1995 and the letter declaring that the pledged shares are free from encumbrances are produced before this Court. The said Agreement dated 6th November 1995 and the said letters are produced before this Court. The same are taken on record and marked Exhibits ‘P-3’ and’P-4’ respectively. 6. According to the Plaintiff vide letter dated 6th November 1995, the Defendants waived notice of variation of interest from time to time as per the directions of RBI and informed the Plaintiff that the notice as notified on notice board of Plaintiff would be sufficient. The said letter dated 6th November 1995 is produced before this Court. The same is taken on record and marked Exhibit ‘P-5’. Thereafter, vide letter, also dated 6th November 1995 both the Defendants gave a joint undertaking to repay the amount due as per the Agreement. The said letter dated 6th November 1995 is taken on record and marked Exhibit ‘P-6’. 7. After receipt of the said loan amount of Rs.1,00,000/- from the Plaintiff, the Defendant Nos. 1 and 2 issued a receipt dated 6th November 1995 acknowledging receipt of the said amount of Rs. 1,00,000/- towards loan against the shares. The said receipt is produced before this Court. The said receipt is taken on record and marked Exhibit ‘P-7’. 4 s-1703-99 8. The Defendants after availing the aforesaid facilities, failed to make payments as per agreed under the Agreement dated 6th November 1995. The said shares pledged by the Defendant No.1 were therefore put for sale by the Plaintiff. However, it came as a rude shock to the Plaintiff when the said shares were found to be fake and forged. 9. M/s. Grasim Industries vide its letter dated 17th August 1998 addressed to the Plaintiff dated 3rd August 1998 have recorded that all the shares which were handed over by the Defendant No.1 to the Plaintiff towards the security against the loan granted by the Plaintiff, are fake and forged. The said letter dated 3rd August 1998 is produced before this Court. The said letter dated 3rd August 1998 is taken on record and marked Exhibit ‘P-8’. 10. Thereafter, the Plaintiff from time to time called upon the Defendants to clear the amount outstanding under the loan Account. The Defendants failed and neglected to clear the said outstanding amount. The Plaintiff through their Advocates letter/ notice dated 14th August 1998 called upon Defendant Nos. 1 and 2 to pay to the Plaintiff their dues aggregating to Rs.62,577/- together with interest at the rate of 19.38% or such other rate which shall be compounded quarterly from 1st July 1998 till the payment or realisation within seven days of the receipt of the notice. A copy of the said legal notice dated 14th August 1998 is produced before this Court. The same is taken on record and marked Exhibit ‘P-9’. However the Defendants failed and neglected to respond to the said letter or to make any payments to the Plaintiff as called upon by the Advocate for the Plaintiff by his letter dated 14th August 1998. 5 s-1703-99 11. The Plaintiff has produced before this Court a certified extract of the statement dated 14th October 1998 of the Defendants Account maintained by the Plaintiff for the period 6th November 1995 to 24th September 1998 showing that an amount of Rs. 66,353/- is payable by the Defendants to the Plaintiff. The said Statement of Account is taken on record and marked Exhibit ‘P-10’. Since the Defendants failed to pay the said amount, the Plaintiff Bank filed the above Suit for recovery of the said amount of Rs. 66,353/- together with further interest thereon at the rate of 19.89% per annum, compounded quarterly, as per the particulars of claim annexed as Exhibit ‘H’ to the Plaint and further interest at the rate of 19.89% per annum compounded quarterly from the date of filing of the Suit till payment or realisation and costs. 12. I have gone through the averments made in the Plaint and also the Evidence along with compilation of Documents filed by the Plaintiff. From Exhibits ‘P-1’ and ‘P-2’, it is established that the Defendant by Application dated 4th November 1995 requested the Plaintiff Bank to grant a loan to the Defendant No.1 to the extent of Rs.1,00,000/- against the pledge of shares which Application was approved by the Plaintiff. From Exhibit ‘P-3’, it is established that an Agreement dated 6th November 1995 was executed by the Defendant No.1 as Borrower and Defendant No.2 as Surety with the Plaintiff in respect of the said loan against the pledge of shares inter alia consenting to the terms and conditions pertaining to the repayment of the loan and payment on interest thereon. Under the said Agreement, the Defendant pledged in favour of the Plaintiff 350 Grasim shares of the face value of Rs.3,500/- and market value of Rs.2,10,000/-. From Exhibit ‘P-4’, it can be seen that the Defendant 6 s-1703-99 No.1 also issued a letter declaring that the pledged shares are free from encumbrances. From Exhibit ‘P-5’ it can be seen that the Defendant had waived notice of variation of interest from time to time as per the directions of RBI and had informed the Plaintiff that the notice as notified on its notice board of the Plaintiff would be sufficient. From Exhibit ‘P-6’ it can be seen that vide letter dated 6th November 1995, Defendant Nos. 1 and 2 gave a joint undertaking to the Plaintiff to repay the amount due from the Agreement. Exhibit ‘P-7’ shows that the Defendants have acknowledged receipt of the loan amount of Rs.1,00,000/-. From Exhibit ‘P-8’, it is established that all the shares which were handed over by the Defendant No.1 to the Plaintiff of M/s. Grasim Industries towards the security against the loan granted by the Plaintiff are fake and forged. From Exhibit ‘P-9’, it is established that the Plaintiff through their Advocate’s letter/ notice dated 14th August 1998 called upon the Defendant Nos. 1 and 2 to pay to the Plaintiff their dues aggregating to Rs.62,577/- together with interest at the rate of 19.38% or such other rate which shall be compounded quarterly from 1st July 1998 till payment or realisation within seven days of the receipt of the notice. However, the Defendants failed and neglected to respond to the said letter or to make any payments to the Plaintiff as called upon by the Advocate for the Plaintiff by his letter dated 14th August 1998. From Exhibit ‘P-10’ it is established that the Plaintiff has maintained the Defendants’ account for the period 6th November 1995 to 24th September 1998, from the contents of which it is further established that an amount of Rs.66,353/- is due and payable by the Defendant to the Plaintiff. As set out hereinabove, the Writ of Summons was served on the Defendants by substituted service. However, the Defendants have not filed their written statement and have also not come forward to defend the Suit. In view thereof, what is stated by 7 s-1703-99 the Plaintiff has gone unchallenged. There is no reason why what the Plaintiff Bank has stated in the Plaint as well as in the Affidavit of Evidence should not be accepted. 13. In the above circumstances, in my view, the reliefs sought by the Plaintiff are required to be granted. In view thereof, I pass the following order :- (i) The Defendants are ordered and decreed to jointly and severally pay to the Plaintiff Bank a sum of Rs.66,353/- with further interest thereon at the rate of 18% per annum from the date of filing of the Suit till the payment and/or realisation. (ii) The Defendants shall pay costs of this Suit to the Plaintiff. (iii) Plaintiff will be entitled to refund of Court fees, if any, as per Rules. (iv) The Suit is accordingly disposed of in favour of the Plaintiff and against the Defendants. [ S.J. KATHAWALLA, J. ]