BANK OF MAHARASHTRA Vs. MERMAID PACKAGES

JUDGEMENT

(1.) The plaintiff has filed the above suit for a decree of Rs.8,71,090/- against the defendants with interest @ Rs.18.75 p.a. with quarterly rests from the date of filing of the suit till realisation. The defendants could not be served by ordinary process and were served by publication in the newspaper "Statesman'; by affixation at their last known address and at the notice board of the High Court for the date fixed in the court. None appeared on behalf of defendants and they were proceeded ex-parte 17.12.1997. Plaintiff was permitted to lead ex-parte evidence by way of affidavit alongwith documents.

(2.) The plaintiff in support of its case filed the affidavit of V.P. Ganeshan, Chief Manager & Principal Officer, of the plaintiff bank who has stated that he being a principal officer and constituted attorney of the bank was competent to file the affidavit; and that defendant No.1 M/s. Mermaid Packages as a partnership concern constituted by defendants 2 & 3 opened the current account in the bank in the name of the firm in May 1991. The account was current, open and mutual and the balance could be in debit as well as in credits. They approached the plaintiff bank for grant of temporary overdrafts to meet their financial requirements which was allowed from time to time. In May 1992 defendants requested for TOD limit of Rs.2 lakhs in the said account. Consequently, on 12.5.1992 defendants were allowed a TOD limit of Rs.2 lakhs and in consideration thereof they executed the necessary documents i.e. Request letter, D.P. note for Rs.2 lakhs, undertaking of the defendants that the said D.P. note is to stand as continuing security even if the said account shows nil balance. They also approached the bank for grant of inland letter of credit facility to the extent of Rs. 3.0 lakhs for the purchase of raw-material for their business. After scrutiny, the facility of inland letter of credit of Rs.3.0 lakhs was sanctioned by the plaintiff on 12.5.1992 and the defendants. In consideration thereof, executed agreement for opening of inland irrevocable without recourse letter of credit, agreement of hypothecation of plant and machinery, and agreement of guarantee by defendants 2 & 3 in their individual capacity. Under this limit, the letter of credit was issued by the plaintiff bank at the request of the defendants in favour of supplier and the same were to be paid by the bank on demand on the due date. Defendants agreed to maintain sufficient balance to liquidate the account thus debited for payment of the amount of letter of credit by the plaintiff on their demand by their respective beneficiaries. Defendants further agreed that if the bank is called upon to pay the amount of the letter of credit by the beneficiary, the defendants will reimburse the balance and pay this amount under the letter of credit with interest at the rate applicable from time to time as per RBI/Bank Rules. On 7.11.1992 on the request of the defendants, the plaintiff bank enhanced the letter of credit limit from Rs. 3.0 lakhs to Rs.6.0 lakhs and the defendants, in consideration thereof, executed similar set of documents again. The defendants have been availing the TOD limits since inception and got issued letter of credit in favour of their employers for varying amounts on various dates. The defendants failed to adjust the current account and clear the temporary overdraft credited in the said account despite demand. The defendants having committed default, the plaintiff recalled the loan by serving a recall notice on the defendants on 21.4.1995 calling upon them to adjust their accounts with the plaintiff bank within 10 days of the receipt of the notice. The defendants failed to do the same. It is further stated on the date of filing the suit a sum of Rs. 1,89,746.66 was outstanding in the TOD limit in the current account including Interest calculated upto 11.5.1996. A sum of Rs. 1,07,660.34 has accrued as interest but not applied and debited in the said account thus making a total outstanding TOD limit of Rs. 2,97,407/-. It is pleaded that a sum of Rs.3,59,124.33 was outstanding against the defendants on the date of filing of the suit as per the details given in para 14 of the plaint. Copy of the statement has been filed. The plaintiff proved on record power of attorney Ex. PW-1/1 Request letter Ex.PW-1/2; D.P. note Ex. PW 1/3; the undertaking Ex.PW-1/4, another request letter for grant of inland credit limit for Rs. 3.0 lakhs ex.PW-1/4A, irrevocable letter of credit Ex.PW.1/5; agreement of hypothecation of plant and machinery Ex.PW-1/6, agreement of guarantee executed by defendants 2 & 3 Ex.PW-1/7; request letter for enhancing limit to Rs.6 lakhs EX.PW-1/8; letter of irrevocable credit Ex.PW-1/9; agreement of guarantee executed by defendants No. 2 & 3 in their individual capacity to stand as guarantor for the total limit of Rs.8.0 lakhs Ex.PW-1/10; recall notice Ex.PW-1/11; and certificate of interest accrued but not applied in both the limit account Ex.PW-1/12 to Ex.PW-1/18.

(3.) The case set up by the plaintiff in the suit is duly supported by the documents and the affidavit filed by the plaintiff in support of its case. Defendants have chosen not to contest the suit despite service. There is nothing to disbelieve the evidence tendered by way of affidavit. Thus, the plaintiff has succeeded in proving the averments in the suit. Accordingly, the suit is decreed. The plaintiff would be entitled to recover the suit amount along with interest @ 18% p.a. on the suit amount from the date of filing of the suit till realisation and costs.