STATE BANK OF INDIA Vs. PREM DASS

JUDGEMENT

(1.) Suit was filed on the allegations that the plaintiff-bank is a body corporate constituted under the State Bank of India Act, 1955, having its central office at Madam Carna Road, Nariman Point, Bombay. One of the branches of the plaintiff- bank in situated at Chandni Chowk., Delhi S.K.Burman, Manager (SIB) and principal Officer posted at Chandi Chowk Branch is competent to sign and verify the ptainton behalf of the plaintiff-bank under the General Regulations No.76 & 77 of the State Bank of IndiaGeneral Regulations, 1955, made in exercise of the powers conferred by sub-section (3) of Section 50 of the State Bank of India Act, 1955, with the previous sanction of Central Government read with the notification published in the Gazette of India dated September 26,1959 and August 26,1972. Defendant No. 1 was granted Rs.1,36,000.00 by way of Medium Term Loan for purchase of a bus on June 20,1979, on his agreeing to pay interest on the amount so advanced @ 2% below the State Bank advance rate minimum 11 % per annum rising and falling therewith calculated on the daily balance of the amount due. Defendant No.1 further agreed to repay the loan in 42 monthly instalments with interest and the first instalment was to be paid on September 20,1979. By way of security Bus No.DEP-2742 (Chasis No.344050059592) was hypothecated by defendant No.1 with the plaintiff-bank. It is further alleged that defendants 2 to 4 stood guarantors for defendant No.1 and agreed to pay the loan amount with interest in case defendant No.1 failed to pay the same. Defendant No.1 executed agreement for the Medium Term Loan dated June 20,1979, letter dated June 20, 1979 and an affidavit. Third Party, Guarantee Agreement was alone executed by the defendants. Defendants availed of the facility of the total loan amount sanctioned, It is stated that defendant No. 1 made deposits on May 27,1981, June 16,1981, January 20,1982, March 17,1982 and May 5,1982 in the loan account. He further executed revival letter dated November 29,1983. It is stated that a sum of Rs. 1,38,307/69P is due from the defendants alongwith interest upto April 20, 1985. It was prayed that a decree for recovery of the aforesaid amount of Rs.1,38,307/69P with interest @ 18% per annum beyond April 21, 1985, may be passed in favour of the plaintiff and against the defendants.

(2.) Defendants 1 to 4. filed a joint written statement. It is alleged that the Central Government/Delhi Administration framed a scheme to raise the economic condition of the SC/ST and Weaker Section people living in Delhi. The Scheme envisaged that the Central Government/Delhi Administration would provide to persons, who may apply for bus loan from nationalised banks against hypothecation of the buses. Scheme further envisaged that such buses would operate under Delhi Transport Corporation and the. bus owners would be paid Rs.5,000.00 per month. Loan advanced through nationalised banks was to be repaid in instalments after the expiry of period of five years from the date of disbursement. Thus, repayment was to commence after April 1985 and the plaintiff-banks has cause of action to file the present suit. It is denied that the plaint has been signed and verified by a proper person. It is further pleaded that the plaintiff-bank has failed to fulfil its part of the agreement by not keeping the insurance policy alive. It is staled that under the aforesaid scheme rate of interest chargeable from the defendants was to be 4- 1/2% instead of 11% per annum. Plaintiff-bank has not given credit or the entire amount deposited by defendarnt No.1. It is also pleaded that the loan against hypothecation was advanced to defendant No.1 only to the extent of 50% of the sanctioned loan amount of Rs.1,36,000.00. It is alleged that defendants 2 to 4 did not stand guarantors for the re-payment of the loan amount and they were mere witnesses. It is denied that the defendants executed any documents, as alleged. Liability to pay interest @ 18% per annum beyond April 20,1985, is denied.

(3.) In the replication filed to the joint written statement or defendants 1 to 4, the plaintiff-bank has reaffirmed the averments made in the plaint.