BANK OF BARODA Vs. RAJESH SAREEN

JUDGEMENT

(1.) This suit has been filed alleging that the plaintiff-Bank is constituted under the Banking Companies (Acquisition and Transfer of Undertaking) Act No. 5 of 1970 having its head office at Express Towers, Nariman Point, Bombay, with one of its branchs at Connaught Circus, New Delhi. Plaint has been signed and verified and die suit instituted by Krishan Kumar Chopra, who has been duly authorised to sign and verify the plaint and to file the suit. Defendant No. 2 is the proprietary concern of defendant No. 1. At the request of defendant No. 1, plaintiff-Bank agreed to grant him advance to the tune ofRs.53,000.00 byway of Demand Term Loan for purchase of a Maruti vehicle. In consideration of sanctioning of the loan defendant No. 1 on November 3,1986, executed demand promissory note, agreement of hypothecation in respect of vehicle No. DDA-302, letter of instalment, letter of continuing security, letter of undertaking, letter of lien and set-off, bearer letter and letter authorising plaintiff-Bank to pay the insurance premium etc. of the said vehicle on behalf of defendant No. 1. Sanctioned loan carried interest of 7.5% over the bank rate with a minimum of 17.5% per annum with quarterly rests. Loan account in the name of defendant No. 1. was opened in the books of accounts of the plaintiff-Bank and hte loan was disbursed to defendant No. 1. Defendant No. 1 did not pay the monthly instalments and the interest agreed upon and a total sum of Rs. 59,192.55p was due from him on the date of the filing of the suit.

(2.) It is further alleged that defendants deposited two Cheques Nos. 627446 dated November 20,1986, for Rs. 20,000.00 and 06628 dated November 26,1986, for Rs. 78,000.00 both drawn on Syndicate Bank on November 21,1986 and November 27,1986, respectively and on the pay-in-slips depositing the cheques request was made by then for purchasing the same which request was acceded to by the Chief Manager of the plaintiff-Bank. Amount of both the aforesaid cheques totalling Rs. 85,200.00 was credited in the current account in the name of defendant No.2.Both the cheques on being sent for collection were returned unpaid with the remarks 'refer to drawer'. On dishonour the plaintiff-Bank credited the 'Bill Purchase General Ledger Account' of defendant No. 2 and debited the 'Past Due Bills Purchase Account'. It is stated that the plaintiff-Bank also informed the defendants about the dishonour of the aforesaid cheques and asked them to deposit a sum of Rs. 85,200.00 with interest but the defendants failed to do so. Defendants are, thus, further liable to pay Rs. 85,200.00 with interest thereon @ 18% per annum from November 21,1986 onwards. Amount of interest till the filing of the suit comes to Rs. 30,931.32P. It is stated that despite service of the notice of demand dated November 29, 1988 defendants have failed to pay Rs. 59,192.55p in the Loan Account, and Rs. 1,16,131.32p in the Cheque Purchase Account. It was prayed that a decree for Rs. 1,75,323.87p with costs and interest pendente lite and furture may be passed in favour of the plaintiff-Bank and against the defendants. Vehicle No. DDA-302 hypothecated by defendant No. 1 with the plaintiff-Bank is also sought to be sold to meet the decretal amount.

(3.) Defendants have contested the suit by filing written statement. By way of preliminary objections it is alleged that the plaint has not been signed and verified and suit instituted by an authorised person on behalf of the plaintiff-Bank. On merits, it is not denied that defendant No. 1 who is the proprietor of defendant No. 2, approached the plaintiff-Bank in or about November, 1986 for grant of Demand Term Loan for purchase of a Maruti Vehicle and loan to the tune of Rs. 53,000/ - was sanctioned by the plaintiff-Bank against hypothecation of the vehicle, as alleged. However, it is alleged that the documents, as detailed in Para 6 of the plaint, were filled in later on and are not even properly stamped as per law. It is denied that the agreed rate of interest was 7.5% oiver the bank rate with a minimum of 17.5% with quarterly rests as alleged by the plaintiff-Bank. It is admitted that the defendants deposited two cheques in question and those were purchased by the plaintiff-Bank and the Current Account of defendant No. 2 was credited with an amount of Rs. 85,200.00 as alleged. However, it is stated that no intimation in regard to dishonour of both the cheques in question was sent by the plaintiff-Bank to the defendants. Dishonoured cheques have been illegally withheld by the plaintiff-Bank. Liability to pay interest @ 18% per annum on the said amount of Rs. 85,200.00 is emphatically denied. It is stated that the defendants suffered hug financial loss and as such could not pay the amount in time. They still want to clear the dues in easy instalments and the amount of interest may either be waived or charged @ 6% per annum.