PUNJAB NATIONAL BANK Vs. FIVE STAR PRNCIL INDUSTRIES

JUDGEMENT

(1.) The plaintiff has filed the present suit for recovery of a sum of Rs.2,69,473.28 against the defendants with costs and pendente lite and future interest. The plaintiff is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, having its Head Office at 5, Parliament Street, New Delhi and amongst others one branch office at Rajouri Garden, New Delhi and is competent/entitled to sue in its own name. Shri Bhola Singh is the Branch Manager of the Rajouri Garden Branch of the Bank and as such is its principal officer and a person conversant with the facts of the case and is able to depose about the same and is also the general attorney of the Bank who is fully authorised to institute and present the suit, sign pleadings, engage a lawyer, to prosecute the same and to do all other acts, deeds and things in this regard.

(2.) It is alleged that defendants No. 2 to 6 in the capacity of partners of defendant no.1, the partnership firm, approached the plaintiff Bank in August, 1980 and requested for the Term Loan Limit of Rs.1,20,000.00 for the purchase of machinery and further requested for the grant of Cash Credit Limit to the extent of Rs.2.00 lacs for the manufacturing of the pencils of different types. The plaintiff Bank, however, agreed for the grant of Term Loan of Rs.75,000.00 and Cash Credit Limits of Rs.85,000.00 and another Cash Credit (Pledge) loan limit of Rs.75,000.00 which were sanctioned in the name of defendant no.1 on 5.9.1980 subject to the conditions that all the partners, defendants 2 to 6 shall execute the relevant documents and further the said loan should be guaranteed by defendants 7 and 8. Defendants 2 to 6 executed the relevant documents inter alia the Demand Promissory Note for Rs.85,000.00 dated 5.9.1980, Agreement of Hypothecation dated 5.9.1980, whereby the raw material, finished and semi-finished goods purchased or to be purchased were hypothecated as security for the repayment of the loan, interest and other charges. Various documents pertaining to the medium term loan were also executed and defendants 1 to 6 also hypothecated the machinery purchased or to be purchased for the term loan repayable together with interest @ 3.5% p.a. over the Reserve Bank of India rate with a minimum of 12.5% p.a. with quarterly rest, subject to the various rates of interest as per the direction of the Reserve Bank of India. Defendants 7 and 8 Sh.S.C.Puri and L.K.Trehan, executed the agreement of guarantee in favour of the plaintiff Bank with regard to the loans availed by defendants 1 to 6. Defendant no.7 had also created equitable mortgage on property No. RA-101, Inderpuri, New Delhi in favour of the plaintiff in consideration of defendants 1 to 6 availing the loan facilities detailed hereto before. The details of creating equitable mortgage are given below:- @SUBPARA = (a) Date of mortgage : Defendant No.7 created an equitable mortgage on his property No.RA-101, Inderpuri, New Delhi in favour of the plaintiff Bank in consideration of the loan sanctioned to defendant no.1 with the intention to create mortgage and secure the amount of loan granted under term loan and cash credit loan facilities. @SUBPARA = (b) Details of the title deeds: A registered original sale/title deeds are lying with East Patel Nagar Branch of Punjab National Bank, since defendant no.7, the owner of the plot measuring 250 sq.yds. bearing No.RA-101, Inderpuri, New Delhi had constructed the same by raising loan from another branch of the Punjab National Bank situated at East Patel Nagar, New Delhi and the original title deeds are lying with the said branch and the second charge for the Rajouri Garden Branch had been created and noted in the Title Deed Register. @SUBPARA = (c) Name of the Mortgagor : Shri S.C.Pury resident of RA-101, Inderpuri, New Delhi. @SUBPARA = (d) Name of the Mortgagee: Punjab National Bank, Rajouri Garden Branch, New Delhi. Plaintiff. @SUBPARA = (e) Amount of loan sanctioned: Cash Credit loan of Rs.85,000.00 and Rs.75,000.00 and Medium Term Loan for Rs.75,000.00 were granted by the plaintiff Bank to defendant no.1 through its partners, defendants no. 2 to 6 who availed the loan facilities and had agreed to pay interest at the prevailing rate of interest. @SUBPARA = (f) Rate of Interest : The defendants have agreed to pay interest @ 3.5% p.a. over the Reserve Bank of India rate with a minimum of 12.5% p.a. with quarterly rests or at such enhanced rate as may be levied by the Bank. @SUBPARA = (g) Property subject to mortgage: Constructed House bearing No. RA-101, Inderpuri, New Delhi. @BTINDENT = Defendants 2 to 6 in the capacity of partners and defendants no. 7 and 8 being guarantors approached the plaintiff Bank for and on behalf of defendant no.1, the partnership firm and requested for the raise of Cash Credit Loan facility from Rs.85,000.00 to Rs.1,00,000.00 which the plaintiff Bank agreed and the loan limit of Rs.85,000.00 was enhanced to Rs. 1 lac and another loan of Cash Credit (Pledge) Limit of Rs.75,000.00 was also sanctioned on 2nd July, 1981. Defendants no. 7 and 8 executed the relevant documents on 13.7.1981 inter alia the Demand Promissory Note as well as the letter of Hypothecation for the enhanced amount of Rs.1,00,000.00 and another document for the pledge of Cash Credit Loan limit, whereby the raw material, finished, unfinished goods, purchased or to be purchased, fully shown in the Schedule thereto had also been pledged with the Plaintiff Bank.

(3.) Defendants no. 7 and 8 also stood guarantors for the repayment of the loan which was enhanced and sanctioned fully detailed hereto before and thus held themselves jointly and severally liable along with defendants 1 to 6 and further agreed to pay interest @ 3.5% p.a. over the Reserve Bank of India rate with a minimum of 13.5% p.a. subject to various rates as per the Reserve Bank of India rules and bye laws. Defendant no. 7 further agreed to create charge on his property No.RA-101 Inderpuri, New Delhi on the enhanced limit of Rs.1 lac and the loan limit of Rs.75,000.00 . Defendants no. 1 to 6 have been availing the loan facilities from time to time and various entries of withdrawal as well as deposits of the amount in their respective accounts have been duly entered by the plaintiff Bank in their ledger account duly maintained in ordinary course of banking business and since the defendants failed to operate the account and furnish the relevant details/returns of stocks hypothecated with the bank, the plaintiff Bank had been left with no option but to call upon the defendants to pay through legal notice dated 28th Feb. 1985, which was duly served upon the defendants, but they failed to comply with the same and the plaintiff Bank had to transfer the accounts of the defendants to the protested accounts on 1st Dec. 1985. The certificate as well as certified true copy of the Cash Credit Loan Account No.24 showing outstanding balance of Rs.1,74,096.28 as on 1st Dec. 1985 and in Medium Term Loan (Machinery) Account No.36/80 showing the outstanding amount of Rs.93,925.80 as on 1st Dec. 1985 are placed on the record.