ENCHANTE JEWELLERY Vs. CITIBANK N A

JUDGEMENT

(1.) THIS suit has been filed by the plaintiff for permanent/mandatory injunction and damages. The plaintiff had taken auto loans from the defendant bank for finance of the four vehicles viz. HR-55-6574, HR-55-7598, hr-55-7599 and HR-55-7597 between 26. 12. 2000 and 7. 2. 2001. The Equated monthly Installment (EMI) of Rs. 16512/- was fixed for the first vehicle purchased i. e. vehicle No. HR-55-6574 and EMIs for rest of the three vehicles was Rs. 18356/- each. It is plaintiff's own case that due to serious financial troubles plaintiff had moved Board for Industrial and Financial reconstructiont (BIFR ). Though the plaintiff has not given the date of moving the Board but the documents filed shows that the plaintiff had moved the board in the beginning of year 2000. Plaintiff company was declared a sick industrial company by BIFR vide its order dated 25. 10. 2002. Plaintiff claimed that despite financial constraint, plaintiff tried its best to pay EMIs on time. However, the documents show that plaintiff did not pay EMIs of any of the vehicles after March' 03 and defaulted in payment of EMIs. Plaintiff claims that plaintiff was in negotiations with the Bank and had appraised the bank of its financial difficulties and wanted to clear EMIs and settle the accounts but the defendant bank failed to settle the accounts with the plaintiff. This pleading is a very strange pleading because if plaintiff wanted to pay the EMIs nobody could have stopped plaintiff from paying emis. The plaintiff had issued Post Dated Cheques (PDCs ). The bank was putting these PDCs for encashment on the due date and these cheques were getting dishonoured, how the plaintiff wanted to settle the account has not been stated by the plaintiff in the plaint. In any case, according to the plaintiff defendant bank took forcible possession of one of the vehicles viz. Toyota Qualis Car No. HR-55-7598 from Mr. Pawan Mehra, younger brother of Chand Mehra (Director of the plaintiff company) on 9. 10. 2003 at 9. 00 a. m. through some unlawful elements. Mr. Pawan Mehra was dragged out of the car and he was not allowed to remove his personal belongings from the car including jewellery products worth Rs. 7 lac and he was forced to sign a blank vehicle surrender form. This form was later on filled up by the agents of the defendant and a noting was made that no cash and no valuable articles were lying in the car. The plaintiff company got shocked due to this act of the defendant bank. Mr. Pawan Mehra, not being a Director of Plaintiff Company had no authority to handover the vehicle or to sign vehicle surrender certificate. It is also stated that plaintiff being a sick company under SICA, the defendant could not have taken a coercive action against plaintiff without obtaining permission from BIFR. On the same day (day of possession) plaintiffs director Chand Mehra wrote a letter to defendant bank requesting it to handover the car back with personal belongings and the articles of the company to the plaintiff. The defendant assured that they would sort out the matter amicably. However, defendant bank vide letter dated 11. 10. 2003 informed the plaintiff that they had repossessed the said vehicle saying that it had been voluntarily surrendered by Mr. Pawan Mehra and they would sell the same in case of failure of the plaintiff to clear the dues within 07 days of receipt of letter. The plaintiff replied this letter on 14. 10. 2003 protesting that the vehicle was not voluntarily surrendered and Mr. Pawan mehra was not a Director in the plaintiff company and had no authority to surrender the vehicle. It was also informed that plaintiff was a sick industrial company and the vehicle was carrying belongings of the plaintiff i. e. jewellery worth about rs. 7 lac. The defendant wrote letter dated 15. 10. 2003 to the plaintiff agreeing for an amicable settlement and referred to the two demand notices issued to the plaintiff, however, the plaintiff took the stand that notices were never received. It is also stated that inventory prepared by the defendant at the time of seizure of the car was not notarized by them. The plaintiff stated that since the plaintiff was a sick company it was difficult for it to arrange for huge amount in one go however, it informed defendant that it was ready to pay full and final payment for one vehicle, which would then be sold in order to raise funds and to clear balance payment in respect of other vehicles. The defendant agreed to this proposal vide its letter dated 22. 10. 2003. The plaintiff offered to the defendant a sum of Rs. 1,02,294/- as first installment so that 'no Objection Certificate' could be released towards vehicle No. HR-55-6574 and after selling this vehicle, the plaintiff was to pay balance amount of Rs. 3,43,046/- on or before 30. 10. 2003 to secure the release of car bearing No. HR-55-7598 confiscated by the defendant. The plaintiff paid the first installment on 22. 10. 2003, 'no Objection Certificate' was not issued by the defendant on the same day and it was released only on 27. 10. 2003. It is stated by the plaintiff that there was a delay in releasing 'no Objection certificate' with the result that plaintiff could not initiate the sale process for car HR-55-6574 before 28. 10. 2003 and had to sell it off without bargaining at an amount of Rs. 1 lac lesser than the market price.

(2.) THE plaintiff however did not state at what price the car was sold and what the market price was. The last date of payment of installment as per plaintiff was 30. 10. 2003. The plaintiff requested defendant to give another period of 7-14 days for completing the sale of the car and in the meantime plaintiff offered a sum of Rs. 1,21,041/- as full and final payment towards car No. HR-55-7598 (against the loan account of this car) and requested defendant to release 'no Objection Certificate' for second car also. This letter was not replied by the defendant. The efforts of the plaintiff to contact the defendant also failed. On 3. 11. 2003 Chand Mehra, Director of plaintiff visited the office of defendant bank along with three Pay Orders towards full and final payment of the three loan accounts. The defendant however, refused to accept the said payment and refused to issue 'no Objection certificate' of the other cars and threatened to sell the car No. HR-55-7598, confiscated by the defendant and also threatened to confiscate the other two cars. Plaintiff submitted that effort of the plaintiff to settle the matter with the defendant subsequently also failed as defendant did not respond to the letters and requests of the plaintiff. The plaintiff feared that the defendant may dispose of car No. HR-55-6574, seized by it. The plaintiff parked other vehicles in the garage in the fear of their confiscation and was therefore not able to use other vehicles as well. Plaintiff claimed that since plantiff was a sick industrial company, BIFR's permission was necessary for the defendant to seize the car. It is also stated that plaintiff suffered loss of goodwill and reputation due to the act of the defendant and also suffered immense financial loss besides mental agony and harassment as the plaintiff was deprived of peaceful enjoyment of the four vehicles. Plaintiff also stated that plaintiff had suffered loss @ Rs. 10,000/- per day per car from 9. 10. 2003 till 14. 11. 2003 ie. till date of filing of suit which was the usual earning of the plaintiff from each car along with interest. The plaintiff therefore, claimed Rs. 13,02,000/- as the damages towards loss of earning. Plaintiff also claimed that jewellery worth around Rs. 7 lac was lying in the car and was seized along with car illegally by the defendant so the plaintiff was entitled to Rs. 7 lac against loss of jewellery and personal belongings. Plaintiff claimed Rs. 1 lac of damages towards loss suffered by plaintiff in selling car No. HR-55-6574 at a loss. Thus, plaintiff claimed total damages of Rs. 21,02,000/- from the defendant. Plaintiff also sought a decree of permanent injunction that the bank should not confiscate car bearing No. HR-55-7599, hr-55-7597 and the defendant should be retrained from selling car No. HR-55-7598 seized by it. It also wanted a mandatory injunction directing defendant to give 'no Objection Certificate' towards three other vehicles/cars.

(3.) THE defendant in the WS took several preliminary objections regarding suit being not maintainable. On merits, it was stated that the four vehicles were financed by the defendant bank, who remained the contractual owner of these vehicles till the time entire finance was not repaid by the plaintiff company. It was stated that the defendant, under the agreement entered between the parties, had a right to repossess the vehicle under following circumstances: (1) The Borrower (s) failing to pay the loan or any fee charges, costs in a manner herein contained and any one EMI or any other amount due hereunder remains unpaid for a period of 45 (forty five) days from the dates on which it is due; or (2) The Borrower (s) failing to file the particulars of the vehicle in the prescribed form as provided in the annexure to this agreement; or (3) The Borrower (s) committing breach of any of the terms, covenants and conditions herein contained or has made any misrepresentations to the Bank; or (4) The vehicle being confiscated, attached or taken into custody by any authority or subject of any execution proceedings; or (5) The Borrower (s), being an individual (s) an insolvency notice is served on him/them, or being a corporation, a notice of winding up is served on it or a receiver is appointed or attachment is levied on any of his/its/their property or assets; or (6) The vehicle is distrained, endangered or damaged or bodily injured is caused to the third party by accident with the vehicle or others; or (7) The vehicle is stolen or is a total loss in the opinion of the Bank; or (8) There existing any other circumstances which in the sole opinion of the Bank, jeopardizes the Bank's interest; then, in any of the aforesaid events, the Bank shall be entitled to deemed immediate repayment of the loan, and the Bank will be entitled to charge extra 2% or any other rate, which is applicable at that time as per bank policy on the Principal outstanding. (9) The Bank is entitled to take the repossession of the hypothecated vehicle whether the entire loan amount has been recalled or not, when-ever in the absolute discretion of the Bank there is likelihood or due money being paid and/or the vehicle is likely to be transferred to defeat the security and the due amounts of the Bank. (10) The Borrower (s) shall not prevent or obstruct the Bank from taking the procession of the vehicle. For this purpose the Bank's authorized representatives, servants, officers and agents will have unrestricted right of entry in any premises of the Borrower (s ). The bank will be within its rights to use Tow-van to carry away the vehicle. The authorized representatives of the Bank would be entitled to sell the vehicle by public auction or private treaty, without being liable for any loss, without prejudice to the Bank's rights and remedies to suit against the Borrowers and to give proper receipts and effectual discharges to the purchaser thereof and to apply any amount with the Bank in or towards payment of such deficiency. Nothing contained in this clause shall oblige the Bank to sell the vehicle and the Bank shall be entitled to proceed against the borrower (s)/guarantor (s) independently of such security. (11) The borrower shall be liable to pay various charges for procession of the vehicle like tow-away charges, godown charges, rentals and other such expenses incurred by the Bank for effecting the procession of the vehicle and for its sake keeping etc. The procession charges is described in clause 11 of the agreement.