D KALAISELVI Vs. INDIAN BANK

JUDGEMENT

(1.) This second appeal is directed against the judgment and Decree dated 30.12.2005 passed in A.S. No. 32 of 2005, decreeing the suit for recovery of Rs. 97,707/- with interest and thereby reversing the judgment of District Munsif Court, Madurantakam in O.S. No. 133 of 2004.

(2.) The case of plaintiff is that on 22.2.1996, first defendant borrowed a sum of Rs. 40,000/- from the plaintiffs Bank for digging a new well under NABARD scheme and executed 'Promissory Note' and 'Hypothecation Agreement' for prompt re-payment. Second defendant is the husband of first defendant, who had executed a guarantee letter on the same date. First defendant deposited the title deeds on 23.2.1996 for the purpose of creating an equitable mortgage. It was confirmed by their letter dated 24.2.1996. Further case of the plaintiff Bank is that defendants have also confirmed balance outstanding on 19.2.1999 and 16.2.2002. The plaintiff Bank has filed the suit O.S. No. 133 of 2004 claiming Rs. 97,707/- along with interest.

(3.) The defendants resisted the suit contending that they have obtained loan from the bank, which has been refinanced by NABARD Bank and under the scheme defendants ought to have obtained a certificate from the Geological Department regarding the prospects of the well. Further case of defendants is that after digging the well, there is failure of the Well. The Bank verified the same and furnished the particulars of failure of the well to its Certifying Agency, which is constituted for the specific purpose. According to the defendants, once the bankers received the letter about the failure of the well, no interest should be charged on the said loan. Since there was delay on the part of plaintiff Bank in getting compensation under NABARD Scheme, the plaintiff cannot recover any amount from the defendants. The defendants have alleged that due to deficiency in service rendered by the plaintiff bank, the first defendant has incurred loss of Rs. 2,00,000/-, which the plaintiff Bank is bound to compensate.