K V PATHI Vs. LAKSHMIVILAS BANK

JUDGEMENT

(1.) This appeal is directed against order dated 9.6.2003 in O.S. No.207 of 1999 on the file of I Additional Senior Civil Judge, Ranga Reddy District, wherein the suit filed by the appellant for declaration that the defendant bank is not entitled to claim a sum of Rs.19,403/- from the plaintiff and for directing to release and return to the plaintiff, the share documents annexed in the plaint schedule and also directing the defendant to pay Rs. 1,00,000/- towards damages, was dismissed.

(2.) The appellant filed the suit with the following averments: The plaintiff was a constituent of defendant bank and he obtained a cash credit loan of Rs.2,85,000/- in 1995 pledging the shares of various companies, which are mentioned in the schedule. As per the terms and conditions of the loan agreement, the plaintiff made regular repayments till early 1996. Thereafter, the plaintiff due to financial constraints could not make the payments and wrote a letter dated 7.8.1997 offering to pay monthly instalments of Rs.3,000/-. The defendant agreed for the same and received payments made at Rs.3,000/- per month since August, 1997. The Manager of the defendant's branch advised that if one time payment of the principal amount due and Rs.l2,000/- towards interest is made before 15.3.1998, it would be treated as full and final payment, waiving the penal interest. It was also agreed that on making such one time payment, the shares of the plaintiff pledged with the defendant would be released and [returned. Accordingly, the plaintiff made payment of Rs.25,465/- on 13.3.1998 towards principal and Rs.12,000/- towards interest. The defendant accepted the amount and closed the account and showed the balance in the statement of account as 'Nil'. In spite of repeated requests, the defendant did not return the share certificates as promised. The plaintiff was surprised to receive a letter dated 3.3.1999 from the defendant stating that there was still an (outstanding amount of Rs.19,403/-. By illegally retaining the share certificates, the plaintiff was deprived of the benefits accrued to the shareholders. The plaintiff wrote several letters to the defendant, but in vain. The plaintiff came to know that the defendant was attempting to part with some of the shares by getting the same transferred in their favour for the purpose of adjusting against the plaintiffs account in liquidation of the outstanding amount of Rs.19,403/-. The plaintiff got issued a notice through advocate calling upon the defendant to return the share: certificates but there has been no reply from the defendant. The plaintiff is not only entitled for return of the share certificates but also for damages for the shock and mental tension due to the unscrupulous and obstinate stand of the defendant, in a sum of Rs.1,00,000/-.

(3.) The respondent-defendant filed a written statement contending in bref as follows: It is true that the plaintiff pledged shares of various companies with the defendant along with his wife. Under the rules relating to Income Recognition and Non Performance of Advances prescribed by Reserve Bank of India, interest will not be debited from the account from the date of non performance of the account, i.e., 1.1.1996 in the present case and therefore, copy of the statement of account furnished to the plaintiff is not a discharge in his favour. The plaintiff has to pay the principal amount of Rs. 19,403/- as communicated to him. Out of the shares pledged by the plaintiff, the defendant purchased 100 shares of M/s. Aurabindo Pharma Limited by exercising their rights as pledgee on 11.3.1999 and on 24.4.1999 the formalities of transfer were completed and the loan account was closed on that day and the amount of Rs.20,270/- was appropriated towards outstanding loan and the balance of Rs.29,730/- is lying to the credit of the plaintiff. This was conveyed to the plaintiff by letter dated 21.9.1999. Before purchase of the shares, the defendant by letter dated 3.3.1999 informed the plaintiff the possible sale of the shares. The plaintiff approached the ombudsman and his claim was rejected holding the right of the defendant in respect of the pledged shares.