UNION BANK OF INDIA Vs. ANNAPURNAUDYOG

JUDGEMENT

(1.) THIS appeal filed by the plain tiff-appellant is directed against the judgment and corresponding decree dated 26-3-1997 and 9-4-1998 passed in Title (Mortgage) Suit No, 30 of 1983, whereby the suit filed by the plaintiff-appellant against the defendant-respondents for decree for a sum of Rs. 5,71,915/- along with interest thereon as well as for preliminary mortgage decree in respect of properties mentioned in Schedule to the plaint, against the defendant Nos, 4 and 5 for recovery and realization of the aforesaid amount and for other reliefs, was dismissed,

(2.) THE case of the plaintiff is that the defendant No. 1 being a partnership firm represented by defendant Nos. 2 and 3 was extended a term loan facility to the extent of rs. 1. 83 lakh by the plaintiff-Bank for the purpose of setting up their business. The term loan was sanctioned by the bank vide letter dated 26-3-1974. The defendant had further applied for a cash credit facility to the tune of Rs. 30. 000/- (rupees thirty thousand) and by way of security, an equitable mortgage in respect of the landed property on which the factory is situated, was created in favour of the plaintiff-bank by depositing title deeds. The defendants had availed maximum limit of term loan of Rs. 1. 83 lakh and further sum of Rs. 30,000/- (rupees thirty thousand) under the cash credit facility and against which the defendant Nos. 2 and 3 had executed promissory notes on 29-3-1974 for Rs. 2. 53 lakhs besides executing letter of hypothecation of the stock and goods on 29-3-1974 for Rs. 2. 13 lakhs. A letter of continuing guarantee dated 29-3-1974 was also executed by them assuring that the demand promissory notes executed for Rs. 2. 53 lakhs would be continuing security and would be enforceable for all money dues from the defendants under the term loan and cash credit facility. Furthermore, letters of guarantee was executed by defendants 4 and 5 on 29-3-1974 by which they stood guarantors for repayment of the loan and by way of security, both of them had executed equitable mortgage in respect of their properties appertaining to their house situated within Giridih Municipality. Further case of the plaintiff is that the defendants had executed a fresh demand promissory note on 10-3-1977 and had also pledged their fixed deposit by way of security and when further enhancement of cash credit facility of Rs. One lakh was extended by the bank to them, the defendants again executed a fresh demand promissory notes on several dates i. e. on 1-5-1978, 20-3-1980 and 17-8-1991, besides accepting, acknowledging and confirming the correctness of the balance of dues of the bank on various dates. Further case of the plaintiff is that the defendants became irregular in paying the monthly instalments towards repayment of the loan and consequently, a demand notice was issued by the bank to the defendants on 21-4-1982, followed by another notice dated 18-1-1983 demanding payment of the total sum of Rs. 5,71,915/- which included principal amount and the interest accrued thereon and since the money was not paid, cause of action accrued to the plaintiff to file the suit.

(3.) THE defendants by their written statement had denied and disputed the entire claim of the plaintiff. Giving parawise reply to the averments in the plaint, the defendants pleaded that they had never executed demand promissory note for sum of Rs. 2. 53 lakhs nor did they execute any letter of guarantee in favour of the plaintiff-Bank on the dates as alleged in the plaint. The defendants had, however, admitted that they had applied for loan of Rs. 1. 83 lakhs and for further cash credit facility and against which total amount sanctioned by the bank was rs. 2. 13 lakhs only and have questioned the claim of the bank as to the basis for executing any demand promissory note for a sum of Rs. 2. 53 lakhs when the loan sanctioned was only Rs. 2. 13 lakhs. The defendants have further pleaded that at the time when the loan was sanctioned to them on 26-3-1974, there was no demand by the bank for furnishing guarantors for the loan and as such, defendants 4 and 5 were never required to stand guarantors personally for the loan advanced to defendant No. 1 or to create any equitable mortgage of immovable properties by way of additional security. Denying the plaintiffs claim, the defendants have pleaded that even otherwise, the alleged correspondence between the plaintiff bank and defendants, delivery letter of deposit of title deeds even if constitute mortgage in writing of any immovable property, it is liable to be compulsorily registered and in absence of any registered deed of mortgage, the plaintiff has no right to make defendant nos. 4 and 5 liable personally. Further pleadings of the defendants is that on the initial date, when the loan for a limited amount was sanctioned by the bank on 26-3-1974 several blank printed forms signed by the defendants were obtained by the then manager of the bank without allowing the defendants to read the same or to put dates on the papers and these documents were later on conveniently converted into documents of purported hypothecation and guarantee executed on imaginary dates by the bank for illegal gain from the defendants. The defendants have likewise denied to have accepted or acknowledged or confirmed the correctness of any balance confirmation sheet of the Bank to the extent of liability of rs. 5,21,915/- and have specifically denied to have borrowed any money beyond the sanctioned amount of Rs. 2. 13 lakhs and have claimed that they had paid off the entire dues by way of monthly instalments. The defendants have further denied the correctness of the balance sheet and the ledger account claimed by the Bank. The defendants have further pleaded that the suit is not maintainable for non-joinder of necessary parties as because the plaintiff bank had got its claim against the defendants insured from the Reserve Bank of India and deducted monthly premium from the defendants' Account and under such circumstances, the defendants were entitled to the benefit of insurance and for the amount of dues claimed against the defendants. The plaintiff-bank has already preferred its claim against Reserve Bank of India and until such claim is rejected by the Reserve Bank of India, the suit against the defendants for the same amount is not maintainable and, therefore, the Reserve Bank of India ought to have been impleaded as a necessary party. The defendants have also pleaded that the suit is barred by law of limitation. Thus, while denying the. entire claim of the plaintiff, the defendants have made a qualified partial admission that they had applied for and obtained a term loan of Rs. 1. 83 lakhs and further amount of Rs. 30,000/- (rupees thirty thousand) only by way of cash credit facility in the month of march, 1974, but add that the entire amount has been repaid by them by way of monthly instalments and as such, they do not owe any money whatsoever to the Bank.