AI Structured Summary
Not yet generated for this judgment
Judgment
This appeal is directed against the judgment and decree
dated 10.03.1997 decree sealed and signed on 15.03.1997
passed by Sri Gauri Shankar Lal, the then Sub-judge IV, Bettiah
in Money Suit No. 14 of 1989 in the matter of Canara Bank vs.
Sri Raghav Dubey & Anr . whereby and whereunder the suit was
partly decreed on contest with proper cost.
The plaintiff-appellant has filed the aforesaid suit for
recovery of Rs. 3,12,706.20/- along with interest pendente lite
and future till the final realization along with the cost of the suit.
Briefly stated, the case of the plaintiff is that the
plaintiff at the request of the defendant no. 1 agreed to grant
him an advance by way of a term loan of Rs. 1,44,000/-
repayable at Bettiah by specified installments together with
interest thereon at the rate of 6% over the bank rate with
minimum of 15 per cent per annum or at such rate or rates
which may be notified from time to time. The defendant no. 1 is
the borrower and the defendant no. 2 is the guarantor who
reside and work for gain within the jurisdiction of the court. The
plaintiff advanced the loan for the purpose of purchase of Tata
Truck, the defendant no. 1 created a first charge by way of
hypothecation in favour of the plaintiff on all tangible and
moveable property including the Tata Truck bearing Regd. No.
2601 as a security to the repayment at any time with interest
thereon. The defendant no. 2 stood as guarantor. This loan was
advanced to the defendant no. 1 on 11.07.1981 and the
defendants became liable to repay the same to the plaintiff. The
rate of interest was charged and raised from 15 % to 17 % and
the intimation thereof was given by the plaintiff to the
defendant. The defendants admitted and acknowledged that they
were liable to pay Rs. 1,62,930.75/- on 12.03.1984, Rs.
1,81,051.45/- on 13.06.1986 and Rs. 1,65,393.45/- in respect
of the said term loan. The defendants did not pay the
installments as agreed and thereby have failed and neglected to
pay the said amount or any interest thereof. Both the defendants
are jointly and severally liable to pay the said amount. The said
advance was made at Bettiah and are payable at Bettiah. The
whole and material part of cause of action has arisen at Bettiah
within the jurisdiction of that court.
The defendant no. 1 has appeared who filed his written
statement and contested the suit. The case of the defendant, in
short is that the suit as framed is not maintainable. The plaintiff
has got no cause of action for the suit. The claim of the plaintiff
is barred by limitation, the claim as put forward is wrong,
exaggerated with wrong calculation. The terms of the term loan
as per oral assurance of the then Bank Manager was that the
plaintiff after delivery of chasis will allow further advance for
construction of body of the truck and the interest will run from
the date when the truck would began to ply on the road, as the
purpose of the loan was to provide job to the unemployed driver.
The signatures of the defendants were taken by the then
Manager on some blank printed forms, according to his
directions and he assured that these forms will be filled up in due
course and copies of these forms thereafter, will be supplied to
these defendants. But up till now no copy of any paper have
been supplied to these defendants. The defendant could not read
and understood English language. These papers were not
knowingly signed by the defendants. The defendants completely
denied the rate of interest was agreed to be the rate of 15 %. It
is also denied that any enhanced rate of interest was intimated
to the defendants. The defendants had never executed any
paper and acknowledgement as alleged. As a matter of fact on
12.06.1986 the plaintiff called the defendants in the bank
premises and asked to write whatever he is to dictate. This way
the recitals of aforesaid application was never the statement of
the defendants rather the plaintiff got the application written on
his own dictation under the threat and due pressure, hence, the
plaintiff cannot take advantage of the paper and the recitals of
that paper would not be the statement of the defendants. No
notice was ever served on the defendants, the statement of
account has been wrongly and illegally calculated and as such it
is not binding on the defendants. All the documents of the
plaintiff are fabricated and are not binding on the defendants.
The signature of the defendants were taken without dates,
playing fraud upon him by taking undue advantage of their being
creditors and unemployed and have been converted into the
letter of acknowledgement by the plaintiff. The defendants
several times approached the plaintiff to grant them further loan
as agreed upon, so the body may be constructed. The plaintiff
repeatedly refused to do such help. So, the defendant is not
liable to pay interest for that period. The amount of interest and
rate of interest is also wrong and the plaintiff is not entitled to
get the relief claimed in the plaint and the suit is fit to be
dismissed with cost.
Learned trial judge on the basis of the pleadings of the parties framed following issues on re-cast:-
(a) Is the Suit as framed maintainable in its present form
?
(b) Has the plaintiff got valid cause of action for the suit ?
(c) Is the suit barred by the law of limitation ?
(d) Whether agreement and letters of hypothecation were
signed by the defendant on blank paper and if so what will be its
legal effect ?
(e) Was there any assurance for further advance for
construction of body of Truck and was there also any oral
agreement, that the interest would run from the date of the
truck plying on road ?
(f) Whether letter of acknowledgment dated 12.06.86 was
signed by loanee and written by guarantor under undue pressure
?
(g) has there been any supervision or inspection of the
Truck or the security under hypothecation ?
(h) Was there any agreement for DIC G.C. Insurance ?
(i) Whether the account submitted by bank is correct or
exaggerated ?
(j) Is plaintiff entitled to a decree as prayed for in the
plaint ?
(k) Is plaintiff entitled to any other relief or reliefs ?
Learned trial court took up issue no. (d), (e), (f) and (g) at first together and decided the same against the plaintiff
and in favour of the defendants. Thereafter, issues no. (h), (i)
and (j) have been taken and held that the accounts submitted by
the bank is not correct, it is exaggerated and the plaintiff is
entitled to a part decree in the suit and accordingly, decided
these issues. Issues no. (a) (b) (c) and (k) have been taken
together and the suit has been decreed in part holding that the
plaintiff is entitled to recover Rs. 24,248.90/- as principal
amount on the date of filing of the suit and total interest Rs.
84,846/- till filing of the suit and thereafter with 6.5 % simple
interest per annum on total principal amount of Rs. 24,248.90/-
since the filing of the suit till realization pendente lite and future
interest and accordingly decreed the suit in part on contest with
proportionate cost.
The plaintiff being partly aggrieved with the judgment
and decree has preferred this appeal challenging the legality,
correctness and propriety of the same on the grounds that the
finding given by the trial court is not only arbitrary but perverse
also. No oral evidence is admissible in the face of documentary
evidence and to vary the contents of such documents. The
finding is confused one and is not based on any cogent reliable
and admissible evidence. The entire observation of the trial court
is contrary to the settled principle of law and all the issues right
from d to j have been improperly framed to deviate the main
issue. The trial court acted as an agent of the defendants in
calculating the principal sum claimed by the plaintiff as well as
the interest payable by the defendants as per the terms of the
agreement in respect of the period before filing of the suit as
well as the pendente lite and future interest. The learned court
below in arbitrary manner has made the calculation of principal
sum as well as the interest which is against the directives of the
Reserve Bank of India. The loan transaction is admitted and the
defendants signed on all the documents in which rate of interest
and compounding of interest and loan amount are mentioned but
learned court below by ignoring all such factual aspects of
documents adopted a novel practice unknown in law to calculate
the amount payable by the defendants on the basis of vague
pleadings of the defendants and uncorroborated and highly
discrepant statements of the defendants and his witnesses. The
entire calculation and discussions made in paragraph 19 and 20
of the judgment are absurd, illegal and baseless and perverse as
well as beyond the jurisdiction of the court. A commercial
transaction between the bank as creditor and any person as
debtor cannot be reopened by any court of law nor the rate of
interest can be scaled down. Hence, the findings which is
material in respect of liabilities of the defendants to pay the due
amount of loan to the bank has been wrongly arrived at by the
learned court below and as such the same is not sustainable and
fit to be set aside. The documentary evidence adduced on behalf
of the plaintiff are admitted, legal, valid and enforceable in law
which have been properly admitted in evidence but the learned
court below failed to consider and appreciate the evidentiary
value of the exhibited documents on the basis of which the suit
of the plaintiff has to be decreed in toto. The loan transaction
between the bank and defendants is admitted transaction, the
amount of loan is also admitted, therefore, the suit must be
decreed in respect of the entire claim of the plaintiff. The plaintiff
is a nationalized bank in which public money is involved. The
bank officers are supposed to act in accordance with the banking
norms and recognized procedure of bank law as per the
guidelines of the Reserve Bank of India. The defendant no. 1 has
filed the written statement with misleading and evasive
statement, hence, under the law evasive denial in respect of rate
of interest and compounding of interest is no denial under the
law in view of the provisions of order VIII rule 5 of the C.P.C.
The denial in the written statement must be specific and
categorical otherwise evasive denial of a fact is deemed to be
admitted and for that reliance has been placed upon a
judgments reported in AIR 1964 Patna page 348 in the case
of Punit Rai and Anr. Vs. Mohammad Majid and Ors. and
AIR 1966 Supreme Court page 292 in the matter of Tek
Bahadur Bhujil v. Debi Singh Bhujil and Ors. It has been
argued that in view of the said provision of law, the entire claim
of the plaintiff is fit to be decreed and there is no scope of
passing decree by scaling down the rate of interest and changing
the compounding interest to simple interest. Learned court below
committed grave error by adopting novel system of accounting
without any foundational fact and thereby arrived at a wrong and
perverse conclusion. The statement of account, Ext. 9, cannot be
ignored by the court below nor the court can act beyond it. Ext.
9 is the certified copy of bank ladger which is banker''s book as
defined under Section 2 (3) read with Section 2 (8) of the
Bankers'' Books Evidence Act, 1891. Section 4 of the Act makes
Ext. 9 as an admissible and reliable document and the contents
thereof shall be presumed to be correct and as such no finding
contrary to Ext. 9 is permissible under the law. As per Ext. 9, the
principal sum adjudged before filing of the suit till 30.11.1989 is
Rs. 3,12,706.20/- which has been claimed by the plaintiff bank
along with pendente-lite and future interest till final realization
along with the cost of the suit which cannot be scaled down to
Rs. 24,248.90/- in arbitrary manner as has been done by the
court below erroneously. All the documents proved that the
principal amount of loan shall carry interest at the rate of 15 %
per annum compounded quarterly which was further enhanced
to 17 % as per circular of the Reserve Bank of India and the
terms of the agreement Ext. 3 but the court below has wrongly
calculated simple interest at the rate of 12.5 % per annum
before the filing of the suit which had been scaled down to 6.5 %
simple interest per annum on total principal sum, wrongly
adjudged by him to Rs. 24,248.90/- for the pendente lite period.
Such exercise by the trial court is highly absurd, illegal and
contrary to law. Section 21 (A) of the Banking Regulations Act
has taken away the power of the court to re-open the
commercial transactions of the bank with any party and to scale
down the rate of interest as well compounding of the interest.
Reliance has been placed upon a judgment reported in 1994 (5)
SCC page 213 in the case of Corporation Bank Versus D.S.
Gowda and Anr. In a commercial loan transaction interest with
quarterly rest is permissible if charged as per circular of the
Reserve Bank of India and the court cannot interfere with the
same under Section 21 (A) of the Banking Regulation Act.
Further reliance has been placed upon a judgment reported in
(2002) 1 SCC page 367 in the case of Central Bank of India
Versus Ravindra and Ors. The banking transactions cannot be
reopened by any court on the ground of interest being excessive.
Section 21 (A) of the Banking Regulation Act has been validly
enacted upon interest being a matter of contract can be charged
by bank and as such the judgment and decree passed by the
learned court below is fit to be set aside and the suit is fit to be
decreed in full with pendente-lite and future interest shall be
payable at the rate of 15 % per annum compounding quarterly
on the total sum of Rs. 3,12,906.20/- as well as further
enhanced rate of 17 % from the date of enhancement as
reflected in Ext. 9 even as per the provision of Section 34 of the
C.P.C. The plaintiff-appellant is also entitled to the cost
throughout and this appeal is fit to be allowed with cost.
The respondent did not appear to argue in this appeal,
resulting, the appeal was heard ex-parte.
The only point for consideration in this appeal is as to
whether the plaintiff is entitled for decree in full as claimed in the
plaint and whether the judgment and decree passed by the
learned trial judge is fit to be set aside or not ?
The plaintiff to prove his case has examined
altogether two witnesses. PW 1 Jayant Bandhopadyaya and PW 2
is Purandar Bhushan Prasad. PW 1 could not be cross-examined
by the defendants. the plaintiff could not produce that witness in
court for cross-examination by the defendants. Therefore, his
evidence was expunged vide order sheet dated 25.02.1997.
Thus, PW 2 is the only witness of the plaintiff. He has come to
prove the case of the plaintiff and has proved the filed
documents. Ext. 1 is the loan application/Sanction letter dated
30.07.1981, Ext. 2 is Pronote dated 11.07.81 for Rs. 1,44,000/-
in which rate of interest is 15 % per annum compounded
quarterly, Ext. 3 is the Hypothecation agreement dated
11.07.1981 in which rate of interest has been mentioned as 15
% per annum compounded quarterly or at such other rate/rates
as notified by the bank. Ext. 4 is the guarantee letter dated
11.07.87 with covering letter in which also rate of interest has
been mentioned as 15 % per annum compounded quarterly.
Ext. 5 is the authorization letter dated 11.07.81, Ext. 6 is
acknowledgement of debt and security dated 31.12.1983. Ext.
6/A is the acknowledgment of debt and security dated
13.06.1986 and Ext. 6/B is acknowledgment of debt and security
dated 01.04.88, Ext. 7 is legal notice, Ext. 8 and 8A are
registration receipts. Ext. 9 is the statement of accounts from
11.07.81 to 30.11.89 in respect of the loan amount LHV 10/81
in the name of Mr. Raghav Dubey the defendant no. 1 which
also contains the other expenses and charges payable by the
defendant to the bank and as per the agreement.
The aforesaid documentary evidences adduced on
behalf of the plaintiff have been properly admitted in the
evidence but the learned court below failed to consider and
appreciate the evidentiary value of the exhibited documents on
the basis of which he came to the wrong finding. The learned
court below has come to the conclusion that loan application is
not filled up by the defendant Raghav Dubey. Raghav Dubey has
only signed the loan application form and someone has filled up
in English. Signing of loan application by Raghav Dubey is
admitted one, it is not denied. The loan transaction between the
bank and defendants is admitted transactions and amount of
loan is also admitted. The defendant no. 1 has filed written
statement with evasive denial, hence, under the law evasive
denial in respect of rate of interest and compounding interest is
no denial under the law in view of the provisions of order VIII
Rule 5 C.P.C. The denial in the written statement must be
specific and categorical otherwise the evasive denial of the fact is
deemed to be admitted. The rulings relied upon by the learned
counsel for the appellants reported in AIR 1964 Patna page
348 (Supra) and AIR 1966 Supreme Court page 292
(Supra) are fully applicable in the present case.
On behalf of defendants DW 1 is Ram Ayodhya
Sharma. He has come to say that in his workshop Raghav Dubey
has brought chasis of the truck in Asharh and Sawan month in
the year 1981 and for four months the same remained in his
workshop and when money was demanded he told that bank will
give money then he will pay the same but the bank did not give
money and then he arranged the money on interest from
market.
During cross-examination he has become
incompetent. He has stated that he works in the said workshop
as carpenter and owner is Mustaque Miyan. He has stated
further that in his presence no talk was made regarding payment
of money. DW 2 is Raghav Dubey himself. He has come to
support his case as made out in the written statement. He has
stated that the bank manager got his signature on all the papers
in blank forms. In paragraph 13 he has stated that he has taken
loan of Rs. 1,44,000/- from the bank in pursuance thereof
papers were prepared. One truck gives income of Rs. 6,000/- per
month. Bank loan was to be repaid per month in installments
but how much installment was to be paid he cannot say. In
paragraph 15 he has stated that from whom he has taken the
money for construction of the body he has not given in writing
and he cannot produce that man for evidence. In paragraph 17
he stated that he cannot say as to what money he has repaid to
the bank since 1981. He has seen the statement of accounts but
what is stated regarding interest he cannot say. Thus, this
witness evidence is not reliable. DW 3 is Babu Nandan Shukla.
He is the guarantor. He has also come to say that on plain paper
his signature was obtained at the dictation of bank manager. In
paragraph 2 he has stated that the bank manager did not give
money for construction of the body, resulting, there was delay of
six months in construction of the body. During cross-examination
he has admitted his signature on the agreement. In paragraph 6
he has stated that he has got no concern with the affairs of
Raghav Dubey. He cannot say as to what amount Raghav Dubey
has deposited in the bank. During cross-examination he has become incompetent witness.
By way of documentary evidence Ext. A and A/1 are
the signatures of Raghav Dubey on agreement, Ext. B is the
owner book and Ext. C is the letter of Canara Bank.
The evidence adduced on behalf of the defendant is
not reliable and does not appear that the defendant has not
admitted the loan amount. The learned trial court committed
grave error in calculating the principal sum adjudged by legal
scrutiny of the loan amount on the basis of legal engineering
which is impermissible in the law. He committed grave error by
adopting novel system of accounting without any foundational
fact and thereby arrived at a wrong and perverse conclusion. The
statement of account, Ext. 9, cannot be ignored by the court
below nor the court can go beyond it. Ext. 9 is the certified copy
of the bank ledger which is banker''s book as defined under
Section 2 (3) read with Section 2(8) of the Bankers'' Book
Evidence Act 1891. Section 4 of the Act makes the Ext. 9 as
admissible and reliable document and contents thereof shall be
presumed to be correct and as such no finding contrary to Ext. 9
is permissible under the law. As per Ext. 9, the principal sum
adjudged before filing of the suit till 30.11.89 is Rs.
3,12,706.20/- which has been claimed by the plaintiff bank along
with pendente lite and future interest till final realization along
with the cost of the suit which cannot be scaled down to Rs.
24,248.90/- in arbitrary manner done by the court below
erroneously. All the documents proved that the principal amount
of loan shall carry interest at the rate of 15 % per annum
compounded quarterly which was enhanced to 17 % as per
circular of the Reserve Bank of India and the terms of
agreement, Ext. 3, but the court below has wrongly calculated
simple interest at the rate of 12 % per annum before the filing
of the suit which has been scaled down to 6.5 % simple interest
per annum on total principal sum wrongly adjudged by him to
Rs. 24,248.90/- for the pendente lite period. Such exercise by
the court below is illegal and contrary to the law. In the case of
Corporation Bank Versus D.S. Gowda and Anr. (Supra) It
has been held that in a commercial loan transaction interest
with quarterly rate is permissible if charged as per circular of the
Reserve Bank of India and court cannot interfere with the same
under Section 21A of Banking Regulation Act. Further in the case
of Central Bank of India Versus Ravindra and Ors. (Supra)
it has been held that the banking transaction cannot be re-
opened by any court on the ground of interest being excessive.
Section 21A has been validly enacted. Compound interest being
a matter of contract can be charged by bank.
Under the facts and circumstances narrated above,
the plaintiff is entitled to get a decree in full as claimed in the
plaint. Accordingly, the judgment and decree passed by the
court below is hereby set aside. The pendente-lite and future
interest shall be payable at the rate of 15 % per annum
quarterly compounded on the total amount of Rs. 3,12,906.20/-
as well as further enhanced rate of 17 % from the date of
enhancement as reflected in Ext. 9. The plaintiff-appellant is also
entitled to cost throughout. In the result, this appeal is allowed
but under the circumstances without cost.