JUDGMENT
A.S. Chaudhary, Presiding Officer
1. Original Application No. 6 of 2000 was filed under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 for recovery of Rs. 1,89,38,751 44 (Rs. one crore eighty-nine lakhs thirty-eight thousand seven hundred fifty-one and paise forty-four) only against the defendant Nos. 1 to 6 who are joint ly and severally liable to repay the Bank’s dues together with interest thereon @ 16.83% per annum with quarterly rests in respect of debts due in the Cash Credit (Hypothecation) and EPC accounts and @ 20% per annum with quarterly rests in respect of the debts due in the FBP Account. The applicant-Bank has also claimed the recovery of this amount through the sale of the hypothecated goods and immovable properties equitably mortgaged with the applicant-Bank. A cost of the suit has also been claimed. The said suit has been received on transfer under operation of law in this Tribunal and re-numbered the case as T.A. 1593 of 2000.
2. The facts of the case as contained in the application are that the applicant-Bank is a body corporate constituted under the State Bank of India Act, 1955, having its central office at Mumbai and one of its Local Head Offices at Lucknow and inter alia a Branch known as Overseas Branch, Kanpur Nagar. The Assistant General Manager and Principal Officer Mr. G.D.S. Banga of the said branch is duly conversant with the facts of the present case and is duly authorized by a Power of Attorney to verify and sign the plaint on behalf of the plaintiff-Bank.
3. The defendant Nos. 2, 3 and 4 are the promoters and directors of the defendant No. 1 which is a company duly incorporated under the Companies Act, 1956. The defendant No. 1, sought financial assistance from the applicant-Bank and requested the applicant to finance loan for the business purpose of defendant No. 1 i.e., business of finishing of leather and manufacturing of leather goods. The applicant-Bank considered on their request and sanctioned Rs. 150.00 lakhs and non-funded based limit of Rs. 50.00 lakhs.
4. The defendants accepted the terms and conditions contained in the agreement letter dated 31.12.1996 and the Board of Directors of the defendant No. 1 by virtue of resolution passed in a meeting of Board of Directors held on 01.01.1997 resolved and gave consent and allowed the defendant No. 1 to borrow from the applicant-Bank various credit facilities to the tune of Rs. 200.00 lakhs secured by hypothecation and pledge of entire goods, movable and other assets, present and future holding documents of title to goods, book debts, outstanding moneys, receivables, by way of first charge and create second charge on the fixed assets of the defendants and personal guarantee of the defendant Nos. 2, 3, 4 and 5 and corporate guarantee of defendant No. 6. The rate of interest was also agreed in between the parties as per the Reserve Bank of India directives from time-to-time.
5. The defendants in order to secure the due repayment of the Banks dues, executed the following security documents in favour of the applicant-Bank on 04.01.1997 :
...... Agreement for Loan for Overall limit (Form C-1) (Exhibit A/3); ...... Agreement of hypothecation of goods and assets (Form C-2) (Exhibit A/4); ...... Agreement for Overdraft hypothecation of debts and assets (Form L) (Exhibit A/5); ...... Agreement regarding grant of individual limits within the overall limit (Form C-5) (Exhibit A/6); ...... Letter of hypothecation (Exhibit A/7); ...... General Letter of Hypothecation (Exhibit A/7 A); ...... Shipping Lien (Exhibit A/8); ...... General Letter of Indemnity (Exhibit A/9); ...... Letter of undertaking by defendant No. 1 not to create any further charge over their property and assets including uncalled capital (Exhibit A/10).
Besides it, the defendant Nos. 2, 3, 4, 5, and 6 projected themselves as guarantors and guaranteed in their individual capacity to strengthen the security to liquidate the amount at debit in the accounts under various heads of credit facilities. They also executed Deed of Guarantee for overall limit of Rs. 2,00,00,000.00 on 04.01.1997 guaranteeing due payment by the defendant No. 1.
6. The defendant No. 6 is also a company incorporated under the Companies Act, 1956, guaranteed the repayment of all notices due from the defendant No. 1 to the applicant. The Board of Directors of defendant No. 6 in the meeting held on 12.12.1996 gave sanction and allowed the defendant No. 6 to stand guarantee to cover the credit facilities provided to the defendant No. 1 by the applicant. The defendant No. 6 has also furnished the corporate guarantee in favour of the applicant.
7. Defendant No. 1 is the owner of land measuring 18,733 sq. metres, comprised in Plot Nos. D-1 and D-2 situated at Industrial Area, Unnao Site 1, Tehsil and Distt. Unnao, U.P. The defendant No. 1 created equitable mortgage in favour of defendant No. 7 to secure credit facilities from it. The defendant No. 1 which has first charge on the aforesaid immovable property and the fixed assets and is entitled to lay hands thereon in priority to the applicant for the recovery of its unpaid dues, if any. However, the defendant No. I created second charge on the aforesaid immovable property and the fixed assets in favour of the applicant. The defendant No. 7 also agreed to create second charge thereon as such the applicant is also entitled to recover its dues from the sale proceeds of the immovable property and fixed assets over which it has a second charge, when the dues of defendant No. 7 not satisfied.
8. In the year 1998, there was a change in the allocation of individual limit within the overall limits inasmuch as limit of letter of credit (import/Inland) was reduced to Rs. 15.00 lakhs from Rs. 40.00 lakhs. The applicant-Bank in the ordinary course of business maintained accounts and a book debt facility account in the name of defendant No. 1 opened account in the applicant-Bank by which they availed and enjoyed the loan facility.
9. But later on the account of the defendant No. 1 became irregular and they failed to maintain financial discipline. The cause of action has arisen when financial assistance was availed by the defendant No. 1.
10. The applicant repeatedly requested the defendants and called upon them to regularize their accounts. But accounts of the defendant No. 1 were as usual. The applicant-Bank served a legal notice upon the defendants on 13.2.1999 that was also not responded by the defendants. Therefore, the applicant-Bank was having no other option except to file the instant application against the defendants for recovery of Rs. 1,89,38.751.44 (Rs. one crore eighty-nine lakhs thirty-eight thousand seven hundred fifty-one and paise forty-four) only together with pendente lite and future interest @ 16.83% per annum with quarterly rests in respect of the debts due in the Cash Credit (Hypothecation) and EPC accounts and @ 20% per annum with quarterly rests in respect of the debts due in the FBP account.
11. The Counsel for the applicant-Bank before the Tribunal at Jabalpur stated that he would not file any evidence. On receipt of the application on transfer from Jabalpur, a show-cause notice was issued by the Tribunal. In response to show cause notice only defendant Nos. 1 and 2 appeared. Service upon rests of the defendants was held sufficient by publication. Defendant No. 1 appeared through defendant No. 2 and filed an application for time to file the reply but did not contest the application of the applicant-Bank. The application, therefore, proceeded ex parte against all the defendants.
12. For determination of the fact that the amount due is a debt and lawfully recoverable, or not the applicant-Bank was required to file evidence on 22.01.2002. The Counsel stated that they have filed all documents to be relied upon.
13. The evidence of the applicant-Bank comprises documentary evidence and oral evidence comprises the affidavit of Mr. G.D.S. Banga and Mr. Akash Mittal.
14. The documentary evidence consisted of copy of resolution Exhibit A/2, Agreement for loan Exhibit A/3, Agreement for hypothecation of goods, Exhibit A/4, Agreement for Overdraft hypothecation Exhibit A/5, Agreement regarding grant of individual limits (Exhibit A/6), Letter of hypothecation Exhibit A/7, General letter of hypothecation Exhibit A/17-A, Shipping lien Exhibit A/8, General letter of indemnity Exhibit A/9. Letter of undertaking by defendant No. 1 Exhibit A/10, Deed of Guarantee overall limit of Rs. 2.00 crores Exhibit A/11, Copy of Form No. 23 Exhibit A/12. Copy of resolution passed in the meeting Exhibit A/13, Resolution of Board of Director of defendant No. 6 Exhibit A/14, Copy of Tripartite Agreement Exhibit A/15. Certificate of Form No. 8 Exhibit A/16, Agreement letter Exhibit A/17, Letter regarding the grant of individual limits with overall limits Exhibit A/18. Copy of Form Nos. 8 and 13 Exhibit A/19, Recall Notice Exhibit A/20, Statement of accounts Exhibit A/21, Statement of accounts in respect of EPC Limit Exhibit A/22 and Statement of accounts in respect of FBP limit Exhibit A/23. By examining these, documentary evidence only one conclusion is drawn that the applicant-Bank sanctioned the limit and obtained security from the defendants for the repayment of facilities granted to them.
15. The oral evidence comprises affidavit of Mr. Banga. Mr. G.D.S. Banga has derived his knowledge from the record. He has no personal knowledge of the fact and advance of loan, utilization of the loan and outstanding dues of the loan. He states that he has gone through the security documents contained in the record of the documents in respect of the defendants. True copy of the documents have been filed along with the application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The original documents bear the signature of the person/persons stated and described in the documents. He has verified the signatures from the specimen signature given by these persons at the time of applying the credit facility. The signature tallied with the specimen signature and he has identified their signatures on the documents. The deponent thereafter states that a total outstanding of Rs. 1,89,38,751.44 is due upon the defendants. The verification clause of this affidavit states that the content of this affidavit contained in para Nos. 1, 2, 3 and 4 are true to his personal knowledge. If we examine the evidence of the witness then it will be seen that affidavit and its contents belie the verification clause and the affidavit is not trustworthy. Rather it is no evidence in the eye of law. The entire affidavit of the deponent shows that he has derived the knowledge on the basis of the record not from the personal knowledge. The affidavit also does not prove any fact. This conclusion is based on the following facts:
“The evidence of this witness in para No. 1 contains the facts on the basis of the record. He has not seen the borrowers who executed the documents, signing the writing. He does not state that those executants signed the documents in his presence. A witness can prove the execution of the documents only in two ways–firstly, document has been signed by the witness in his presence. Secondly, he is acquainted with the writing of that person as he has seen him writing. The witness shows that he has tallied the signatures of the executant’s with the specimen. Neither witness has disclosed where the specimen are nor the specimen have been filed along with this application. In fact there are no specimen. There can be specimen only when these defendants have some accounts or the specimen signature have been taken at the time of the signing of the documents. In this case signature are only on the documents and there are no specimen. Besides it, the version of the witness impresses that he is handwriting expert and is recording the truth by the virtue of his expertise evidence. Thus the evidence of this witness is not trustworthy. Regarding the outstanding dues, outstanding will be when the defendant has utilized the facility. This witness of Mr. Akash Mittal has not stated a word about facts stated in the pleadings of the applicant-Bank. These witnesses do not say how much amount was sanctioned, how much amount was utilized by the defendants. Whether he operated the accounts for utilizing the facility sanctioned to him. Merely the grant of the facility and execution of the documents cannot establish the utilization of the facility and the outstanding balances. The oral evidence of both the witnesses is silent on this point. The witnesses have not stated how much amount was utilized and how much is outstanding.”
16. The reference at this stage may be had to the statement of accounts filed by the applicant-Bank. Of course this document can fill the gap, which the evidence of the said witnesses have created the statement of accounts can be read in evidence only when it has been filed as per the requirement of law. This documents is not admissible in evidence at all.
17. The reason of its not being admissible in evidence is as below :
The applicant-Bank has filed the statement of accounts by a mechanized computer system. It has been done by some Private Agency Shiv Ganga, Kota. The law requires that if the statement of accounts has been filed by obtaining the printout then adifferent certificate is required. The Bankers Books of Evidence Act has been amended by Information Technology Act on 07.06.2000. Sub-section (8) of Section 2 defines the certified copy when it is filed by a Bank. Sub-section (8) of Section 2 of Bankers Books of Evidence Act, 1891 is reproduced below :
“(8) Certified copy” means when the books of a Bank–
(a) are maintained in written form, a copy of any entry in such books together with a certificate written at the foot of such copy that it is a true copy of such entry, that such entry is contained in one of the ordinary books of the Bank and was made in the usual and ordinary course of business and that such book is still in the custody of the Bank, and where the copy was obtained by a mechanical or other process which in itself ensured the accuracy of the copy, a further certificate to that effect, but where the book from which such copy was prepared has been destroyed in the usual course of the Bank’s business after the date on which the copy had been so prepared, a further certificate to that effect, each such certificate being dated and subscribed by the principal accountant or manager of the Bank with his name and official title; and
(b) consist of printouts of data stored in a floppy, disc, tape or any other electromagnetic data storage device, a printout of such entry or a copy of such printout together with such statements certified in accordance with the provisions of Section 2A.
2A. Conditions in the printout.–A printout of entry or a copy of printout referred to in Sub-section (8) of Section 2 shall be accompanied by the following namely–
(a) A certificate to the effect that it is a printout of such entry or a copy of such printout by the principal accountants or branch manager; and
(b) A certificate by a person incharge of computer system containing a brief description of the computer system and the particulars of:
(A) the safeguards adopted by the system to ensure that data is entered or any other operation performed only by authorized persons;
(B) the safeguards adopted to prevent and detect unauthorized change of data;
(C) the safeguards available to retrieve data that is lost due to systematic failure or any other reasons;
(D) the manner in which data is transferred from the system to removable media like floppies, discs, tapes or other electromagnetic data storage devices;
(E) the mode of verification in order to ensure that data has been accurately transferred to such removable media.
(F) the mode of identification of such data storage devices;
(G) the arrangements of the storage and custody of such storage devices;
(H) the safeguards to prevent and detect any tampering with the system; and
(I) any other factor which will vouch for the integrity and accuracy of the system.
(c) a further certificate from the person incharge of the computer system to the effect that to the best of his knowledge and belief, such computer system operated properly at the material time, he was provided with all the relevant data and the printout in question represents correctly, or is appropriately derived from, be relevant data.”
17. The aforesaid provisions as amended contained in Bankers Books of Evidence Act do cast a duty upon the Bankers either to produce the original ledger or to produce the ledger, which is duly certified as per the provisions of Bankers Books of Evidence Act. The statement of accounts Exhibit A/21 shows that it is a computerized statement of accounts but no such certificate as required by law has been appended to it. Mr. G.D.S. Banga has attempted to certify it. But he being a Senior Officer of the Bank must have known where the signature is to be put. This document bears rubber stamp containing certificate, which is not meant for computerized statement of accounts. The signature by Mr. G.D.S. Banga has been made above the certificate not below the certificate. Meaning thereby he has not placed the horse before the cart but has placed cart before the horse. Normally a certificate if signed men it is signed below the certificate and not above the certificate. Thus there is no certificate as required by the law. Even if a defence was taken that the statement certified has been filed that too is not correct because the certificate does not bear the signature of the authority signing it.
18. Accordingly the application establishes only a contract of loan, execution of documents and not anything beyond it. The evidence of the applicant-Bank is, therefore, deficient and application is likely to be dismissed.
ORDER
The application for the issue of the recovery certificate is dismissed with costs.