IN THE HIGH COURT OF KERALA AT ERNAKULAM
AS.No. 537 of 1995()
1. P.S.ARUCHAMI
... Petitioner
Vs
1. CANARA BANK
... Respondent
For Petitioner :SRI.T.C.MOHANDAS,T.M.SUNIL
For Respondent :SRI.V.M.KURIAN,A.V.THOMAS,
The Hon'ble MR. Justice V.RAMKUMAR
Dated :02/06/2009
O R D E R
V. RAMKUMAR, J.
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A.S.No.537 of 1995
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Dated this the 2nd day of June, 2009
JUDGMENT
The defendant in O.S.No.339 of 1992 on the file of the
Sub Court, Palakkad is the appellant in this appeal. The said
suit was one for realisation of a sum of Rs.68,260/-.
2. The case of the plaintiff can be summarised as
follows:-
Pursuant to an application for agricultural short term
loan for Rs.44,100/- submitted to the plaintiff-bank by the
defendant for the purpose of digging well, construction of
pump shed and for purchase of pumpset and motor and other
accessories for his agricultural operations in the agricultural
lands belonging to the defendant situated at Pudussery village
in Palakkad Taluk, the plaintiff sanctioned the said loan as per
Loan No. ALFD 2/87. To secure repayment of the above
amounts covered under the above loan, the defendant had
on 6.3.1987 executed a Demand Promissory Note for
A.S.No.537 of 1995
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Rs.44,100/- in favour of the plaintiff promising to repay the
loan with interest at 10% per annum with compounded
quarterly rests. The defendant had also executed Ext.A2 take
delivery letter dated 6.3.1987 in favour of the plaintiff-bank
accepting the terms and conditions contained therein and also
agreeing to repay the loan in 8 yearly instalments together
with interest as and when due. The defendant had further
executed Ext.A3 Memorandum of Agreement in favour of the
plaintiff accepting the terms and conditions contained therein
and hypothecating the crops raised or to be raised from time
to time over the properties described thereunder. As per the
terms and conditions of the loan as agreed to by the
defendant, the plaintiff is entitled to recover the entire dues in
lump in case of default in the matter of re-payment. By way of
further security for the loan, the defendant had on 13.2.87
deposited the title deeds described in the plaint A Schedule
relating to his immovable properties in Schedule B with the
plaintiff-bank in its Sultanpet Branch, Palakkad Taluk with
intent to create a mortgage thereon in favour of the plaintiff
A.S.No.537 of 1995
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for the purpose of securing repayment of money due from the
defendant to the plaintiff-bank. The defendant, on
14.02.1987, executed a letter evidencing deposit of the said
title deeds along with two lists showing the list of title deeds
deposited and the description of the immovable properties
mortgaged in favour of the plaintiff. Thereby the defendant
had created a charge over the Plaint B Schedule immovable
properties. The defendant has defaulted the payment of the
instalments due to the plaintiff and has thereby violated the
terms and conditions of Ext.A3 Memorandum of Agreement .
As per Ext.A4 Acknowledgment of Debt and Security dated
20.11.89, the defendant executed a letter acknowledging the
debt and security in favour of the plaintiff in respect of the
aforesaid loan. As per Ext.A5 account maintained by the
plaintiff in respect of the above transaction the total amount
outstanding as on 28.03.1992 was Rs.65,125.20. The
defendant is liable to pay subsequent interest at the revised
rate of Rs.16.5% per annum from 28.3.1992. In spite of
several demands both in person and by registered letters
A.S.No.537 of 1995
4
made by the plaintiff , the defendant did not settle the
accounts. Hence the suit. The defendant had been given
relief to the extent of Rs.10,000/- under the Agricultural Rural
and Debt Relief Scheme 1990 (ARDR Scheme for short) and
the amount claimed in the suit is after giving credit to all the
amounts remitted by the defendant including the relief given
under the ARDR Scheme. The plaintiff is also entitled to
future interest also at the revised rate of Rs.16.5% per
annum. The plaintiff is also entitled to a charged decree by
sale of Plaint B Schedule mortgaged properties in favour of
the plaintiff. The cause of action for the suit arose on
13.2.1987 when the defendant deposited the title deeds with
the Sultanpet Branch of the plaintiff-bank and on 14.2.1987
when the defendant executed a letter evidencing deposit of
the said title deeds and on 16.3.1987 when the defendant
executed the Demand Promissory Note, take delivery letter
and Memorandum of Agreement in favour of the plaintiff and
on 20.11.1989, when the defendant executed the letter of
acknowledgment of debt and security in favour of the plaintiff.
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Hence the suit.
3. In the written statement filed by the defendant, he
admitted the loan advanced with the stipulation to pay
interest at the rate of 10 % per annum. His case was that
since the loan was to be repaid in yearly instalments
extending up to 8 years, the suit filed in the year 1992 was
pre-mature. He also disputed the interest rate of 16.5%
claimed. He contended that the deduction of Rs.5,606/-
towards the excess amount under the ARDR Scheme was not
correct and that the suit filed before the expiry of the period
of loan was not maintainable.
4. The court below framed two issues for trial. No oral
evidence was adduced by the plaintiff. Exts. A1 to A5 on the
side of the plaintiff and Ext.B1 to B4 on the side of the
defendant were marked on consent. The learned Sub Judge,
as per judgment and decree dated 13.10.94, after accepting
an affidavit dated 26.10.94 from the plaintiff to the effect that
out of total sum of Rs.10,000/- under the ARDR Scheme, a
sum of Rs.4,394/- alone was given credit to by the plaintiff-
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bank, a sum of Rs.2984/- was to be adjusted towards the loan
which the defendant had taken from the Kanjicode Service
Co-operative Bank and a sum of Rs,2622/- had to be adjusted
towards the loan which he had taken from the Palghat District
Co-operative Bank, Menonpara, decreed the suit for
Rs.68,260/- with costs and future interest at the rate of
Rs.12% per annum as against 16.5% claimed by the plaintiff.
It is the said decree which is assailed in this appeal by the
defendant.
5. The learned counsel for the appellant/defendant
reiterated the contentions and grounds raised in the
memorandum of appeal. The main submissions were as
follows:-
When the loan amount was to be discharged in yearly
instalments extending up to 8 years, the plaintiff could take
steps only for recovery of the defaulted instalments and not
the entire loan amount. The suit filed for realisation of the
entire loan amount even before the expiry of 8 years was
premature and therefore not maintainable. The court below
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went wrong in apportioning the relief under ARDR Scheme
between two other banks besides the plaintiff-bank and giving
credit only to Rs.4,394/- towards the loan amount in question.
The affidavit filed in support of the said Scheme was filed only
a few days prior to the disposal of the suit and it was accepted
by the court below behind the back of the defendant. The
court below also went wrong in permitting the plaintiff to
create an equitable mortgage by deposit of title deeds
regarding the Plaint B Schedule immovable properties
belonging to the defendant in favour of the Sultanpet Branch
of the Canara Bank, since that branch had nothing to do with
the loan transaction in question and no equitable mortgage
could be created towards the loan availed of by the defendant
from the plaintiff-bank which is the Pudusseri branch of the
Canara Bank.
6. I am afraid that I cannot agree with the above
submissions in their entirety. As for the contention that the
suit was filed prematurely even before the expiry of 8 years
and that the plaintiff can recover only the defaulted
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instalments and not the entire loan amount, Clause 6 of
Ext.A3 which has been admittedly executed by the defendant
reads as follows:-
“That in the event of the Borrower
committing breach of any of the terms and
conditions stipulated by the Bank or mis-
utilisation, non-utilisation or only partial
utilisation of the proceeds of the loan,
notwithstanding anything herein contained and
notwithstanding the stipulations if any that the
Borrower is allowed to pay the amounts due in
instalments; the bank shall have right to
demand payment of entire liability forthwith
and to take such other steps as may be
necessary to recover the same by enforcing the
securities.”
7. The above clause is to the effect that in the event of
the defendant/borrower committed breach of any of the
terms and conditions stipulated by the bank, the bank shall
have the right to have the payment of the entire liability
forthwith and to take such other steps as may be necessary to
recover the same by enforcing the securities. Yearly
instalments payable was Rs.5,500/- Admittedly, the defendant
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was a defaulter. If so, Clause 6 of Ext.A3 was squarely
attracted, entitling the bank to recover the entire amount in
lump by enforcing the securities. Hence it cannot be said that
the suit was premature.
8. With regard to the equitable mortgage created in
favour of the Sultanpet branch of Canara Bank, it was
specifically pleaded in paragraph 3 of the plaint. No exception
whatsoever has been raised in the written statement with
regard to paragraph 3 of the plaint. That was a matter which
called for specific denial. In the absence of a specific denial
in the written statement, the defendant cannot be heard to
say that the bank was not entitled to create any equitable
mortgage of plaint B Schedule properties in favour of the
Sulthanpet branch of the Canara Bank by way of security for
the enforcement of the land transaction in question. The
absence of such denial in the written statement should be
treated as an admission. An admitted fact need not be proved
in view of Section 58 of the Evidence Act.
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9. Now coming to the relief of Rs.10,000/- which the
defendant was entitled under the ARDR Scheme, the plaintiff
having given credit for the entire amount of Rs.10,000/- in
Ext.A5 account maintained by the plaintiff was not entitled to
apportion the said amount between the plaintiff and two other
banks from which the defendant had allegedly taken loan.
After apportioning a sum of Rs.2,984/- towards the Kanjikode
Service Co-operative Bank, another sum of Rs.2,622/- towards
the Palghat District Co-operative Bank, Menonpara, the
plaintiff bank was giving a credit of Rs.4,394/- only towards
the loan in question. A sum of Rs.5606/- was debited to the
defendant’s account. This was resorted to by the plaintiff in
the form of an affidavit filed on 26.10.94 enclosing a letter
dated 24.10.94 from the Kanjikode Service Co-op.Bank Ltd.
In the first place, a copy of the affidavit was not furnished to
the defendant or his counsel and the defendant was not given
an opportunity of confirming or denying the contents of the
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affidavit. The said affidavit was accepted by the court below
behind the back of the defendant. That was not only illegal
but was also in violation of the principles of natural justice.
Hence, the court below went wrong in permitting the bank to
debit the sum of Rs.5,606/- in Ext.A5 statement of account.
The defendant was entitled to the full credit of Rs.10,000/- by
way of relief towards the ARDR Scheme. Whether the
defendant would be entitled to any such reliefs with regard to
the loans availed of by him from two other banks, was not an
issue could have been adjudicated in the present suit
especially in the manner in which it was done.
The result of the foregoing discussion is that the decree
passed by the court below to the extent that it has upheld the
debit of Rs.5,606/- in the defendant’s account towards the
loan transaction is liable to be interfered with. The defendant
is held entitled to the full relief of Rs.10,000/- under the ARDR
Scheme and the account will stand rectified to that extent.
The bank will be entitled to execute the decree as per a
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revised statement of accounts giving full credit of Rs,10,000/-
by way of relief under ARDR Scheme and calculating interest
at the rate of Rs.12% on the amount due. The Appeal is
allowed in part to the limit extended mentioned above.
Dated this the 2nd day of June, 2009.
V. RAMKUMAR, JUDGE
sj