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S.R.Subramaniam vs M/S Syndicate Bank on 21 July, 2008

Madras High Court
S.R.Subramaniam vs M/S Syndicate Bank on 21 July, 2008
       

  

  

 
 
 IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 21.07.2008
CORAM:
THE HONOURABLE MR.JUSTICE A.C.ARUMUGAPERUMAL ADITYAN
				A.S.NO.29 of 1998	


S.R.Subramaniam					.. Appellant/Defendant

						-vs-

M/s Syndicate Bank
Chevapet, Salem-2 
rep by its Manager Sri.P.Krishnan			.. Respondent/Plaintiff

 		This appeal is filed under Section 96 of C.P.C.  against the Judgment and decree dated 11.1.1993 made in O.S.No.274 of 1987 on the file of the Court of Additional Subordinate Judge, Salem.
			For appellant    :  : Mr.R.Subramanian, Advocate

			For respondent : :  Mr.P.Sreenivasalu,Advocate
							    
					 JUDGMENT 

This appeal has been directed against the decree and Judgment in O.S.No.274 of 1987 on the file of the Court of Additional Subordinate Judge, Salem.

2. The averments in the plaint sans irrelevant particulars are as follows: In the year 1980, the defendant had obtained the following loan limits sanctioned by the plaintiff. 1) Rs.10,000/- at 12% p.a interest on hypothecation of stock-in-trade without margin;2) a sum of Rs.1,00,000/- as general loan on an interest of 12 =% p.a. on a pledge of raw materials without margin;3) A sum of Rs.1.8 Lakhs with interest at 12.5% p.a to enable discounting of bills accompanied by railway receipts and lorry receipts and also bills drawn on Government, semi-Government and reputed public limited companies, accompanied by inspection notes and delivery challans. The bills to be discounted should be honoured within 45 days. There was a repayment holiday for the first six months from the date of loan and the payment was expected at Rs.8,000/- per month from March 1981 to May 1981. In the second year, the repayment should be Rs.8,500/- per month. In the third year the payment should be Rs.9,000/- per month. In the fourth and fifth years, the payment should be Rs.11,500/- per month. In the sanction letter various conditions which should be adhered to by the defendants have been laid and a copy of the said order has been given to the defendant. Thereafter, the defendant has been operating all these facilities for which by way of security the defendant has also executed a promissory note for Rs.1,00,000/- on 26.12.1980 whereby the defendant agreed to repay the amount due with interest at 4.5% per annum over and above the Reserve Bank of India rate subject to a minimum of 13.5% per annum compoundable once in three months viz., on the 31st March , 30th June ,30th September and 31st December of each year. As per accounts maintained by the plaintiff’s bank, the amount due from the defendant as on 24.4.1987 comes to Rs.2,75,002/23ps. The defendant has also executed written acknowledgment of debts on 23.12.1983 and 18.4.1985. Hence the suit.

3. The defendant in his written statement would contend that it is not correct to state that the plaintiff sanctioned Rs.10,000/- at 12.5% p.a., interest of hypothecation of stock in trade without margin. On hypothecation of stock in trade, the limit sanctioned by the plaintiff was Rs.1,00,000/-. The bill discounting facility in para 3(iii) for Rs.1,80,000/- was not at all availed by the defendant. The repayment schedule given are not correct. The defendant has never agreed to the repayment schedule mentioned in paragraph 3 to the plaint. The original letter of sanction along with plaint was also not produced by the plaintiff. The defendant has not operated all the facilities mentioned in the plaint. It is not true to say that the defendant had executed a promissory note to repay the amount mentioned in the promissory notice at 5% p.a. over and above the Reserve Bank of India rates subject to minimum of 13.5% per annum compoundable once in three months are not correct. The said promissory note was executed only as a collateral security for the due payment of the loan facility availed by the defendant with interest at the rates stipulated at the time of the sanction of the loan. The minimum rate of interest with quarterly rests is not applicable to the defendant transactions. The account copy of the plaintiff does not reflect the true nature of the defendant transactions. The interest calculated in the statement of accounts is not correct. The defendant denies the entries therein, particularly with reference to the interest charge, the rate of interest, the manner in which it has been worked out and also the interest claimed from 1.1.1983 to 24.4.1987 as the plaintiff has not charged any interest from 1.1.1983. The interest claimed from 1.1.1983 to 24.4.1987 is not correct. The defendant has not executed any acknowledgment of debts on 23.12.1983 and 18.4.1985. If there are any acknowledgments of debt, they are all fabricated for the purpose of this case. The plaintiff at the time of sanctioning various facilities to the defendant had obtained the defendant’s signature on a number of blank forms and has now created the acknowledgments of debt using them. The claim in the advocate notice and the suit do not tally. The value of the suit is not correct. The prayer in the suit for subsequent interest at 18% p.a compoundable every quarter is not maintainable in law. The interest claimed is usurious. The Firm Athreya Incorporations, plagued by National shortage of raw material and regional shortage of electrical power became sick Unit and it was declared as early as 1978 a sick industry by the plaintiff and other financial institutions involved in financing the defendant Unit. The consortia of financial institutions viz., 1) The plaintiff Bank(2) National Small Industries Corporation Ltd.3)T.N.I.C Bank Ltd., 4) Director of Industries and Commerce, after prolonged deliberations amongst themselves and in consultation with the Director of Small Industries Service Institute under the auspices of the Sick Industries Rehabilitation Committee,a body constituted by the Government to revive and rehabilitate sick industrial Units, in principle decided to rehabilitate the defendant unit via a programme of nursing in the year 1979. The plaintiff Bank ultimately in the year 1980 authored a programme of nursing along with the other institutions and sanctioned fresh financial facility and commenced implementation. But the plaintiff Bank did not implement the programme effectively and pragmatically but has come forward with this premature suit. Even after filing of the suit, the Honourable High Court of Madras in W.P.No.11074 gave a directions to all the concerned financial institutions to proceed with the implementation of the nursing programme and help the defendants sick unit to resuscitate and put sound footing. The plaintiff had elected to waive his right to levy interest and having agreed not to levy interest cannot now claim interest. The interest claimed therefor is incorrect, excessive and unlawful. The plaintiff has taken number of signatures on blank forms from the defendant and the plaintiff has created letters of acknowledgments filling up blank forms. The plaintiff is estopped from filing this suit by reasons of his agreeing the nurse the sick unit and taken steps to implement the same. It amounts to promissory estoppel in law. The plaintiff Bank is a Nationalised Bank having drawn up a programme of nursing along with other financial institutions and having obtained from the credit guarantee organisation of the Reserve Bank of India , the guarantee and cover for the advances made to the defendant unit under the nursing programme and otherwise, cannot merrily abandon the programme. It would not only amount to breach of contract but also a clear violation of the Reserve Bank of India regulations. It would be a travesty of the truth of the plaintiff had lodged their claim with the Reserve Bank of India, for reimbursement of the advances made to the defendant Unit under the credit guarantee scheme, based on false and fictitious claims. The suit is therefore premature. The defendant had to contract business with their supplies after obtaining
the oral consent of the then Manager of the plaintiff. The defendant in fact had written to the plaintiff about all these development with regard to contracting business for the supply and sale of the defendant’s goods. The plaintiff has filed in about 11 suits against the defendant, the suit is hit under the provision of Order II Rule 2 of CPC. Hence the suit is liable to be dismissed.

4. On the above pleadings, the learned trial Judge had framed four issues for trial. On the side of the plaintiff, P.W.1 to P.W.5 were examined. Exs A1 to A83 were marked. On the side of the defendant, the Proprietor of the Company was examined as D.W.1 and no exhibit was marked on the side of the defendant. After meticulously scanning the evidence both oral and documentary, the learned trial Judge has decreed the suit with costs as prayed for. Aggrieved by the findings of the learned trial Judge, the defendant has preferred this appeal.

5. Heard the learned counsel appearing for the appellant and also learned senior counsel appearing for the respondent and considered their respective submissions.

6. The points that arose for determination in this appeal are

1) Whether the rate of interest claimed by the plaintiff at 13.5% p.a. on the basis of Ex A83 is correct?

2)Whether the suit laid down by the plaintiff on the basis of Exs A1 and A2 is maintainable?

3) Whether the decree and Judgment in O.S.No.274 of 1997 on the file of the Court of Additional Subordinate Judge, Salem is liable to be set aside for the reasons stated in the memorandum of appeal?

7. Point Nos.1 and 2:

Heard the learned counsel appearing for the appellant, who would contend that under Ex A1, the defendant had availed four loan facilities from the plaintiff bank. But Ex A2 promissory note has no bearing with Ex A1. P.W.1, the then Manager of the plaintiff Bank during the relevant point of time in his evidence would depose that as per the nursing programme, on application by the defendant, under Ex A1, four loan facilities were sanctioned to the defendant and as per the goods loan facility, the defendant is entitled to avail over draft facility to the tune of Rs.1,00,000/- and the rate of interest for the said amount is 12.5% and including interest levy it comes to 13.5%p.a compound interest. Admitting the rate of interest as security for the over draft facility availed by the defendant, the defendant had executed Ex A2 promissory note for Rs.1,00,000/- on 26.12.1980 agreed to pay 13.5% interest per annum consisting monthly/quarterly for the value received. The defendant as D.W.1 would admit in the cross examination that he has availed Rs.1,00,000/- loan as per Ex A1. Even though he would admit his signature in Ex A2, he would deny the contents in Ex A2. But in the written statement, he has not stated that Ex A2 is the forged document. He would further admit that only under cheque, he had received the payment from the plaintiff bank. Ex A2 promissory note was acknowledged by the defendant under Ex A80 and Ex A81. Even in Exs A80 and A81, the defendant has specifically acknowledged the liability as Rs.1,26,763/53ps as on 23.12.1983 and as Rs.1,30,618/73ps as on 18.4.1985.

7a) Under Ex A79 notice, the plaintiff has stated that a sum of Rs.1,31,276/73ps was the amount due under the suit loan from the defendant as on 7.1.1987. A perusal of Ex A83 statement of account will go to show that as on 23.4.1987, the amount due was Rs.1,31,260/23ps but thereafter the plaintiff had added interest for the period from 1.1.1983 to 23.4.1987 On 24.4.1987 as Rs.1,43,742/-. But Ex A83 statement of account of the plaintiff is bereft of any particulars for the interest calculated for the period from 1.1.1983 to 24.4.1987.

7b)At the request of this Court, the learned counsel appearing for the appellant/defendant has filed a memo of calculation showing that as on 31.12.1982, a sum of Rs.1,30,561/- was due. Thereafter, he has calculated the interest for the said amount from 1.1.1983 to 24.4.1987 ie the date of filing of the suit and according to the calculation memo filed by the learned counsel for the appellant, the amount due to the plaintiff bank from the defendant comes to Rs.2,31,746/-. In the absence of any detail regarding the calculation of interest for the period from 1.1.1983 to 24.4.1987 by the plaintiff bank, we have necessarily to accept the memo of calculation filed by the appellant/defendant for which no objection so far was filed by the plaintiff,even though, the said memo was filed on 26.6.2008 before this Court . After executing Ex A1 and after availing the loan over draft facility sanctioned by the plaintiff bank, for availing goods loan and also after executing Ex A2 promissory note as security thereof, it is not open for the defendant to contend that Ex A1 is nothing to do with Ex A2 promissory note. The learned trial Judge has not given any explanation in his Judgment for the plaintiff failing to furnish the particulars of calculation memo for calculating the interest for the period from 1.1.1983 to 24.4.1987 has decreed the suit as prayed for. Under such circumstances, I am of the view that as per the calculation memo filed by the appellant/defendant , the amount due to the plaintiff bank from the defendant comes to Rs.2,31,746/-only. Point Nos. 1 and 2 are answered accordingly.

8.Point No.3:

In view of my discussion in the earlier paragraphs, I hold on point No.3 that the decree and Judgment in O.S.No.274 of 1987 on the file of the Court of Additional Subordinate Judge, Salem is liable to be modified.

9.. In fine, the appeal is allowed and the decree and Judgment in O.S.NO.274 of 1987 on the file of the Court of Additional Subordinate Judge, Salem is modified and the suit is decreed for Rs.2,31,746 only instead of Rs.2,75,002/23ps. The plaintiff is entitled to interest at the rate of 13.5% p.a. from the date of the suit till the date of decree and future interest at 12% p.a. From the date of decree till the date of realisation on the above said amount of Rs.2,31,746/- with proportionate costs throughout. Memo of calculation filed by the appellant/defendant shall form part of the decree.

21.07.2008
Index:Yes
Internet:yes
sg
To

1. The Additional Subordinate Judge, Salem

2.The Record Keeper, V.R.Section, High Court, Madras

A.C.ARUMUGAPERUMAL ADITYAN,J
sg

A.S.NO.29/1998

21.07.2008

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