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1996 DIGILAW 324 (DEL)

ALLAHABAD BANK v. ALOK PRAKASH JAIN

1996-04-01

MANMOHAN SARIN

body1996
MANMOHAN SARIN ( 1 ) THE plaintiff bank instituted a suit for recovery of Rs. 5. 79. 617. 46 (Rs. Five lacs seventy nine thousand. six hundred seventeen and forty six paise only) with costs against Mr Alok Prakash Jain. defendant No. 1 herein and his wife Smt. Sushila Jain, defendant No. 2 herein. ( 2 ) THE plaintiff s case in brief is. that the defendants. Shri Alok Prakash Jain and Smt. Sushila Jain, had approached the plaintiff bank for credit facilities through their Calcutta Branch in 1966. The defendants were extended credit facilities. The defendants had further pledged 18,000 equity shares of Punjab National Bank Limited, the name of which was subsequently changed to PNB Finance Limited, as security for the overdraft amounts and credits extended. . The account of the defendant was transferred from Calcutta to Scindia House. Branch New Delhi on 28th March, 1969. The debit balance on the dale of transfer was Rs. 2. 46. 959. 27 From time to lime the plaintiffs account was credited with the amount of dividend received on the equity shares that had been pledged as security. The account of the defendant was debited w ith interest "that accrued @ 15% per annum with quarterly rests and 2% per annum as penal interest. The defendants despite several assurances and promises to pay and liquidate the amount, did not do so and the account remained irregular The defendants have admitted the liability in writing number of times. The plaintiff there upon instituted the suit for recovery of Rs. 5,79,617. 46 as stated. ( 3 ) THE defendants were duly served in the suit and filed the written statement. wherein they denied that the plaint has been signed and verified and the suit instituted by a competent person. The defendants did not dispute the grant of credit and overdraft faciities and admitted the pledging of the equity shares. It was claimed that 18,600 equity share, had been pledged as security. The defendants disputed the correctness of the debit to their account on transfer, on the ground that the plaintiff bank had charged exorbitant interest at penal rates. The defendants contended that the plaintiff bank was to charge simple interest @ 9% per annum and not 15% interest per annum with quarterly rests or penal interest. The defendants denied that the plaintiff bank was entitled to sell the pledged shares. The defendants contended that the plaintiff bank was to charge simple interest @ 9% per annum and not 15% interest per annum with quarterly rests or penal interest. The defendants denied that the plaintiff bank was entitled to sell the pledged shares. ( 4 ) THE defendant No died during the pendency of the suit This was so stated in Court on 10-9-1984. The plaintiff duly applied for bringing on record the L Rs. of defendant No. 2. The said application (IA 6310/ 84) was allowed vide orders dated 9-11-1984 Counsel for the legal representatives of defendant No. 2, did not desire to file a written statement. The suil was thereafter adjourned a number of times on the ground that the parties were attempting a settlement. Further defendant No 1 vide orders dated 1 l-12-1984 in IA 6311/ 84. was appointed as guardian of the minors Master Yasheel Jain and Master Tushat Jain. who had been implcaded as defendants 2 (c) and 2 (d ). ( 5 ) THE defendants were proceeded ex-parte on 5-11-1986. Vide orders dated 14-5-1993 the plaintiff is directed to file fresh affidavit by way of ex-parte evidence. The plaintiff has filed on record affidavit by way of evidence and the documents have been duly exhibited The plaintiff by the affidavit filed by way of evidence has duly proved on record copy of the general power of attorney issued in favour of deponent Sh. K. L. Tandon. The same is exhibit Public Witness-1/a. The plaintiff has also proved and placed on record exhibit Public Witness-1 /1. which is the copy of the general power of attorney issued in favour of Shri Nand Kishore Gupta who had signed, verified and instituted the suit on behalf of the bank. Copy of the general power of attorney in favour of Shri R. C. Suri. Regional Manager of the plaintiff bank, who had signed they akalatnama in favour of the plaintiffs counsel is exhibit Public Witness-1/2. The plaintiff has also proved the execution of the documents by the defendants viz. letter seeking credit facility exhibit Public Witness-1/3. account opening form exhibit Public Witness-1/4 and the letter of authority exhibit Public Witness-1/5. the agreement dated 25-4-1966. executed between the parties has also been proved. The Loan application form exhibit Public Witness-1/7 as well as the letter pledging the shares exhibit Public Witness-1/8. have all been placed on record and proved. letter seeking credit facility exhibit Public Witness-1/3. account opening form exhibit Public Witness-1/4 and the letter of authority exhibit Public Witness-1/5. the agreement dated 25-4-1966. executed between the parties has also been proved. The Loan application form exhibit Public Witness-1/7 as well as the letter pledging the shares exhibit Public Witness-1/8. have all been placed on record and proved. The plaintiff has also proved on record the agreement providing for 3 1/2% interest per annum over the Reserve Bank of India rate with a minimum of 9 1/2% per annum. The plaintiff has also proved on record the correspondence with the defendant and in particular letters received from the defendant admitting their liability and seeking time to pay as well as requesting the bank not to exercise the option to sell the shares. The said correspondence is exhibit Public Witness-, 1/10 to exhibit Public Witness-1/17. The plaintiff bank servedv a number of notices of demand. The same are exhibit Public Witness-1/9 to exhibit Public Witness-1/18-21. The defendants acknowledged their liability in the correspondence. The statement of account verified under the Bankers Books Evidence Act. showing the balance as Rs. 5. 79. 617. 46 has been proved and placed on record as exhibit Public Witness-1/24. ( 6 ) FROM the foregoing, the plaintiff has proved its case against the defendants There is no merit in defendants contention that the rate of interest payable was 9% The stipulation in the agreement was 3. 5%. over the RBI rate. w ith a minimum of 9%. The plaintiff is entitled to a decree for the amount claimed in suit. The liability of the defendant shall be joint and several, subject to the limitation that the liability of defendants 2 (a) to 2 (d) shall not exceed such amount as may have devolved upon them from the estate of deceased defendant No. 2 Smt. . Sushila Jain. The suit of the plaintiff is therefore decreed for a sum of Rs. 5,79,617. 46 (Rupees Five lacs seventy nine thousand six hundred seventeen and forty six paise only) together with costs and pendente lite and future interest @ 15% on the aforesaid amount of Rs 5. 79. 617 46 till realiization. The plaintiff shall also be entitled to recover decretal amount from the sale of the pledged equity shares of PNB Finance Limited pledged with the plaintiff bank and appropriate the proceeds thereof towards the decretal amount.