K. Ramamoorthy, J. ( 1 ) THE State Bank of India through its Chandni Chowk Branch, Delhi, has filed the suit against four defendants for recovery of Rs. 4,25,417. 55. ( 2 ) THE case of the plaintiff is that in 1973 the first defendant, through its Directors defendants 2 and 4, approached the plaintiff and requested grant of loan and wanted facilities upto limit of Rs. 4,00,000. 00 for the purpose of business of the first defendant Company. On 15. 01. 1973 the following documents were executed by the defendants: A) Ex. P-2, Promissory note dated 15. 01. 1973 for Rs. 4,00,000. 00 agreeing to pay interest @ Rupees 1th per cent over the State Bank Advance Rate minimum of Nine and 3/4lh per cent per annum with monthly rests. B) Ex. P-3 a letter from the first defendant dispensing with a notice of dishonour in term of Section 98 (a) of the Negotiable Instruments Act, 1891. C) Ex. P-4 is the guarantee form executed by the second defendant Mr. Jawahar Lal Barman, the third defendant, Mr. Prem Chand Kashyap and the fourth defendant, Mrs. Krishna Barman, wife of the first defendant. These documents clearly prove the transactions between the parties. ( 3 ) DEFENDANTS wanted Cash Credit on security and the following documents were executed on 19. 01. 1973: A) Ex. P-6 is the agreement for Cash Credit on security of pledge of goods, produce and Merchandise. B) Ex. P-8 is the promissory note dated 19. 01. 1973 for Rs. 2,00,000. 00 with interest half percent above the State Bank advance rate minimum nine per cent per annum. C) Ex. P-14 is the letter for dispensing with a notice of dishonour in terms of Section 98 (a) of the Negotiable Instruments Act, 1891. D) Ex. P-9 is the Guarantee form executed by the second defendant Mr. Jawahar Lal Barman, the third defendant Mr. Prem Chand Kashyap and the fourth defendant, Mrs. Krishna Barman, wife of the first defendant. These documents clearly prove the transactions between the parties. E) Ex. P-10 is the agreement for Cash Credit on Security of Pledge of Goods, Produce and Merchandise for payment of Rs. 4,00,000. 00. ( 4 ) ACCORDING to the plaintiff the first defendant availed of the facilities and necessary entries are made in the books of accounts. These documents clearly prove the transactions between the parties. E) Ex. P-10 is the agreement for Cash Credit on Security of Pledge of Goods, Produce and Merchandise for payment of Rs. 4,00,000. 00. ( 4 ) ACCORDING to the plaintiff the first defendant availed of the facilities and necessary entries are made in the books of accounts. The defendants have committed default in paying the balance as on the 9th of the April 1975 to the tune of Rs. 5,82,846. 95 as noted in Exhibit P-15. The first defendant admitted the balance of Rs. 1,31,908. 44 in Cash Credit Account as on 31. 12. 1973 under Exhibit P-16, the defendants confirmed the balance of Rs. 5,00,313. 12 as on 31-12-1973 in the other accounts. Under Exhibit P-12, the defendants wanted some accommodation for advance and executed an agreement. ( 5 ) IN para 10, the plaintiff stated thus: That the balance due from the First defendant s account aforesaid under the aforesaid Cash Credit Account together with interest as stated hereinabove amounts to Rs. 4,25,417. 55. Details of the said account excluding interest for the period 09. 04. 1975 to 11. 01. 1976 are maintained in the books of account of the plaintiff. Ex. "b" hereto is a true and correct copy of the relevant entries from the ledge from 30. 12. 1973, when the balance was confirmed, upto 01. 01. 1976 duly certified under the Bankers Book Evidence Act, 1891, and it is prayed that the same may be read as part and parcel of this plaint. ( 6 ) IN para 12, the plaintiff refers to the mortgage of immovable property. The plaintiff ultimately claims a decree for Rs. 4,25,417. 55 with interest @ 18% per annum and, the plaintiff prays for a mortgage decree. ( 7 ) THE defendants have filed written statement contending, inter alia, that the plaintiff; acted in an arbitrary fashion and caused loss to the defendants. Without the knowledge of the defendants the plaintiff locked the premises preventing the defendants from carrying on business and ultimately the defendants had to close down the business. The plaintiff filed its replication. The plaintiff have Filed the documents which are exhibited as P-1 to P-29. The defendants have filed documents which are exhibited as D-1 to D-30. ( 8 ) THE following issues were framed on 30. 08. The plaintiff filed its replication. The plaintiff have Filed the documents which are exhibited as P-1 to P-29. The defendants have filed documents which are exhibited as D-1 to D-30. ( 8 ) THE following issues were framed on 30. 08. 1983: 1) Did defendant No. 4 deposit the title deeds in respect of property No. 12-B, Chirag Delhi by way of equitable mortgage for repayment of the advance/loan in question? 2) to what amount is the plaintiff entitled and from whom? 3) to what rate of interest is the plaintiff entitled and for what period? 4) Did the Manager of the plaintiff bank visit the factory of defendant No. 1 in early 1974 and by misrepresenting transferred the factory type pledged. goods into a lock and key type pledged? If so to what effect? 5) Did the plaintiff wrongfully withhold the above-mentioned goods, if any, and was the plaintiff bound to sell the same forthwith. If so to what effect? 6) Relief. ( 9 ) THE plaintiff examined Public Witness -1 to Public Witness -4 and the defendants examined Mr. Jawahar Lal Burman, (who is defendant No. 2 and the Managing Director of the first defendant) as DW-1. ( 10 ) I shall take up first the proof of the claim by the plaintiff. The fact that the defendants had taken the money from the Bank is not disputed. The defendants executed documents which arc marked as Exhibits P-24, P-25 and P-26. The plaintiff hadfiled the statement of account which is marked as Exhibit P-l. Public Witness -I Mr. J. C. Relan, Manager of the Bank speaks to the transactions and also prove the statement of accounts. The witness also speaks to the pledge of goods and also the lock and key account between the plaintiff and the defendants. ( 11 ) PW-2. Mr. P. R. Bhatia was examined to prove promissory note Ex. P-1 and marked as S-3, Ex. P-2 and endorsement Ex. P-2a and his evidence is very cogent and nothing has been elicited in the cross-examination which could persuade me to reject his testimony. ( 12 ) MR. R. C. Kapur was examined as Public Witness -3. He was working as Field Officer from May 1974 to the end of the year 1978. He also speaks to the transactions between the plaintiff and the defendants and proved the documents put to him. ( 12 ) MR. R. C. Kapur was examined as Public Witness -3. He was working as Field Officer from May 1974 to the end of the year 1978. He also speaks to the transactions between the plaintiff and the defendants and proved the documents put to him. A question was put to Public Witness -3 whether any reply was sent by the Bank to the letters written by the defendants, which are exhibited as D-2, D-3, D-4,d-6, D-7, D-10, D-12, D-14, D-15, D-19, D-20, D-21, D-25, and D-28. Nothing was put to Public Witness -3 as to what the defendants have written in these letters and how did the defendants expect the plaintiff to act and what was it that the plaintiff filed to act and by any inaction on the part of the plaintiff how did the defendants suffer any injury. Therefore, the court cannot draw any inference against the plaintiff. ( 13 ) THE plaintiff examined Public Witness -4 Mr. Jai Dev, who was working as Godown Keeper from the end of 1972 to the end of 1975. He proved Exhibit P-7, P-20 to P-23 about the stocks in the premises which was the subject matter of the pledge. ( 14 ) DW-1 Mr. Jawahar Lal Burman, who is the second defendant and Managing Director of the first defendant, would show that the plaintiff bank converted the factory type pledge to lock and key type pledge. What is the effect of the plaintiff doing this, assuming it was done, is not spoken by him. He would show that the goods manufactured were kept under lock and key for a long time what manufactured was synthetic fibre and the fibre got damaged because of wrong storage. He would state that in respect of the mortgage created by the first defendant as per the perpetual lease deed the defendants have no right to sell the property, therefore, the goods of mortgage is not valid and the plaintiff cannot bring that property for sale. According to this witness, no notice was given by the plaintiff for charging the rate of interest. The plaintiff could have sold the goods earlier and if that had been done it would have fetched a very high prices. According to the witness, the signatures in the documents were put when the documents were blank and they were filled up by the bank later on. The plaintiff could have sold the goods earlier and if that had been done it would have fetched a very high prices. According to the witness, the signatures in the documents were put when the documents were blank and they were filled up by the bank later on. ( 15 ) I have considered the documents and the oral evidence adduced and I am satisfied that the plaintiff has proved its case by the documents produced by it. ( 16 ) I shall take up the issues now. Issue No. 2 relates to deposit of the title deeds by the 4th defendants in respect of the property bearing Plot 12, Block No. B, Chirag Co-operative House Building Society, Chirag Delhi, New Delhi. The first defendant passed the resolution which is marked as Exhibit P-1 and the resolution reads thus: RESOLVED that: 1. State Bank of India be approached for opening a Banking account with them. 2. The State Bank of India, Delhi be requested to grant us loans in the following manner: Cash Credit - lock and key : 3,00,000. 00 Cash Credit - Factory Type : 4,75,000. 00 Overdraft against usance : 4,00,000. 00 Bills: Export Packing Credit Loans : 3,00,000. 00 3. The State bank of India, Delhi is hereby authorised to honour cheques, Bills of Exchange, and Promissory Notes drawn, accepted or made on behalf of the Company by Shri Jawahar lal Barman, General Manger of the Company and to act on any instructions so given relating to the account, whether the same be overdrawn or not, or relating to the transactions of the Company. Shri Jawaharlal Barman, General Manager of the Company be and is also authorised to sign statements, pledge/delivery invoices and other information required by the Bank from time to lime. 4. Shri Jawaharlal Barman, General Manager, of the Company be and is hereby authorised to execute security documents and conduct the affairs of the accounts. 5. Shree Jawaharlal Barman, General Manager of the Company together with Prem Chand Kashyap, Kunwar Netrapal Singh and Mrs. Krishna Barman, the Directors of the Company be requested to stand sureties in their personal capacity for the loans to be sanctioned by the Bank. It is further resolved that Mrs. Pushpa Katariya will lodge with the Bank title deeds of property standing in her name and situated at Katra Tobacco, Khari Baoli, Delhi and Mrs. Krishna Barman, the Directors of the Company be requested to stand sureties in their personal capacity for the loans to be sanctioned by the Bank. It is further resolved that Mrs. Pushpa Katariya will lodge with the Bank title deeds of property standing in her name and situated at Katra Tobacco, Khari Baoli, Delhi and Mrs. Krishna Barman will lodge title deeds of her property situated at Plot No. B-12, Chirag Co-operative House Building Society Ltd. , as an additional cover towards the factory type limits to be granted by the Bank. 6. The common seal of the company will be affixed in presence of Mrs. Krishna Barman, the Director. "mrs. Krishna Barman will lodge title deeds of her property situated at Plot No. B-12, Chirag Co-operative House Building Society Ltd. , as an additional cover towards the factory type limits to be granted by the Bank. " This is Clause 5 in the resolution dated 03. 11. 1969. This resolution was confirmed in the Board Meeting of the first defendant held on 12. 01. 1973 which is marked as Exhibit P-28. The argument is that the lease deed which is marked as Exhibit P-38 provides that the lessee had no power to sell and therefore, the plaintiff Bank cannot seek to enforce the mortgage. Exhibit P-13 is the letter of deposit. Mrs. Krishna Barman had written a letter dated 29. 09. 1975 which is is marked as Exhibit D-36 in the following manner: "the title deeds of our Director - Mrs. K. Barman of her plot of land in the Chirag Enclave had been pledged by us as a Collateral Security for hypothecating advance of Rs. 4. 0 lacs advanced to the Company. For purposes of her Wealth Tax returns, certified copy of her title deed is required to be submitted to the Income Tax Office. . . . " ( 17 ) ANOTHER letter dated 06. 06. 1974, which is marked as Exhibit D-3 also confirms the creation of equitable mortgage to secure the repayment of the loan. Para 4 of Exhibit D-3 reads as follows: While you have already with you the CollateralSecurity of one of our Directors plot opposite Nehru Place, we are also agreeable to give you instead, the second charge on our assets, on obtaining approval of Haryana Financial Corp. , and your acceptance to the above. DW-1 Mr. Para 4 of Exhibit D-3 reads as follows: While you have already with you the CollateralSecurity of one of our Directors plot opposite Nehru Place, we are also agreeable to give you instead, the second charge on our assets, on obtaining approval of Haryana Financial Corp. , and your acceptance to the above. DW-1 Mr. Jawahar Lal Barman admits these facts. ( 18 ) THEREFORE, the defendants cannot dispute the right of the plaintiff to enforce the mortgage. Whatever the rights, title and interest, the 4th defendant has in the property, could be proceeded against by the plaintiff. When the property is brought to sell the concerned party who has granted perpetual deed, i. e, the Union of India would also consider granting permission for sale of the property on payment of necessary charges to the Government of India and the purchaser of the property in the court auction could apply to the Union of India for necessary certificate in this behalf and on payment of the charges fixed by the Union of India, the Union of India would issue necessary order permitting the sale of the property on scuh terms and conditions that the Union of India may impose. ( 19 ) ON Issue No. 2, about the quantum the plaintiff can claim, the main defence of the defendants is that the statement of accounts marked as Exhibit S-2 has not been proved in accordance with law. Mr. Dewan learned counsel for the defendants relied upon the judgement of the Supreme Court in Chandradhar Goswami and ors Vs. Gauhati Bank Ltd. AIR 1967 SC 1058 in which it held that: It will be clear that S. 4 gives a special privilege to banks and allows certified copies become prima facie evidence of the existence of the original entries in the accounts and arc admitted as evidence of matters, transactions and accounts therein, but such admission is only where, and to the same extent as, the original entry itself would be admissible by law and not further or otherwise. Original entries alone under S. 34 of the Evidence Act would not be sufficient to charge any person with liability and as such copies produced under s. 4 of the Bankers Books Evidence Act obviously cannot charge any person with liability. Original entries alone under S. 34 of the Evidence Act would not be sufficient to charge any person with liability and as such copies produced under s. 4 of the Bankers Books Evidence Act obviously cannot charge any person with liability. Therefore, where the entries are not admitted it is the duty of the bank if it relies on such entries to charge with liability, to produce evidence in support of the entries to show that the money was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. But no person can be charged with liability on the basis of mere entires whether the entires produced are the original entries or copies under S. 4 of the Bankers Books Evidence Act. The main argument by Mr. Dewan was that the concerned officer who wrote the ledger had not been examined and the original ledger books had not been produced by the plaintiff bank and, therefore, the statements of accounts filed by the plaintiff cannot be accepted as correct and they are not admissible in evidence. ( 20 ) THE fact that the statements of accounts were sent to the defendants is not disputed and as I had noticed already the first defendant had also confirmed the balance due by writing letters to the plaintiff. The statements of accounts filed are duly certified. The bank has complied with the provisions of the Bankers Books Evidence Act 1891 (18-1891 ). Section 4 of the Bankers Books Evidence Act, 1891 reads as under: Section 4 : Mode of proof of entries in bankers books - Subject to the provisions of this Act, a certified copy of any entry in a bankers book shall in all legal proceedings be received as prima facie evidence of the existence of such entry, and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extend as, the original entry itself is now by law admissible, but not further or otherwise. ( 21 ) THE defendants having accepted the balance due to the plaintiff cannot now say that the statements of accounts are not admissible in evidence. In Calcutta National Bank Ltd. Vs. Sonapur Tea Co. ( 21 ) THE defendants having accepted the balance due to the plaintiff cannot now say that the statements of accounts are not admissible in evidence. In Calcutta National Bank Ltd. Vs. Sonapur Tea Co. Ltd. AIR 1957 Calcutta 9, a similar argument was dealt with by the Calcutta High Court and the Calcutta High Court rejected that argument by observing that the defendants should have asked the bank to produce the original ledger if the defendants had any doubt about the contents of the statements of accounts. The evidence produced by the Bank can be accepted in the absence of the any evidence contra by the defendants. It is the case of the defendants that they are also maintaining accounts and they could also produce the account so that the statements of accounts produced by the plaintiff could be verified. The same view was taken by the Punjab High Court in The Punjab National Bank Ltd. Delhi Vs. Vinod Kumar and others AIR 1957 Punjab 257. The Punjab High Court held that "the object of the Act is to render the entries to the Bankers Books admissible in evidence and to enable copies of the entries to be used instead of compelling the Bank to produce the original entries. " In the light of the conduct of the defendants in this case I feel that I need not deal with the point any further. ( 22 ) IN the light of the confirmation letters marked as Exhibits P-24, P-25 and P-26 there is absolutely no difficulty in accepting the statements of account filed by the plaintiff. Therefore, the amount claimed by the plaintiff to the tune of Rs. 4,25,417. 55 stands proved. The learned counsel for the plaintiff brought to my notice that the pledged goods were auctioned, after obtaining orders from this Court and the auction was held on 31. 05. 1979 and a sum of Rs. l,14,038. 00 was realised and the balance due is Rs. 3,11,379. 55. This issue is, therefore, answered in favour of the plaintiff and it is held that a sum of Rs. 11,379. 55 is due to the plaintiff. ( 23 ) ISSUE No. 3 relates to the rate of interest. The defendants 1 to 4 have executet various documents as Ex. P-2 to P-14 wherein the defendants have admitted to pay the interest claimed by the Bank. 11,379. 55 is due to the plaintiff. ( 23 ) ISSUE No. 3 relates to the rate of interest. The defendants 1 to 4 have executet various documents as Ex. P-2 to P-14 wherein the defendants have admitted to pay the interest claimed by the Bank. According to the plaintiff the rate of interest ofone fourth per cent above the State Bank advance rates minimum on nine and three fourth per cent per annum with monthly rests was the agreed rate. This was changed as mentioned in para 15 (E) of the plaint. Now according to the plaintiff the rate of interest is 23. 5% per annum and the defendants are liable to pay interest from the date of plain till the date of realisation @ 23. 5% per annum. Having regard to the overall circumstances and the facts that the defendants were put to a lot of hardship and they had to close down the business, I feel in the interest of justice that the rate of interest could be fixed @ 9% per annum from the date of plaint till the date of realisation and I pro-ceed on this basis that the plaintiff realised through the auction a sum of Rs. l,14,038. 00 on the date of plaint. This is just for the purpose of fixing the rate of interest payable on the sum of Rs. 3,ll,379. 00. I make it very clear that on the sum of Rs. 4,25,417. 5 from the date of plaint upto 31. 05. 1979 the plaintiff cannot claim any interest. This issue is answered accordingly. ( 24 ) ISSUE No. 4 relates to the conversion of the factory type facilities into lock and key type facilities. On a reading of the evidence of Public Witness -1 to Public Witness -4 and DW-1, I am not able to persuade myself to accept the case of the defendants. The learned counsel for the plaintiff relied upon the letter dated 25. 08. 1975 marked as Exhibit D-17 where the first defendant did not raise any objection in this behalf. Exhibit D-17 reads as under: "dear Sir, While delivery of one lot of polyster was taken earlier, payment for the second lot has also been made to you, as you know, and the above account has been reduced by over Rs. one and fourth lacs (app. ). 2. Exhibit D-17 reads as under: "dear Sir, While delivery of one lot of polyster was taken earlier, payment for the second lot has also been made to you, as you know, and the above account has been reduced by over Rs. one and fourth lacs (app. ). 2. We propose to take delivery of third lot of synthetic yarn of 23 cases (about 508 KG 152/d Shreelon polyster) during September or earlier at Rs. 130. 00 which please confirm. 3. Thereafter we will take delivery, of metallic yarn (Rs. 6,000. 00 ), 828 meteres of full voil (Rs. 9,936. 00 ) 3,400. 00 metres of Combric (Rs. 10,200. 00 ); either before or along with the remaining 14 cases of 40/d Shreelon Nylon yarn and one case of crimped yarn about 130. 00 per kg. The total amount of loan which will be thus liquidated will be Rs. 3. 0 lacs approximately. 4. Out of the remaining 3. 0 lacs of loan you will have embroidered goods worth Rs. one and half lac under your L and K. , the delivery of which will be taken by us against payment, and liquidated by about and next year. b) For the remaining one and half lac plus interest, we would request you to sanction us hypothecation limits, to secure your advance. 5. For repayment of your above advance, we would further request to revive our usance bills discounting facilities of Rs. 4. 0 lacs, on approved parties. As previously, you will advance us 75% retaining a margin of 25% with you. On receiving the proceeds against each bill, 10% will go towards repayment of your loan and the balance 15% will be credited to our account. 6. The time schedule which we have mentioned above arc indicative and except for any unforeseen reason beyond our control earlier payment are expected to be made. 7. We hope you will find our above approach reasonable and pragmatic to liquidate Banks outstanding. 8. For reasons explained personally, our auditing/compilation of B/s have been delayed, but arc expecting this to be ready after about Dewali. Meanwhile, we enclose herewith our Auditors Certificate regarding working from January to middle June (15th), 1975. This total sales have been of Rs. 9. 60,971. 60. 8. For reasons explained personally, our auditing/compilation of B/s have been delayed, but arc expecting this to be ready after about Dewali. Meanwhile, we enclose herewith our Auditors Certificate regarding working from January to middle June (15th), 1975. This total sales have been of Rs. 9. 60,971. 60. While examining these, you are requested to bear in mind that the actual working was for about three and three and half months since:- - We started in middle January of this year.- On imposition of Excise Duly at the end of February, the working was suspended till April, till after the Government revised the excise duty, reducing it from Rs. 20. 00 to Rs. 10. 00 per KG.- During this period there were serious power shortage and breakdown, as you know, particularly in Faridabad, and it was because of diesel set that we were able to achieve these sales. 9. We hope, that in the light of completely new social and economic changes planned and being executed by the Government, a nationalized institution like yours will not be found wanting in playing its role of assistance to Small Scale Units, as proclaimed by the Government. We may add that we are an undisputed S. S. I unit. 10. Your early confirmation/acceptance to the above is requested and will be glad to provide any further clarification/details. Therefore, the arguments of the learned counsel for the plaintiff that this contention has been put forth for the first time in the written submission cannot be said without any force. Therefore, this issue is also answered in favour of the plaintiff and against the defendant. Accordingly, there shall be a preliminary decree directing the defendants: a) to pay to the plaintiff a sum of Rs. 3,11. 379. 00 ; b) to pay to the plaintiff interest @ 9% p. a on the sum of Rs. 3,ll,379. 00 from the date of the plaint till the date of realisation; c) to pay to the plaintiff a proportionate costs of the suit within three weeks. The office shall prepare the. preliminary decree in accordance with law. "