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2008 DIGILAW 1830 (PNJ)

Daya Nand v. State Bank of India

2008-10-31

RAKESH KUMAR GARG

body2008
JUDGEMENT Rakesh Kumar Garg J. - Through this appeal, the defendant has challenged the judgment and decree of the Lower Appellate Court upholding the judgment and decree dated 10.08.2006 passed by Civil Judge (Senior Division), Bhiwani, whereby suit of the plaintiff-respondent for recovery of Rs. 2,64,613/- along with pendente lite and future interest at the rate of 12% per annum with half yearly rests from the date of filing of the suit till its realization, under Order 34 of the Code of Civil Procedure has been decreed. 2. The case set up by the plaintiff-Bank is that the defendant-appellant approached the plaintiff-Bank vide loan application dated 05.12.2000 with a request to sanction a loan of Rs. 1,98,000/- for purchase of Mahindra Tractor against registered mortgage of agricultural land. The plaintiff-Bank agreed to sanction a loan of Rs. 1,98,000/- for the purchase of tractor. The appellant besides the mortgage deed dated 07.12.2000 also executed various other documents including letter of authority (Ex. P-12) to make the payment to the dealer. In pursuance of this authority letter dated 08.12.2000 (Annexure P- 12), a sum of Rs. 2,52,000/- (Rs. 1,98,000/- being loan amount Rs. 54,000/- the margin money deposited by the appellant) were paid to M/s Onkar Tractors, authorized dealer of Mahindra Tractor, Bhiwani, who delivered the Mahindra Tractor Model No. 265 DI HP 30, bearing Engine and Chasis No. HDB-4809 to the defendant. The aforesaid tractor dealer issued invoice No. 188 dated 08.12.2000 in token of having sold the aforesaid tractor to the defendant. In this way, the defendant duly availed the loan facility and purchased the Mahindra Tractor in question and hypothecated the same with the plaintiff- Bank. It was further submitted that the term loan of Rs. 1,98,000/- was to bear an interest at the rate of 12% per annum with half yearly rests or at such other rate or rates as may be prevailing from time to time as per the instructions of bank/RBI. The prevailing rate of interest was @12% per annum with half yearly rests. The aforesaid loan plus interest and other charges were repayable in 18 half yearly instalments, each of Rs. 11,000/- plus interest commencing from June 2001. The prevailing rate of interest was @12% per annum with half yearly rests. The aforesaid loan plus interest and other charges were repayable in 18 half yearly instalments, each of Rs. 11,000/- plus interest commencing from June 2001. It was also agreed, that in case of default of making the payment of instalments as per the terms of the agreement or if the banks interest is found adversely effected in consequence of any act or omission of the defendant, the plaintiff bank shall be entitled to recover the entire amount due in lump sum. The defendant failed to adhere to the terms and conditions of the agreement entered into with the plaintiff bank and did not make the payment of instalments. Therefore, he was contacted so many times by the field staff of the plaintiff bank, but the defendant paid no heed to it. The defendant instead of making payment got served legal notices dated 18.06.2002/19.06.2002, upon the plaintiff bank mentioning that the tractor has not been delivered by the tractor dealer. The defendant served legal notice after getting the delivery of tractor on 08.12.2000. On receipt of the notice, the field staff of the plaintiff bank visited Baliali and contacted the defendant and other inhabitants of the village, for making necessary enquiry in the matter and it revealed that the defendant had sold the tractor illegally and in contravention of the agreement. When the field officer of the plaintiff bank directed the defendant to make the payment, failing which the bank will be compelled to lodge FIR against him, the defendant sought time and undertook to clear the entire amount upto 31.08.2002, but the defendant failed to do so. Lastly the plaintiff bank also served a legal notice dated 21.01.2003, through Shri Dharam Chand Chaudhary, Advocate to make the payment of amount due within 15 days, from the receipt of the said notice, but the defendant did not make the payment. A sum of Rs. 2,64,613/- inclusive of interest up to 06.03.2003 was due and outstanding from the defendant to the plaintiff which he was liable to pay along with pendente lite and future interest @12% per annum with half yearly rests. Hence, this suit. 3. The suit was contested by the defendant-appellant and it was stated that despite completion of all formalities, the delivery of tractor has not been given to him. Hence, this suit. 3. The suit was contested by the defendant-appellant and it was stated that despite completion of all formalities, the delivery of tractor has not been given to him. It was further submitted that the plaintiff-bank and the dealer i.e. Onkar Tractors in connivance with each other have not given the delivery of the tractor to him, therefore, the defendant was not bound to make the payment of the amount in dispute. The defendant has also filed a complaint in the District Consumer Disputes Redressal Forum and the same is still pending for decision and the present suit has been filed by the plaintiff-Bank as a counter-blast to the said complaint. In fact, the plaintiff-Bank and the dealer of the tractor have committed fraud upon him. He made several requests to the administration and the Superintendent of Police, Bhiwani, but no action whatsoever has been taken against them. The plaintiff bank sent the draft of loan directly to the Onkar Tractors and the same has been encashed by it. The plaintiff bank was bound to ensure the delivery of the tractor to him and also bound to verify this fact, but neither the plaintiff bank has conducted any verification nor ensured the delivery of the tractor to him. Therefore, in the given circumstances, the defendant was not under any obligation to make the payment of the amount in dispute. Dismissal of the suit was prayed for. 4. From the pleadings of the parties, following issues were framed by the trial Court for adjudication: 1. Whether the plaintiff is entitled to recover a sum of Rs. 2,64,613/- as alleged ? OPP 2. Whether the suit is not maintainable in the present form ? OPD 3. Relief. 5. After completion of evidence, the trial Court heard both the counsel for the parties and decreed the suit of the plaintiff with costs and held that the plaintiff bank was held to be entitled to recover an amount of Rs. 2,64,613/- from the defendant along with pendente lite and future interest at the rate of 12% per annum with half yearly rests, from the date of filing of the suit till its realization. 2,64,613/- from the defendant along with pendente lite and future interest at the rate of 12% per annum with half yearly rests, from the date of filing of the suit till its realization. The defendant was given six months time to pay the decretal amount, failing which the plaintiff bank was held entitled to recover the decretal amount by way of sale of mortgaged property of the defendant i.e. agricultural land situated in the revenue estate of village Baliali, Tehsil Bawanikhera, District Bhiwani. 6. Feeling aggrieved by the aforesaid judgment and decree of the trial Court, the defendant filed an appeal which was dismissed vide impugned judgment and decree dated 07.08.2007 passed by Additional District Judge-II, Bhiwani. 7. While dismissing the appeal filed by the defendant, the Lower Appellate Court held as under : "Further, I would like to mention over here that even the defendant himself has not denied that the bank has not made payment to the Onkar Tractors, Bhiwani and if that is so, then the payment made by the bank, was against the purchase of the tractor by the defendant. The amount has been received by the dealer Onkar Tractors, Bhiwani, who has submitted the bill with the bank and the plaintiff bank has acted as per the instructions of the defendant and now, the defendant cannot be allowed to wriggle out from authorization and undertaking given by him to the plaintiff bank, for releasing of the amount for the purchase of the tractor. The defendant has himself failed to prove on the file any collusion of the bank with the dealer by leading cogent or relevant evidence, rather the facts of the present case reveals that the present defendant has colluded with the dealer. He remained silent for a period of two years for non-delivery of the tractor if any, which is not even believable or plausible. No doubt a man can tell lie, but the documents placed on the file by the plaintiff bank certainly speaks the truth and all these documents clearly prove that the defendant has duly availed the loan facility from the plaintiff bank and agreed to pay the loan amount along with interest at the rate of 12% per annum with half yearly rests. The defendant has not repaid the said amount despite demand by the plaintiff bank and the statement of account Ex. The defendant has not repaid the said amount despite demand by the plaintiff bank and the statement of account Ex. P-20 to which the presumption of truth is attached as per Bankers Book of Evidence Act, confirms and establishes on the file that a sum of Rs. 2,64,613/- was outstanding against the defendant in connection with the loan raised by him till 06.03.2003 and the defendant is certainly liable to make the payment of the said loan along with future interest. Thus, the findings of the trial Court on issue No. 1 is certainly legal, valid, based on facts and law, require no interference from the Appellate Court. The counsel for the appellant/defendant has referred to the certain decisions of Rajasthan Consumer Dispute Redressal Commission, but I would like to mention over here that the appellant gets no help from the said citation. The said law as laid down in connection with the complaint filed before the Consumer Forum in a complaint and not in a civil suit of the bank. The decision of the Consumer Forum shall be independent to the present decision which has no bearing on that decision. However, in the instant case, it has been established on the file that the defendant has raised loan from the plaintiff bank and has not paid even a single penny towards the said amount of the loan raised by him and now, he is bound to pay the balance dues against him amounting to Rs. 2,64,613/- and the observations and findings of the trial Court on issue No. 1 is well protected under law, which is well reasoned, legal, based on facts and law and requires no interference from the Appellate Court." Still not satisfied, the defendant has filed the instant appeal, challenging the impugned judgment and decrees of the Courts below. 8. Mr. L.N. Verma, learned counsel for the appellant has vehemently argued that the Courts below have misconstrued the evidence on record as there is an overwhelming evidence to prove that the tractor in question had been sold away by the dealer Onkar Tractors to Krishan Kumar and Virender on 10.11.2000 and had delivered the same to them and the respondent-bank made the payment of Rs. 2,52,000/- to the dealer against the sale of the tractor in question, who was bound to deliver the said tractor to the appellant and as it has not been done, the appellant is not bound to make the payment in dispute to the respondent-bank. 9. Learned counsel for the appellant has further argued that the Courts below have further erred at law while allowing the pendente lite and future interest at the rate of 12% per annum. According to the learned counsel for the appellant, the pendente lite and future interest on agricultural loan exceeding 6% is not permissible and in any case the future interest cannot be allowed higher than 6% per annum under Section 34 of the Civil Procedure Code. It has also been argued by the appellant that compound interest cannot be granted and the grant of the same vide impugned judgment and decree is against the well settled principles of law. In support of his case, learned counsel has placed reliance upon judgments of this Court cited as Devinder Kumar and another v. Syndicate Bank and others, 1993 PLJ 725 and Jagdish Chander v. Punjab National Bank, 1994 AIR(Punjab) 98. 10. On the basis of the above arguments, the learned counsel for the appellant has sought to raise the following alleged substantial questions of law arising out of the present appeal : 1. Whether the dealer Onkar Tractors was entitled to retain the amount of price of two tractors against the sale of one tractor ? 2. Whether the dealer could receive the price of the same Tractor twice over from two Banks and retain the same ? 3. Whether having released the amount of price of the Tractor in favour of the dealer on behalf of the appellant, it was the duty of the respondent-Bank to ensure delivery of the tractor to the appellant ? On the other hand, Mr. Atul Mahajan, Advocate learned counsel for the respondent-Bank has supported the impugned judgment and decree and argued that the bank has made the payment in dispute to the dealer on the basis of authorization letter executed by the appellant which is not under dispute and the dispute regarding the delivery of the tractor is between the defendant and the tractor dealer and the respondent-bank figures nowhere in between. It has further been argued by the learned counsel for the respondent-bank that the loan has been advanced to the appellant by the respondent-Bank on the basis of execution of documents i.e. agreement for hypothecation according to which the respondent-bank is entitled to charge the interest as granted by the impugned judgment and decrees. The learned counsel for the respondent-bank has also placed reliance upon the undertaking executed by the appellant to pay interest variable from to time as per bank/RBI guidelines and has prayed for the dismissal of the appeal. 11. I have heard learned counsel for the parties and perused the record. The facts of the case are not disputed. Admittedly, the loan was sanctioned to the appellant by the respondent-bank and appellant executed various documents as mentioned in pars No. 2 of the judgment of the trial Court. It is also not disputed by the parties that on the authorization letter of the appellant dated 08.12.2000 (Annexure P-12) the respondent bank released the payment of Rs. 2,52,000/- to the dealer i.e. M/s. Onkar Tractors. The liability to pay has been disputed by the appellant only on the ground that the dealer has not delivered the tractor to him and therefore he is not liable to pay the loan amount. It is the contention of the appellant that the respondent-bank has connived with Onkar Tractors to grab the money of the plaintiff-bank and misutilized the same. However, no evidence has been placed on record to support this contention of the appellant. A finding of fact has been recorded by the courts below that for the first time appellant made a complaint to the bank for the non-delivery of the tractor on 18.06.2002 i.e. after a gap of two and a half years which is not explained. The dispute regarding the delivery of the tractor is between the dealer and the appellant and the respondent-bank figures nowhere in between. There is no such condition in the loan agreement to the effect that bank is entitled to the recovery of loan amount only upon the delivery of the tractor in question. 12. From the facts of the case, it is clearly established that the bank has released the disputed amount on the authorization of the appellant and none else. There is no such condition in the loan agreement to the effect that bank is entitled to the recovery of loan amount only upon the delivery of the tractor in question. 12. From the facts of the case, it is clearly established that the bank has released the disputed amount on the authorization of the appellant and none else. Once the bank has made the payment of sanctioned amount at the asking of the appellant, the respondent bank is certainly entitled to recover the same. In this case, no relief can be granted to the appellant against the dealer for non-delivery of the tractor as the said dealer is not a party to the present suit. Neither recovery of loan amount can be denied to the respondent-bank on the plea that the dealer has not delivered the tractor in question to the appellant. It is relevant to mention here that the learned counsel has also placed reliance upon the fact that appellant filed a complaint before the Consumer Disputes Redressal Forum, Bhiwani, against the dealer and the respondent bank which has been allowed vide order dated 14.01.2008 and the dealer has been directed to clear the loan amount which stands in the name of the appellant along with up to date interest and expenses. In fact, the appellant has also moved an application under Order 41 Rule 27 of the Civil Procedure Code for placing on record the order of the State Consumer Disputes Redressal Forum, Bhiwani dated 14.01.2008 by way of additional evidence. The said complaint was filed after institution of the present suit by the respondent bank on 10.03.2003, whereas the complaint was filed before the District Consumer Forum on 13.03.2003. In my view the reliance of the appellant on the order dated 14.01.2008 passed by the Consumer Forum, Bhiwani, directing the tractor dealer to clear the loan amount of the appellant with the respondent bank is of no consequence for the reason that the said order has not become final as the same has already been challenged before the State Consumer Redressal Commission, Haryana at Panchkula. Moreover, the decision of the Consumer Forum is independent to the present decision which has been passed against the dealer who is not party in the present suit. Moreover, the decision of the Consumer Forum is independent to the present decision which has been passed against the dealer who is not party in the present suit. In any case, if the complaint of the appellant succeeds, he shall be entitled to execute the said order under the provisions of Consumer Protection Act, 1986. Thus, I find no force in the contention raised by the learned counsel for the appellant. 13. The contentions raised by learned counsel for the appellant with regard to charging of compound interest and pendente lite and future interest at the rate of 12% are also misconceived. This Court in the case of Gurnam Singh v. UCO Bank, 1996(3) PLR 624 has held that advancement of loan for purchase of a tractor is not a loan for agricultural purpose only and in such cases the provisions of Section 34 of the Code are not applicable and the bank is entitled to charge interest to claim compound interest at the rate of interest prescribed in the contract. This controversy has also been set at rest by a Full Bench of the Honble Supreme Court in the case of Central Bank of India v. Ravindra and others, AIR 2001 SC 3095, wherein it has been authoritatively held that the expression "principal sum adjudged" includes the amount of interest, charged on periodical rests, and capitalized with the principal sum actually advanced so as to become a amalgam of principal in such case where it is permissible as per contract between the parties and the principal sum so adjudged shall be treated as principal sum within the meaning of Section 34 CPC on which interest pendente lite and future interest may be awarded by the Court. This judgment has further held that the RBI directions with regard to charging of rate of interest from time to time are binding and it has been further held that charging and capitalization of interest on agricultural loans cannot be permitted in India except on annual or six monthly rests. It is pertinent to mention that in the instant case the bank has charged interest at the rate of 12% per annum with half yearly rests which is in consonance with the law laid down by the Honble Supreme Court of India as aforesaid. It is pertinent to mention that in the instant case the bank has charged interest at the rate of 12% per annum with half yearly rests which is in consonance with the law laid down by the Honble Supreme Court of India as aforesaid. The judgment of the Honble Supreme Court also permits charging of pendente lite and future interest on the rate prescribed in the contract. Even otherwise, the learned counsel for the appellant has not referred to any evidence on record or referred to any judgment to show that the loan advanced on the tractor amounts to agricultural loan. For the reasons record above, there is no merit in this appeal. No substantial question of law arises in the present appeal. Dismissed. Appeal dismissed.