PUNJAB AND SIND BANK vs M/S TRINITY AND ANR on 3 September 2019

FINAL ORDER

This original application has been filed by the applicant bank, on 14.07.1998, through Mr. MP Singh & Mr. SP Singh, Senior Manager & Manager, respectively, under Section 19 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 against the defendants for recovery of a sum of Rs.13,79,204.10 (Rupees Thirteen Lakhs Seventy-Nine Thousand Two Hundred Four and Paisa Ten Only) along with costs, pendentelite and future interest @20.5% with monthly rests from the date of filling of this O.A. till the realization of this O.A.

2. The brief facts of the case are that the defendant no.1 is the limited company engaged in the business of aluminum, aluminum products, PVC Resin and plastics, which is represented through defendant no. 2 & 3 are the principal borrowers of the loan facility, while defendant no.4 to 6 stood as guarantors to the loan facility availed by defendant no. 2 & 3 on behalf of the defendant no.1. At the request of the defendants the applicant bank sanctioned the cash credit facility of Rs.10.00 lacs and LC limit of Rs. 25.00 lacs. In order to avail the aforesaid loan facility, the defendants executed and delivered the certain loaning and security documents, such as demand promissory note, form no. 106, form no. 291, form no.126 etc.

3. The aforesaid loan facilities were granted against the hypothecation of all stocks of aluminum, aluminum products, PVC Resin and plastics and also against the mortgage of the property in favour of the applicant bank namely: “land measuring 1 Bigha, situated on Khasra No. 52/15, in the village of Barwala, Delhi.”

4. It has further been submitted by the applicant bank that after availment of the aforesaid loan facility the defendants did not maintain the financial discipline and inspite of various demands of the applicant bank the defendants failed to regularize the account and in view of the same the account became irregular. Thereafter, the applicant bank issued a legal demand notice dated 19.03.1998 and 02.07.1998, but the defendants failed to regularize the account leaving no option to the applicant bank except to file the present original application against the defendants.

5. It has been submitted that vide order sheet dated 01.02.2017, the defendant no.6 is since deceased has deleted from the array of parties and the applicant bank is not adducing any interest to bring his legal heirs. Hence, the present O.A against the defendant no.6 stand abated vide order dated 01.02.2017.

6. Notice of this O.A. was issued to the defendant no.4, he put appearance through counsels and filed his written statement. Further, notices were also issued to defendant no. 1,2,3, 6 & 7 they put appearance through counsels and filed their joint written statement. Furthermore, notice was also issued to defendant no.5, despite notice they failed to appear before this Tribunal and was accordingly proceeded as exparte on 02.05.2000.

7. In the written statements the defendant no.4 has raised various objections such as the present O.A. has not been filed by the authorized officer, that the applicant bank has obtained the forged signatures of the defendant no.4, the defendant no. 4 did not stand as a guarantor to the said loan facility availed by the rest of the defendants, it is also denied that the said property was in the name of the answering defendant in 1993 as the answering defendant has already sold the said property to Rajeev Nagpal(defendant no.6) for a sum of Rs.25,000/- vide agreement to sell dated 09.04.1992 and had no concern with the said property and that the present O.A is barred by limitation. Accordingly, prayed for the dismissal of O.A against him.

8. In their joint written statement, the defendant no. 1 to 3, 6 & 7 have raised various objections such as that the present O.A is not duly filed by an authorized person, that the applicant bank did not disburse the LC Limit of Rs.25.00 lacs in the accounts of the answering defendants, that the defendant no.6 & 7 never stood as guarantors to the loan facility availed by rest of the defendants, that the statement of account is not as per the RBI Guidelines and that the present O. A is barred by limitation.

9. To prove its case, the applicant bank leads its evidence by filling the affidavit of AW- 1 Mr. MP Singh and Mr. SP Singh, Senior Manager and Manager, respectively, of the applicant bank who has exhibited the documents which includes Power of Attorney which is exhibited as EX AW-1/1 & 2, copy of legal notice through advocates along with postal receipt as EX AW-1/3 to 5, copy of statement of account and other charges as EX AW-1/6.

9. To prove its case, the applicant bank leads its evidence by filling the affidavit of AW- 2, Mr. Amarjeet Singh Chawla, who has exhibited the documents which includes copy of demand promissory note dated 28.09.1993 executed by defendant no. 2 & 3 as Ex. AW 2/1, form no. 106 dated 28.09.1993 executed by defendant no. 2 & 3 as Ex. AW 2/2, form no. 291 dated 28.09.1993 executed by defendant no. 2 & 3 as Ex. AW 2/3, form no. 126 dated 28.09.1993 executed by defendant no. 2 & 3 as Ex. AW 2/4, form no. 122 dated 28.09.1993 executed by defendant no. 2 & 3 as Ex. AW 2/5, letter of continuity executed by defendant no. 2 & 3 as Ex. AW 2/6, hypothecation of goods dated 28.09.1993 executed by defendant no. 2 & 3 as Ex. AW 2/7, deed of guarantee dated 28.09.1993 executed by defendant no. 2 & 3 as Ex. AW 2/8 & 9, copy of deposition of title deeds dated 28.09.1993 executed by defendant no. 2 & 3 as Ex. AW 2/10, form no 84AA dated 28.09.1993 executed by defendant no. 2 & 3 as Ex. AW 2/11 and the Khautauni of property as Ex. AW 2/12.

10. To prove its case, the defendant no.4 leads its evidence by filling the affidavit of RW- 4, Mr. Sunil Girotra, who has exhibited the documents which includes report in original as Ex. RW 4/1, copy of sale deed as Ex. RW 4/2, copy of agreement to sell as Ex. RW 4/3, original letter dated 08.09.1997 as Ex. RW 4/4 and original copy of complaint as Ex. RW 4/5.

11. The defendants have raised the objection that the present O.A. is not filed by the authorized officer, but on perusal of the it is observed that the present O.A. has been filed by Mr. MP Singh and SP Singh, Senior Manager and Manager, of the bank, whose power of attorney executed by the applicant bank in his favour is Ex. AW-1/1 & 2. Therefore, the plea is not maintainable and the same is rejected.

12. In the present matter, on behalf of the applicant bank, Mr. MP Singh has been examined who had stated in his affidavit that the defendant no.1 being the partnership concern and the defendant no.2 & 3 are the partners of the same who were dealing in the business of aluminum products under the name & style of M/s Trinity and obtained the loan facility from the applicant bank i.e., cash credit facility of Rs. 10.00 lacs and also one LC

limit(inland) of Rs. 25.00 lacs. Thereafter, the account has gone irregular, accordingly, the demand notice was made through its counsels on 19.03.1998 & on 02.07.1998, calling upon the defendants to clear their outstanding dues. The said receipts have been duly proved i.e., AW 1/3 to 1/5. Even thereafter, the defendants failed to make the payment, resultantly, the defendants are liable to make the payment of Rs. 13,79,204.10 as on dated due on 10.07.1998 alongwith interest and other charges.

13. Further, one another officer, Mr. Amarjeet Singh Chawla, was also examined, who made a similar statement and corroborated the fact and exhibited the documents. Thus, witness also deposed that the defendant no. 4 to 6 stood as guarantors and also gave their personal guarantees, who duly executed the letter of continuing guarantee dated 28.09.1993. Therefore, all these defendants are jointly and severally liable to pay the abovesaid dues. It is also further stated that the defendant no. 4 deposited the title deeds in original of the property-in- question i.e., land measuring 1 Bigha, situated on Khasra No. 52/15, in the village of Barwala, Delhi, accordingly, the equitably mortgage was thus, created in the favour of the applicant bank as collateral security for the loan advanced. The same has been exhibited as Ex. 2/10 & 2/11 and also exhibited as Ex. AW 2/12.

14. Further, on behalf of the applicant bank, Mr. Devinder Singh Anand was also examined, who stated that the defendant no.1 to 3 have been availing the loan facility from time to time and the same were renewed on the guarantee given by defendant no.7. The defendant no.2-3 on behalf of defendant no.1 executed various loan documents on 19.01.1996 including the demand promissory note, which have been proved on record, but, thereafter, the account has gone irregular. The defendants also proved/exhibited all the relevant documents including demand promissory note dated 19.01.1996 by defendant no. 2 & 3 as Ex. AW 3/1, form no. 106 dated 19.01.1996 by defendant no. 2 & 3 as Ex. AW 3/2, form no. 291 dated 19.01.1996 by defendant no. 2 & 3 as Ex. AW 3/3, form no. 126 dated 19.01.1996 by defendant no. 2 & 3 as Ex. AW 3/4, form no. 122 dated 19.01.1996 by defendant no. 2 & 3 as Ex. AW 3/5, letter of continuity dated 19.01.1996 by defendant no. 2 & 3 as Ex. AW 3/6, hypothecation of goods to secure the demand cash credit dated 19.01.1996 by defendant no. 2 & 3 as Ex. AW 3/7 and deed of

continuing guarantee dated 19.01.1996 by defendant no. 2 & 3 as Ex. AW 3/8.

15. Further, it is also stated that the defendant no. 7 stood as guarantor and executed the continuing guarantee deed dated 19.01.1996 which is Ex. AW 3/8 thereby agreeing to indemnify the applicant bank for all losses, damages, accordingly, all the defendants, alongwith defendant no. 7 are jointly and severally liable. He also deposed that the defendant no.1 to 5 also executed loan documents and equitably mortgage was created with respect to the property-in- question in favour of the applicant bank i.e., 1 Bigha, situated on Khasra No. 52/15, in the village of Barwala, Delhi.

16. On the other hand, on behalf of the defendant no.4, Mr. Ashwani filed his own affidavit in his evidence and stated that he had already sold the property-in-question to Rajiv Nagpal, i.e., defendant no. 6 for a sum of Rs. 25,000/- vide agreement to sell dated 09.04.1992 and other relevant documents have been signed in the presence of witnesses. Further, on behalf of the defendant no. 4, one Brij Mohan one of the attesting witnessing has been examined, who had signed the agreement to sell dated 09.04.1992, wherein it is proved on record that he witnessed the said agreement which was executed between Mr. Sunil Girotra and Mr. Rajiv Nagpal qua the purchase of the property in question for a sum of Rs. 25,000/- and the carbon copy of the same and the same was retained by the defendant no.4 in his presence. Further, on behalf of the defendant no. 4, one another attesting witness, Ashwani Girotra was also examined, who also suffered a similar statement to that of Mr. Brij Mohan. Mr. Sunil Girotra has also filed affidavit in evidence and proved the sale deed dated 23.08.1998 executed between Sunil Girotra & Ms. Vidhyawati w/o Mansa Ram and Mr. Ravinder for a sum of Rs. 15,000/- i.e., RW 4/2. He also proved that he sold the said property-in- question to Rajiv Nagpal by virtue of the agreement to sell for a consideration of Rs. 25,000/- and the said agreement (RW 4/3) was duly attested by Mr. Ashwani and Mr. Brij Mohan. Sunil Girotra further made a statement that he did not execute any documents relating to creation of equitably mortgaging of the property bearing no. 1 Bigha, situated on Khasra No. 52/15, in the village of Barwala, Delhi and stated that he infact sold the property-in-question on 09.04.1992 to Mr. Rajiv Nagpal, i.e., defendant no.6, who dishonestly in-connivance with others played fraud and cheated him by forging his signatures and impersonated himself as Mr. Sunil Girotra before the applicant bank and fraudulently executed the documents forging his signatures, which were never executed by him. Mr. Sunil Girotra also deposed that he got lodged a FIR under Section 420, 463, 465, 467, 471 IPC against the defendant no.1 -2 with the Police Station, Patel Nagar vide complaint dated 08.04.2001 (EX. RW 4/5). He also deposed that he never executed any documents in favour of the applicant bank giving guarantee and equitably mortgaging the property-in-question and whatever has been done, there was active connivance of the defendant no.6 in-collusion with the officials of the bank. Therefore, the defendant no. 4 cannot be held liable.

17. On behalf of the defendant no. 4, the handwriting expert report has been filed, which also corroborates the fact that the loan documents were not signed by him and his signatures have been forged. To rebut the said contention on behalf of the applicant bank, no such evidence has been led except the bald statements made by the bank officials that Mr. Sunil Girotra personally came and he put signatures over the loan documents and executed personal guarantees in their presence, accordingly, he had actually created equitable mortgage with respect to the property-in-question. The statement made by Sh. Sunil Girotra is further even supported from depositions of attesting witnesses Mr. Ashwani and Mr. Brij Mohan, who fully supported the case of the defendant no. 4. The handwriting expert report as well as statement suffered by the defendant no. 4 and attesting witnesses fully corroborated the fact that the property-in- question has already been stand sold by him by virtue of agreement to sell dated 09.04.1992 in the favour of Rajiv Nagpal. This fact is further also stand supported from the FIR Ex. RW 4/5, which also corroborated the fact that the fraud has been committed by all the defendants in collusion with the officials of the applicant bank, creating equitable mortgaged the property-in-question. Apparently, it is proved that but the personal guarantee was not executed by the defendant no. 4 and infact, the fraud was committed by the defendant no. 6, to whom, the property-in-question already been sold by defendant no. 4 by virtue of the agreement to sell dated 09.04.1992. Therefore, once it is proved on record that the defendant no. 4 did not execute any loan documents and personal guarantees, therefore, the defendant no. 4 cannot be held liable for the dues of the applicant bank. However, it is proved on record that the credit facilities were duly availed by defendant no.2 & 3 under the name & style of defendant no.1 and rest of the defendant no. 2 & 3 & 5 to 7 duly executed their personal guarantees. Further, once, it is proved on record that the sale deed with respect to the property-in-question has been deposited though not by the defendant no. 4, but by the defendant no. 6 and it is also proved on record that the defendant no. 4 had executed the agreement to sell in favour of defendant no. 6, then certainly, the property-in-question shall stand equitably mortgaged with the applicant bank as there was clean intention to deposit the title deeds on the part of the defendant no.6, who has entered into agreement to purchase the said property from the defendant no. 4 and to that extent the evidence remained unrebutted, though in fraudulent manner. So far as the property-in-question is concerned, it is proved on record that the title deeds to the respective said property were deposited by the defendant no.6 as he had become the owner of the same by virtue of the agreement to sell dated 19.04.2001 executed between defendant no.4 and him. Though, the legal heirs of the defendant no.6 are not impleaded, but it is also a matter of fact that the defendant no.1 to 3 & 6 & 7 were duly represented by Mr. B.L Anand as well as Mr. R. Sharma, advocate, and they kept on appearing on behalf of them till 06.08.2003, but did not appear on the next date of hearing i.e., 12.09.2003. Therefore, though, it is being stated that the defendant no.6 has also died during the pendency of the suit, but once he was represented by the counsels and after the written statement has been filed, when the case was at the stage of evidence, the defendant no.1 to 3 and 6 & 7 failed to appear in the present matter, then bank cannot be expected to know that the defendant no.6 had died. Even ld. counsel of these defendants also did not prefer to disclose the said fact & names of the legal heirs of the defendant no.6. Further, the applicant is a public bank herein and the bank cannot be expected to know the legal heirs of the deceased, if any such person dies during the pendency of the suit. Therefore, in such like circumstances, under Order 22 Rule 4 comes into play, which is as under: “The Court whenever it thinks fit, may exempt the plaintiff from the necessity of substituting the legal representatives of any such defendant who has failed to file a written statement or who, having filed it, has failed to appear and contest the suit at the hearing; and judgement may, in such case, be pronounced against the said defendant notwithstanding the death of such defendant and shall have the same force and effect as if it has been pronounced before death took place.”

18. In view of the said provisions the judgement can be also pronounced against the said dead person. In such like circumstances, the property-in-question shall remain attached which was stand mortgaged, as it is proved on record that the document were deposited and fraud has been committed by the defendant no.6 with whom agreement to sell was executed by the defendant no.4, and the property-in-question liable towards the dues, though, the defendant no.6 or his legal heirs cannot be held liable personally.

19. In sequel of the abovesaid discussion, this Tribunal is of the affirm view that the applicant bank succeeded in proving its case against the defendant no.1 to 3, 5 to 7. Accordingly, the defendants 1 to 3 and 5 & 7 are also jointly and severally liable to pay the dues of the bank alongwith interest and pendentelite.

ORDER

(i) I allow this OA and direct the defendant no. 1 to 3 & 5 & 7, to pay to the applicant bank, jointly or severally, within 30 days, a sum of Rs.13,79,204.10 (Rupees Thirteen Lakhs Seventy-Nine Thousand Two Hundred Four and Paisa Ten Only) together with cost and future interest @20.5% p.a., from the date of filing of this O.A. till the date of realization; failing which the aforesaid amount shall be recovered from the sale of mortgaged property namely, “land measuring 1 Bigha, situated on Khasra No. 52/15, in the village of Barwala, Delhi.” In case of shortfall, the same shall be recovered from the sale of movable and immovable properties of the defendant no. 1 to 3 & 5 & 7.

(ii) . The recovery certificate be issued forthwith and be sent to the Recovery Office-II, Debts Recovery Tribunal-III, Delhi.

(iii) . Parties are directed to appear before the Recovery Officer-II, DRT-III, Delhi on 10.10.2019.

(iv) . Copies of final order as well as Recovery Certificate be sent to all concerned free of cost.

(DHARMINDER SINGH) PRESIDING OFFICER DRT-III, DELHI (Pronounced in open court) Dated: 03.09.2019 PD