CORPORATION BANK vs SRI. HTRAJDEEP & OTHER on 5 August 2019

1. 1) **Sri H.T.Rajdeep** Aged about 48 years S/o H.K.Thamme Gowda

2. 2) **Kumari Thridhamini** D/o Mr.H.T.Rajdeep Aged about 16 years Being minor rep.by her father & natural guardian-Mr.H.T.Rajdeep Both are r/at: Karegowda Building B.M.Road, **Sakaleshpura** Hassan District-573 134

..

**DEFENDANTS**

**Counsels on record/appeared for:**

**Applicant : Sri Sreekantha D1 & D2 : Sri S.Jagadeesha**

2TA No.1754/2017 in OA 791/2015-DRT-I**FINAL ORDER**

1. The present Application came to be registered on the basis of jurisdictional transfer and renumbered as Transfer Application No.1754/2017 under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 seeking recovery of an amount of Rs.81,23,985/- (Rupees eighty-one lakh twenty-three thousand nine hundred and eighty-five only) from the Defendants with interest and cost.

2. Brief facts of the Applicant Bank are that, the 1^st defendant had approached the applicant bank seeking financial assistance for the purpose of improvement of his agricultural activities in respect of schedule properties. Accordingly, the applicant bank considered his request and sanctioned (i) Agricultural credit facility-I of Rs.9,47,000/- (ii) Agricultural credit facility-II of Rs.9,20,000/- both vide sanctioned letter dated 03.08.2000, (iii) Agricultural credit facility-III of Rs.10,20,000/-vide sanctioned letter dated 03.09.2001 and another (iv) Agricultural credit facility-IV of Rs.13,90,000/- vide sanctioned letter dated 23.07.2005 subject to various terms and conditions of the applicant bank and defendant has executed necessary loan related documents in favour of the applicant bank. It is further submitted that, the credit sanction intimations have been duly acknowledged by the defendant to whom the loans were sanctioned and the defendant for guaranteeing the repayments of the loans availed by him, has executed memorandum of deposit of title deeds in respect of Sy.No.305, 306 and 307 situated at Hebbasale Village, Sakaleshapura Taluk, Hassan District and Sy.No.29/P and 70 of Markahally Village, Hethur Hobli, Sakaleshapura Taluk, Hassan District belongs to the defendant, creating the mortgage in favour of the applicant bank along with his minor daughter Kum.Thridhamini. It is further submitted that the defendant requested to rephasement of the loans to the applicant bank and same were granted. In terms of the sanction, the defendant required to repay the loans along with interest @15.75% for first two loans, @16.25% for third loan and @ 9% for fourth loans. It is further submitted that after availing the loans, they failed to regularize the loan accounts and also failed to pay the installments and did not come forward to repay the balance outstanding. Hence, the present TA. The applicant bank has produced the documents in favour of its case viz., Loan applications, Sanction memorandums, DP notes, Take delivery letters, Terms and condition letter, Amendment agreement, letters of request for rephasing of loan, acknowledgements of debts, sale deed, partition deed, continuity letters and certified copies of account extracts etc.,

3. In response to the summons, defendants 1 and 2 appeared through their counsel and filed written statements. Defendant No.1 in his written statement has contended that the present application filed by the applicant bank is not maintainable either in law or on facts, same is liable to be dismissed in limine. Most of the averments and allegations contained therein are denied. The proceedings initiated and the amount claimed is absolutely false and baseless and interest charged is not in conformity with the guidelines fixed by the RBI in so far as the agricultural loan is concerned. Further the application is bad in law for misjoinder of a minor who is not a party to the loan documents for the 2^nd defendant is neither a borrower nor a guarantor. The property mortgaged is not the absolute property of this defendant, as the same were acquired by inheritance, on which the 2^nd defendant has right of her own, hence the document executed by this defendant 5 TA No.1754/2017 in OA 791/2015-DRT-I

on behalf of his minor daughter is not sustainable in law. Further the interest charged @ 15.75% p.a with quarterly rests is not permissible as the loans sanctioned are for agricultural operation, hence the amount claimed towards principal as on 04.12.2015 and the interest accrued from 01.07.2006 to 03.12.2015 is not correct and the defendant is not liable to pay the same. It is further submitted that, apart from, On Demand Promissory note and all other documents got executed in favour of the applicant bank shows a figure of Rs.15,25,000/- as against the released amount of Rs.9,47,000/- and hence the Applicant bank is not entitled to rely upon such documents which is contrary to the loan released. That on account of non-release of the entire loan sanctioned and documents executed, the defendant was put to great hardship and his agricultural operation was adversely affected. The various rephasements as mentioned by the applicant bank were not done with the request of the defendant and the documents obtained under the alleged rephasing are misleading and On Demand Promissory notes have been obtained without there being any consideration and rate of interest are contrary to one made in the application. It is further submitted that, the entire documents produced by the applicant bank are legally invalid and the same are inadmissible in evidence and the amounts shown in the statements are wrongly calculated and accumulated figures by adding the interest exorbitantly at much higher rates than the one applicable to the agricultural loans. It is further submitted that as per 'Vidarbha scheme' of Government of India, the entire interest charged upto 31.06.2006 is required to be waived and whatever repayment made to that date is required to be adjusted towards the repayment of the principle amount, but the applicant bank has failed to do so. In view of the above facts and circumstances, the reliefs sought for in the application against this defendant are unlawful, unjust and unsustainable and same are devoid of merits. Hence, prays for dismissal of the application.

4. Defendant No.2 in her written statement has contended that the present application filed by the applicant bank as against this defendant is neither maintainable in law nor sustainable upon the facts, hence same is liable to be dismissed in limine. Further, the claim amount of Rs.81,23,985/- with interest and overdue interest compounded quarterly as claimed is not legally recoverable from this defendant and it is not a debt due or payable under the terms and conditions of the term loan agreement, hypothecation agreement, D.P. Notes, acknowledgement of debts and such other documents. The application is bad in law for mis-joinder of a party who is neither a borrower nor a guarantor to the loan documents. This defendant being a minor as on the date of the loan has no contractual obligation or capacity to enter into any contract and none of the documents furnished by the applicant bank bear the signature of this defendant. Any document said to have been executed on behalf of this defendant is not sustainable in law, as this defendant has acquired her right over the properties is not binding on her, hence the applicant bank is not entitled to enforce the charge in respect of the schedule properties. In view of the above facts and circumstances, the reliefs sought for in the application against this defendant are unlawful, unjust and unsustainable and same are devoid of merits. Hence, prays for dismissal of the application.

5. The applicant Bank adduced evidence through the affidavit of AW1 which is marked at Ex.A-1, the list of documents is marked at Ex.A-2 and 66 documents are marked as Ex.A-3 to Ex.A-68.

6. On behalf of the defendants, defendant Nos.1 and 2 have been adduced their evidence as DW.1 and DW2 and got marked at Ex.D1 and D2.

7. On the above background, I have gone through the records and heard the arguments advanced by Ld. Counsels appearing for both sides, and the following points arise for my consideration:

- a) Whether the applicant has made out the case to allow the TA? and

- b) To what relief, the parties are entitled?

8. For the following reasons, I answer the above-referred points in the following manner:

**REASONS**

9. The applicant bank has filed evidence affidavit of its Senior Manager Sri Uthaiah P.A. as AW1 and through him filed list of documents vide Ex.A2 and produced 66 documents marked as Ex.A3 to A68 as proof of its claim against defendants No.1 and 2. The defendants No.1 and 2 have filed their written statement and filed evidence affidavit as DW1 and DW2, raising similar contentions. The main contention raised is that, the claim application filed by the applicant bank is not maintainable either in 9 TA No.1754/2017 in OA 791/2015-DRT-I

law or on facts. The defendant No.1 has raised various contentions such as, the application is bad in law for misjoinder of a minor, who is not a party to the loan documents for the 2^nd defendant is neither a borrower nor a guarantor and the property mortgaged is not the absolute property of this defendant. Further, denial of these defendant No.1 is that, he has not executed any loan agreement, hypothecation agreement, Take Delivery Letters, Terms and Conditions Letter, Amendment agreement, D.P.Notes, Letter of request for rephasing of loans, Sale Deed, Partition Deed, Continuity Letters, acknowledgement of debts and such other documents. Per contra, in order to establish the case of the applicant bank, it mainly relies on the loan documents particularly Ex.A4 which is demand promissory note dated 03/08/2000, wherein the defendant No.1 has agreed to pay on demand a sum of Rs.9,20,000/- with interest @ 15.75% per annum. The said demand promissory note was delivered to the bank by the defendant No.1 as per ExA5 take delivery letter. Besides the above documents, the defendant No.1 has also executed memorandum of agreement thereby admitted the claim and also the payment schedule. Similarly, ExA8 is letter requesting the rephasing of

repayment schedule along with amended agreement as per ExA9. ExA10 is the hypothecation agreement, whereunder, the defendant No.1 has hypothecated crops grown in the land shown in the schedule. ExA11 is the term loan agreement which also discloses the mode of repayment etc. The defendant No.1 has also executed acknowledgement of debt as per ExA12 and demand promissory notes at ExA14 and ExA15 with respective covering letters. The defendant No.1 has also mortgaged the properties by deposit of title deeds at ExA18 by depositing original sale deed marked at ExA19. So availing of loan is clear from these documents and subsequent rephasing of repayment schedule, execution of promissory note, amended agreements, take delivery letters etc. as per ExA21 to ExA33 and repeated rephasing of account and repayment schedule as per subsequent documents produced at ExA36 to ExA51, it is clear that the defendant No.1 has failed to pay the claim amount with interest as agreed. Though the defendant No.1 has denied the borrowing of the loan or execution of the documents, he has failed to prove his contention by cogent evidence before the Tribunal. The defendant No.1 has also raised various other contentions which are not supported by any documents. Further, the defendant No.1 has contended that, as per "Vidarbha Scheme" of Government of India, entire interest charged upto 31/06/2006 is required to be waived and whatever repayment made to that date is required to be adjusted towards the repayment of the principal amount, but in this connection, the defendant No.1 has not produced any documents in support of his claim. In this case, in order to avail the loan from the applicant bank, the defendant No.1 has executed Ex.A4 demand promissory note dated 03/08/2000, wherein the defendant No.1 has agreed to pay on demand a sum of Rs.9,20,000/- with interest @ 15.75% per annum and demand promissory note was delivered to the bank by the defendant No.1 himself as per Ex.A5 take delivery letter and his only signatures are found in the said demand promissory note and take delivery note. The signature of defendant No.2 is not found in the Ex.A4 and A5. Besides the above documents, the defendant No.1 has also executed memorandum of agreement, amended agreement, hypothecation agreement, term loan agreement, acknowledgement of debts, but the defendant No.2 has not signed the above said documents. Further, the defendant No.1 himself has mortgaged the properties by deposit of title deeds at Ex.A18 by depositing the original sale deed marked at ExA19 to the applicant bank while availing the loan. So availing of loan is clear from these documents and subsequent rephasing of repayment schedule, execution of promissory note, amended agreements, take delivery letters etc. as per Ex.A21 to Ex.A33 and repeated rephrasing of account and repayment schedule as per subsequent documents produced at Ex.A36 to A51, it is clear that the defendant No.1 only has borrowed the loans from the applicant bank and he has failed to pay the claim amount with interest as agreed. So, question of defendant No.2 as a necessary party by the applicant bank to this OA is not made out. Applicant bank has also failed to show that the loan has been borrowed for the benefit of estate and the minor defendant. Unless above aspect is established with cogent evidence, the 2^nd defendant cannot be made liable for the suit claim. Hence, OA against defendant No.2 is not maintainable and therefore is liable to be dismissed. While the applicant bank has filed evidence affidavit and produced 66 documents which are marked at Ex.A3 to A68 in support of its claim against defendant No.1, and the defendant No.1 except making general and bald statements, contentions and denials, has failed to produce any documentary proof in support of the contentions raised in the written statements as well as averred in the evidence affidavit, such contentions which are not supported by documentary proof of evidence cannot be accepted as against the evidence affidavit of AW1, list of documents vide Ex.A2 and 66 original documents vide Ex.A3 to A68 filed by the applicant bank in support of its claim. The defendant No.1 has also not rebutted such evidence and therefore the claim of the applicant bank stands proved against defendant No.1 and therefore deserves to be allowed against defendant No.1.

9. I, therefore pass the following:

**ORDER**

The claim of the applicant bank stands allowed against defendant No.1 with interest and costs.

The OA against defendant No.2 stands dismissed.

In the event of failure of defendant No.1 to pay the said OA amount, the applicant bank is at liberty to sell the mortgaged properties described in the schedule- Item Nos.1 to 3 of the main petition in accordance with law as sought by the applicant bank in the OA.

In spite of sale of the mortgaged properties mentioned in the schedule- Item Nos.1 to 3 of the main petition, if the OA amount is not fully realized, then the applicant bank is at liberty to proceed against the persons and other properties of the defendant No.1 as required under law.

Applicant Bank shall file fresh Memo of calculation of OA amount together with interest, costs etc., to be paid by defendant No.1 duly taking into account the amount/s if any paid by the defendant No.1 and/or amount realized by sale of assets, etc., during the intervening period after filing the OA, to enable the office to prepare Recovery Certificate for the amount to be paid by the defendant No.1 to the applicant bank.

Office is directed to issue Recovery Certificate as sought by the applicant bank in the OA and do the needful as required under law forthwith.

(Dictated to the Steno, transcribed by him and after necessary corrections, signed and pronounced by me in the Open Court on this the 5th day of August, 2019)

**K.RAVINDRAN NAIR** **Presiding Officer,** **I/C/DRT-II, Bengaluru**

15TA No.1754/2017 in OA 791/2015-DRT-I**ANNEXURE****Witness Examined for the Applicant :**

AW1. Affidavit of Sri Utthaiah, Senior Manager of the applicant bank.

**List of Documents Exhibited for the Applicant :**

Ex.A-1 : Affidavit of AW-1 Ex A-2 : List of Documents Ex.A-3 to 68 : 66 Documents

**Witness Examined for the Defendants :**

D.W.1. Affidavit of Sri H.T.Rajdeep D.W.2.Affidavit of Kumari Thridhamini H.R.

**List of Documents Exhibited for the Defendants:**

Ex.D1 : Affidavit of DW.1. Ex.D2 : Affidavit of DW2.

**K.RAVINDRAN NAIR** **Presiding Officer,** **I/C/DRT-II, Bengaluru**

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