IN THE COURT OF THE SENIOR CIVIL JUDGE:
KOTHAPETA.
Sri Y. Nagaraja, Senior Civil Judge, Amalapuram (F.A.C.) Senior Civil Judge, Kothapeta
Friday, the 17th day of August, 2018.
O.S.No.55/2016
Between:
State Bank of India, G. Pedapudi branch,
represented by its Branch Manager ...Plaintiff
and
Rani Kalpana, Proprietor M/s Subhodaya Coir
Industry. ..Defendant
This suit is coming on 10082018 for final hearing before me in the presence of Sri K. Rajeev, Advocate for the plaintiff and Sri C.S. Sastry, Advocate for the defendant and having stood over for consideration till this day this court made the following:
J U D G M E N T
1.This is a suit filed by the plaintiffbank to pass a decree for recovery of Rs.4,45,120/ pertaining to the term loan account in favour of the plaintiffbank with a subsequent interest at 14.55% per annum from the date of suit till realization and costs recoverable against the defendant personally and movable and immovable properties of defendant including hypothicated stocks, machinery and work shed etc., to the plaintiffbank and for costs.
2.The case of the plaintiff as per the averments made in the plaint are as follows:
The plaintiff Bank i.e., State Bank of India, a body corporate constituted under the State Bank of India Act, 1955 and having its central office at Madam Cama road, Mumbai, PIN Code 4000 021 and a branch among other places at Ganti Pedapudi village, P. Gannavaram
Mandal. The Branch Manager of State Bank of India is duly authorized to sue and represent on behalf of the plaintiff bank.
The suit filed by the plaintiffBank against defendant for recovery of the amount of Rs.4,45,120/ pertaining to the term loan account in favour of the plaintiff bank with subsequent interest @ 14.55% per annum and costs recoverable from the person and movable and immovable properties of the defendant. The defendant is carrying on coir industry business under the name and style of M/s Subhodaya Coir industry at D.No.563/1, Udumudi village, P. Gannavaram Mandal, East
Godavari District as its sole Proprietrix. The defendant approached the plaintiff Bank and submitted application with a request to sanction loan to the business of defendant under SME Credit card scheme by way of term loan. On her applications, the plaintiff Bank sanctioned a term loan limit of Rs.4,75,000/ under term loan account No.31663183013 to the defendant and cash credit loan limit of Rs.20,000/. The defendant as a borrower executed all necessary documents in favour of Bank. Hence she is liable to pay the suit amount to the plaintiffBank.
The scheme was formulated and approved by Coir Board under rejuvenation modernization and technology upgradation of the Coir industry (REMOT). The Bank has entered into memorandum of understanding with Coir Board for implementation of the scheme. The said application for sanction of loan was forwarded to plaintiffBank. The plaintiff Bank accepted her proposal on submission of necessary documents from coir board and District Industrial centre etc. The plaintiff bank was sanctioned Rs.4,75,000/ + Rs.20,000/ (Total
Rs.4,95,000/) to the defendant industry on 09032011. The defendant also executed the arrangement letter dt.09032011 which enclosed with terms and conditions in favour of the bank. The defendant executed the agreement of loan cum hypothecation deed dt.09032011 executed by defendant in favour of plaintiff Bank. The defendant executed demand promissory note dt.09032011 for an amount of Rs.4,95,000/ in favour of plaintiff Bank.
As per the terms and conditions of the term loan, the term loan to be availed within the period of three months from the date of sanction and the term loan is to be repaid in 60 monthly instalments of
Rs.7,916/ each + interest with the first instalment commencing on 09092011 and last instalment falling due on 09082016. The agreed rate of interest at 0.50% above State Bank Advance Rate (SBAR) interest at 11.75% p.a., rising or falling therewith on daily products with monthly rests at effective rate of 12.25% at floating rate as per R.B.I., guidelines.
The defendant also executed the necessary documents in connection with the loan transaction. All the documents were duly executed by the defendant with the knowledge of the contents of the same having been explained to defendant. The defendant availed the term loan facilities from the plaintiff Bank under loan account No.31663183013. The defendant availed above said loan amounts and failed to repay the same as agreed upon. She operated the accounts and received the loan amount and had benefit thereon.
The defendant is very irregular in repayment the loan. She executed the revival letter dt.19022014 and acknowledged her liability in favour of bank. After repeated demands and letters, the plaintiff bank got issued a legal notice dt.23052016 to the defendant through panel
Advocate with a demand to repay the loan amount. The defendant received the notice but did not repay the loan and did not issue reply notice. The defendant availed loan facilities from plaintiff bank and developed her assets and intentionally avoiding to repay the term loan due amount. The machinery in the premises of the defendant's coir unit is under hypothecation with the plaintiff bank. The plaintiff bank purchased the said machinery when the defendant requested to grant loan for running coir unit. The machinery was purchased by the plaintiff bank through their D.Ds., issued in favour of the sellers. The plaintiff bank have got 1st charge over the machinery to recover the due under the loan accounts. Moreover, the defendant executed the agreement cum hypothecation deed dt.09032011 hypothecating all the machinery, movables, other material of the coir unit with the plaintiff bank. The defendant is a defaulter in payment of the term loan amount. As per the certified extract of the term loan account No.31663183013 maintained by the plaintiff bank in its regular course of business a sum of
Rs.4,45,120/ is found due to the plaintiff bank. The true copy of term loan account No.31663183013 duly certified by the Branch Manager as per Banker Books of Evidence Act. As seen from the transactions reflected an amount of Rs.4,45,120/ is due and payable to the plaintiff
Bank as on 15082016 when the interest applied. The term loan account of defendant become irregular and slipped to classify as an
N.P.A. The plaintiff bank is legally entitled to recover the ultimate balance i.e., outstanding due and unrealized interest of the loan facilities which are stated in the statement of account duly certified as required under Sec.4 Bankers Book Evidence Act. It is stated that the plaintiff bank has intimated all its borrower(s) defendant of changing the rate of interest whenever the changes in SBAR/PLR are displayed/notified at/by the branch published in news papers/made through entry of interest changed in any statement of account to the variance, in such rate of interest, as per the directions that may be issued by the Reserve Bank of
India from time to time or variance in bank advance/base rate.
The plaintiff Bank has the right to recover the pendent lite and future interest at the contractual rates as applicable under the loan documents and as per the directions of Reserve Bank of India on the debts shown as recoverable from the defendant and has also right to recover the contingent charges and other costs. The plaintiff Bank further submits that in view of the introduction of Sec.21A in the
Banking Regulation Act, the defendant is precluded from agitating against the rate of interest chargeable by the plaintiff Bank, the defendant is bound to pay the loan amount with interest, charge and also increased rate of interest and stipulated by the plaintiff bank. Thus the plaintiff bank is entitled to recover the suit amount and costs along with subsequent interest at 14.55% p.a., with monthly rests on the suit amount from the date of suit till its realization from the person and properties of defendant. The defendant is not responding when the plaintiff bank is demanding to pay the due amounts. Demands and legal notice turned futile. As there are valid partpayments and the defendant availed the term loan facility and the last instalment falling due on 09082016 the suit claim is not barred by limitation. Hence the suit.
3.The defendant filed her written statement by denying the allegations made in the plaint. Interalia contented that the suit is not maintainable either under law or on facts. It is submitted that the allegations made in the plaint are absolutely false and untenable. The plaintiff has not given credit to the payments made by the defendant and thereby the calculation made by the plaintiff is false and erroneous. The rate of interest claimed by the plaintiff is usurious and not according to the rules and conditions of the loan agreement. The allegations made in the plaint and the documents relied by the plaintiff are quite contrary and thereby it shows the conduct of the plaintiff bank. As can be seen from the plaint it shows that the plaintiff is claiming interest at 14.55% instead of agreed rate of interest. The plaint does not contain the full particulars of the amount taken and the amount paid by the defendant and the plaint is also silent on which amount they have calculated the interest and also it is not clear how the plaintiff is arrived at a suit claim.
There are no particulars in the above aspect and simply filed the suit without any calculation or valuation para in the plaint which is a must in the suits of the present nature.
It is submitted that the loan is covered under CGTMSE which is meant for development and for encouragement of small scale industries by the Government of India. As per the said scheme if any outstanding is there from the industry that will be reimbursed under the said scheme to a tune of 75% of the outstanding and the remaining 25% of the outstanding is to be recovered from the available property which is hypothecated to the plaintiff. The defendant industry has hypothecated its stock and machinery to the plaintiff bank which is available for realization of the amount if any due by the defendant. The said CGTMSE is implemented by the Government of India to see that at least 75% of the amount due by sick industry is recovered to the banks from the
Government itself. For the purpose of the said scheme the banks will collect the premium for insurance which will be sufficient to meet the outstanding of sick industry. Accordingly, the plaintiff has also collected premium from the defendant. It is submitted right from the beginning the industry was badly affected due to lack of power supply in combined
Andhra Pradesh till 2014 which resulted in heavy loss to the industry.
However, the defendant with a fond of hope she had run the industry but she could not get any development in the business due to lack of proper market and also due to lack of labour. For all these reasons the industry has became sick and it is stopped since fag end of 2014 and now at present the industry is in idle condition. Though, the industry is closed the machinery and other movables are all there in the industry and they are available in its premises. The plaintiff cannot seek for realization of the suit amount recoverable against the defendant personally, movable and immovable properties of defendant including hypothecated stock. He can only seek for a decree against the hypothecated stock but nothing else. There is no cause of action for the suit and the alleged cause of action is not true and correct. Therefore, the defendant prays to dismiss the suit with costs.
4.Basing on the above pleadings the following issues are framed for trial:
ISSUES: 1.Whether the interest claimed by plaintiff is usurious?
2.Whether plaintiff is entitled for decree against defendant personally or against the properties of defendants?
3.Whether the plaintiff is entitled for decree as prayed for?
4.To what relief?
5.During the course of trial, on behalf of plaintiff bank the present Bank
Manager by name Sri Ch. Narahari Sekhar examined as P.W.1 and got marked Exs.A.1 to A.9. On behalf of defendant, her husband by name
Rani Venkata Siva Rama Krishna examined as D.W.1 and no documents marked.
6.Heard both sides. Perused the material on record.
7.Issue Nos.1 and 2:
Since issue Nos.1 and 2 are interconnected to each other and in order to avoid repetition of pleadings, evidence and discussion, both issues are discussed commonly.
There is no dispute from both sides that the defendant is running coir industry business at Udimudi village, P. Gannavaram Mandal, East
Godavari District. She submitted an application to sanction loan to her business under S.M.E., credit card scheme. Accordingly, plaintiff bank sanctioned the loan to the defendant.
8.The case of the plaintiff’s bank is that on 09032011 the plaintiff bank sanctioned Rs.4,95,000/ to the defendant in order to carry on coir industry business under the name and style of M/s Subhodaya Coir
Industry at Udimudi village, P. Gannavaram Mandal, East Godavari
District. In evidence thereto, the defendant executed the arrangement letter dt.09032011. The defendant also executed an agreement of loan cum hypothecation deed dt.09032011, demand promissory note dt.09032011 for an amount of Rs.4,95,000/. As per the terms and conditions of the loan, the term loan to be availed within 3 months from the date of sanction and it has to be repaid in 60 monthly instalments at
Rs.7,916/ each plus interest with installation commencing from 09092011 and last instalment falling on 09082016. The rate of interest was at 12.25% p.a., at floating rate as per the Reserve Bank of
India guidelines. As per the above terms, the defendant availed term loan from the plaintiff bank under loan account No.31663183013.
Subsequently, the defendant was very irregular in payment of the loan.
On 19022014 defendant executed revival letter and acknowledged her liability in favour of plaintiff bank. After repeated demands and letters, the plaintiff bank got issued legal notice dt.23052016 and the same was received by defendant but did not repay the loan and did not issue the reply notice.
The machinery in the premises of defendant coir union is under hypothecation with the plaintiff bank. The said machinery was purchased by plaintiff bank when the defendant requested to grant loan for running coir union. The plaintiff bank got 1st charge over the machinery to recover the loan amount. Further, defendant executed agreement cum hypothecation deed dt.09032011 by hypothecating all the machinery, movables other material coir union with the plaintiff. As per the statement of loan account the defendant fell due of Rs.4,45,120/ as on 15082016. The term loan account of defendant became irregular and slipped to N.P.A. Hence, the plaintiff is legally entitled to recover the ultimate balance i.e., outstanding due and the unrealized interest of the loan.
In support of the contention of plaintiff bank’s case the present Bank
Manager by name Sri Ch. Narahari Sekhar examined as P.W.1 and got marked Exs.A.1 to A.9.
On the other hand, defendant denied the entire case of plaintiff and contended that the plaintiff bank has not given credit to the payments made by the defendant and the cancellation made by the plaintiff bank is false and erroneous. The rate of interest claimed by the plaintiff is usurious and not according to the rules and conditions of the loan agreement. The plaintiff bank claiming interest at 14.55% in spite of agreed rate of interest.
9.It is further submitted on behalf of defendant that loan is covered under C.G.T.M.S.C., which is meant for development and for encouragement of small scale industries by Government of India. As per the said scheme if any outstanding is there from the industry that will be recovered under the said scheme to a tune of 75% out of the outstanding amount and the remaining 25% of the outstanding amount has to be recovered from the available property hypothecated. As per the said scheme at least 75% of the amount due by the sick industry is to be recovered by the bank from the Government itself. For the purpose of said scheme, the banks will collect premium for insurance from time to time which will be sufficient to meet the outstanding dues of sick industry. It is further submitted that from the beginning the industry was badly affected due to power supply in combined state of A.P., till 2014, which resulted in heavy loss to the industry. However, the defendant with a fond of hope run the industry but she could not get any development due to lack of proper market and lack of labour. For all these reasons, the industry became sick and stopped still fag end of 2014. At present, the industry is in idle condition though it was closed
The machinery and other movables are there in the premises. The plaintiff bank cannot seek for realization of amount against the defendant personally, movable, and immovable properties of the defendant including hypothecated stock. The plaintiff bank can only seek for decree against the hypothecated stock but nothing else.
In support of the said contention, husband of defendant is examined as D.W.1 in his evidence he categorically deposed on par with the pleadings mentioned in the written statement and no exhibits marked.
Thus from the contentions of both sides, there is no dispute that the defendant carrying on coin industry business under the name and style of Subrahmanya crop industry at Udimudi village, P. Gannavaram mandal, East Godavari District. There is no dispute about the availing loan of Rs.4,95,000/ from the plaintiff bank by executing Exs.A.1 to A.5.
Further, there is no dispute about the execution of revival letter dt.09032011 under Ex.A.6. Further, there is no dispute with regard to legal notice under Ex.A.7. As seen from the averments of written statement of defendant it is clear that the defendant did not pay the loan amount to the plaintiff. But it is only the contention that the plaintiff bank has to recover 75% of the defaulted loan amount from the
Government under C.G.T.M.S.E., scheme and to recover 25% of defaulted loan amount plaintiff bank has to proceed against hypothecated property of the defendant. Further, it is the contention of the defendant that the rate of interest claimed by plaintiff bank is usurious.
10.Coming to the evidence of P.W.1 who is the present Manager of plaintiff bank with the best on par with pleadings mentioned in the plaint and got marked Exs.A.1 to A.9. In the crossexamination of P.W.1 with regard to the rate of interest it was suggested that the interest claimed by the plaintiff bank is usurious and interest calculated wrongly. On perusal of plaint averments, the rate of interest, subsequent interest claimed at 14.55%. But as per the statement of account file under
Ex.A.9 the rate of interest was claimed at 12.70%. As per contents of
Ex.A.2 appraisal note for S.M.E. credit card the rate of interest was at 11.75%. As per Ex.A.3 letter of arrangement with regard to the rate of interest kept blank. As per Ex.A.5 demand promissory note dt.0903 2011 the rate of interest was mentioned at 13.25% with monthly rests.
Thus, from the recitals of plaint and statement of account filed under
Ex.A.9 it is clear that the plaintiff bank claimed the interest at 12.70%.
As per the contention of defendant that the plaintiff bank claimed interest at 14.55% in stead of agreed rate of interest. As per Ex.A.5 demand promissory note, the rate of interest agreed was 13.25% with monthly rests. As per Ex.A.9 statement of account, the rate of interest claimed was 12.70% which clearly establishes that the contention of the defendant that the plaintiff bank claimed the interest at 14.55% is not correct. Further, the rate of interest claimed by the plaintiff bank is agreeing to the terms agreed by the parties and also as per the norms of respondent. In view of the same, this court hold that the rate of interest claimed by the bank is not usurious. Coming to the further contention of defendant that the loan is covered by C.G.T.M.S.C., scheme if any outstanding amount is due, then the Government of India will reimburse 75% of the same and remaining of outstanding will be recovered from the hypothecated property of the plaintiff. There is no dispute that the loan was sanctioned to the plaintiff under rejuvenation, modernization and technology upgradation of the coir industry scheme of the Coir Board, which reveals the same as per Ex.A.1 application of the defendant in availing term loan. As per the terms and conditions of hypothecation agreement and letter of arrangement if the defendant abide by the terms then she is entitled for the benefit under the scheme. The defendant at no point of time, intimated to the plaintiff bank that her industry fell sick. The D.W.1 in his crossexamination made the following admissions: “It is true my wife executed Exs.A.1 to A.8 documents and obtained loan from S.B.I., G. Pedapudi. Our contention is the bank should be collected the suit amount from the Government under C.G.T.M.S.E. It is true my wife is liable to pay the suit amount. We did not submitted any representations either to the bank or Government that amount should be recovered from
Government under C.G.T.M.S.E. scheme. As per our contention, the bank should be recover debt from Government under
C.G.T.M.S.E., scheme.Either myself or my wife never submitted any representation either to the bank or to the Government that the suit debt should be recovered by the Government under
C.G.T.M.S.E.”
D.W.1 further admitted as follows: “There is no stock available in our industry. We have not submitted any representation to the Bank officials about quantum of stock in our industry and also we never requested the bank authorities to auction our stock.”
D.W.1 further admitted as follows: “Our industry was running successfully till 2014.
Subsequently, our industry stopped. We never submitted any letter to the bank officials due to lack of the power supply our industry was sick. It is true subsidy amount of Rs.2,00,000/ credited to my wife account on 30052013. The same fact was mentioned in Ex.A.9. It is true the contents in Ex.A.9 are true. It is true our machinery is completely rusted and it is unfit for sale.”
Thus from the admissions made by D.W.1 it is clear that the suit transaction took place between plaintiff bank and defendant and defendant is liable to pay the suit amount. Further, in order to get benefit under C.G.T.M.S.E., scheme either the defendant or her husband i.e., D.W.1 did not make any representation to the bank or to the Government. As per the contention of the plaintiff bank due to the default committed by the defendant the loan availed by the defendant slipped to N.P.A. Hence, she is not entitled for any benefit under the said scheme. Further, defendant did not act in accordance with the terms and conditions under the said scheme. In view of the same, the contention of the defendant that 75% of the outstanding amount to be recovered from the
Government by the plaintiff bank cannot be accepted and the plaintiff bank is entitled for decree against the defendant personally and against the properties. Accordingly, issue Nos.1 and 2 are answered in favour of the plaintiff bank and against the defendant.
11.Issue No.3:
In view of my finding on issue Nos.1 and 2 the suit is to be decreed as prayed for.
12.In the result, the suit is decreed with costs by directing the defendant to pay Rs.4,45,12000 Ps., to the plaintiff bank with subsequent interest at 12.70% per annum from the date of the suit till the date of realization on the suit amount of
Rs.4,45,12000 Ps.
Dictated to Stenographer (Gr.I), transcribed by him, corrected and
pronounced by me in open court this the 17th day of August, 2018.
Senior Civil Judge,
Amalapuram. (F.A.C.) Senior Civil Judge, Kothapeta.
Appendix of evidence
Witnesses examined
For Plaintiff:
P.W.1: Ch. Narahari Sekhar
For Defendant:
D.W.1: Rani Venkata Siva Rama Krishna
For Plaintiff:
Ex.A.1: Application for small business credit card executed by defendant in favour of State Bank of India, dt.01122008
Ex.A.2: Appraisal note for SME credit card executed by the defendant in favour of State Bank of India, dt.09032011
Ex.A.3: Letter of arrangement executed by defendant in favour of plaintiff bank dt.09032011
Ex.A.4: Agreement of loan cum hypothecation executed by defendant in favour of plaintiff bank dt.09032011
Ex.A.5: Demand promissory note executed by the defendant in favour of plaintiff bank dt.09032011
Ex.A.6: Revival letter acknowledged executed by the defendant in favour of plaintiff bank dt.19022014
Ex.A.7: Legal notice dt.23052016 issued by the plaintiff bank to the defendant through Panel Advocate
Ex.A.8: Acknowledgment card of the defendant dt.27052016
Ex.A.9: Certified copy of the term loan account maintained by the defendant from 09032011 to 15082016
For Defendant:
Nil
Senior Civil Judge,
Amalapuram, (F.A.C.) Senior Civil Judge, Kothapeta.
IN THE COURT OF THE SENIOR CIVIL JUDGE:
KOTHAPETA.
Sri Y. Nagaraja, Senior Civil Judge, Amalapuram (F.A.C.) Senior Civil Judge, Kothapeta Friday, the 17th day of August, 2018.
O.S.No.55/2016
Between:
State Bank of India, represented by its Branch Manager, G. Pedapudi at present Sri Kanuri Vajra Ravi Kishore, S/o Venkatarao, aged 33 years, Hindu, Branch Manager, G. Pedapudi village,
P. Gannavaram Mandal. ...Plaintiff
and
Rani Kalpana, W/o Venkata Siva Ramakrishna, Proprietor M/s Subhodaya Coir Industry, aged 48 years, Hindu, Business, D.No.563/1, Udumudi village, P. Gannavaram Mandal,
J.C.J. Kothapeta. ...Defendant
Date of presentation: 19082016 Date of filing: 15092016
This is a suit filed by the plaintiffbank to pass a decree for recovery of Rs.4,45,120/ pertaining to the term loan account in favour of the plaintiffbank with a subsequent interest at 14.55% per annum from the date of suit till realization and costs recoverable against the defendant personally and movable and immovable properties of defendant including hypothicated stocks, machinery and work shed etc., to the plaintiffbank and for costs.
Cause of action for the suit arose on 01122008 when the defendant submitted application for small business credit card, on 09032011 when the defendant availed loan facilities from the plaintiff bank and executed the agreement cum hypothecation deed, on 09032011 when the defendant executed the arrangement letter with terms and conditions, when the defendant executed demand promissory note dt.09032011 for an amount of Rs.4,95,000/ in favour of plaintiff Bank, on all subsequent days when the defendant failed to repay the term loan amount and after repeated demands, when the defendant executed revival letter dt.19022014 acknowledged her liability in favour of bank, on 23052016 when the plaintiff bank got issued legal notice to the defendant, when the defendant received the legal notice and neither repaid nor replied the term loan due amount to the plaintiff bank, on all subsequent days when the defendant failed to pay the amount and where the plaintiff bank is situated at Ganti Pedapudi village, P. Gannavaram Mandal, East Godavari District where the defendant is running coir industry at Udumudi village, P. Gannavaram Mandal and residing at Udumudi village, P. Gannavaram mandal within the jurisdiction of the court.
Value of the suit:
The outstanding term loan account due amount with interest as on 15082016 after deduction of partpayments is Rs.4,45,12000
A court fee of Rs.6,926/ is paid thereon under Sch.I, Art.1(c) of A.P.C.F. and S.V. Act.
This suit is coming on 10082018 for final hearing before me in the presence of Sri K. Rajeev, Advocate for the plaintiff and Sri C.S. Sastry, Advocate for the defendant and having stood over for consideration till this day, THIS COURT DOTH ORDER AND:
DECREE
i) That the defendant do pay to the plaintiff a sum of Rs.4,45,12000 Ps., to the plaintiff bank with subsequent interest at 12.70% per annum from the date of the suit till the date of realization on the suit amount of Rs.4,45,12000 Ps.
ii) That the defendant do also pay to the plaintiff a sum of Rs.21,98100 Ps., towards costs of the suit.
Given under my hand and seal of the court this the 17th day of August, 2018.
Senior Civil Judge,
Amalapuram, (F.A.C.) Senior Civil Judge, Kothapeta.
Memorandum of costs
For Plaintiff: For Defendant: 1.Stamp on vakalat 200 1.Stamp on vakalat 200 2.Stamp on plaint 6,92600 2.Advocate’s fee 15,05000 3.Advocate’s fee 15,05300 3.Writing charges 5000 Costs allowed: 21,98100 Costs certified: 15,102–00
Senior Civil Judge,
Amalapuram, (F.A.C.) Senior Civil Judge, Kothapeta.