Friday, 12 August 2016

When a person can not take defence that he had signed on blank forms while taking loan from bank?

 In para 13 of the cross-examination, defendant No. 3 has also given number of admissions, which read as under:
It is true that I signed all the loan documents alongwith defendant nos. 2 and 4. It is true that all loan documents were signed by me as a Guarantor and Director of the company. I did not make any complaint to the bank and/or its higher official for having obtained my signatures on the blank forms including form of guarantee letter.
(emphasis supplied) 
40. Perusal of the aforesaid evidence would unequivocally go to show that defendant No. 3 has admitted to have signed all loan documents alongwith defendant Nos. 2 and 4. He has also admitted that loan documents were signed by him as guarantor as also in the capacity of Director of the defendant No. 1-Company. He has also admitted that he did not make any complaint to the bank or its higher authority for obtaining his signatures on the blank forms including form of guarantee letter. It is, thus, clear that execution of the loan documents has been admitted and the execution of the agreement of guarantee has also been admitted. The defendant No. 3 has failed to prove that the said documents were blank documents. Had it been so, he would not have remained silent. He is an educated person. He would have definitely complained to the higher authorities of the bank against the Branch Manager for having obtained blank loan documents from him. Apart from his own bare statement, there is no other evidence on record. Defendant No. 3 was running Industrial Unit. He has seen ups and downs of the life. Such a person is not expected to sign blank documents. Apart from this assuming to be so, once having acted upon those documents having taken advantage of those documents; having taken advantage of the money borrowed from the bank and having used it for years together for its Industrial unit; the defendant No. 3 cannot be allowed to take such somersault and contend that the documents were blank though he has borrowed money, though he had taken guarantee.
Bombay High Court
Central Bank Of India, A Body ... vs The Sion Bakers And Confectioners ... on 11 April, 2008
Equivalent citations: 2008 (110) Bom L R 1363

Bench: V Daga


1. This is a suit filed by the plaintiff - Bank for recovery of its outstanding dues, due and recoverable from the defendants with interest thereon.
FACTUAL MATRIX:
2. Factual matrix borne out from the plaint reveals that the the plaintiff is a nationalised Bank; whereas the first defendant is a Company incorporated Page 1366 under the Companies Act; and the third defendant was a Promoter of the said Company.
3. The third defendant, as a Promoter of the first defendant, made application dated 18.9.1976 to borrow following financial facilities:
(i) The term loan Rs.1,89,000/- with certain other cash credit facilities for the business of defendant No. 1-Company.
(ii) Term loan limit in the sum of Rs. 1,36,000/- against hypothecation of machinery to be purchased costing Rs.1,70,000/- and furniture valued at Rs.10,000/-.
(iii) The demand loan in the sum of loan Rs. 53,000/- against pledge of FDRs and MIDRs worth Rs. 78,000/- standing in the names of the promoter and his family members.
(iv) Clean Overdraft Limit in the sum of Rs.30,000/-to meet advertising expenditure.
(v) Cash Credit Limit in the sum of Rs.20,000/- against hypothecation of raw material.
4. The present suit relates to the outstanding dues, due and recoverable in terms of Term Loan and Cash Credit (Hypothecation) Account.
5. The plaint allegations reveal that defendant No. 1 in respect of the aforesaid Cash Credit (Hypothecation) and the term Loan Accounts in the sum of Rs. 20,000/- and Rs. 1,36,000/- respectively executed loan documents, the details of which are given in the plaint.
6. The plaint allegations further reveal that the Cash Credit Hypothecation Limit was enhanced from Rs. 20,000/- to Rs. 50,000/- for which defendant No. 1 had executed additional loan documents on 27.6.1977, the details of which are also to be found in para 8 of the plaint.
7. The plaint allegations further reveal that in respect of the aforesaid financial facilities granted to defendant No. 1, defendant Nos. 2 to 4 stood guarantors (for defendant No. 1) by executing joint letter of guarantee dated 27.6.1977, wherein they have guaranteed the repayments of the loan amounts borrowed by the defendant No. 1 to the extent of Rs. 3,02,000/-.
8. The accounts of the first defendant were found to be irregular. Number of defaults committed by defendant No. 1 were noticed by the Bank. As such, from time to time, defendant No. 1 was put on notice to bring their account within the permissible limits.
9. The plaint allegations further reveal that by a letter of acknowledgement dated 17.10.1979, defendant No. 1 confirmed and acknowledged its liability in respect of Term Loan Account as on 30th September, 1979 in the sum of Rs.85,404.90 towards principal liability and Rs.2,454.21 towards interest liability. By another letter dated 17.10.1979 defendant No. 1 confirmed and acknowledged its liability in Cash Credit Hypothecation Account due as on 30.9.1979 in the sum of Rs. 54,262.52 ps. towards principal sum and Rs. 1,944.82 ps. towards interest liability.
10. According to the plaintiff, defendant No. 1 negotiated for sale of their factory with one M/s. Bhartiya Bakery Workers Association Ltd. The Page 1367 plaintiffs were accordingly informed that prospective buyers will deposit consideration amount directly with the plaintiffs. However, as promised no amount was paid to the bank by either of them. As such, demand notices were issued to all the defendants calling upon them to pay the outstanding dues of the plaintiffs. That is how the present suit is filed against the defendants for recovery of the outstanding dues of the bank recoverable from the defendants.
11. On being served with the writ of summons the defendant Nos. 1 and 4 submitted to the decree on admission in terms of prayer Clauses (a),(b) and (c) of the plaint and applied for payment of decree in instalments. The decree, against the defendant Nos.1 and 4, on admission, in terms of prayer Clauses (a), (b) and (c) of the plaint, was passed on 11.9.1981.
12. Defendant No. 3 has filed a written statement and denied liability of the bank. Defendant No. 2 did not file any written statement although he was served in the year 1981. Claim of the plaintiff against defendant No. 2 remained unchallenged. The defendant No. 2, thus, suffered ex parte decree. The suit was also decreed against him in terms of prayer Clauses (a), (b), (c), (d) and (h) by this Court vide order dated 28.1.1993.
13. The defendant No. 3 was the only contesting defendant having filed his written statement, remained in the ring, as such considering respective pleadings of the plaintiff and defendant No. 3, issues (as against defendant No. 3) were framed, on 20.1.1993 which read as under:
ISSUES:
(1) Whether the suit has properly filed and the plaint has been declared by the authorized officer of the plaintiffs? ...( Yes. ) (2) Whether defendant No. 3 proves that his signature was obtained on the blank form and letter of guarantee as alleged in para 20 of his written statement? ...(No. ) (3) Whether the plaintiffs prove that the defendants are jointly and severally liable to pay a sum of Rs. 77,071.70 and Rs. 41,202.00 as claimed in the suit? ...(Yes, as per order) (4) Whether the plaintiffs are entitled to the decree as prayed? ...(Yes. as per order) (5) Other reliefs? ...(As per order) THE EVIDENCE:
14. With the aforesaid factual backdrop and the issues drawn and settled, the parties were permitted to lead their respective evidence. The suit was posted to 17.2.1993 for recording evidence and thereafter it was adjourned from time to time.
15. The plaintiff, in the meanwhile, took out chamber summons to lead secondary evidence contending that the original documents are not available. The said chamber summons No. 447 of 2006 was heard. The said chamber summons was opposed by defendant No. 3 contending that the documents annexed with are typed copies of originals. The photo copies of such typed copies of the original documents would not amount to secondary evidence. Considering rival contentions and dispute between Page 1368 parties to the suit, the learned Single Judge (Smt.Mhatre, J.) vide her order dated 20.7.1976 allowed the plaintiff bank to lead secondary evidence in respect of all documents except the letter of guarantee alleged to have executed by defendant No. 3 as guarantor for defendant No. 1.
16. After the aforesaid order dated 20.7.2006, the matter was adjourned from time to time for recording evidence. During this period one more order dated 3.9.2007 came to be passed,( Shri Khanwilkar,J); wherein the directions were issued to the plaintiff to disclose on affidavit about the steps taken regarding execution of the decree passed against the defendant Nos. 1, 2 and 4. Thereafter, from time to time, plaintiff-bank was granted time to comply with the order dated 3.9.2007, in compliance of which the plaintiff-bank has filed an affidavit dated 3.12.2007.
17. The plaintiff-bank has filed an affidavit of evidence in lieu of examination-in-chief duly sworn by one Mr.Arun Kamthekar. He was produced for cross-examinatio. He was cross-examined by Advocate appearing for defendant No. 3. The defendant No. 3 has examined himself; he was cross-examined by plaintiff-bank. That is how, rival parties brought their respective evidence on record.
18. The plaintiff-bank's witness has deposed on oath that suit was decreed against defendant Nos.1 and 4 on 11.9.1981 in terms of prayer Clauses (a), (b) and (c) of the plaint and the Court Receiver appointed on 7.7.1981 was discharged without passing accounts. He further deposed that the suit against defendant No. 2 was also decreed on 29.1.1983 since no written statement was filed by him. He has further deposed that in view of the decree against some of the defendants, plaintiff-bank has recovered total sum of Rs.69,000/- from defendant Nos. 1 and 4 since they have paid this amount in various instalments on various dates till April, 1983 and further deposed that defendant No. 1-Company went in liquidation on 17.10.1983, as such defendant No. 1 Company as on date does not possess any property. The plaintiff-bank, therefore, could not recover their balance decretal dues amounting to Rs.49,273.90 (i.e. suit claim Rs. 1,18.273-90 minus repayment Rs. 69,000 =Rs 49,273.90).
19. The plaintiff's witness has further deposed that defendant No. 4 expired during the pendency of the suit. Consequently, no further recovery could be made from him. The said witness has further deposed that whereabouts of defendant No. 2 are not known. He has further deposed that by an order dated 7.7.1981 the Court Receiver had taken inventory of furniture and fixtures lying in the bakery on 30.7.1981 since business was being run. The Court Receiver, thus, did not take possession and ultimately he was discharged on 11.9.1981 since he could not receover anything for want of tangible assets.
20. The plaintiff's witness has also deposed that various loan documents were executed by defendant No. 1 and it's guarantors including defendant No. 3 to secure term loan as well as Cash Credit (Hypothecation) Account. The said witness has also deposed that on or about 11.9.1981 wife of defendant No. 3 with her son had written a letter to the plaintiff-bank requesting it to deduct loan amount given to defendant No. 1 from the Page 1369 matured M.I.D.R. and R.D.S. which were pledged by them with the plaintiff-bank as a security for the loan advanced to the defendant No. 1. Accordingly, due adjustments were made by the plaintiff-bank.
21. At this juncture, I may place it on record that not a single loan document was proved by the plaintiff-bank through its witness in accordance with the provisions of the Evidence Act.
22. With the aforesaid evidence on record, plaintiff's witness was cross-examined by the Advocate for defendant No. 3.
23. The defendant No. 3 entered the witness box. In examination-in-chief, he deposed that loan documents were defective. That the figures of loan amount were not mentioned in the letter of guarantee and the agreement of hypothecation. That the bank had not put its seal and that it was not signed by the branch manager of the bank, as such loan documents are not enforceable at law.
24. He has deposed that he had visited plaintiff-bank number of times and seen the original Ledger maintained by bank in the month of October, 2007; wherein the accounts were not properly maintained and that the term loan account was showing credit balance of Rs.600-23. The said witness has admitted that so far as the inspection of ledger showing debit and credit balance referred by him have not been pleaded in the written statement since it was a recent development. He has also admitted that he did not apply for amendment to the written statement. He has further deposed that he has recorded this fact by writing letter written to the bank but could not produce it in the suit. Learned Counsel appearing for the defendant tried to produce this letter during the course of examination-in-chief. For want Leave to produce, he was not allowed to produce it. Even otherwise there were no pleadings in support of the contention sought to be proved by this letter. Any evidence without pleading is inadmissible. The Apex Court in Ram Sarup Gupta (dead) by L.Rs. v. Bishun Narain Inter College and Ors. observed as under:
It is well settled that in the absence of pleading, evidence, if any, produced by the parties cannot be considered. It is also equally settled that no party should be permitted to travel beyond its pleading and that all necessary and material facts should be pleaded by the party in support of the case set up by it. The object and purpose of pleading is to enable the advisary party to know the case it has to meet. In order to have a fair trial it is imperative that the party should state the essential material facts so that other party may not be taken by surprise.
25. The defendant No. 3 also tried to depose that he had resigned from the Directorship of defendant No. 1-Company in the year 1978. He has also deposed that after filing of the consent terms defendant No. 4 was appointed as the Court Receiver. Thereafter, he was permitted to run factory unit of defendant No. 1.
Page 1370
26. In the examination-in-chief, itself, defendant No. 3 has categorically without any reservation admitted that he has signed loan documents on behalf of defendant No. 1 in favour of plaintiff-bank. He has also admitted that he has taken guarantee of defendant No. 1 for repayment of loan sanctioned by the plaintiff-bank in the sum of Rs. 3,02,000/-. He has also admitted that guarantee of defendant No. 1 was taken for repayment of loan sanctioned by the plaintiff-bank though the loan amount disbursed was much less than the amount guaranteed. He has also admitted that he had signed a printed form of guarantee letter comprising of four to five pages. He has also admitted that it was signed by all three Directors as guarantors for defendant No. 1 borrower in his presence. He has further stated that the documents executed by him were blank printed forms, as such not liable to pay the outstanding dues of the plaintiff-bank as guarantor.
ADMISSIONS OF THE DEFENDANT No. 3.
27. The extract of accounts which were filed by the plaintiff-bank, were admitted to be correct. Consequently, they were exhibited on admission as Exhs.P-3 and P-4 respectively.
28. With the aforesaid evidence on record, the plaintiff cross-examined defendant No. 3, who, again in the cross-examination, admitted to have signed all the loan documents alongwith defendant Nos. 2 and 4 as Director. He has also admitted that he stood Guarantor of defendant No. 1-Company. He has also admitted that he did not make any complaint for having obtained his signature on blank forms by the plaintiff-bank. He has also admitted in the cross-examination that defendant No. 4 had admitted all the documents including guarantee letter. He also admitted that after decree was passed against defendant Nos. 3 and 4 Court Receiver was discharged by the Court. He also admitted that prior to borrowing loan he had borrowed loan in his personal name from the plaintiff-bank. That loan was taken by pledging the fixed deposit receipts which were in the name of his wife and two sons. He has also stated that he had made request to the plaintiff-bank to transfer said personal loan in the name of defendant No. 1-Company and that request was granted by the plaintiff-bank. He has also admitted that demand loan borrowed was in the sum of Rs. 53,000/- against the pledge of F.D.R. by way of security. However, in the cross-examination he deposed that he is not liable to pay loan due since he has resigned from the post of Director though at the time of availing loan he was very much Director of defendant No. 1-Company.
29. With the aforesaid evidence on record the suit was heard for final hearing at length.
CONSIDERATION:
30. Having heard rival parties, I must place on record that the plaintiff-bank though filed an affidavit of evidence in support of suit claim by way of examination-in-chief of one Shri A.R. Kumathekar (P.W.1) but factually failed to prove any of the loan documents in accordance with the provisions of Indian Evidence Act, still, I am compelled to decree this suit in favour of the plaintiff-bank merely on his own admissions for the reasons recorded hereinafter.
Page 1371
31. At the out set, I must mention that once both parties are allowed to lead evidence, oral as well as documentary then the onus of proof looses much of its importance as held by the Apex Court in the case of Paras Nath Thakur v. Smt. Mohani Dasi (deceased) and Ors. reported in A.I.R. 1959 S.C. 1204.
32. The plaintiff bank, asstated hereinabove, could not prove its claim, through its witness but the defendant has helped the plaintiff to prove its claim through cross-examination of the plaintiff's witness as well as by giving number of admissions while in the witness box. Defendant No. 3 himself brought on record the decree suffered by defendant Nos. 1,2 and 4 for the suit claim in the very suit. Defendant No. 4 admitted suit claim and thereby admitted to be a guarantor of defendant No. 1 liable to pay suit claim. The Advocate for defendant No. 3, in the cross-examination, confronted plaintiff's witness with the letter dated 28.4.83 signed by the then Branch Manager of the plaintiff bank together with extracts of accounts; namely, last entry showing debit balance in the sum of Rs.41,220/-. With the result, the said two documents were marked and exhibited as Exhs.P-2 and P-3 in view of the Apex Court judgment in the case of Ram Janki Devi v. Juggilal Kamlapat .
33. Now, if one turns to these two documents; namely, letter dated 28.4.1983 (Exh.P-2) and the extracts (Exh.P-3) in respect of cash credit hypothecation account, wherein, the last debit entry is in the sum of Rs. 41,202/-. which is sufficient to establish the liability vis-a-vis cash credit account is concerned. This extract of account corroborated with the oral evidence of the plaintiff's witness can conveniently be relied upon to fasten liability in view of Section 34 of the Evidence Act as held by the Apex Court in the case of State Bank of India v. Yumnam Gouramani Singh . The oral evidence is a good corroboration for the purposes of Section 34 of the Indian Evidence Act. Even, otherwise, decree suffered by defendant No. 1 Company is sufficient to hold the decretal liability against the defendant No. 1 guaranteed by the guarantors. Thus, consideration for taking guarantee stands proved. One of the co-guarantor defendant No. 4 has also suffered decree as guarantor.
34. Having said so, if one turns to another piece of evidence; namely, letter dated 28.4.83 (Exh.P-2) that letter has established the credit entry Rs. 26,699.97 in the cash credit account. Defendant No. 3 would be entitled for credit in the cash credit account to the extent of Rs. 26,699.97. Apart from this, this letter also admits to have received by the plaintiff Rs. 69,000/- deposited from time to time by defendant nos.1 and 4 after decree against them. Thus, defendant No. 3 would be entitled to claim deduction in the suit claim to the extent of Rs. 26,699.97 plus Rs. 69,000/- total amounting to Rs.95,699.97 ps as against the suit claim, i.e. in the sum of Rs. 1,18,293.98 ps. How this deduction is to be accounted for against the suit claim is being indicated in the operative part of the judgment.
Page 1372
35. With the aforesaid evidence on record, if one travels through the evidence of defendant No. 3, he has given number of admissions which are fatal to his own defence. In his examination-in-chief he has admitted that he was Director of defendant No. 1-Company, however, claimed to have resigned in the year 1978. No evidence in support of this statement is on record. He has also deposed in para 5 of his evidence with regard to the criminal case which was filed in the Court of Judicial Magistrate at Dadar but there is no reference to all these facts in the written statement. Therefore, the evidence in the absence of pleading is inadmissible as held by the Apex Court in the case of Ram Sarup Gupta v. Bishun Narain Inter College and D.M. Deshpande and Ors. v. Janardhan Kashinath Kadam (dead) by L.Rs. and Ors., Hence, this factor cannot be considered. Even otherwise, this factor cannot result in dismissal of suit against defendant No. 3 guarantor, even if resignation is taken to be proved. Once a guarantor always a guarantor unless discharged.
36. So far as the loss of hypothecated property is concerned, there is no reference with regard to the said defence in the written statement. Again, for want of pleadings this part of defence is not inadmissible. In para 7 of the examination-in-chief defendant No. 3 has stated as under:
I admit that I did sign loan documents on behalf of the defendant No. 1 in favour of the plaintiff-bank. I have taken guarantee of the defendant No. 1 for repayment of loan sanctioned by the plaintiff-bank. The guarantee was given for Rs. 3,02,000/-though the loan amount disbursed was much lesser amount. The guarantee deed which I had signed was a printed form comprising of four to five pages. It was signed by all three Directors.
(emphasis supplied)
37. The above admissions are very much binding on the defendant No. 3. The admission is the best evidence against the person giving it.
38. The extracts of accounts with respect to the term loan account were also used by learned Counsel for defendant No. 3 during the course of examination of the witness. The extract of account, as such it was marked as Exh.P-4 in view of the Supreme Court judgment in the case ofRam Janki Devi v. Juggilal Kamlapat .
39. In para 13 of the cross-examination, defendant No. 3 has also given number of admissions, which read as under:
It is true that I signed all the loan documents alongwith defendant nos. 2 and 4. It is true that all loan documents were signed by me as a Guarantor and Director of the company. I did not make any complaint to the bank and/or its higher official for having obtained my signatures on the blank forms including form of guarantee letter.
(emphasis supplied) Page 1373
40. Perusal of the aforesaid evidence would unequivocally go to show that defendant No. 3 has admitted to have signed all loan documents alongwith defendant Nos. 2 and 4. He has also admitted that loan documents were signed by him as guarantor as also in the capacity of Director of the defendant No. 1-Company. He has also admitted that he did not make any complaint to the bank or its higher authority for obtaining his signatures on the blank forms including form of guarantee letter. It is, thus, clear that execution of the loan documents has been admitted and the execution of the agreement of guarantee has also been admitted. The defendant No. 3 has failed to prove that the said documents were blank documents. Had it been so, he would not have remained silent. He is an educated person. He would have definitely complained to the higher authorities of the bank against the Branch Manager for having obtained blank loan documents from him. Apart from his own bare statement, there is no other evidence on record. Defendant No. 3 was running Industrial Unit. He has seen ups and downs of the life. Such a person is not expected to sign blank documents. Apart from this assuming to be so, once having acted upon those documents having taken advantage of those documents; having taken advantage of the money borrowed from the bank and having used it for years together for its Industrial unit; the defendant No. 3 cannot be allowed to take such somersault and contend that the documents were blank though he has borrowed money, though he had taken guarantee.
41. Apart from the above in para 15 defendant No. 3 has admitted that defendant No. 4 was a joint guarantor with him. Thus, defendant No. 3 admitted that he was a co-guarantor. The defendant No. 4 had admitted all documents including guarantee letter and suffered decree in the very suit. The admission of defendant No. 3 given in para 15 reads as under:
So far as the defendant No. 4 is concerned, he had also admitted all the documents, including guarantee letter. It is true that after the decree was passed against deft. nos.3 and 4 in the year 1981 Court Receiver was discharged.
(emphasis supplied)
42. Once defendant No. 4 has suffered decree on admission that admission binds the defendant No. 3 because to that guarantee letter defendant No. 3 is also a party. The admission of defendant No. 4 would very much bind defendant No. 3 in view of law laid down in the case ofBhura and Anr. v. Bahadursingh and Anr. . In view of this settled legal position the defendant No. 3 cannot escape the liability of the bank as one of the guarantors.
43. The decree suffered by defendant No. 4- co-guarantor is binding on the defendant No. 3. With the aforesaid evidence on record, if one further travels through the cross-examination of defendant No. 3, he has admitted that defendant No. 4 not only suffered decree but also acted upon the decree by paying various instalments.
Page 1374
44. Defendant No. 3 in para 17 of his cross-examination has also admitted that prior to borrowing loan he had borrowed loan from the very same plaintiff in his personal name. That loan was taken by pledging fixed deposit receipts which were in the name of his wife and two sons. He had also admitted that request was made by him to plaintiff-bank to transfer the loan in the name of defendant No. 1. That request was accepted by the bank. Loan amount was transferred to the account of defendant No. 1. Defendant No. 3 has also admitted that the request for transfer of account was made by him jointly with defendant Nos. 2 and 3 and that was granted by the plaintiff bank. Loan was in the sum of Rs. 53,000/- borrowed against the pledge of F.D. receipts which were given by way of security. He has also admitted in para 19 of his cross-examination that as a Director he had visited plaintiff-bank for applying loan. Thus, he is well aware of the banking transactions and knows how are they carried.
45. His only defence in para 19 appears to be that he has resigned from the post of Director as such he is not liable to pay loan amount though at the time of availing loan and signing loan documents and taking guarantee he was a Director of defendant No. 1. The said defence , by no means, can be accepted. A person having taken guarantee cannot be absolved of his liability as a guarantor unless he makes payment and discharges his liability in toto or claims discharge in accordance with law.
46. In the aforesaid view of the matter, by no means, the suit claim can be dismissed. The defendant No. 3 has not taken any of the defences sought to be canvassed by learned Counsel appearing for defendant No. 3. Hence none of them can be accepted.
47. At this stage, it may be placed on record that this Court had directed plaintiff-bank to disclose on oath as to how much amount was recovered by them from other defendants and subsequent to two decrees suffered by defendant Nos. 1, 2 and 4. The Branch Manager of plaintiff-bank has filed affidavit in that behalf. However, learned Counsel appearing for defendant No. 3 objected and urged that the said affidavit cannot be considered since the same was filed after the evidence of the parties was over. The submission made in this behalf hardly holds any water since the order was made for the benefit of the defendant No. 3 so as to find out to what extent suit liability can be reduced against him. However, without going to the niceties of the submissions made. Even if those affidavits are not read in evidence it will not make any difference so far as ultimate judgment is concerned. As such, the affidavits filed on record are excluded from consideration in view of the objection raised by the Advocate for defendant No. 3 for whose benefit the order was passed.
48. The learned Counsel appearing for defendant No. 3 urged that the document; namely letter of guarantee was blank and the same was signed by defendant No. 3 without understanding the contents thereof. The submission made is devoid of any substance; firstly, because the defendant No. 3 himself has admitted having stood guarantor for the loan advanced to defendant No. 1, secondly, he has admitted to have signed the letter of guarantee in favour of the bank, thirdly, he has also admitted that the sanctioned loan was in the sum of Rs. 3,02,000/- though the loan amount Page 1375 disbursed was much less. The extract of the relevant said evidence is reproduced in para 36 of the judgment. Thus, it is clear that defendant No. 1 admitted to have taken guarantee for repayment of Rs. 3,02,000/-and actual amount disbursed by the bank was less than the amount guaranteed. The co-guarantor, defendant No. 4 has also admitted his liability as guarantor and has suffered decree. This admission of the defendant No. 4 (co-guarantor) and decree suffered by him will also bind the defendant No. 3 as recorded in para 41 to 43 supra. Under these circumstances, the defence that alleged document of guarantee was blank does not hold good.
49. Assuming for the sake of argument that the letter of guarantee was blank, the admission given by the defendant No. 3 himself in his evidence has supplied the omission, if any, in the Letter of guarantee by dislodging that the guarantee was for amount of loan sanctioned in the sum of Rs. 3,02,000/-.
50. The loan documents obtained by the bank are in a standard format of contract, standard clauses of the guarantee agreement have been widely adopted because the experience shows the facilitated grant of loan. In the banking transactions, while granting loan and obtaining loan documents, the banks do not compromise on the terms and conditions thereof. In such a contract standard form enables the banker to say "if you want loan or banking services at all, these are the only terms on which they are available. Take it, or leave it." It is a type of contract on which conditions are fixed by one of the party and upon to acceptance by the person appearing from the bank. The contract which, frequently, contain many conditions would present for the acceptance and is not open to discussion. It is settled law that a person who signs document which contains a contractual assumption in normal bound by them even though he is not ready, even though he has ignored all the precise legal effect. Law, in this behalf, is settled by the Apex Court in the case of Bihar A.C.B. v. Green Rubber Industry as back in the year 1989, 1991 S.C.C. 791. Thus, none of the contentions raised in this behalf can be accepted.
51. So far as the next contention raised by learned Counsel appearing for defendant No. 3 that guarantor stand discharged because the plaintiff neglected to take any action in hypothecal case or touching them or filing suit also needs to be over ruled. For the simple reason that the hypothecated goods are always in possession of guarantor. The bank cannot take law in their own hands and forcibly take possession of the hypothecated good, possession of which rest with the borrower. The creditor banks have no option to file the suit and obtain appropriate order from the court. Suit can be filed well within limitation. Accordingly, turning to the facts of this suit the plaintiff bank has filed the suit well within limitation. Plaintiff bank applied for appointment of Receiver. The Court was pleased to appoint Receiver. Receiver had taken inventory and thereafter all further proceedings with respect to the hypothecated goods were as per the orders of this Court. There is hardly any scope to make allegations against the bank with respect to the neglect of security against which the finance was made. At this juncture, it will be relevant to note that in view of the provisions of Section 145 of the Contract Act the guarantor is entitle to protect his interest by taking appropriate proceedings. Defendant No. 3 has failed to Page 1376 take any action to protect his own interest if one turns to the proceeding of the suit to which defendant No. 3 is also a party. One would find hardly defendant No. 3 had taken any step to secure or to protect the hypothecated goods. He never brought any lapse on the part of the plaintiff or the Court Receiver to the notice of the Court. He did not bring any motion to secure his interest. Thus, looking to the lapse on the part of defendant No. 3 it does not lie in his mouth to claim discharge at the fag end of the trial of the suit especially suit is pending past more than 28 years. Thus, none of the contentions raised by the defendant holds good.
52. In the aforesaid view of the matter, suit stands decreed in toto against defendant No. 3. However, defendant No. 3 shall be entitled to and the plaintiff-bank shall be bound to give credit to defendant No. 3, of the part payments made by other defendants from time to time. It is clarified that the future interest shall first be calculated and charged on the decretal amount till the date of receipt of part payment. After adding the amount of interest to the decretal claim, the amount of part payment shall be substracted from the total amount thereof. Remaining balance amount shall be chargeable to future interest till the date of receipt of next part payment. Further part payments received should be accounted for in the same manner as indicated herein till the entire amount of part payments made are exhausted. In other words, the interest shall be chargeable on the reduced debit balance. Hence, the following order.
ORDER.
1. Defendant No. 3 do pay to the plaintiff sum of Rs. 1,18,273.90 with interest thereon @ 10% per annum from the date of suit till the date of each part payment and/or payment in full and final.
2. Defendant No. 3 do pay cost of the plaintiff and shall bear his own costs.
3. Decree be drawn in terms of this order.
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