Radhey Shyam vs Punjab & Sind Bank

Ranjit Singh, J

This appeal is filed by the appellant to impugn the order passed by the Tribunal below which has allowed the O.A. filed by the bank and dismissed the S.A., holding that the bank is entitled to recover a sum of Rs. 25,45,042/- with simple interest @17% p.a. from 25.1.2005 till recovery from appellants and respondents 2 to 4 jointly and severally.

Along with the appeal, the appellant has also filed an application seeking waiver of pre-deposit. Earlier, the counsel had sought exemption from filing court fee, which was not allowed. Notice was issued in the appeal as well as on the waiver application. The respondents have been served and today the counsel is permitted to make submissions on the waiver application as well as in the appeal. This mode is being adopted on the ground to see if there is any merit found in the appeal, then appropriate order can be passed on the waiver application.

The appellant was impleaded as defendant No. 4 in the O.A. and was a guarantor. This O.A. was filed by the bank impleading the appellant as mortgagor of the property bearing No. 681, Pocket-II, Paschim Puri, New Delhi. In its O.A., the bank has alleged that respondent No. 2 is the proprietorship concern of respondent No. 3 whereas appellant and respondent No. 4 were guarantors. Appellant was also mortgagor of property. The bank had sanctioned Packing Credit of Rs. 5 lac, FOBP Limit of Rs. 5 lac and Cash Credit (Hypothecation) limit of Rs. 10 lac to respondent No. 2 through its proprietor respondent No. 3. Both respondents 2 and 3 had executed necessary security documents. Appellant and respondent No. 3 had executed fetter of guarantee and appellant had created equitable mortgage by deposit of title deed on 5.6.1998 of immovable property referred to above Respondents 2 and 3 failed to adhere to the financial discipline and accordingly bank issued notice on 7.8.2003 claiming a sum of Rs. 25,45,042.95. The appellant filed written statement questioning the maintainability of the application on the ground that the bank had suppressed relevant facts. The appellant had pleaded that there was no privity of contract between the appellant and the bank and that he had never executed any document in favour of the respondent bank. The appellant had also denied that he had mortgaged his property in favour of the respondent bank. He, however, pleaded that he had operated some loan from Indian Overseas Bank, Janakpuri Branch, New Delhi through respondents 2 and 3 and his relative Mr. Rajpal. The appellant stated that the original title deed of the property was deposited with Indian Overseas Bank, Janakpuri Branch and when the appellant came to know about his conveyance deed being possessed by the respondent bank, he filed a criminal complaint under section 420, 409, 467, 468, 471 read with 120(B)/34 IPC against Mr. Rajpal, Mr. Arvind Kumar, Ms. Seema, Manage, Indian Overseas Bank, Janakpuri Branch, New Delhi and the Manager of respondent bank. As per the appellant, this complaint was registered before Metropolitan Magistrate. The pleas thus was that the appellant had not created any equitable mortgage in respect of the property in favour of the respondent bank.

In his S.A. filed before the Tribunal below, the appellant had pleaded that he had instituted a complaint against the Manager of Indian Overseas, Bank reference to which is already made above and that the appellant had not mortgaged his property. The appellant has also pleaded that the respondent bank had deliberately declined the objection filed by him under section 13(3) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the SARFAESI Act) and the bank had filed the O.A. by committing gross abuse of process of law.

On the basis of pleadings, the Tribunal below formulated the following points which required determination:--

"1. Whether D1 and D2 have not availed the credit facilities and executed the documents?

Whether D4 has not executed the Deed of Guarantee?

Whether D4 has not created the equitable mortgage in respect of the immovable property?

Whether the applicant is not entitled to recover the amount claimed?

Whether the action initiated by the applicant' against the subject matter property is valid and appropriate?

Relief?"

So far as the appellant is concerned, the point Nos. 2, 3 and 5 would be relevant. Plea by the appellant was that he had not executed the deed of guarantee and had not created any equitable mortgage. In this background, if is to be seen whether the action initiated by the bank against the property was valid and proper.

The witness produced by the bank stated that the appellant had executed AW 1/31, Letter of Guarantee dated 28.1.2002 thereby guaranteeing repayment of all the money, interest, penal interest and other charges, etc. due on the above mentioned credit facilities from respondent No. 2 to the respondent bank. The appellant had denied execution of guarantee deed. His evidence was that he had approached his distant relative Mr. Rajpal, S/o. Mr. Ram Lal for arranging finance of Rs. 2 lac for his domestic purposes. Mr. Rajpal used to arrange finance for the needy persons from finance companies as well as banks. He requested Mr. Rajpal to get a loan of Rs. 2 lacs from any nationalized bank. The appellant was introduced to respondents 3 and 4 who were dealing in financing of loan to needy persons through Mr. Rajpal. Mr. Rajpal and respondent No. 3 required the title deed of the house of the appellant and on their request he had handed over the sale deed of his house to respondent No. 3 in the month of July 1998. Mr. Rajpal and respondents 3 and 4 took the appellant to the Manager of Indian Overseas Bank, Janakpuri Branch where the concerned official obtained is signature on various papers. Mr. Rajpal and respondents 3 and 4 handed over the original sale deed of the house of the appellant to the loaning officer of Indian Overseas Bank. The appellant was handed over a cheque of Rs. 1 lac and Rs. 1 lac was given in cash was given to him. The appellant deposited the cheque with the bankers Punjab National Bank. As per the appellant, he never visited the office of respondent bank for the purposes of loan. Pleading that he being illiterate person not able to read or write; the appellant had stated that no correspondence was made between him and Indian Overseas Bank and the appellant, after receiving Rs. 1 lac, and the bank had also did not make any demand from him. He has accordingly expressed his surprise to receive a notice from the respondent bank in the first week of April 2004. In response, the appellant immediately made a representation, DW 1/D, and also approached the official of the respondent bank and other associated persons and officially lodge an FIR with SHO, Police Punjabi Bagh, Police Station. It appears that the appellant had filed a copy of the complaint on record, DW 1/1. He had also produced a statements of Retd. Col. V.K. Sharma, the statement of Mr. Y.K. Sharma, Assistant Manager. As per the appellant, the Magistrate had taken cognizance and had issued bailable warrant against the Manager of the respondent bank.

The Tribunal below has considered all the contentions raised by the appellant and also the documents which have been produced. The Tribunal has found that though the appellant has raised a contention that he had gone to Indian Overseas Bank to avail the loan, but has not produced and document in this regard to show that he had availed any such loan. As per the Tribunal, such story that he had contacted Mr. Rajpal who took him to the officials of Indian Overseas Bank where he was given Rs. Lac could be cooked up by anyone. The Tribunal has found that it is strange that the appellant had entrusted the documents for availing the loan of Rs. 2 lac, but did not enquire about what happened thereafter on the loan transaction or did not make any effort to repay the loan or to demand the documents which he had statedly supplied. The Tribunal has found that the-story projected by the appellant to be concocted and unfounded to save himself from the responsibilities.

The counsel for the appellant was serious enough to contend that the appellant had been defrauded and this poor person who is working as a tailor has been made to meet this fate because of this fraud. Counsel make an attempt to take me through the documents to prove his assertion that the appellant has been defrauded in the manner as is alleged.

Counsel was asked to refer that part of the pleadings where he had pleaded fraud and what aspect of that pleaded case has been ignored by the Tribunal below. Counsel then drew my attention to the averment made in the reply filed by him to the O.A. filed by the bank. No doubt, the appellant had denied having created the mortgage or having taken this loan from the respondent bank but the counsel could not point out any averment where fraud on the part of the bank had been pleaded. To deny an averment made in the O.A. is quite different from the fact that one is defrauded.

The basis on which the appellant has denied the plea raised in the O.A. has been considered by the Tribunal. The same pleas virtually are repeated before me as well. The counsel for the appellant would contend that he had produced on record of the case file, the statements of witnesses recorded by the Magistrate in the criminal case. The Tribunal apparently ignored these statements on the ground that these were not relevant in deciding the O.A. The mention by the Tribunal that these statements may not have any evidentiary value in the civil case may be one thing but in my view such statements could not have been permitted to be placed on record for consideration in the manner these have been produced in evidence. The certified copies of the statements obtained from the criminal court and producing these on record of the O.A. apparently is not a proper mode to lead evidence or to prove the same, If the intention on the part of the appellant was to rely on this evidence, he was bound to produce those witnesses whose statements had been recorded in the criminal case. The counsel, in my view, has termed these statements as evidence but concededly, the witnesses had not been subjected to cross-examination and their statements were simply recorded by the Magistrate while summoning the person against whom the appellant had filed this complaint before the Magistrate.

The counsel for the appellant could not with any justification plead anything either in law or otherwise to show that this could relevantly be relied upon. In this background the appellant, in my view, failed substantiate any of his pleas of having not availed of this loan or of not signing the documents of his pleas of having not availed of this loan or of not signing the documents. Important thing to note here is that it is not a case of complete denial by the appellant. He concedes to have gone to the bank though a different Bank with document for the purpose of obtaining loan. Respondents 3 and 4 have been introduced to the appellant by Rajpal. Thus, they are not strangers to the appellant. Appellant also concedes to have obtained some loan from Indian Overseas Bank. Thus, it is not a case where somebody has just stood up to say that the appellant had mortgaged this property to secure the loan which was obtained by respondents 3 and 4. If he has been defrauded, he would have grievance against respondents 3 and 4 and Mr. Rajpal for which he alone and alone is responsible.

It can also not be ignored that the appellant had deposited the title deed. The conveyance deed is AW 1/32 and AW1/33 is the form No. 84AA dated 2.2.2002. This is confirming the deposit of title deed. Even the statement of appellant on the basis of the statement of the Manager of Indian Overseas Bank was found to be a false statement. The Tribunal has also found certain infirmities in the plea and statement made by the appellant which apparently are well-founded and would arise in the mind of a normal person as a reaction of normal human being. To me also the plea raised by the appellant would sound too artificial to place any reliance. The appellant though claimed to be an illiterate person, still cannot be taken as so ignorant not to realize the implication of depositing the title document of his property with the bank after obtaining some amount.

I, therefore, do not find any cause or reason to interfere with the well reasoned order passed by the Tribunal below and accordingly would dismiss the appeal as it lacks any merit. In view of this no order need to be passed on waiver application.