T.A. 7 of 2003. Case: State Bank of India Vs Rakesh Kumar Shaw and Ors.. Kolkatta Debt Recovery Tribunals

Case NumberT.A. 7 of 2003
CounselFor Appellant: M. Kanji and Farida Yasmin, Advs. and For Respondents: P. Pal and L.N. Seth, Advs.
JudgesD.C. Thakur, Presiding Officer
IssueIndian Control Act, 1872 - Section 17; Evidence Act, 1872 - Section 58; Banking Regulation Act, 1949 - Sections 21 and 35A; Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 19(2), 19(20) and 19(22); Interest Act, 1978; Code of Civil Procedure, 1908 (CPC) - Section 34 - Order 6 - Order 12, Rule 6
CitationII (2005) BC 184
Judgement DateFebruary 25, 2005
CourtKolkatta Debt Recovery Tribunals


D.C. Thakur, Presiding Officer

  1. In a judicial proceeding wherein all the three defendants have been, after the careful, close scrutiny of their written statements respectively filed on September 4, 2001, February 26, 2001, found in simultaneously traversing and admitting in disguise the claim amount of the applicant Bank for a sum of Rs. 33,26,459-47 p, should the regular course of adducing evidence either orally or by documents be in that proceeding necessarily adopted by a Tribunal, before which the above legal proceeding has been initiated by the applicant Bank? In answer to the above query, a simple 'yes' would be sufficient.

  2. Before dealing with the above query raised out of its own motion and at the time when this Tribunal has engaged itself in scanning the claim application of the applicant Bank presented on October 11, 1999 before the learned transferring Tribunal, against those defendants as well as the two written statements that have been received by the said Tribunal on the aforementioned days and dates; and lastly, the three evidence-on-affidavits, out of which the first two have been filed by the two competent officers of the applicant Bank and the third evidence-on-affidavit has been filed by the defendant Nos. 2 and 3 jointly, on September, 4, 2001, it has been felt highly necessary to refer to the factual background of the present legal proceeding initiated by the Bank on and from October 11,. 1999. While describing such factual background, this Tribunal has also assessed the evidentiary value of the documents upon which the applicant Bank has relied much for the purpose of suing against the defendants as well as it has nevertheless examined both the written statement and the evidence-on-affidavit that has been accompanied by the relevant documents.

  3. The defendant No. 1 is the sole proprietor of M/s. Howrah Trading Company, a construction company and also a registered SSI unit that has commenced its business on and from April 19, 1992 in the processing of scraps, metals of different varieties, non-ferrous casting from its factory premises situated at P-239, Benaras Road, Belgachia, Howrah-8, PIN-711108. The said defendant made, on June 18, 1996, one application to the Branch Manager, Fort William Branch of the application Bank, after requesting the said Bank to sanction to the said defendant the two types of facilities namely--(a) Stock Cash Credit (medium term) to the extent of Rs. 20 lacs; and (b) Clean Cash Credit (Bills) to the extent of Rs. 10 lacs for the purpose of carrying out the above types of business on the job contract bases with both the private and public sectors; more particularly, the Indian Railways. The said application was made to the Bank in form No. 3 from Howrah, after giving therein the detailed whereabouts of M/s. Howrah Trading Company (e.g. the individual ownership bearing the registration No. 210915432 dated April 15, 1996). That application for sanction of credit facilities was allowed by the applicant Bank which informed by its letter of sanction bearing reference No. SB/96/197/1 dated October 17, 1996 all the three defendants of that they had been sanctioned those facilities for the very purpose specified in the application made in Form No. III on June 19, 1996. The said letter had been claimed to be received by each of those defendants. In the said letter the personal guarantees of all the three defendants had been asked for by the Bank to be created in its favour. The pledge of the entire movable items of machineries owned and used in the factory premises of their own was also demanded in particular by the Bank. The valuation of the stocks pledged/hypothecated to the Bank was also prescribed in the said letter. In the said letter, the rate of interest was proposed to be the regulating one in respect of both the facilities, for both Cash Credit Advance (hypothecation) and Clean Cash Credit (Bills) 1.25% above SBAR, rising and falling therewith subject to the minimum of 16.75% per annum with quarterly rests, was also made known to the defendants. The defendants were also asked by the Bank to be covered by the comprehensive insurance policy, which would necessarily cover the risk as stipulated in the condition No. (xii) entitled as Insurance.

  4. On the close verification of the materials on record, it has been found out that the said letter along with a hosts of terms and conditions has been found to be received by all the three defendants, who have further been found provenly related to each other, because their signatures have been found specifically present in the said letter.

  5. It should be noticed here that the defendant Nos. 2 and 3 have strongly contended the following:

    The plaintiff Bank forced us to sign the documents mentioned in the said sub-paragraph, even before we could ascertain the legal effect of the same.

    After the comparative study made minutely between the signatures contained in the written statement and those in the said letter of sanction, it has appeared to this Tribunal that the same persons have signed both the written statement as well as the letter of sanction. The contention of the said participating defendants has been perhaps founded on one of the limbs usually taken by the defendants under Section 17 of the Indian Control Act, 1872 (Act No. IX of 1872), for calling a contract void ab initio and non-enforceable against themselves. This Tribunal is, consequently, getting itself constrained to countenance with a such plea; and such plea shall be later on found defeated by the same defendants.

  6. After receiving the said letter of credit, a number of documents of like two DP Notes respectively executed for a sum of Rs. 20 lacs as well as for a sum of Rs. 10 lacs, two DP notes delivering letters, agreement for hypothecation and guarantee, letter of undertaking, agreement for Cash Credit in Form No. C (General), one security of pledge of goods, produce and merchandise were executed by all those three defendants, who are repeatedly being held to be related to each other; and were later on delivered to the applicant Bank. Those documents continued to remain in possession of the said Bank till October 10, 2001. The allegation, as raised by the defendant Nos. 2 and 3, has been met by the Bank while saying the following in its affidavit:

    The Bank portion of the said documents were filled in by defendant No. 1 and all the defendants put their signature in my presence. I know their signature.

  7. Another feature of those who defendants is that those defendants have stood as the guarantors and have deposited the FDR of Rs. 5 lacs standing in their favour with the Bank. as security for the loan granted by the Bank to the favour of the defendant No. 1. The claim raised by the applicant Bank that the defendant Nos. 2 and 3 have stood as the guarantor in relation to the two types of facilities sanctioned or granted to the defendant No. 1 for the purpose of carrying out the manufacturing process at Howrah appears to be admitted, when the defendant No. 1 raises an allegation at paragraph No. 8 of the written statement filed by him on September 4, 2001, which has been setforth hereinbelow:

    Sub-paragraph (xi) of paragraph 5 of the plaint is substantially correct. It is submitted therein that when various securities in the form of immovable property, Insurance premium to the tune of Rs. 5,50,000/-. Fixed deposits to the tune of Rs. 5,00,000/- together with interest, have been in the hands of the plaintiff Bank, for what other reasons the Bank ventured to take legal recourse for realisation of the amounts within a so short time without allowing the defendant to make an understanding with the Bank to operate the said two accounts and thus in the usual course of business dealing with the Bank, the defendant would have got the opportunity to reduce the balance of the said two accounts.

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