(1.) BOTH the appeals have been heard analogous as the appellant/applicant is the same in both the appeals and although the respondents/defendants were different but the nature of both the cases is the same and similar. The points involved in both the appeals are also almost same and similar.
The facts of the cases are simple and as such being reiterated in nutshell as follows:
1. Appeal No. 322/03
The appellant/applicant had sanctioned a sum of Rs. 19 lacs together with interest @ 18% per annum with quarterly rest to respondent-defendant No. 1, of which respondent-defendant No. 2 is the proprietor. The finance was sanctioned and disbursed for the licence of liquor shop. The defendant/respondent Nos. 3 to 8 stood as guarantors to defendant Nos. 1 and 2 and defendant/respondent Nos. 1, 4 and 6 had also deposited their original deed of title by way of security as equitable mortgage for the loan sanctioned and advanced. The banking documents as per banking rules were executed by the defendants-respondents in their proper perspective. The defendant/respondent No. 2 opened a cash credit account in the Bank in the name of defendant/respondent No. 1. Deposit and withdrawals as well as interest were maintained in the loan account of defendant No. 1. Mr. A.K. Sharma, Senior Manager, Principal Officer having a valid power of attorney filed a suit in the Civil Court on 13th April, 1994, for a sum of Rs. 33,05,782.95. The original borrowers i.e. defendant/respondent Nos. 1 and 2 had not contested the suit nor they have appeared in the appeal also. Only defendants/respondent Nos, 3,5 and 8 contested the claim taking different pleas, such as interest claimed was excessive. They did not stand as guarantors and even if they were held to be guarantors, their guarantee has been discharged due to negligence of the Bank. They had also taken the plea that defendant/respondent Nos. 1 and 2 had the licence of liquor shop which expired on 31st March, 1992. To the knowledge of the Bank, the stocks and advances were not monitored and as such the guarantee ended by the expiry of licence. While the suit was proceeding in the Civil Court, Tribunal was set up as per the provisions of the RDDBFI Act, 1993 and the suit has been transferred to the DRT, Allahabad and then after due notice to the parties, the proceeding continued and ended in dismissal.
(2.) Appeal No. 323/03
On 4th May, 1991 the appellant Bank sanctioned Rs. 18 lacs together with interest @ of 18% per annum with quarterly rest to respondent/defendant Nos. 1 and 2. The finance was sanctioned and disbursed for the licensed liquor shop. Defendant/ respondent No. 2 had opened a cash credit account in the Bank in the name of defendant No. 1. Defendant/respondent No. 3 stood as a guarantor for defendant Nos. 1 and 2 and also executed equitable mortgage by deposit of title deeds. Other banking documents as usual were executed by the main borrowers in favour of the Bank. When the account became irregular, the appellant Bank filed a suit in the Civil Court on 31st April, 1994 through Mr. A.K. Sharma, Senior Manager, Principal Officer and holder of valid power of attorney claiming a sum of Rs. 28,41,263.95. The main borrowers i.e. respondent defendant Nos. 1 and 2 had not contested the claim, only the defendant/respondent No. 3 as guarantor had contested by filing a written statement taking various pleas as had been taken for the other case by the guarantors and not being reiterated again. On establishment of Tribunal under the Act the case was transferred to the DRT, Allahabad and was registered as T.A. No. 24/01. After giving due notice to all the parties, the proceeding continued before the Tribunal and then ended in dismissal.
Against the impugned judgment of dismissal, the present appeals have been preferred. In both the proceedings on the basis of pleadings of the parties the following points/issues were framed:
(a) Whether the claim of the applicant/Bank is barred by time?
(b) Whether Shri A.K. Sharma had any right to institute the proceeding as objected to by the defendants?
(c) Whether the contesting defendants had stood as guarantors, if so, to what effect?
(d) Whether the interest charged is excessive as alleged by the defendants?
(e) To what relief if any, the applicant Bank is entitled?
1. All other issues except that of Issue Nos. 4 and 5 have been decided in favour of the appellant Bank. Regarding Issue No. 4 it has been held that the interest claimed is excessive as the Bank failed to prove that interest was agreed upon @ 18% per annum together with quarterly rest. It was held by referring to some documents as placed from the side of the Bank that there was no mention of quarterly rest and as such the Bank cannot claim such interest capitalizing with principal and when the Bank was asked to file further statement showing principal and interest separately with withdrawals and deposit separately, the Bank failed to do so and as such under Issue No. 5 the whole claim of the Bank has been dismissed.
2. The short point that has been advanced from the side of the appellant before the Appellate Court is that the Presiding Officer of the DRT, Allahabad committed gross error in wholly dismissing the claim of the Bank. When the main borrowers had never contested the claim and that the guarantors although filed unsigned written statement had not corroborated the same or supported the same by adducing evidence/ filing affidavit in evidence in support of the written statement which nullified the total defence of the defendants. On the other hand it has been submitted by the learned Counsel for the respondent in both the appeals to the effect that even if the borrowers had not contested the claim of the appellant Bank and the contesting defendants could not substantiate their defence, then also the appellant must prove their case by way of oral and documentary evidence and when they failed to file proper accounts even after direction of the Tribunal, then the dismissal recorded cannot be questioned.
3. In the light of the submissions made by the learned Counsel for both the parties, I have perused the records of both the cases and also read the reasons of dismissal in the impugned judgments. It is true that the main borrowers had never contested the claim of the Bank which means that they have admitted the claim of the Bank. Guarantor's defence is limited. However, in such defence also if excessive claim has been made, even if not being countered by the principal borrowers, then also for their joint liability they can raise the same, if the accounts are not maintained properly. But in the present case, practically defendants could not substantiate their defence by adducing any evidence and more so when their written statement remained unsigned as alleged. Such non-signature might be an irregularity and permitted to be signed with the Court's permission, but then the written statement being not a public document, . unless being corroborated cannot be taken into consideration. Even if the defence version is not substantiated, then also it remained the bounden duty of the claimant i.e. appellant-Bank to substantiate that claim by both oral and documentary evidence. In the present case from the side of the appellant evidence has been adduced in support of the claim and the documentary evidence had also been produced and marked as exhibits. If there is any difference between the documentary evidence and oral evidence, then the Court is to take a decision in the circumstances of a particular case as to the veracity of the oral and documentary evidence. The claim of the Bank is that the Cash Credit Loan was sanctioned with interest @ 18% per annum with quarterly rest. But some of the documents as referred had not been mentioned "quarterly rest". But there is oral evidence by way of affidavit that agreement was there for interest with quarterly rest. Such evidence by affidavit had not been controverted by any counter affidavit. As per the direction of the Tribunal by order dated 23rd April, 2003, it appears from the record that fresh statements were supplied by the appellant Bank but it has been mentioned in the impugned judgments that the appellant Bank did not comply with the direction of the Tribunal. It does not appear that such fresh affidavit with copy of account had been considered by the learned Tribunal before recording the dismissal order. The point might be there that if interest is not on the terms of quarterly rest, then there might not be scope of capitalizing the interest and in that way a fresh statement submitted might not be also served the purpose if it is held that quarterly rest was outside the scope of agreement between the parties while sanctioning the loan. But that must also be decided by considering the circumstances in the particular case. The principal borrower had never objected to the claim made on the basis of interest with quarterly rest and the plaint and affidavit in evidence supports the claim of quarterly rest as claimed from the side of the Bank but if some documents are silent, then it remains the duty of the appellant Bank to fill the lacunas as to how it had happened without being mentioned in the documents. As per general R.B.I. guidelines such loans are being sanctioned with interest as quarterly rest but here in the present case it does not appear that such controversy has been considered in their proper perspective by the learned Tribunal in the impugned judgments, rather by referring to one or two documents only the learned Tribunal came to his finding, that too dismissing the whole claim which is definitely illegal and inoperative in the eye of law. There is some negligence on the part of the appellant Bank also, when they did not explain the lacunas regarding the documents referred to although not being objected to specifically either by the principal borrowers or by the contesting guarantors (it is also a question whether guarantor can raise so or not).
(3.) WHEN the records are incomplete as regards the points involved and raised as discussed above, there is no scope of this Appellate Tribunal to come to a definite finding except holding that dismissal of the whole claim of the appellant Bank is illegal, erroneous and inoperative in the eye of law as the records are incomplete. There is no other alternative but to send back the cases on remand to the D.R.T., Allahabad after setting aside the dismissal orders. On remand the D.R.T. shall consider the controversial points regarding quarterly rest as claimed and if it is found that quarterly rest interest was out side the scope in these two part agreements, then to find out as to how much claim of. the appellant can be entertained to be proved and then consider future and pendente lite interest as per Section 19(20) of the RDDBFI Act. Considering the above points, the discussions made by this Tribunal shall also be construed and also opportunity should be given to both the parties to adduce further evidence if desired so and then come to the finding finally.;