Interim Order 11

Order Details: COPY OF ORDER
Pdf Text: IN THE COURT OF SH. PANKAJ ARORA:
DISTRICT JUDGE-16, CENTRAL DISTRICT:
TIS HAZARI COURTS: DELHI
Suit No. 329/2023
UCO Bank
……........Plaintiff
Versus
M/s. Deepak Trading Company & Ors. …........Defendant
O R D E R
1. By way of this Order, this Court shall decide the
application under Order XXXVII read with Section 151
CPC moved on behalf of the defendant seeking leave to
defend the present suit.
2. Plaintiff has filed the present summary suit under Order
XXXVII CPC seeking recovery of Rs.10,16,048.36/-
against the defendants.
3. Succinctly put, the case of the plaintiff is that the plaintiff
is a Nationalized Bank, Nationalized vide Banking
companies (Acquisition and Transfer of Undertakings)
Act, 1970, having its Zonal Office at 5, Parliament Street,
Connaught Place, New Delhi and having its branch at
Chawri Bazaar branch, Delhi. Shri Sandeep Kumar,
Manager/Branch Head of the plaintiff has been authorized
to represent the plaintiff and to file the present suit.
Defendants are the principal borrower and self guarantor
in the present loan matter and whereas, the defendants
have approached and obtained the loan in questions from
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the plaintiff. Defendants have approached the plaintiff for
grant of Loan and offered himself as guarantor for
repayment of loan amount which may granted to
defendants and considering the request, the plaintiff in the
normal and usual course of its business sanctioned and
granted to the defendants a loan in questions time to time
as mentioned in Bank Statement. Defendants guaranteed
repayment of the loan amount granted to defendants and
in consideration of having granted loan to defendants
executed usual loan and security documents in favour of
the plaintiff and delivered the same to the plaintiff and all
the terms and conditions of grant of loan were contained
in the said documents executed by the defendants and as
such, the defendants has obtained the said loan in
questions from the plaintiff /bank respectively. That vide
the indicative application for Loan, the defendants as a
borrower and as guarantor applied for the aforesaid loan in
questions and the plaintiff has also entered in loan
agreement with the defendants. Defendants executed
relevant documents i.e., loan agreement and other
documents, etc. at the time of obtaining the aforesaid loan
in questions from the plaintiff / bank and also submitted
said attested copies of the relevant documents for availing
said loan with the plaintiff and as per the loan documents
having been executed by the defendants in favour of the
plaintiff / bank, the defendants agreed to repay the
aforesaid loan amount respectively. Defendants agreed to
pay the said principal, interest and all charges and
expenses due / payable to the plaintiff, strictly in terms of
said loan agreement and other documents executed by the
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defendants in favour of the plaintiff, as principal borrower
and guarantors respectively and in case of default in
payment of said principal, interest and all other charges
and expenses accrued thereon, due/payable to the plaintiff,
in respect of the loan facilities received from the bank,
which the bank may have against the defendants, to be
recovered from sale proceeds of their movable and
immovable properties or avail an appropriate legal remedy
/ action to this effect against the defendants. Defendants
have duly admitted his aforesaid outstanding liability due /
payable to the plaintiff and signed balance and security
confirmation letter etc. in this regard. Therefore, vide the
sanctioned letter the plaintiff bank sanctioned the
payment/sum for loan @ Rs 10,00,000/- (Rupees Ten
Lakhs only) in favour of the defendants for the repayment
of aforesaid loan in question respectively. Aforesaid loan
amount was disbursed by the plaintiff bank to the
defendants. Defendants is liable to pay the due loan
amount. In terms of the said loan documents, the
defendants had agreed that if a default is committed by the
defendants in repayment of the loan amount then the
plaintiff bank shall have liberty to charge interest as well
as penal interest. Defendants further agreed that they shall
be liable to pay the amount outstanding as per the
statement of account and after making the last payment,
the defendants has not making any further payment since
then to till date. Aforesaid loan in questions granted to the
defendants was repayable and the plaintiff opened the
separate loan account in its books of accounts in which all
the amounts paid by the defendants was credited.
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Defendants are very irregular in repayment of loan amount
and are not observing financial discipline in the same
despite repeated requests and demands and have failed to
regularize the same. Loan in questions of the defendants
however became overdue on account of repeated defaults
committed by them repayment of the dues of plaintiff and
hence the plaintiff bank sent several letters and reminders
whereby the bank advised the defendants to pay and clear
the overdue, but the defendants failed to do so. Defendants
could not make good such deliberate and willful defaults
in repayment of dues of the plaintiff bank despite being
given several opportunities by the bank. Defendants
stopped operation in the said account. Despite the various
requests made by the plaintiff, the defendants have neither
regularize the said account not liquidated their liability
and in view of their failure to pay the dues / operate the
account satisfactorily as is required the plaintiff in terms
of Reserve Bank of India Guidelines as to the Income
recognition and prudential accounting norms, classified
the above said outstanding account as non performing
assets (NPA). Defendants have failed and neglected to
repay the outstanding dues in regard to the said limit and
committed breaches of the terms and conditions of
sanction / grant. Hence, this suit.
4. The defence raised by the defendants in leave to defend
application is that the suit filed by the plaintiff is bad in
the eyes of law as the same is filed with a malafide
intention and the plaintiff has not approached the Court
with clean hands. Present suit is not, signed, verified and
filed by a competent person, therefore, this suit may be
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dismissed forthwith. Present suit does not disclose any
cause of action against the defendants. Even the plaintiff
bank has suppressed the material facts that what
installments have been paid by the defendants and how
much installments are due and outstanding. Plaintiff has
concealed the material facts from this Court and in utter
frustration have stated vaguely about the real facts and
circumstances of the case and is misleading the Court by
his contradictory statements. Defendants have taken the
loan of Rs.10,00,000/- from the plaintiff bank. The
defendant has been paying the installments regularly to the
plaintiff bank. Even the installment upto the month of
December, 2022 have been made by the defendants to the
plaintiff without any failure. Defendant suffered with
financial crises from the period of January, 2023 and due
to this reason, the defendants could not make the payment
of subsequent EMIs of January and February, 2023 and
after recovering from the financial crises, the defendant
approached to the bank in the month of March, 2023 to
deposit the EMIs of January and February, 2023 as well as
EMI of March, 2023 but the plaintiff officials refused to
receive the same. Defendants are willing to pay the same
within the time. Plaintiff bank illegally and unlawfully
demanded the entire amount and in this regard the
defendants requested to the plaintiff bank that they have
no right to demand the entire remaining balance amount in
one go as per the terms and conditions of the loan
agreement, but the plaintiff bank officials did not accede
to the said request of the defendant. Rate of interest as
alleged in the plaint are too much excessive, which is not
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tenable as per the Banking Rules and in the eyes of law. It
is further submitted that at the time of granting the loan,
the defendant was not informed about the exorbitant rate
of interest. The bank has not given the details of the
interest charged on the principal amount the statement of
account did not reflect the actual rate of interest charged
on the borrowing amount, neither the bank has given the
rate of penal interest charged on the borrowing amount
and the head on charges debited in the account of the
defendant. The details of the interest charged in the
defendant's account is not properly reflected. Hence, the
present suit liable to be dismissed. Reliance is placed upon
the matter reported in AIR 2001 Supreme court, 3095, in
the matter “Central Bank of India Vs. Ravinder and
Others” wherein it is stated that
"The bank is bound by the
direction of the Reserve Bank of India to make an
averment in the plaint that interest has been interest
/compound charged at such rates and capitalized at such
periodical rests as are permitted by the Reserve Bank of
India. A statement of account shall be court filed in the
showing details and giving particulars of debit entries and
if debit entries relates to interest then getting out also the
of period of which the interest has best charged. Herein in
the case, present the statement of account did not show
how the interest has been charged and at what rate and for
which period the interest has been charged. The statement
of account which has been filed by the plaintiff bank is
like a doctor's prescription, which could be understood by
the doctors himself only. The interest charged by the
plaintiff bank is manifold, the amount actually advanced,
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the Penal interest, services charges and other overhead
charges are debited in the account of the defendant and
capitalized of which debit the defendant is not even aware
of."
5. In reply filed by the plaintiff to the leave to defend
application, plaintiff reiterated the averments made in the
plaint.
6. Arguments heard as advanced by Ld. Counsel for the
plaintiff. None has appeared on behalf of the defendant
despite several calls since morning. Last opportunity has
already been given to the parties to address arguments on
leave to defend application. Accordingly, opportunity of
the defendant to address arguments on the said application
stands closed. However, this Court has considered the
leave to defend application moved on behalf of the
defendant. The plaintiff had instituted the present suit
under Order XXXVII CPC on the basis of loan documents
The said loan documents
prima-facie shows that the same
have been signed by the defendant. As per the loan
statement, defendants have defaulted in making in the
payment. The plaintiff had further relied upon legal notice
and postal receipts. A suit based upon loan agreement
squarely falls under Order XXXVII CPC.
7. Furthermore, it is mentioned in the plaint as well as
argued on behalf of the plaintiff that the cause of action
arose within the territorial jurisdiction of this Court.
8. The defence of the defendant that the statement of account
did not show how the interest has been charged and at
what rate and for which period the interest has been
charged, is a triable issue.
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9. The Hon’ble Supreme Court of India has summarized the
principles with respect to adjudication of leave to defend
in a suit under Order XXXVII CPC in the case titled as
B.L. Kashyap & Sons Ltd. v. JMS Steels & Power Corpn.,
(2022) 3 SCC 294. It was held as follows:
“It is at once clear that even though in IDBI
Trusteeship [IDBI Trusteeship Services Ltd. v.
Hubtown Ltd.,0(2017) 1 SCC 568 : (2017) 1 SCC
(Civ) 386] , this Court has observed that the
principles stated in para 8 of Mechelec Engineers
case [Mechelec Engineers & Manufacturers v.
Basic Equipment Corpn., (1976) 4 SCC 687] shall
stand superseded in the wake of amendment of Rule
3 of Order 37 but, on the core theme, the principles
remain the same that grant of leave to defend (with
or without conditions) is the ordinary rule; and
denial of leave to defend is an exception. Putting it
in other words, generally, the prayer for leave to
defend is to be denied in such cases where the
defendant has practically no defence and is unable
to give out even a semblance of triable issues before
the court.
33.1. As noticed, if the defendant satisfies the Court
that he has substantial defence i.e. a defence which
is likely to succeed, he is entitled to unconditional
leave to defend. In the second eventuality, where
the defendant raises triable issues indicating a fair
or bona fide or reasonable defence, albeit not a
positively good defence, he would be ordinarily
entitled to unconditional leave to defend. In the
third eventuality, where the defendant raises triable
issues, but it remains doubtful if the defendant is
raising the same in good faith or about genuineness
of the issues, the trial court is expected to balance
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the requirements of expeditious disposal of
commercial causes on one hand and of not shutting
out triable issues by unduly severe orders on the
other. Therefore, the trial court may impose
conditions both as to time or mode of trial as well
as payment into the court or furnishing security. In
the fourth eventuality, where the proposed defence
appears to be plausible but improbable, heightened
conditions may be imposed as to the time or mode
of trial as also of payment into the court or
furnishing security or both, which may extend to
the entire principal sum together with just and
requisite interest.
33.2. Thus, it could be seen that in the case of
substantial defence, the defendant is entitled to
unconditional leave; and even in the case of a
triable issue on a fair and reasonable defence, the
defendant is ordinarily entitled to unconditional
leave to defend. In case of doubts about the intent
of the defendant or genuineness of the triable issues
as also the probability of defence, the leave could
yet be granted but while imposing conditions as to
the time or mode of trial or payment or furnishing
security. Thus, even in such cases of doubts or
reservations, denial of leave to defend is not the
rule; but appropriate conditions may be imposed
while granting the leave. It is only in the case where
the defendant is found to be having no substantial
defence and/or raising no genuine triable issues
coupled with the court's view that the defence is
frivolous or vexatious that the leave to defend is to
be refused and the plaintiff is entitled to judgment
forthwith. Of course, in the case where any part of
the amount claimed by the plaintiff is admitted by
the defendant, leave to defend is not to be granted
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unless the amount so admitted is deposited by the
defendant in the court.
33.3. Therefore, while dealing with an application
seeking leave to defend, it would not be a correct
approach to proceed as if denying the leave is the
rule or that the leave to defend is to be granted only
in exceptional cases or only in cases where the
defence would appear to be a meritorious one. Even
in the case of raising of triable issues, with the
defendant indicating his having a fair or reasonable
defence, he is ordinarily entitled to unconditional
leave to defend unless there be any strong reason to
deny the leave. It gets perforce reiterated that even
if there remains a reasonable doubt about the
probability of defence, sterner or higher conditions
as stated above could be imposed while granting
leave but, denying the leave would be ordinarily
countenanced only in such cases where the
defendant fails to show any genuine triable issue
and the court finds the defence to be frivolous or
vexatious.”
[Emphasis supplied]
10. In view of the above cited judgment, though the defendant
had raised triable issues, however, still a doubt exists
regarding the genuineness of the same as defendant has
admitted that he has obtained loan from the plaintiff bank
and therefore, without expressing any opinion on the
merits or the de- merits of the case of the plaintiff, the
defendant is granted leave to defend with condition that he
will deposit Rs.2,00,000/- (Rupees Two Lakhs only)
before the Court by way of fixed deposit in the name of
this Court by the next date of hearing. Accordingly, the
application for leave to defend is disposed of as allowed.
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The defendants are directed to file written statement
within the stipulated time period with advance copy
thereof to the opposite side.
11. Replication may be filed thereafter by the plaintiff with
advance copy of the same to the opposite party.
12. Put up for filing of FDR, completion of pleadings and
affidavits of admission / denial of documents on
15.01.2026.
Announced in the open Court
on 03.11.2025
(PANKAJ ARORA)
DISTRICT JUDGE-16/ CENTRAL:
TIS HAZARI COURT:DELHI/03.11.2025
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