IN THE COURT OF SH. KAMLESH KUMAR, ADJ (CENTRAL) -17, DELHI

Suit No. 673/08

Bank of BarodaA body corporate having its Head Office at Mandvi, Baroda,And inter alia a branch called Greater Kailash Branch, at M-20, Greater Kailash Part I,New Delhi-110048 .....Plaintiff

Versus

1. Ms. Sonali Soni M-35, Flat No.6,Greater Kailash-I, New Delhi-110048

2. Ms. Raj Dulari Ratti,63(G) Block V, Eros Garden,Charmwood Village, Suraj Kund Road,Faridabad, Haryana

3. Ms. Anila SoniM-168A, Greater Kailash-I,New Delhi-110048

4. Ms. Shakuntala SoniM-168A, Greater Kailash-I,New Delhi-110048 ......Defendant

Date of Institution of Suit : 01.04.2006Date of Decision : 23.10.2009

JUDGMENT

This is a suit for recovery of Rs.8,68,288/- filed by the Plaintiff,

Bank of Baroda, against the Defendant, Ms. Sonali Soni and

others.

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2) The Plaintiff, a body corporate, constituted and functioning

under the Banking Companies (Acquisition & Transfer of

Undertakings) Act, 1980; having its Head Office at Baroda and a

branch at Greater Kailash Part-I, New Delhi, was approached by

Ms. Sonali Soni, the Defendant no.1 for an educational loan on

04.01.2002. The Plaintiff sanctioned a loan of Rs.6,65,000/- for

Diploma in Hotel and Restaurant Management, a course of one year

from Swiss School of Hotel and Tourism Management, Switzerland on

the basis of a provisional letter of acceptance dated 30.08.2001. The

Defendants executed various documents viz Demand Promissory-

Note for Rs.6,65,000/-; letter of installment with acceleration

clause dated 11.01.2002 (got executed by the Defendant no.1);

General Form of Guarantee dated 11.01.2002 (executed by the

Defendant no.2,3 & 4) and draft undertaking dated 11.01.2002

executed by all the four Defendants. The loan amount of

Rs.6,48,800/- was disbursed by the Plaintiff Bank and the Defendant

no.1 was to repay the said educational loan in 35 monthly

installments of Rs.18,475/- each and further a sum of Rs.18,375/-,

the 36th and last instalment, with interest @ 12% p.a. with monthly

rests.

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3) The Plaintiff was informed by Mr. Ravi Soni, father of the

Defendant no.1 vide his letter dated 12.09.2003 that the course was

likely to be completed in the month of September 2003 and a

similar information request was given by the Defendant no.3 to the

Plaintiff vide letter dated 18.11.2003. The Defendants requested

that the repayment may start in January 2004 after the period of

moratorium. The Plaintiff Bank accepted the request, though the

delay was not explained but the loan was rescheduled with

repayment to start after a moratorium of 12 months of the

completion of Diploma Course. The repayment was to commence

from February 2004 and the monthly installments were tentatively

rescheduled to Rs.28,232/- (including interest) per month payable

in 36 installments. The Plaintiff requested the Defendant to furnish

a copy of the course completion certificate and the Defendants

submitted a certificate dated 29.05.2002 according to which the

Defendant no.1 had successfully completed the course.

4) The Defendant no.3 (guarantor) made a payment of Rs.4000/-

in the month of June 2004 and further payments totalling to

Rs.1,48,815/- were made in the months of November and

December 2004. The Defendants, however, failed to make any

payment thereafter. The Defendant no.1 failed to pay the monthly

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installments regularly and thus became liable to pay the amount

with penal interest @ 2% over and above the stipulated rate of

interest. The payment of Rs.1,48,815/- on behalf of the Defendant

no.1 was made by the Defendant no.3 by seeking adjustment of

fixed deposits already pledged with the Plaintiff Bank as security

vide letter dated 16.01.2004. The Plaintiff repeatedly requested the

Defendants to make payment of the loan amount and also got

issued a legal notice dated 11.02.2005. The Defendants, however,

failed to pay and Shri Ravi Soni, father of Defendant no.1 on behalf

of all the Defendants, replied to the legal notice raising objection to

the rate of interest being charged and did not make any payment

whatsoever. The Defendant no.1 as principal borrower and

Defendants no.2 to 4 as guarantors became jointly and severally

liable to pay the sum of Rs.8,68,288/- as on 31.03.2006. Hence the

suit.

5) The Defendants have contested the suit. In their written

statement, the Defendants claimed that the suit has been filed with

malafide intention to harass them overlooking the objectives of

educational loan scheme. The Defendants alleged that only an

amount of Rs.5,88,800/- was disbursed against the sanction of

Rs.6,65,000/- and for the rest of amount, the Defendant no.1 had

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to run from pillar to post. The Defendants denied that the

Defendant no.1 had taken the loan for the purpose of one year

diploma course in hotel management from Swiss School of Hotel

Management, Switzerland. The Defendants submitted that the

course was of full duration out of which one year was to be

completed from Switzerland. The Defendants, further, alleged that

the Plaintiff Bank got their signatures on blank papers in the name of

completing formalities. The Defendants denied that the repayment

of the loan had to be made in 36 months and submitted that the

loan is required to be paid over a period of 5 to 7 years under the

educational loan scheme and the Plaintiff has been acting in

contravention thereof. The Defendants also alleged that the Plaintiff

had not provided the sanction letter as well as the schedule of

repayment etc. and denied that the Plaintiff was informed that the

course of the Defendant no.1 would be completed by September

2003. The Defendants also alleged that the payments made in

March 2004 to the Plaintiff is not reflected in the statement of

account. The Defendants also submitted that they were made to

surrender the FDRs towards the repayment of the loan. The

Defendants claimed that the Plaintiff has not implemented the

educational loan scheme as per RBI Guidelines. The Defendants

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denied that they ever acknowledged the debt vide letter dated

14.10.2004. The Defendants prayed that the suit be dismissed.

6) On the pleadings of the parties, the following issues were

framed :-

1 Whether the Plaintiff is entitled to claim the amount of Rs.8,68,288/-, as prayed for? OPP

2 Whether the Plaintiff is entitled to claim interest, if so, at what rate, on what amount and for what period? OPP

3 Whether the Plaintiff has overlooked the obligations under the Educational Loan Scheme and has not disclosed the date of declaring NPA, if so, its effect? OPP

4 Relief

7) The parties were called upon to lead their respective evidence

on the issues. The Plaintiff examined Shri O.P. Arora, its Manager

as PW1. He led evidence through his Affidavit Ex.PW1/A and proved

on record the documents relied on by the Plaintiff Bank as

Ex.PW1/1 to Ex.PW1/21. The Defendants examined Shri Ravi Soni

as DW1. He led evidence through his Affidavit Ex.DW1/A and

proved on record the documents Ex.DW1/1 to Ex.DW1/3 and

Ex.DW1/6 to Ex.DW1/16.

8) PW1 Shri O.P. Arora, proved on record his affidavit Ex.PW1/A;

power of attorney executed in his favour by the Bank as Ex.PW1/1;

application of Defendant no.1 for educational loan as Ex.PW1/2,

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the documents executed by the guarantors as Ex.PW1/3 to

Ex.PW1/5. He also proved on record, the demand promissory note

and letter of installment as Ex.PW1/6 and Ex.PW1/7. He further

proved on record the General Form of Guarantee executed by the

Defendants no. 2,3 & 4 and undertaking dated 11.01.2002 as

Ex.PW1/8 and Ex.PW1/9. He also proved on record the pledge of

Fixed Deposits Receipts for Rs.1,80,000/- as Ex.PW1/10. He,

further, proved on record the request of Defendant no.1 to release

the sum of Rs.60,000/- after initial release of Rs.5,88,800/- , the

previous day as Ex.PW1/11. He proved on record the letter written

by the father of the Defendant no.1 Mr. Ravi Soni as Ex.PW1/12

and letter written by Mrs. Anila Soni mother of the Defendant no.1

and the Defendant no.3 as Ex.PW1/13. The copies of letters dated

18.11.2003, 16.03.2004 and 20.04.2004 issued by the then Chief

Manager of the Plaintiff Bank regarding the payment of loan have

been proved as Ex.PW1/14 to Ex.PW1/16. He also proved on record

the letter dated 01.06.2004 addressed by the father of the

Defendant no.1 informing the Plaintiff Bank that due to financial

difficulty, they could not repay the amount but had every intention

to do so and stated that the entire amount would be repaid in the

end of June 2004. The copy of the letter has been proved on record

as Ex.PW1/17. He also proved on record letter dated 16.11.2004

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whereby the Defendant no.3 requested the Plaintiff Bank to adjust

the fixed deposits already pledged with the Bank. He further proved

on record the statement of account duly certified under Bankers

Book Evidence Act as Ex.PW1/21. When cross-examined by ld.

Counsel for the Defendants, he testified that Shri Naresh Gupta

who had signed the plaint, is constituted Attorney of the Bank and

he had produced the same on record as Ex.PW1/1. In further

cross-examination, he testified that the loan in question had been

sanctioned as per the scheme prevalent at that time and that the

loan was not sanctioned as per the scheme which came into force

later on. He, further, testified that the penal interest has been

charged after the Defendants failed to make the payment. He

testified in further cross-examination that the amount of loan is

disbursed to a customer on the basis of his demand and that in the

instant case as against the sanction of loan of Rs.6.65 lacs, the

Defendant no.1 had taken only two installments totalling to

Rs.6,48,800/- and that the Bank kept the upper limit of the loan

intact till completion of the education. He testified that the

document Ex.PW1/7 had been filled in by him, in presence of the

customers (borrower) and had signed in his presence. He denied the

suggestion that signatures of the Defendants had been obtained on

blank forms/papers. He admitted the suggestion of the Defendants

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to be correct that the loan was to be repaid to the Bank by the

Defendant no.1 / customer after one year of completion of the

course by her. He denied the suggestion that the suit is premature

as the Defendant no.1 had not completed her course on the date of

filing of the suit.

9) DW1 Shri Ravi Soni led evidence through his Affidavit

Ex.DW1/A and proved on record, the documents Ex.DW1/1 to

Ex.DW1/3 and Ex.DW1/6 to Ex.DW1/16. His Affidavit is on the

lines of the written statement. He proved that he was authorised by

the Defendants to depose on their behalf. He proved on record the

passbook showing the disbursement of loan as Ex.DW1/6 and

letters addressed to the Plaintiff with regard to the schedule of

payment as Ex.DW1/7 to Ex.DW1/12. He also proved on record the

statement of Bank account, list of collateral security and passbook

showing transactions of personal loan of Rs.50000/- as Ex.DW1/13

to Ex.DW1/15 and copy of the reply to the legal notice as

Ex.DW1/16. When cross-examined by the ld. Counsel for the

Plaintiff, he testified that the Defendant no.1 was in Bombay in the

first half and in Delhi in the second half of the year 2006. He, further,

testified that the Defendant no.1 is trying to set-up her own

management consultancy services at Dubai. He denied the

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suggestion that loan advanced to the Defendant no.1 was towards

one year advanced study programme. He volunteered that the

Defendant no.1 extended her studies and the course was completed

in September 2006. He testified that the Defendant no.1 had

extended her studies by two years. He also testified that the Bank

was informed on regular basis during the period 2002 to 2006

regarding the extended studies and that the Bank was particularly

informed when its officials visited his house. He testified that both of

his statements namely - (I) denying the suggestion that loan

advanced was towards one year study programme, (ii) the portion

marked X to X1 in Ex.PW1/12 viz - we expect Sonali to finish her

studies in September 2003 - are correct. He further testified that

the loan was applied in the year 2002 when she was in the second

year of the course. He further testified in cross-examination that he

had made representation to the Bank regarding the extension of

studies in his personal meetings with Bank Officials. He, further,

testified that in his letters, he had indicated that the course had

been extended by the Defendant no.1.

10) I heard the ld. Counsel for the parties at the bar and have

carefully gone through the record. My findings on the issues are as

under:-

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Issue No.1 Whether the Plaintiff is entitled to claim the amount of Rs.8,68,288/-, as prayed for? OPP

Issue No.2 Whether the Plaintiff is entitled to claim interest, if so, at what rate, on what amount and for what period? OPP

11) I propose to decide both the issues, being interrelated,

simultaneously. The onus was on the Plaintiff to prove that it is

entitled to claim the suit amount and interest thereon. PW1 Shri

O.P. Arora has proved the loan application made by the Defendant

no.1 Ms. Sonali Soni for educational loan. He has also proved on

record, the sanction of educational loan of Rs.6,65,000/- and

disbursement of Rs.6,48,800/- as per request/requirement of

Defendant No.1. He has also proved on record, the documents viz

demand promissory note, letter of installment, general form of

guarantee and undertaking executed by the Defendants. It is

evident from these documents that a loan of Rs. 6,48,800/- was

availed by the Defendant no.1 and the Defendants no.2, 3 & 4 stood

guarantee and also furnished undertaking towards repayment of

the loan amount. Shri O.P. Arora PW1, has proved that the

Defendant no.1 was to repay the educational loan in equal monthly

installments of Rs.18,475/- with the last and final 36th installment

of Rs.18,375/-. He has proved on record that the father of the

Defendant no.1 Mr. Ravi Soni, as her attorney, informed that the

course would be completed by September 2003. He also proved that

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the Defendant no.3 also informed the Bank similarly. He proved the

letters sent by the Defendant no.1 and Defendant no.3 dated

12.09.2003 and 18.11.2003 on record. He has, further, proved on

record that at the request of the Defendants, the repayment-

schedule of the loan was revised. The repayment was to commence

from February, 2004 in monthly installments of Rs.28,232/-. It has

come over record that the Defendant No.1 completed her course

on 29.05.2002 and the Defendants furnished to the Plaintiff, a

certificate issued by Swiss School of Hotel Management, Switzerland.

Shri O.P. Arora also proved on record that on the basis of request

made by Defendant no. 3 vide her letter dated 16.11.2004, a sum of

Rs.1,48,815/- was adjusted in the loan account from the fixed

deposits pledged by her. Shri O.P. Arora has proved on record that

the Defendants only paid a sum of Rs.1,52, 815/- whereas a sum of

Rs.3,72,303/- was payable as interest on the principal amount of

Rs.6,48,800/- and thus, as on 31.03.2006, an amount of

Rs.8,68,288/- was payable by the Defendants.

12) The counsel for the Defendants and Shri Ravi Soni, father of

the Defendant no.1 contended that the Plaintiff Bank has acted in

contravention of the educational loan scheme regarding the

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repayment schedule and the interest chargeable. The contention of

the Defendants has force in the eyes of law. The Plaintiff Bank is a

Government of India undertaking and has acted strictly in

accordance with the guidelines issued by the RBI. The Defendants

have failed to show by documentary or any other evidence on

record as to how the Plaintiff Bank has contravened any policy of

the Government of India or Reserve Bank of India. The Defendants

apparently have failed to understand the different schemes issued

by the RBI. In fact, the scheme applicable at the relevant time and

thereafter, were provided to Shri Ravi Soni, father of the Defendant

no.1, under the Right to Information Act also. However, the

Defendant no.1, as principal borrower and Defendants no.2 to 4, as

guarantors are bound by the terms of the sanction of loan as on

11.01.2002. Any changes in scheme could be effective only with

the consent of both the parties and the Defendants have failed to

show as to how there was any change in the scheme and whether

the Bank accepted/implemented any of such modifications. The

record, on the other hand, reveals that the Plaintiff Bank revised

the repayment schedule also at the request of the Defendants.

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13) The contention of the Defendants that the Plaintiff Bank

could not have asked them to furnish any collateral security is

contrary to the scheme issued by the Reserve Bank of India which

was followed by the Plaintiff Bank. The Plaintiff Bank, in fact, could

ask for collateral security equal to 100% of the loan amount or co-

obligation of parent/guardian/third party alongwith the assignment

of future income of the student, for payment of the instalments, in

case the loan sanctioned was above Rs.4 lacs. The scheme also

provides that the documents were to be executed by both the

students and the parent/guardian. The scheme also provided that

the security could be in the form of Government Securities, Public

Sector Bonds, NSCs, Bank Deposits etc. in the name of student

/parent / guardian or any other third party. The scheme also

clearly provided that the Bank could ask for margin money in case

the loan sanctioned was above Rs.4 lacs. The scheme provided for

the rate of interest chargeable including the penal interest. The

Defendants have failed to show that any of these terms and

conditions have been contravened by the Plaintiff Bank. The

contention of the ld. Counsel for the Defendants is, accordingly,

rejected.

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14) Ld. Counsel for the Defendants submitted that the Plaintiff

Bank has violated the terms of repayment. The scheme clearly

provided the repayment holiday/moratorium was the course

period + 1 year or six months after getting job whichever is earlier.

The loan was repayable in five years after the said period. These

terms and conditions have not been disputed by the Plaintiff Bank.

The record reveals that at the time of sanction / disbursement of

the loan, the parties agreed that the repayment would be in 36

monthly instalments. Even after the loan was repayable in 5 to 7

years, it was for the Defendants to accept or not to accept the said

conditions of repayment proposed by the Bank. However, after

accepting the same, the Defendants have challenged the same. In

fact, the record reveals that the Defendants never challenged the

terms and conditions of the repayment even till the year 2005.

15) Shri Ravi Soni, father of the Defendant no.1, vide his letter

dated 26.08.2004 (Ex.DW1/12) addressed to Chief Manager of the

Plaintiff Bank stated that they are totally committed to repay the

loan and it was only because they did not have the funds that they

had not been able to make the payment. He regretted that the

funds that were expected many months ago had not been received

and due to non-availability of funds, the instalments for the

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months February to August could not be made. He assured that he

would be able to make the payment after mid-September, when he

expected the funds to be available. It was only when the Defendants

failed to pay the loan installments and after the amount pledged by

the Defendant no.3, in the shape of FDRs, was also adjusted, that

the Defendants started taking contrary stands. Shri Ravi Soni,

father of the Defendant no.1 and attorney of all the Defendants,

had himself informed the Bank that Ms. Sonali Soni was expected

to finish her studies in September 2003.

16) The Defendants inexplicably have taken the stand that the

Defendant no.1 had not taken the loan, for a one - year course. The

Defendants pleaded that the said course was of full duration and

only one year was to be completed in Switzerland. This plea of the

Defendants clearly shows utter dishonesty on their part. The loan

application Ex.PW1/2 clearly shows that the duration of the course

was one year and it was full time. It is, thus, clear that the course

was definitely full time but was of one year duration only. This is

clearly evident from the particulars of the course for which the loan

was required. The contents of the application form are admitted by

the Defendants except the instalments part. It is thus evident that

the Defendants have accepted/admitted all the contents which

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included the duration of the course and can not dispute the same.

In fact, the instalments part has not been admitted by the attorney

of the Defendants only because the loan has not been repaid as

agreed.

17) DW Shri Ravi Soni has testified in his cross-examination that

the Defendant no.1 extended her studies. Obviously, the extension

of studies or going for still higher studies was not a part of terms and

conditions of the loan sanctioned. It is not the case of the

Defendants that the Defendant no.1 could not complete the course

of one year. Had she been unsuccessful or had she required more

time to complete that one year course, the period of moratorium

could be extended. The certificate issued by the institution of the

Defendant no.1, however, shows that she had successfully

completed the course by 29.05.2002. DW Shri Ravi Soni was

specifically asked in cross examination if he or the Defendant no.1

had informed the Bank about the extension of studies. He remained

evasive and stated that he informed the Bank officials orally and in

personal meetings. This plea definitely does not inspire confidence.

The record reveals that DW Shri Ravi Soni has/had been writing a

number of letters - one after the other regarding the repayment. He

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would have definitely written about the extension of studies also if

that was really the case. It is, therefore, evident that his plea is an

afterthought. Shri Ravi Soni, as attorney of the Defendants and as

father of the Defendant no.1, has clearly taken false pleas just to

avoid or delay the repayment of the Bank loan. His contention that

the course was not of one year or that the rate of interest charged

was not as per the Bank's scheme etc. has no force whatsoever in

the eyes of law and facts on record and hence rejected.

18) The record reveals that the Plaintiff Bank adopted a very

cooperative attitude, keeping in view the nature of the loan and

beneficiary thereof. The Plaintiff not only revised the schedule of

repayment but also repeatedly requested the Defendants to repay

the outstanding dues. In pursuance of the suggestions made by the

court, the Plaintiff Bank even agreed to settle the matter amicably

and met the Defendants on a number of occasions but all such

efforts failed. The record reveals that the attorney of the Defendants

Shri Ravi Soni raised all sorts of unsustainable pleas. He alleged

that the Defendant no.1 was made to run from pillar-to-post for

disbursement of the loan which is contrary to record. The first

installment of the loan was disbursed on 11.01.2002 and the

second on 12.01.2002, when so requested by the Defendant no.1.

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It, therefore, appears very strange that Shri Ravi Soni has levelled

false allegations against the Bank officials. The record also reveals

that in his cross-examination, Shri Ravi Soni has taken

contradictory pleas. He admitted having written to the Bank that

the studies of Ms Sonali were expected to be completed by

September 2003 and yet claimed that she had not completed her

studies upto the year 2006. Such testimony makes him an

unreliable / untrustworthy witness. The person who can take pleas

contradictory to the one on record in writing, in the shape of

documents certainly can not be trusted. Apparently, the

Defendants attorney has done so, to avoid the payment of legal

dues to the Plaintiff Bank. He might have initially faced certain

difficulties in arranging the payment as is evident from his letters

addressed to the Bank. However, at the time of his cross

examination, he admitted that the Defendant no.1 was in India in

Bombay in the first half and in Delhi in the second half in the year

2006. Obviously, she would have been working gainfully at that

time. Yet, she did not choose to make the payment of the loan

amount. Shri Ravi Soni has, also, admitted in his cross-

examination that the Defendant no.1 is setting up her own

consultancy in Dubai. Obviously, she would be having sufficient

funds to do so. It is, thus, clear that the Defendants did not and do

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not intend to repay the Bank loan and this fact has resulted in

taking false pleas in the court. Shri Ravi Soni has falsely alleged

that the Defendant no.3 was compelled to surrender the fixed-

deposits. The letter written by the Defendant no.3 and the

circumstances at that time clearly show that there was no coercion

whatsoever from the Plaintiff Bank. The Plaintiff has thus clearly

established on record that the Defendant is liable to pay the suit

amount.

19) The Defendants have paid a sum of Rs.3,88,916/- towards the

principal amount ( as admitted liability) during the trial i.e. on

30.11.2007. The said amount has been duly adjusted against their

liability by the Plaintiff Bank. The Plaintiff Bank has also charged

simple interest during the period March 2002 to March 2005 and

compound interest thereafter, as per the Bank scheme. The Plaintiff

has clearly established that the Defendants are liable to pay a sum

of Rs.6,40,217/- as on 30.09.2009. This statement of account has

been placed on record by the Plaintiff Bank after revising the rate of

interest strictly as per the Bank scheme. The issues no. 1 & 2 are,

therefore, decided in favour of the Plaintiff and against the

Defendants.

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Issue No.3 Whether the Plaintiff has overlooked the obligations under the Educational Loan Scheme and has not disclosed the date of declaring NPA, if so, its effect? OPP

20) In view of my findings on the Issues No. 1 & 2 above, this

issue is also decided against the Defendant and in favour of the

Plaintiff.

21) Relief

In view of my findings on the issues above, I hold that the

Plaintiff is entitled to the amount of loan disbursed to the

Defendant no.1 with simple interest @ 11.5% from March 2002 to

May 2005 and compound interest thereafter w.e.f. June 2005

pendentelite and future till realisation.

22) The suit of the Plaintiff succeeds and is decreed in favour of

the Plaintiff and against the Defendants. The Plaintiff Bank shall

also be entitled to the costs of the suit.

23) Decree sheet be drawn accordingly. File be consigned to

record room.

Announced in the open court (KAMLESH KUMAR)Today i.e. on 23 October, 2009 Additional District Judge

DELHI

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Suit No.673/08

23.10.2009

Present: None.

Vide my separate judgment of the date, the suit of the

Plaintiff has been decreed. Decree sheet be drawn accordingly.

File be consigned to record room.

(Kamlesh Kumar)ADJ/Delhi23.10.2009

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