Judgment:
1. This appeal is filed by the appellants original applicant Sangli Bank Ltd. being aggrieved by the judgment and order dated 2nd July, 2004 passed by the learned Presiding Officer of the DRT-II, Mumbai in Original Application No. 204/2000 (High Court in Suit No. 3691 of 1995). By the impugned judgment and order, the learned Presiding Officer allowed the original application in favour of the Bank with no order as to costs against all the defendants subject to that liability of legal representatives of defendant No. 7 Madhusudan Kamani (deceased) would be restricted to the extent of available estate, if any, in her hands from deceased Madhusudan Kamani and the learned Presiding Officer ordered the defendants to pay jointly and severally to the applicant Bank a sum of Rs. 15,00,000/- with interest at the rate of 16.5% per annum with quarterly rests from 19th August, 1992 till the date of filing of the original application with further directions that the said amount would be adjusted/set off against to be adjudged pecuniary liability of the Bank in Small Causes Suits No. LEC ] 25/139, 126/140 both of 1994 and 3/4 of 1995 filed by the defendant Nos. 1 to 5. The learned Presiding Officer further ordered the balance if any, was to be recovered subsequently and directed issuance of recovery certificate in the above stated terms. The Bank however, is aggrieved because though its claim was adjudicated, the execution of the recovery certificate was deferred till final outcome of the suits filed by the defendants/landlord against the Bank which are pending in the Small Causes Court, Mumbai.
2. To understand the controversy, few facts, which are required to be stated are as follows : The applicant Sangli Bank Ltd. at the request of the defendant Nos.
1 to 5 agreed to grant loan of Rs. 30 lacs on the guarantee of defendant Nos. 6 to 10. The defendant Nos. 1 to 5 by their letters dated 11th August, 1992 requested the applicant Bank to pay to M/s.
Kamani Buildings (defendant Nos. 6 to 10 are partners) a sum of Rs. 3 lacs on behalf of each of them. The applicant Bank acceded to the request. Accordingly, the defendant Nos. 1 to 5 delivered demand promissory notes dated 19th August, 1992 for Rs. 15 lacs with interest at the rate of 19.75% per annum. The defendant Nos. 6 to 10 executed the guarantee agreement. Accordingly, a sum of Rs. 15 lacs was released. However, the repayment was not made. Therefore, the Bank demanded the amount from the borrowers and subsequently invoked the guarantee. However, no payment was even then made. Therefore, the Bank was constrained to file the original application.
3. The defendant Nos. 1 to 5 appeared and filed their joint written statement wherein they admitted that the loan was sactioned by the Bank and that the guarantee was also given by them. It was further their contention that they forwarded blank documents like demand promissory notes, guarantee etc. to the applicant Bank for releasing facility to the extent of Rs. 30 lacs. The Bank subsequently filed the matter in the documents including the date 19th August, 1992 showing that the documents were executed on that day. It was their contention that they had so given blank documents because the applicant Bank was licensee in respect of certain premises owned by M/s. Kamani Buildings of which defendant Nos. 1 to 5 were partners. According to the applicant Bank, they wanted to expand their business and had requested for giving additional premises, which was agreed by them (defendant Nos. 1 to 5) with the consent of landlord Kamani Buildings. It was contended that the Bank in the Board meeting held on 8th September, 1989 agreed to sanction the loan in question to be utilized for payment of taxes to BMC, repairs of the building and for clearing old dues of the defendants sister concern payable to the Bank. It was agreed that repayment was to be made from the lease rentals. The documentation in respect of allotment of additional premises was to be done by Little and Co. (it was not done). There were several meetings between the parties for completion of the transaction including final negotiations between the Chairman of the Bank and Mr. Ashok Kamani, which were held on or about 19th August, 1992. The Bank however, did not take additional premises which were lying vacant, thereby compelling the defendant Nos. 1 to 6 to file suit against the Bank (High Court Suit No. 315 of 1995) for recovery of Rs. 15 lacs for committing breach of the contract. It was contended that the letters dated 11th August, 1992 given by the defendant Nos. 1 to 5 mention that loan of Rs. 3 lacs was sanctioned on that date. It was also contended that the guarantee agreement did not corroborate the contract with the borrowers since it mentions that the sum mentioned of Rs. 16 lacs was to be disbursed as against actual disbursement of Rs. 15 lacs. The contention was also with respect to the rate of interest being wrongly mentioned. On these grounds, it was prayed that the original application be dismissed.
4. The guarantors (defendant Nos. 6 to 10) filed common written statement in which identical submissions were made.
5. The learned Presiding Officer after hearing both the sides and after going through the entire material placed before him, allowed the original application in favour of the Bank. He however, deferred the execution of the recovery certificate till the final outcome of the suits pending in the Small Causes Court. It is this portion of the order, which is hurting the Bank. Hence, the appeal.
6. Mr. Nagori, the learned Advocate appearing for the applicant Bank argued that once the Bank's claim was adjudicated, why the Bank should be asked to wait till the outcome of the suit, pending in the Small Causes Court. It was contended that those suits would take a very longer time and why the Bank should suffer for all these years.
Grievance was also made that the Bank was deprived of the interest.
7. Having gone through the proceedings, it is amply clear that the sanction of the loan was not pure and simple banking transaction. The admitted position is that the Bank had agreed in July/August, 1992 to sanction loan of Rs. 30 lacs to the defendant Nos. 1 to 5. In the original application, the Bank did not state this, but it was indeed a common ground that sanction of loan was not pure and simple banking transaction and the parties admitted that the Bank was in possession of certain premises belonging to Kamani Buildings and defendant Nos. 1 to 5 and their family members had given the said premises to the Bank on rent/lease and licence basis. The rentals were security for repayment of the loan in question. The loan in fact was agreed to be sanctioned as part of lengthy negotiations aimed at clearing outstandings of sister concerns of the family of defendants, who were indebted to the Bank and granting additional premises to the Bank. On this point, there is certain controversy. The defendants' case is that the negotiations ended on or about 19th August, 1992, but the Bank's case is that the talks did not terminate, much less that enforceable contract came into force.
8. The grant of loan as alleged by the Bank and defendant Nos. 6 to 10 having signed a guarantee agreement is an admitted position. Their contention is that on 30th July, 1992, defendant Nos. 1 to 5 had sent blank letter of lien, demand note for grant of Rs. 30 lacs to the Bank, which indeed, appears to be correct. However, it has to be pointed out that settled legal position is that the person who signs blank standard documents takes responsibility for the same and the plea of non est factum is not available to him.
9. After discussing the evidence on record, the learned Presiding Officer came to the conclusion and rightly so, that the defendants were jointly and severally liable to pay to the applicant Bank a sum of Rs. 15 lacs. The rate of interest awarded by him was at the rate of 16.5% per annum with quarterly rests from 19th August, 1992 till the date of filing of the original application in para 12 of the judgment and order, the learned Presiding Officer has given reasons for awarding this rate of interest. There was no sanction letter to show that the agreed rate of interest was at the rate of 19.75% per annum as claimed by the Bank. In the statement of account, there were only debit entries, all of interest, but the Bank had not quantified the rate at which it had been calculated. The rate of interest mentioned in the demand promissory note was at the rate of 19.75% per annum and the learned Presiding Officer indeed, observed that it was not unlikely that interest had been calculated at that rate, but interest allowable up to the date of original application would be at the rate of 16.5% per annum. Accordingly, the learned Presiding Officer granted rate of interest at the rate of 16.5% per annum, which was correct.
As far as subsequent period was concerned, according to the learned Presiding Officer, no interest was allowable for the above mentioned reasons. The applicant Bank was admittedly a tenant/licensee of certain premises in Kalbadevi in which it had its branch. The rent/licence fee was admittedly unpaid because the rentals were to be adjusted in the loan account. The defendant Nos. 1 to 5 had claimed rent/ compensation from the Bank in LEG Suit Nos, 125/139,126/140 both of 1994 and 3/4 of 1995, the agreed claim in the suit was slightly higher than the original application amount pending in the Small Causes Court, Mumbai.
Thus, the claim in those matters was not merely connected with the Bank's claim in the original application, but integral part of the transaction of this original application, which was in the nature of cross-suit/claim. Therefore, the claims in both the matters tried together, was not possible, as the D.R.T. lacks jurisdiction to adjudicate the claims in the matter, which are before the Small Causes Court and the Small Causes Court lacks jurisdiction to try the claim of D.R.T. Therefore, there is no way to club these suits and they have to proceed in different Forums in accordance with law. The amount of course was required to be adjudicated upon and the pecuniary liability of the defendants towards the Bank also was to be crystallised and fixed. This was the ground for which subsequent interest was not granted by the learned Presiding Officer and I find myself in agreement with the reasons given by the learned Presiding Officer in para 13 of the impugned judgment and order, having considered the fact that both the parties have their claim against each other.
10. Thus, in this matter the learned Presiding Officer has adjudicated the claim of the Bank and deferred execution of recovery certificate for the reasons that the suits filed by the defendants claiming rental amount from the applicant Bank are still pending in the Small Causes Court. As observed earlier, sanction of loan was not pure and simple banking transaction. Therefore, this is really a peculiar case. It cannot be said that the order passed by the learned Presiding Officer is faulty. It is very fair, which has to be sustained and should not be interfered with. The appeal, therefore, will have to be dismissed.
Accordingly, following order is passed.