Delhi District Court
Indian Bank vs Himalayan Food Corner Through Its Prop. … on 4 July, 2026
IN THE COURT OF SHRI DEVENDER KUMAR, DISTRICT JUDGE
(COMMERCIAL COURT-01), EAST DISTRICT
KARKARDOOMA COURTS : DELHI
CS (Comm.) No. 135/2021
Indian Bank
Having its Branch Office at
C-1, Maha Laxmi Tower,
Sector 14, Kaushambi,
Ghaziabad, UP.
Having its Corporate Office at
254-260, Avvai Shanmugam Salai,
Royapettah, Chennai-600014 ...... Plaintiff
Vs.
1. Himalayan Food Corner
Through its proprietor Mr. Puran Chand Kandpal
At - C-24, Ground Floor,
Acharya Niketan, Mayur Vihar,
Phase -I, Delhi -110091. ......Defendant No. 1
2. Puran Chand Kandpal
S/o Sh. T L Kandpal
R/o Old no. C-119/9, New No. C-299,
West Vinod Nagar, Gali no. 9,
Shakarpur, Delhi -110084 ......Defendant No. 2
3. Punit Amar
S/o Sh. Shailender
R/o 18-C, OCS Apartment,
Mayur Vihar, Phase -I,
Delhi -110091. ...... Defendant No. 3
Date of Institution : 13.09.2021
Date of Arguments : 03.06.2026
Date of Judgment : 04.07.2026
Digitally
CS (Comm) No. 135/2021 signed by
Indian Bank Vs. Himalayan Food Corner & Ors. DEVENDRA 1/34
DEVENDRA KUMAR
KUMAR Date:
2026.07.04
04:01:00
+0530
JUDGMENT:
1. Vide this judgment, I shall dispose of the suit for recovery of Rs.
11,00,420.14/- along with interest @ 18% per annum filed by the plaintiff
and against the defendants. Brief facts of the case are as under:
2. Plaintiff is a Banking company constituted under the Banking
Companies (Acquisition and Transfer of Undertaking) Act, 1970 and is
being represented through its Branch Manager, Mr. Prakash Chand
Kashyap, who is authorized through GPA dated 03.10.2013 to institute this
suit. It is further alleged that the defendant no. 1 is a proprietorship firm
and engaged in the business of food products through its proprietor /
defendant no.2 in the name of Himalayan Food Corner, at Mayur Vihar,
Delhi -110091, whereas the defendant no. 3 is their guarantor. It is further
alleged that the defendants approached to the plaintiff bank for overdraft/
cash credit limit of Rs. 10 Lacs for business requirements and the plaintiff
bank considered their request and sanctioned cash credit limit of Rs. 10
Lacs on 27.04.2017 and the defendant nos. 1 & 2 hypothecated stock and
books of debts and agreed to pay interest @ 10.50% per annum, with penal
interest @ 2% over and above interest against defaulted payment, which is
now @ 9.05% per annum. Defendant no.3 also disclosed his assets
including ancestral property. It is further alleged that the defendants
executed loan documents dated 27.04.2017 and the plaintiff opened Loan
Account No. 6523654059.
Digitally signed
by DEVENDRA
DEVENDRA KUMAR
KUMAR Date:
2026.07.04
04:02:36 +0530
CS (Comm) No. 135/2021
Indian Bank Vs. Himalayan Food Corner & Ors. 2/34
2.1. Plaintiff has further alleged that the defendant nos. 2 & 3 also
executed their personal guarantee agreement against financial facility,
whereas the defendants failed to repay loan amount and amount of Rs.
8,65,566/- is outstanding towards them, which comes to Rs. 11,00,420.14/-
along with interest as on 18.02.2021. It is further alleged that CC account
of the defendants was declared NPA on 28.05.2019 and the plaintiff served
a legal notice dated 09.12.2019 upon the defendants but they failed to reply
it, whereas the defendants no. 1 & 2 have paid last amount on 12.01.2021.
Plaintiff has filed this suit for recovery of Rs. 11,00,420.14/- along-with
interest @ 18% per annum against the defendants.
3. Defendants No. 1 and 2 have filed their joint written statement
thereby denying all the allegations of the plaintiff and have alleged that the
plaintiff has suppressed the material facts and this suit is not maintainable.
It is further alleged that the defendant no. 3 is not liable to pay any loan
amount, as no amount was borrowed by the defendant no. 3, whereas the
plaintiff has impleaded him without cause of action and locus standi to file
this suit against him. It is further alleged that the defendants are residing
outside territorial jurisdiction of this court and this court has no territorial
jurisdiction to entertain this suit. It is further alleged that the defendant
no. 2 never gave his consent for any Mudra loan of Rs. 10 Lacs and rather
visited the bank to get a loan limit of Rs. 5 Lacs under Pradhan Mantri
Mudra Loan Scheme, which was a Central Government Sponsored Scheme
and did not require any guarantee but the bank officials and commission
agents got signed various documents from the defendant no.2 and also
convinced him to get subsidy against loan amount. It is further alleged that
CS (Comm) No. 135/2021 Digitally signed
by DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. KUMAR 3/34
DEVENDRA
Date:
KUMAR 2026.07.04
04:02:47
+0530
the bank officials manipulated all facts and the plaintiff has misused those
forged documents. It is further alleged that the defendant nos. 2 and 3 ware
not known to each other but the plaintiff officials manipulated all
documents and assured not to worry for commission and that would be paid
only after disbursing of loan account / CC limit and that too from
subsidiary, otherwise the defendants did not sign any loan document and
even name of the defendant no. 2 is also not correctly mentioned therein.
3.1. Defendants have further alleged that the defendants never signed any
loan document and rather signed blank documents which have been
misused by the bank officials. It is further alleged that the defendants
visited bank to enquire about status of their loan, otherwise to approach to
another bank but the bank official asked him to hand over cheques of
commission on issuance of cheque book and only then loan would be
disbursed. It is further alleged that the defendants applied for loan of Rs. 5
Lacs, whereas the documents supplied by the plaintiff show that CC limit /
loan of Rs. 10 was sanctioned and even agreed rate of interest @ 10.50%
per annum has also been changed to @ 12.75% per annum. It is further
alleged that the defendant no.2 did not know the defendant no.3 but still the
bank officials withdrew Rs. 2 Lacs through cheques without knowledge of
the defendant no.2 and transferred to the accounts of the defendant no.1
and it came into knowledge of the defendant no.2 only after going through
case documents.
3.2. Defendants have further alleged that the plaintiff bank again released
amount of Rs. 2 Lacs during covid period under the pretext of subsidy and
CS (Comm) No. 135/2021 Digitally signed
by DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. DEVENDRA KUMAR 4/34
KUMAR Date:
2026.07.04
04:02:55 +0530
presented cheque in personal account of known of the bank officials
without consent and knowledge of the defendants, whereas the bank
officials compelled that defendant no. 2 to deposit cash amounts of Rs.
17,500/- on 21.10.2020, Rs. 2,000/- on 14.10.2020, Rs. 7,000/- on
08.01.2021 and Rs.11,000/- on 12.01.2021. It is further alleged that the
legal notice was not served upon the defendants but the bank deducted its
charges, whereas illegible legal notice has been placed on record. It is
further alleged that loan account was illegally declared NPA by the bank
without following proper norms. Defendants have denied the allegations of
the plaintiff and have prayed that this suit is liable to be dismissed.
4. Defendant no. 3 was duly served but failed to appear and was
proceeded ex-parte vide order dated 20.01.2025.
5. Plaintiff has filed replication to written statements of the defendants
no. 2 & 3 thereby denying all the allegations of the defendants and has
reaffirmed its pleadings.
6. On the basis of pleadings of the parties the following issues were
framed vide order dated 20.09.2025 as under:
ISSUES:-
1. Whether the bank has sanctioned the overdraft facility for an
amount higher than the amount sought by the defendant? If so,
its effect? OPD
2. Whether the defendant no. 2 did not furnish the guarantee of
defendant no. 3? If so, its effect? OPDDigitally signed
by DEVENDRA
CS (Comm) No. 135/2021 KUMAR
Indian Bank Vs. Himalayan Food Corner & Ors. DEVENDRA 5/34
Date:
KUMAR 2026.07.04
04:02:59
+0530
3. Whether the plaintiff is entitled to the amount claimed? OPP
4. If the above issue is decided in favour of the plaintiff, whether
the plaintiff is entitled to interest? If so, at what rate and for
what period? OPP
5. Relief.
7. To prove the case, the plaintiff has examined PW1 Sindhu Dhari
Singh, who has deposed in verbatim of the plaint during examination in
chief and has relied upon documents Ex. PW1/1 to Ex. PW1/8 and Mark A
to Mark E.
7.1. During cross examination, PW1 has deposed that he has been
working with the plaintiff bank since 20.07.2019 and posted at Kausambi
Branch since 04.06.2025. It is further deposed that he never met with the
defendants and have seen them in the court premises. It is further deposed
that he has not filed this case but has filed his affidavit in October, 2025. It
is further deposed that loan limit of Rs. 10 Lacs was applied and has
original loan application but sanction letter was not signed in his presence
and it got signed before erstwhile manager. It is further deposed that loan of
Rs. 10 Lacs was availed by the defendants under Mudra Loan Scheme and
no guarantor was mandatory but it was also not barred. It is further deposed
that documents along with loan application were consented by the
defendants about guarantor and rate of interest at the time of loan was @
10.50 % per annum. It is further deposed that rate of interest was @
12.75% per annum during the period from 27.04.2017 to 03.12.2019 which
includes @ 2% penal interest as per statement of account Ex.PW1/8,
CS (Comm) No. 135/2021 Digitally signed
Indian Bank Vs. Himalayan Food Corner & Ors. by DEVENDRA 6/34
DEVENDRA KUMAR
KUMAR Date:
2026.07.04
04:03:04 +0530
though he was not aware about exact rate of interest being charged against
loan amount at present or when the loan account was declared NPA. It is
further deposed that the bank does not take blank cheque from customers It
is further deposed that loan was declared NPA, as there were no specific
credit transactions to overcome the interest. It is further deposed that the
defendant has deposited amount of Rs. 4,05,806/- during the period
27.04.2017 to 03.12.2019, but he cannot confirm amount paid by the
defendants till filling of this suit. It is further deposed that stamp papers
were purchased by the defendants for loan documents and those are
attached with loan documents. It is further deposed that he cannot tell the
exact amount due as principal at the time of filing of this suit.
7.2. PW1 has further deposed that he was authorized by Deputy Zonal
Manager to appear in this case, who is competent authority to authorize
Deputy Zonal Manager It is further deposed that amount of Rs. 1 Lac on
two occasions soon after disbursal of loan amount was transferred in the
bank account of the defendant no. 3 but it was without the consent of the
borrower. It is further deposed that there is no subsidy in Mudra Loan
Scheme but is a credit guarantee scheme of Central Government but was
not aware whether any such claim was made by the bank. It is further
deposed that there was no time limit to pay total principal of CC account.
He was not aware exact date when the legal notice was sent to the
defendants but copy on record is not legible.
8. Defendants have not led any defence evidence and DE was closed
vide order dated 21.05.2026.
CS (Comm) No. 135/2021 Digitally signed
Indian Bank Vs. Himalayan Food Corner & Ors. by DEVENDRA 7/34
DEVENDRA KUMAR
KUMAR Date:
2026.07.04
04:03:09 +0530
9. I have heard the arguments and perused the record. The onus to
prove issues no. 1 & 2 was put upon the defendants, whereas issues no. 3 &
4 are to be proved by the plaintiff. To discharge this onus, the plaintiff has
examined PW1 Sindhu Dhari Singh, whereas the defendants have not led
any evidence to rebut this onus or to prove issues. However, before giving
my issue wise findings, it is necessary to ascertain, as to whether this suit
has been filed by authorized person on behalf of the plaintiff or not. As
such, before determining this case on merit, it is necessary to prove due
institution of the suit through AR by the plaintiff bank or not.
10. Admittedly, a Civil Suit by a Corporation / Company must be signed
and verified by Authorized Representative in terms of Order 29 Rule 1 of
CPC, whereas appointment of Recognized Representative must be in terms
of Order 3 Rule 2 of CPC. Order 29 Rule 1 CPC is as under:
Order 29 Rule 1. Subscription and verification of pleading.- In suit by
or against a corporation, any pleading may be signed and verified on
behalf of the corporation by the secretary or by any director or other
principal officer of the corporation who is able to depose to the facts
of the case.
11. In view of Order 29 Rule 1 of CPC, it is clear that the authority
mentioned in abovesaid provision must sign and verify the pleadings like
Secretary, Director or any other Principal Officer of the Corporation. These
Authorities may sign and verify the pleadings besides by Authorized
Representatives appointed by the corporation through Board Resolution.
The authority of Recognized Agent/s has been prescribed under Order 3
Rule 1 & 2 of CPC as under:
Digitally
signed by
CS (Comm) No. 135/2021 DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. DEVENDRA KUMAR 8/34
KUMAR Date:
2026.07.04
04:03:13
+0530
Rule 1. Appearances, etc., may be in person, by recognized agent or
by pleader.–Any appearance, application or act in or to any Court,
required or authorized by law to be made or done by a party in such
Court, may, except where otherwise expressly provided by any law
for the time being in force, be made or done by the party in person, or
by his recognized agent, or by a pleader [appearing, applying or
acting, as the case may be, on his behalf :
Provided that any such appearance shall, if the Court so directs, be
made by the party in person.
Rule 2. Recognised agents.–The recognised agents of parties by
whom such appearances, applications and acts may be made or done
are–
(a) persons holding powers-of-attorney, authorising them to make and
do such appearances, applications and acts on behalf of such parties;
(b) persons carrying on trade or business for and in the names of
parties not resident within the local limits of the jurisdiction of the
Court within which limits the appearance, application or act is made
or done, in matters connected with such trade or business only, where
no other agent is expressly authorised to make and do such
appearances, applications and acts.
12. In view of abovesaid legal proposition, it stands proved that any
Recognized Representative may be authorized by way of Power of
Attorney / Resolution of Board of Directors in terms of Section 291 of
Companies Act, 1956 (Now corresponding section under section 179 of
Companies Act, 2013). The authority of Authorized Representative under
Order 3 Rule 2 CPC viz-a-viz signing authority of Authorized
Representative under Order 29 rule 1 & 2 of CPC has been defined in case
titled Nibro Ltd. v. National Insurance Co. Ltd., (1991) 70 Comp Cas 388
(Delhi) as under:
Order 3, rule 1 provides that any appearance, application or act in or
to any court required or authorise by law can be made or done by the
party in person or by his recognized agent or by a pleader appearing,
applying or acting, as the case may be, on his behalf. Provided ofDigitally signed
CS (Comm) No. 135/2021 by DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. KUMAR 9/34
DEVENDRA
Date:
KUMAR 2026.07.04
04:03:17
+0530
course, such an appearance, application or act in or to any court is
required or authorised by law to be done or done by a party in such
court. Where, however, there is an express provision of law, then that
provision will prevail. Thus, if an authority is given to a pleader or a
recognised agent as provided by law, the recognised agent or pleader
can file an appearance or file a suit in court if the party himself is not
in a position to file it. In my view, if a party is a company or a
corporation, the recognised agent or a pleader has to be authorise by
law to file such a plaint. Such an authority can be given to a pleader or
an agent in the case of a company by a person specifically authorised
in this behalf. In other words, a pleader or an agent can be authorised
to file a suit on behalf of a company only by an authorised
representative of the company. If a director or a secretary is authorised
by law, then he can certainly give the authority to another person as
provided under Order 3, rule 1.
The authority of a principal officer of a company in relation to suits
filed on behalf of the limited company does not extend beyond what is
laid down in Order 29 of the Code of Civil Procedure. That provision
does not entitle the principal officer of a company to file a suit on its
behalf and for that the authority has to be found either in the articles
of association of the company or in the resolution of its board of
directors. In the articles of association of several companies, provision
is generally made authorising their managing directors and other
officers to file and defend suits on their behalf. Similarly, the board of
directors of a company can authorise the institution of a suit on behalf
of the company by a resolution. In the case of some companies the
articles empower the managing director or directors to appoint general
attorneys and general managers and given them authority to institute
suits on behalf of the company. But in the absence of any proof in
regard to any such power having been conferred on Shri Ram Lal
Choudhary, it is not possible to accept his statement that he was
authorised to file the suit as the principal officer of the plaintiff hotel.
It is well-settled that under section 291 of the Companies Act except
where express provision is made that the powers of a company in
respect of a particular matter are to be exercised by the company in
general meeting, in all other cases the board of directors are entitled to
exercise all its powers. Individual directors have such powers only as
are vested in them by the memorandum and articles. It is true that
ordinarily the court will not unsuit a person on account of
technicalities. However, the question of authority to institute a suit on
behalf of a company is not a technical matter. It has far-reaching
effects. It often affects the policy and finances of the company. Thus ,
unless a power to institute a suit is specifically conferred on aCS (Comm) No. 135/2021 Digitally signed
Indian Bank Vs. Himalayan Food Corner & Ors. by DEVENDRA 10/34
KUMAR
DEVENDRA
Date:
KUMAR 2026.07.04
04:03:22
+0530
particular director, he has no authority to institute a suit on behalf of
the company. Needless to say such a power can be conferred by the
board of directors only by passing a resolution in that regard.
13. Further, in a landmark judgment titled United Bank of India v.
Naresh Kumar, (1996) 6 SCC 660, it has held that;
9. In cases like the present where suits are instituted or defended on
behalf of a public corporation, public interest should not be permitted
to be defeated on a mere technicality. Procedural defects which do not
go to the root of the matter should not be permitted to defeat a just
cause. There is sufficient power in the courts, under the Code of Civil
Procedure, to ensure that injustice is not done to any party who has a
just case. As far as possible a substantive right should not be allowed
to be defeated on account of a procedural irregularity which is
curable.
10. It cannot be disputed that a company like the appellant can sue
and be sued in its own name. Under Order 6 Rule 14 of the Code of
Civil Procedure a pleading is required to be signed by the party and its
pleader, if any. As a company is a juristic entity it is obvious that some
person has to sign the pleadings on behalf of the company. Order 29
Rule 1 of the Code of Civil Procedure, therefore, provides that in a
suit by or against a corporation the Secretary or any Director or other
Principal Officer of the corporation who is able to depose to the facts
of the case might sign and verify on behalf of the company. Reading
Order 6 Rule 14 together with Order 29 Rule 1 of the Code of Civil
Procedure it would appear that even in the absence of any formal
letter of authority or power of attorney having been executed a person
referred to in Rule 1 of Order 29 can, by virtue of the office which he
holds, sign and verify the pleadings on behalf of the corporation. In
addition thereto and dehors Order 29 Rule 1 of the Code of Civil
Procedure, as a company is a juristic entity, it can duly authorise any
person to sign the plaint or the written statement on its behalf and this
would be regarded as sufficient compliance with the provisions of
Order 6 Rule 14 of the Code of Civil Procedure. A person may be
expressly authorised to sign the pleadings on behalf of the company,
for example by the Board of Directors passing a resolution to that
effect or by a power of attorney being executed in favour of any
individual. In absence thereof and in cases where pleadings have been
signed by one of its officers a corporation can ratify the said action of
its officer in signing the pleadings. Such ratification can be express or
implied. The court can, on the basis of the evidence on record, and
after taking all the circumstances of the case, specially with regard to
CS (Comm) No. 135/2021 Digitally signed
Indian Bank Vs. Himalayan Food Corner & Ors. by DEVENDRA 11/34
KUMAR
DEVENDRA
Date:
KUMAR 2026.07.04
04:03:27
+0530
the conduct of the trial, come to the conclusion that the corporation
had ratified the act of signing of the pleading by its officer.
13. The court had to be satisfied that Shri L.K. Rohatgi could sign the
plaint on behalf of the appellant. The suit had been filed in the name
of the appellant company; full amount of court fee had been paid by
the appellant-Bank; documentary as well as oral evidence had been
led on behalf of the appellant and the trial of the suit before the Sub-
Judge, Ambala, had continued for about two years. It is difficult, in
these circumstances, even to presume that the suit had been filed and
tried without the appellant having authorised the institution of the
same. The only reasonable conclusion which we can come to is that
Shri L.K. Rohatgi must have been authorised to sign the plaint and, in
any case, it must be held that the appellant had ratified the action of
Shri L.K. Rohatgi in signing the plaint and thereafter it continued with
the suit.
14. A combined reading of abovesaid judgments made it clear that the
pleadings must be signed by the authority mentioned under Order 29 Rule
1 of CPC, or by Authorized Agent / Representative. The authorization of
any representative may be in terms of Order 3 Rule 2 of CPC, or by a
Company through Resolution of Board of Directors in terms of Section 291
of Companies Act, 1956 (Corresponding section 179 of Companies Act,
2013). However, authority of any such person/s under Order 29 Rule 1 of
CPC to sign the pleadings must be proved through Article of Association or
Resolution of Board of Directors as held in State Bank of Travancore v.
Kingston Computers (I) (P) Ltd., (2011) 11 SCC 524 as under:
14. In our view, the judgment under challenge is liable to be set aside
because the respondent had not produced any evidence to prove that
Shri Ashok K. Shukla was appointed as a Director of the Company
and a resolution was passed by the Board of Directors of the
Company to file a suit against the appellant and authorised Shri Ashok
K. Shukla to do so. The letter of authority issued by Shri Raj K.
Shukla, who described himself as the Chief Executive Officer of the
Company, was nothing but a scrap of paper because no resolution was
passed by the Board of Directors delegating its powers to Shri Raj K.CS (Comm) No. 135/2021 Digitally signed
Indian Bank Vs. Himalayan Food Corner & Ors. by DEVENDRA 12/34
KUMAR
DEVENDRA
Date:
KUMAR 2026.07.04
04:03:34
+0530
Shukla to authorise another person to file a suit on behalf of the
Company.
13. The Division Bench of the High Court did take cognizance of the
fact that the Company had not summoned any witness from the office
of the Registrar of Companies to prove that Shri Ashok K. Shukla was
a Director of the Company and that the minute book of the Company
had not been produced to prove the appointment of Shri Ashok K.
Shukla as a Director, but reversed the finding of the trial court on
Issue 1 on the basis of the authority letter issued by Shri Raj K.
Shukla and resolutions dated 14-2-2001 and 19-4-2001, by which the
Board of Directors of the Company had authorised some persons to
operate the bank account.
15. In this case, this suit has been filed by Branch Manager of the
plaintiff Sh. Prakash Chandra Kashyap, who was authorized through Power
of Attorney dated 03.10.2013 duly relied upon by PW1 as Mark B. The
authority letter of PW1 Sindhu Dhari Singh is Mark A. Ld. Counsel for
defendants has argued that the plaintiff has not proved authorization of the
then manager to institute this suit, as neither manager Sh. Prakash Chandra
Kashyap has appeared to depose nor original authority has been produced
before the court, due to institution of this suit could not be proved and suit
is liable to be dismissed.
16. On the other hand, Ld. Counsel for plaintiff has argued that this suit
has been duly instituted by authorized person and power of attorney of
erstwhile manager Sh. Prakash Chandra Kashyap is already on record and
proved by PW1 as Mark B, whereas the defendants have not conducted any
cross examination of PW1, due to plea taken by the defendants could not
be proved and this suit is liable to be decreed.
CS (Comm) No. 135/2021 Digitally signed
Indian Bank Vs. Himalayan Food Corner & Ors. by DEVENDRA 13/34
KUMAR
DEVENDRA
Date:
KUMAR 2026.07.04
04:03:39
+0530
17. Admittedly, this suit has been instituted by erstwhile manager of the
plaintiff Mr. Prakash Chand Kashyap and his authority has been relied upon
by PW1 as Mark B. No doubt, original power of attorney has not been
proved by the plaintiff but the defendants have also not conducted any
cross examination of PW1 to prove, as to how this suit was not duly
instituted by the plaintiff. Plaintiff is a banking company and this suit has
been instituted by authorized person of the bank Sh. Prakash Chandra
Kashyap in terms of Section 29 Rule 1 of CPC, whereas the defendants
have not conducted any cross examination to dispute this authority, due to
plea taken by the defendant could not be proved and due institution of this
suit stands proved.
Territorial Jurisdiction
18. Another plea taken by the defendants is that this court has no
territorial jurisdiction to entertain this suit. Though no issue regarding
territorial jurisdiction has been framed by this court, yet this plea has been
taken in WS and is being considered by the court being a legal plea. Ld.
Counsel for defendants has argued that this court has no territorial
jurisdiction to entertain this suit, as the plaintiff bank has been carrying its
business at Kaushambi, Ghaziabad, UP and entire cause of action arose
there, due to no part of cause of action ever arose at Delhi to institute this
suit at Delhi. It is further argued that even all loan documents were also
executed at Kaushambi and loan limit was also availed there, whereas this
suit has been filed at Delhi merely on the basis of address of the
defendants, which is not sufficient ground to file this suit at Delhi, due to
this court has no territorial jurisdiction to entertain this case and suit is
CS (Comm) No. 135/2021 Digitally signed
Indian Bank Vs. Himalayan Food Corner & Ors. by DEVENDRA 14/34
KUMAR
DEVENDRA
Date:
KUMAR 2026.07.04
04:03:43
+0530
liable to be dismissed.
19. On the other hand, Ld. Counsel for plaintiff has opposed all
submissions and has argued that the plaintiff has relied upon Section 20 (b)
of CPC to institute this suit and any suit may be filed where all the
defendants or any of the defendants has been residing or carrying on
business, and in this case the defendants have been residing at Delhi, within
the jurisdiction of this court, due to this court has territorial jurisdiction to
entertain this suit and suit is liable to be decreed.
20. Admittedly, in this case, entire cause of action arose at Kaushambi,
Ghaziabad, UP, where loan / cash limit was applied, disbursed, sanctioned
and availed and even loan documents were also executed. Even loan
account of the defendant no.1 &2 was also maintained there. However, Ld.
Counsel for plaintiff has invoked section 20 (a) & (b) of CPC and it is
necessary to ascertain legal proposition, which is as under:
Section 20. Other suits to be instituted where defendants reside or
cause of, action arises .- Subject to the limitations aforesaid, every suit
shall be instituted in a Court within the local limits of whose
jurisdiction-
(a)the defendant, or each of the defendants where there are more than
one, at the time of the commencement of the suit, actually and
voluntarily resides, or carries on business, or personally works for
gain; or
(b)any of the defendants, where there are more than one, at the time of
the commencement of the suit, actually and voluntarily resides, or
carries on business, or personally works for gain, provided that in
such case either the leave of the Court is given, or the defendants who
do not reside, or carry on business, or personally work for gain, as
aforesaid, acquiesce in such institution; or
(c)the cause of action, wholly or in part, arises.
Digitally signed
CS (Comm) No. 135/2021 by DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. KUMAR 15/34
DEVENDRA
Date:
KUMAR 2026.07.04
04:03:50
+0530
21. After going through abovesaid legal proposition, it stands proved that
Section 20 (a) & (b) prescribe that any suit may be filed where the
defendants or any of the defendants actually and voluntarily resides, or
carries on business, or personally works for gain. Plaintiff has filed this suit
on the basis of address/es of the defendants and prima facie suit on the
basis of this section is maintainable, until and unless proved otherwise.
However, in this case, the defendants had taken this plea in written
statement but have neither conducted any cross examination of PW1 nor
led DE to prove that this court has no territorial jurisdiction. As such, the
defendants have emphasized this plea during oral arguments, whereas there
is no supporting material and this court has territorial jurisdiction to
entertain this case in view of Section 20 (a) & (b) of CPC and the plea
taken by the defendants has no force.
22. Now issue wise findings are to be given on merit. I am taking up
issues no.1 & 2 together being interrelated as under:
ISSUES No.1 & 2: – The onus to prove Issues no. 1 & 2 was put upon the
defendants. Defendants took this plea in written statement that the
defendant no. 1 & 2 applied for overdraft/ cash credit limit of Rs. 5 Lacs to
run Dhaba, whereas the employees of the plaintiff got signed blank
documents and sanctioned cash limit /loan of Rs. 10 Lacs instead of Rs. 5
Lacs just to grab money excess through commission agents. It is further
argued that the defendants never applied for loan of Rs. 10 Lacs under
Prime Minister Mudra Yojna but still CC limit of Rs. 10 Lacs instead of Rs.
5 Lacs was sanctioned and disbursed in connivance with the bank officials
by playing a fraud against the defendants and the defendants are not liableCS (Comm) No. 135/2021 Digitally signed
by DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. 16/34
DEVENDRA KUMAR
KUMAR Date:
2026.07.04
04:03:55 +0530
to pay suit amount. It is further argued that if CC limit of Rs. 5 Lacs was
applied, then the defendants are not liable to pay amount of Rs. 10 Lacs /
suit amount.
23. On the other hand, Ld. Counsel for plaintiff has argued that the plea
taken by the defendants is afterthought, as the defendants applied for cash
limit of Rs. 10 Lacs and duly executed loan documents which have proved
that the defendants applied for CC limit of Rs. 10 Lacs and similar loan /
cash limit was sanctioned and availed by the defendants. It is further argued
that even the defendant no.3 also executed guarantee agreement, due to the
plea taken by the defendants that the defendant no.3 was not known to the
defendants no.2 is also afterthought and such plea taken by the defendants
is not sustainable.
24. Admittedly, the defendants have taken a plea in their written
statements that the plaintiff bank sanctioned overdraft facility/ CC limit for
higher amount than applied by the defendants. However, the plaintiff has
proved various loan documents to prove that the defendants no.1 & 2
applied for over draft facility of Rs. 10 Lacs and has proved loan
application Mark-C, original sanction ticket Ex.PW1/1, DP note Ex.PW1/2,
agreement for open cash credit, hypothecation of stocks and details of
assets and liability Ex. PW1/3, Ex.PW1/4, Ex.PW1/6 and Ex.PW1/7 and
Guarantee agreement Ex.PW1/5. All the documents are bearing signatures
of the defendants no. 2 & 3 and even loan application also bearing
photograph of the defendant no. 2. Defendant no.2 has not denied his
signature and photograph on loan application, whereas he has just disputed
Digitally signed
CS (Comm) No. 135/2021 by DEVENDRA
KUMAR
Indian Bank Vs. Himalayan Food Corner & Ors. DEVENDRA 17/34
Date:
KUMAR 2026.07.04
04:04:00
+0530
his name, however name’s spelling is also have no major difference and
rather similar name Puran Chandra Kandpal has mentioned on documents,
due to loan documents cannot be said fake name. It is pertinent to mention
here that the loan documents were executed on 27.04.2017, whereas the
defendants have not challenged these documents till date and accepted. Not
only this, the defendants have also repaid amount till 12.01.2021 without
any challenge which suggests that similar over draft facility of Rs. 10 Lacs
was applied, sanctioned and availed by the defendants.
25. Further, loan documents are already on record and the plea taken by
the defendants is against the contents of loan documents, due to legal
proposition of such oral testimony against contents of documents has to be
considered as under:
Section-94. Evidence of terms of contracts, grants and other
dispositions of property reduced to form of document.–When the
terms of a contract, or of a grant, or of any other disposition of
property, have been reduced to the form of a document, and in all
cases in which any matter is required by law to be reduced to the form
of a document, no evidence shall be given in proof of the terms of
such contract, grant or other disposition of property, or of such matter,
except the document itself, or secondary evidence of its contents in
cases in which secondary evidence is admissible under the provisions
hereinbefore contained.
Exception 1.–When a public officer is required by law to be
appointed in writing, and when it is shown that any particular person
has acted as such officer, the writing by which he is appointed need
not be proved.
Exception 2.–Wills admitted to probate in India may be proved by
the probate.
Explanation 1.–This section applies equally to cases in which the
contracts, grants or dispositions of property referred to are contained
in one document, and to cases in which they are contained in more
documents than one.
Digitally
signed by
CS (Comm) No. 135/2021 DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. DEVENDRA KUMAR 18/34
KUMAR Date:
2026.07.04
04:04:05
+0530
Explanation 2.–Where there are more originals than one, one original
only need be proved.
Explanation 3.–The statement, in any document whatever, of a fact
other than the facts referred to in this section, shall not preclude the
admission of oral evidence as to the same fact.
Illustrations
(a) If a contract be contained in several letters, all the letters in which
it is contained must be proved.
(b) If a contract is contained in a bill of exchange, the bill of exchange
must be proved.
(c) If a bill of exchange is drawn in a set of three, one only need be
proved.
(d) A contracts, in writing, with B, for the delivery of indigo upon
certain terms. The contract mentions the fact that B had paid A the
price of other indigo contracted for verbally on another occasion. Oral
evidence is offered that no payment was made for the other indigo.
The evidence is admissible.
(e) A gives B a receipt for money paid by B. Oral evidence is offered
of the payment. The evidence is admissible.
(Corresponding Law: S. 91 of Act 1 of 1872).
Section-95. Exclusion of evidence of oral agreement.–When the
terms of any such contract, grant or other disposition of property, or
any matter required by law to be reduced to the form of a document,
have been proved according to Section 94, no evidence of any oral
agreement or statement shall be admitted, as between the parties to
any such instrument or their representatives in interest, for the purpose
of contradicting, varying, adding to, or subtracting from, its terms:
Provided that any fact may be proved which would invalidate any
document, or which would entitle any person to any decree or order
relating thereto; such as fraud, intimidation, illegality, want of due
execution, want of capacity in any contracting party, want or failure of
consideration, or mistake in fact or law:
Provided further that the existence of any separate oral agreement as
to any matter on which a document is silent, and which is not
inconsistent with its terms, may be proved. In considering whether or
not this proviso applies, the Court shall have regard to the degree of
formality of the document:
Digitally signed
CS (Comm) No. 135/2021 by DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. KUMAR 19/34
DEVENDRA
Date:
KUMAR 2026.07.04
04:04:19
+0530
Provided also that the existence of any separate oral agreement,
constituting a condition precedent to the attaching of any obligation
under any such contract, grant or disposition of property, may be
proved:
Provided also that the existence of any distinct subsequent oral
agreement to rescind or modify any such contract, grant or disposition
of property, may be proved, except in cases in which such contract,
grant or disposition of property is by law required to be in writing, or
has been registered according to the law in force for the time being as
to the registration of documents:
Provided also that any usage or custom by which incidents not
expressly mentioned in any contract are usually annexed to contracts
of that description, may be proved:
Provided also that the annexing of such incident would not be
repugnant to, or inconsistent with, the express terms of the contract:
Provided also that any fact may be proved which shows in what
manner the language of a document is related to existing facts.
Illustrations
(a) A policy of insurance is effected on goods “in ships from Kolkata
to Visakhapatnam”. The goods are shipped in a particular ship which
is lost. The fact that particular ship was orally excepted from the
policy, cannot be proved.
(b) A agrees absolutely in writing to pay B one thousand rupees on the
1st March, 2023. The fact that, at the same time, an oral agreement
was made that the money should not be paid till the 31st March, 2023,
cannot be proved.
(c) An estate called “the Rampur tea estate” is sold by a deed which
contains a map of the property sold. The fact that land not included in
the map had always been regarded as part of the estate and was meant
to pass by the deed cannot be proved.
(d) A enters into a written contract with B to work certain mines, the
property of B, upon certain terms. A was induced to do so by a
misrepresentation of B’s as to their value. This fact may be proved.
(e) A institutes a suit against B for the specific performance of a
contract, and also prays that the contract may be reformed as to one of
its provisions, as that provision was inserted in it by mistake. A may
prove that such a mistake was made as would by law entitle him to
have the contract reformed.
Digitally signed
CS (Comm) No. 135/2021 by DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. KUMAR 20/34
DEVENDRA
Date:
KUMAR 2026.07.04
04:04:24
+0530
(f) A orders goods of B by a letter in which nothing is said as to the
time of payment, and accepts the goods on delivery. B sues A for the
price. A may show that the goods were supplied on credit for a term
still unexpired.
(g) A sells B a horse and verbally warrants him sound. A gives B a
paper in these words–“Bought of A a horse for thirty thousand
rupees”. B may prove the verbal warranty.
(h) A hires lodgings of B, and gives B a card on which is written
–“Rooms, ten thousand rupees a month”. A may prove a verbal
agreement that these terms were to include partial board. A hires
lodging of B for a year, and a regularly stamped agreement, drawn up
by an advocate, is made between them. It is silent on the subject of
board. A may not prove that board was included in the term verbally.
(i) A applies to B for a debt due to A by sending a receipt for the
money. B keeps the receipt and does not send the money. In a suit for
the amount, A may prove this.
(j) A and B make a contract in writing to take effect upon the
happening of a certain contingency. The writing is left with B who
sues A upon it. A may show the circumstances under which it was
delivered.
(Corresponding Law: S. 92 of Act 1 of 1872).
26. Section 91 & 92 came into interpretation in case titled Roop Kumar
v. Mohan Thedani, (2003) 6 SCC 595 and relevant observations are as
under:
13. Section 91 relates to evidence of terms of contract, grants and
other disposition of properties reduced to form of document. This
section merely forbids proving the contents of a writing otherwise
than by writing itself; it is covered by the ordinary rule of law of
evidence, applicable not merely to solemn writings of the sort named
but to others known sometimes as the “best-evidence rule”. It is in
reality declaring a doctrine of the substantive law, namely, in the case
of a written contract, that all proceedings and contemporaneous oral
expressions of the thing are merged in the writing or displaced by it.
(See Thayer’s Preliminary Law on Evidence, p. 397 and p.
398; Phipson’s Evidence, 7th Edn., p. 546; Wigmore’s Evidence, p.
2406.) It has been best described by Wigmore stating that the rule is in
no sense a rule of evidence but a rule of substantive law. It does not
CS (Comm) No. 135/2021 Digitally signed
Indian Bank Vs. Himalayan Food Corner & Ors. by DEVENDRA 21/34
DEVENDRA KUMAR
KUMAR Date:
2026.07.04
04:04:29 +0530
exclude certain data because they are for one or another reason
untrustworthy or undesirable means of evidencing some fact to be
proved. It does not concern a probative mental process — the process
of believing one fact on the faith of another. What the rule does is to
declare that certain kinds of facts are legally ineffective in the
substantive law; and this of course (like any other ruling of
substantive law) results in forbidding the fact to be proved at all. But
this prohibition of proving it is merely that dramatic aspect of the
process of applying the rule of substantive law. When a thing is not to
be proved at all the rule of prohibition does not become a rule of
evidence merely because it comes into play when the counsel offers to
“prove” it or “give evidence” of it; otherwise, any rule of law
whatever might be reduced to a rule of evidence. It would become the
legitimate progeny of the law of evidence. For the purpose of specific
varieties of jural effects — sale, contract etc. there are specific
requirements varying according to the subject. On the contrary there
are also certain fundamental elements common to all and capable of
being generalised. Every jural act may have the following four
elements:
(a) the enaction or creation of the act;
(b) its integration or embodiment in a single memorial when desired;
(c) its solemnization or fulfilment of the prescribed forms, if any; and
(d) the interpretation or application of the act to the external objects
affected by it.
14. The first and fourth are necessarily involved in every jural act, and
second and third may or may not become practically important, but
are always possible elements.
15. The enaction or creation of an act is concerned with the question
whether any jural act of the alleged tenor has been consummated; or,
if consummated, whether the circumstances attending its creation
authorise its avoidance or annulment. The integration of the act
consists in embodying it in a single utterance or memorial —
commonly, of course, a written one. This process of integration may
be required by law, or it may be adopted voluntarily by the actor or
actors and in the latter case, either wholly or partially. Thus, the
question in its usual form is whether the particular document was
intended by the parties to cover certain subjects of transaction
between them and, therefore, to deprive of legal effect all other
utterances.
Digitally
signed by
DEVENDRA
CS (Comm) No. 135/2021 DEVENDRA KUMAR
Indian Bank Vs. Himalayan Food Corner & Ors. KUMAR Date: 22/34
2026.07.04
04:04:34
+0530
16. The practical consequence of integration is that its scattered parts,
in their former and inchoate shape, have no longer any jural effect;
they are replaced by a single embodiment of the act. In other words,
when a jural act is embodied in a single memorial all other utterances
of the parties on the topic are legally immaterial for the purpose of
determining what are the terms of their act. This rule is based upon an
assumed intention on the part of the contracting parties, evidenced by
the existence of the written contract, to place themselves above the
uncertainties of oral evidence and on a disinclination of the courts to
defeat this object. When persons express their agreements in writing,
it is for the express purpose of getting rid of any indefiniteness and to
put their ideas in such shape that there can be no misunderstanding,
which so often occurs when reliance is placed upon oral statements.
Written contracts presume deliberation on the part of the contracting
parties and it is natural they should be treated with careful
consideration by the courts and with a disinclination to disturb the
conditions of matters as embodied in them by the act of the parties.
(See McKelvey’s Evidence, p. 294.) As observed in Greenlear’s
Evidence, p. 563, one of the most common and important of the
concrete rules presumed under the general notion that the best
evidence must be produced and that one with which the phrase “best
evidence” is now exclusively associated is the rule that when the
contents of a writing are to be proved, the writing itself must be
produced before the court or its absence accounted for before
testimony to its contents is admitted.
17. It is likewise a general and most inflexible rule that wherever
written instruments are appointed, either by the requirement of law, or
by the contract of the parties, to be the repositories and memorials of
truth, any other evidence is excluded from being used either as a
substitute for such instruments, or to contradict or alter them. This is a
matter both of principle and policy. It is of principle because such
instruments are in their own nature and origin, entitled to a much
higher degree of credit than parol evidence. It is of policy because it
would be attended with great mischief if those instruments, upon
which men’s rights depended, were liable to be impeached by loose
collateral evidence. (See Starkie on Evidence, p. 648.)
18 [Ed. : Paras 18 and 19 corrected as per Official Corrigendum No.
F.3/Ed. B.J./72/2003]. In Section 92 the legislature has prevented oral
evidence being adduced for the purpose of varying the contract as
between the parties to the contract; but, no such limitations are
imposed under Section 91. Having regard to the jural position of
Sections 91 and 92 and the deliberate omission from Section 91 of
Digitally
CS (Comm) No. 135/2021 signed by
DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. DEVENDRA KUMAR 23/34
KUMAR Date:
2026.07.04
04:04:38
+0530
such words of limitation, it must be taken note of that even a third
party if he wants to establish a particular contract between certain
others, either when such contract has been reduced to in a document
or where under the law such contract has to be in writing, can only
prove such contract by the production of such writing.
19 Sections 91 and 92 apply only when the document on the face of it
contains or appears to contain all the terms of the contract. Section 91
is concerned solely with the mode of proof of a document with
limitation imposed by Section 92 relates only to the parties to the
document. If after the document has been produced to prove its terms
under Section 91, provisions of Section 92 come into operation for the
purpose of excluding evidence of any oral agreement or statement for
the purpose of contradicting, varying, adding or subtracting from its
terms. Sections 91 and 92 in effect supplement each other. Section 91
would be inoperative without the aid of Section 92, and similarly
Section 92 would be inoperative without the aid of Section 91.
20. The two sections, however, differ in some material particulars.
Section 91 applies to all documents, whether they purport to dispose
of rights or not, whereas Section 92 applies to documents which can
be described as dispositive. Section 91 applies to documents which
are both bilateral and unilateral, unlike Section 92 the application of
which is confined to only bilateral documents. (See : Bai Hira
Devi v. Official Assignee of Bombay [AIR 1958 SC 448] .) Both these
provisions are based on “best-evidence rule”. In Bacon’s Maxim
Regulation 23, Lord Bacon said “The law will not couple and mingle
matters of speciality, which is of the higher account, with matter of
averment which is of inferior account in law.” It would be
inconvenient that matters in writing made by advice and on
consideration, and which finally import the certain truth of the
agreement of parties should be controlled by averment of the parties
to be proved by the uncertain testimony of slippery memory.
21. The grounds of exclusion of extrinsic evidence are : (i) to admit
inferior evidence when law requires superior would amount to
nullifying the law, and (ii) when parties have deliberately put their
agreement into writing, it is conclusively presumed, between
themselves and their privies, that they intended the writing to form a
full and final statement of their intentions, and one which should be
placed beyond the reach of future controversy, bad faith and
treacherous memory.
Digitally signed
CS (Comm) No. 135/2021 by DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. KUMAR 24/34
DEVENDRA
Date:
KUMAR 2026.07.04
04:04:42
+0530
22. This Court in Gangabai v. Chhabubai [(1982) 1 SCC 4]
and Ishwar Dass Jain v. Sohan Lal [(2000) 1 SCC 434] with reference
to Section 92(1) held that it is permissible to a party to a deed to
contend that the deed was not intended to be acted upon, but was only
a sham document. The bar arises only when the document is relied
upon and its terms are sought to be varied and contradicted. Oral
evidence is admissible to show that document executed was never
intended to operate as an agreement but that some other agreement
altogether, not recorded in the document, was entered into between
the parties.
27. Further in case titled Tulsi v. Chandrika Prasad, (2006) 8 SCC 322, it
has held that;
20. Section 91 of the Evidence Act mainly forbids proving of the
contents of a writing otherwise than by writing itself and merely lays
down the “best evidence rule”. It, however, does not prohibit the
parties to adduce evidence in a case the deed is capable of being
construed differently to show how they understood the same.
28. Further, in case titled Tamil Nadu Electricity Board v. N. Raju
Reddiar, (1996) 4 SCC 551, it has held that;
7. At the outset it must be borne in mind that the agreement between
the parties was a written agreement and therefore the parties are
bound by the terms and conditions of the agreement. Once a contract
is reduced to writing, by operation of Section 91 of the Evidence Act,
1872 it is not open to any of the parties to seek to prove the terms of
the contract with reference to some oral or other documentary
evidence to find out the intention of the parties. Under Section 92 of
the Evidence Act where the written instrument appears to contain the
whole terms of the contract then parties to the contract are not entitled
to lead any oral evidence to ascertain the terms of the contract. It is
only when the written contract does not contain the whole of the
agreement between the parties and there is any ambiguity then oral
evidence is permissible to prove the other conditions which also must
not be inconsistent with the written contract.
29. After going through the abovesaid legal proposition, it stands proved
that if loan terms have been reduced in writing and have been duly signed
CS (Comm) No. 135/2021
Indian Bank Vs. Himalayan Food Corner & Ors. Digitally signed 25/34
by DEVENDRA
KUMAR
DEVENDRA
Date:
KUMAR 2026.07.04
04:04:47
+0530
by the parties, then the defendants cannot led oral evidence to discard those
terms of written documents, due to it shall be considered that the
defendants applied for overdraft limit of Rs. 10 Lacs and the defendants
have failed to prove that they applied for overdraft facility of Rs. 5 Lacs as
alleged.
30. Similarly, the defendants have also pleaded that the defendant no.3
was not their guarantor, whereas the defendant no.3 is ex-parte and has not
contested this case to dispute it. Defendant no.3 executed a guarantee
agreement Ex.PW1/5 alongwith the defendant no.2 and the defendants have
not led any evidence to prove that this guarantee agreement is forged and
fabricated. Through the defendants no. 1 & 2 were precluded to lead any
oral evidence to dispute genuineness of guarantee agreement Ex.PW1/5,
yet the defendants have not led any plausible explanation as to how this
guarantee agreement is forged. PW1 has categorically deposed that the
defendants applied for overdraft liability and also purchased stamp papers
to execute loan documents including guarantee agreement, whereas no
evidence has been led as to dispute this guarantee agreement to be forged
and fabricated. Defendants have just put a suggestion to PW1 that
guarantor was fictitious, whereas the defendants have not taken any action
against this forgery of guarantee agreement and even have repaid more than
Rs. 4,05,806/- against overdraft facility. Again, guarantee agreement is also
on record and any oral evidence to dispute this guarantee agreement
Ex.PW1/5 cannot be allowed, if original agreement is already proved on
record and such oral evidence is barred under Section 91&92 of Evidence
Act, 1872 (now Sections 94 & 95 of BSA, 2023).
CS (Comm) No. 135/2021 Digitally signed
Indian Bank Vs. Himalayan Food Corner & Ors. by DEVENDRA 26/34
DEVENDRA KUMAR
KUMAR Date:
2026.07.04
04:04:51 +0530
31. Ld. Counsel for defendant nos. 1 & 2 has argued that no guarantee
was required under Mudra Loan Yojna, due to there was no occasion to
furnish any guarantee, whereas PW1 has proved that it was not mandatory
but was also not prohibited. If guarantee against loan was not prohibited
and furnished by the defendants, then it cannot be said that guarantee
agreement is forged or manipulated. In fact, the defendant no. 3 was
appropriate person to depose before the court that he never stood guarantor
to the defendant no. 1, whereas the defendant no. 3 has preferred not to
appear before the court to contest and remained ex-parte, due to it cannot
be said that he did not furnish guarantee, especially when some transactions
are also reflected between the defendant nos. 2 and 3. Accordingly, the
defendants have failed to discharge the onus to prove both issue no. 1 & 2
and both the issues are decided in favour of the plaintiff and against the
defendants. As such, the defendants have failed to prove that the defendants
applied for cash credit limit of Rs. 5 Lacs and not for Rs. 10 Lacs and
rather the plaintiff has proved that the defendants applied and sanctioned
CC limit of Rs. 10 Lacs and signed loan documents Ex.PW1/1 to
Ex.PW1/7 and failed to repay loan amount and suit amount is outstanding
against them as per statement of accounts Ex.PW1/8. Both the issues are
decided against the defendants and in favor of the plaintiff.
32. ISSUES No. 3 & 4: The onus to prove both the issues was put upon
the plaintiff and to discharge the onus, the plaintiff has examined PW1
Sindhu Dhari Singh, who has proved that the defendants approached to the
plaintiff bank for cash credit limit of Rs. 10 Lacs vide loan application
Mark C and over drafter / cash credit limit was sanctioned vide sanction
CS (Comm) No. 135/2021 Digitally signed
by DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. KUMAR 27/34
DEVENDRA
Date:
KUMAR 2026.07.04
04:04:56
+0530
letter Ex.PW1/1 and the defendants signed loan agreements Ex.PW1/2 to
Ex. PW1/4, Ex.PW1/6 and Ex.PW1/7. It is further proved that the
defendant no. 3 also executed a guarantee agreement Ex.PW1/5 and
overdraft facility was disbursed and the bank also opened a loan account of
the defendants and even the defendants no. 1 & 2 have also repaid amount
of Rs. 4,05,806/- but failed to pay remaining amount and CC account was
declared NPA. It is further proved that the plaintiff sent various reminders
to the defendants to pay amount but the defendants failed to repay
outstanding amount.
33. Ld. Counsel for defendants has argued that the defendants never
applied for overdraft facility of Rs. 10 Lacs and rather applied for CC
limit / loan facility of Rs. 5 Lacs but the bank officials have manipulated
loan documents of Rs. 10 Lacs in connivance of commission agents and
now seeking recovery on the basis of forged documents. However, I have
already given my findings on issues no. 1 & 2 that the defendants applied
for overdraft facility of Rs. 10 Lacs and failed to repay utilized amount as
well as interest. It is further proved that as per statement of accounts
Ex.PW1/8, suit amount is outstanding against the defendants. Defendants
also hypothecated goods and book debts with the bank and executed
hypothecation documents. However, Ld. Counsel for defendants has argued
that PW1 is not authorized person to prove this case and has no knowledge
about this case, as neither overdraft was applied, disbursed or sanctioned in
his presence nor loan documents were executed in his presence, due to
PW1 has failed to prove this case.
Digitally signed
CS (Comm) No. 135/2021 by DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. KUMAR 28/34
DEVENDRA
Date:
KUMAR 2026.07.04
04:05:01
+0530
34. Admittedly, this case is based upon written loan documents and
testimony of PW1 is also based upon record. In fact, this case was not
based upon personal knowledge of PW1 and was based upon loan
documents maintained by the bank and PW1 was well aware about facts on
the basis of record maintained by the bank. If loan documents were
maintained in the regular course of business and have been proved by an
authorized witness, then lack of personal knowledge of witness qua
execution of those documents is of no use, especially when execution of
loan documents has already been proved on record. PW1 has deposed that
he neither met the defendants nor loan was sanctioned in his presence, but
during cross examination, he has deposed that on the basis of documents,
cash credit limit of Rs. 10 Lacs was availed by the defendants and the
defendants also furnished guarantee despite having no mandate and as per
statement of account Ex.PW1/8, loan amount is outstanding against them.
35. Ld. Counsel for defendants has further argued that the defendants
have already paid substantial amount of Rs. 4,05,806/-, which is also
admitted by PW1, whereas principal amount along with interest has to be
charged, due to it cannot be said that the suit amount is not outstanding.
Even otherwise, the defendants were supposed to prove, if suit amount was
not outstanding, then what exact amount was outstanding towards the
defendants, however the defendants have not given any counter figure of
amount actually due towards them, due to the defendants have failed to
prove that suit amount is not outstanding.
CS (Comm) No. 135/2021 Digitally signed Indian Bank Vs. Himalayan Food Corner & Ors. by DEVENDRA 29/34 DEVENDRA KUMAR KUMAR Date: 2026.07.04 04:05:05 +0530
36. Ld. Counsel for defendants has argued that rate of interest was not
agreed as charged by the plaintiff, due to the defendants are not liable to
pay interest @ 12.75% per annum. However, PW1 has proved that the bank
has charged interest @ 12.75% per annum but it was not rate of interest
during entire period. However, rate of interest was @ 10.50% per annum as
per Ex.PW1/1 and Ex.PW1/3 with monthly rest, due to the defendants are
liable to pay same rate of interest against outstanding amount. As such, the
plaintiff has proved statement of account Ex.PW1/8 and the defendants
have not disputed statement of accounts Ex.PW1/8, due to the defendants
are liable to pay interest against outstanding amount.
37. So far as liability of guarantor / defendant no.3 is concerned, he
stood guarantor to the defendant nos. 1 & 2 and signed guarantee
agreement Ex.PW1/5. The guarantor who has signed guarantee agreement
is jointly and severally liable to pay amount according to guarantee
agreement in terms of Indian Contract Act. Relevant sections of Contract
Act are as under.
Section-126. “Contract of guarantee”, “surety”, “principal debtor” and
“creditor”.–A “contract of guarantee” is a contract to perform the
promise, or discharge the liability, of a third person in case of his
default. The person who gives the guarantee is called the “surety”; the
person in respect of whose default the guarantee is given is called the
“principal debtor”, and the person to whom the guarantee is given is
called the “creditor”. A guarantee may be either oral or written.
Section 127. Consideration for guarantee.–Anything done, or any
promise made, for the benefit of the principal debtor, may be a
sufficient consideration to the surety for giving the guarantee.
Illustrations
(a) B requests A to sell and deliver to him goods on credit. A agrees to
do so, provided C will guarantee the payment of the price of the
CS (Comm) No. 135/2021 Digitally signed
Indian Bank Vs. Himalayan Food Corner & Ors. by DEVENDRA 30/34
KUMAR
DEVENDRA
Date:
KUMAR 2026.07.04
04:05:10
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goods. C promises to guarantee the payment in consideration of A’s
promise to deliver the goods. This is a sufficient consideration for C’s
promise.
(b) A sells and delivers goods to B. C afterwards requests A to forbear
to sue B for the debt for a year, and promises that, if he does so, C will
pay for them in default of payment by B. A agrees to forbear as
requested. This is a sufficient consideration for C’s promise.
(c) A sells and delivers goods to B. C afterwards, without
consideration, agrees to pay for them in default of B. The agreement is
void.
Section 128. Surety’s liability.–The liability of the surety is co-
extensive with that of the principal debtor, unless it is otherwise
provided by the contract.
Illustration
A guarantees to B the payment of a bill of exchange by C, the
acceptor. The bill is dishonoured by C. A is liable, not only for the
amount of the bill, but also for any interest and charges which may
have become due on it.
Section – 145.Implied promise to indemnify surety.–In every contract
of guarantee there is an implied promise by the principal debtor to
indemnify the surety, and the surety is entitled to recover from the
principal debtor whatever sum he has rightfully paid under the
guarantee, but, no sums which he has paid wrongfully.
In view of abovesaid law, it stands proved that liability of a guarantor is
coextensive and Section 128 of Act makes it clear that guarantor is equally
liable to pay amount, in case of default and is entitled to recover paid
amount from principal debtor in terms of Section 145 of Contract Act.
38. The liability of a guarantor has been dealt with by Hon’ble Apex
court in case titled Industrial Investment Bank of India Ltd vs Bishwanath
Jhunjhunwala, Civil Appeal No. 4613 of 2000 and relevant observations
are as under:
Digitally signed
CS (Comm) No. 135/2021 by DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. DEVENDRA KUMAR 31/34
Date:
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18. Mr. Gupta also submitted that the liability of the guarantor and the
principal debtor are co-extensive and not in alternative. He also
submitted that sections 29, 31 and 32 of the State Financial
Corporations Act are pari materia with sections 39, 40 and 41 of the
IRBI Act.
19. Mr. Gupta, in support of his submission, placed reliance on a
judgment of this Court in Bank of Bihar Ltd. v. Damodar Prasad &
Another (1969) 1 SCR 620. In that case, the court referred to a
judgment in Lachhman Joharimal v. Bapu Khandu and Tukaram
Khandoji (1869) 6 Bombay High Court Reports 241, in which the
Division Bench of the Bombay High Court held as under:
“The court is of opinion that a creditor is not bound to exhaust his
remedy against the principal debtor before suing the surety and that
when a decree is obtained against a surety, it may be enforced in the
same manner as a decree for any other debt.”
This Court, while approving the said judgment, observed that, “the
very object of the guarantee is defeated if the creditor is asked to
postpone his remedies against the surety. In the present case the
creditor is a banking company. A guarantee is a collateral security
usually taken by a banker. The security will become useless if his
rights against the surety can be so easily cut down.”
20. In State Bank of India v. M/s. Indexport Registered (supra), this
Court held that the decree holder bank can execute the decree against
the guarantor without proceeding against the principal borrower.
Guarantor’s liability is co- extensive with that of the principal debtor.
In that case, this court further observed that, “the execution of the
money decree is not made dependent on first applying for execution
of the mortgage decree. The choice is left entirely with the decree-
holder. The question arises, whether a decree which is framed as a
composite decree as a matter of law, must be executed against the
mortgage property first or can a money decree, which covers whole or
part of the decretal amount covering mortgage decree can be executed
earlier. There is nothing in law which provides such a composite
decree to be first executed only against the principal debtor. The court
further observed that “the liability of the surety is co-extensive with
the principal debtor, unless it is otherwise provided by the contract”.
21. The term “co-extensive” has been defined in the celebrated book
of Polock & Mulla on Indian Contract and Specific Relief Act, Tenth
Edition, at page 728 as under:
Digitally
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DEVENDRA KUMAR
KUMAR Date:
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“Co-extensive. – Surety’s liability is co-extensive with that of the
principal debtor.
A surety’s liability to pay the debt is not removed by reason of the
creditor’s omission to sure the principal debtor. The creditor is not
bound to exhaust his remedy against the principal before suing the
surety, and a suit may be maintained against the surely though the
principal has not been sued.”
25. A Division Bench of the High Court of Karnataka, in The
Hukumchand Insurance Co. Ltd. v. The Bank of Baroda &
Others AIR 1977 Kant 204 had an occasion to consider the question
of liability of the surety vis-a-vis the principal debtor. The court held
as under:-
“The question as to the liability of the surety, its extent and the
manner of its enforcement have to be decided on first principles as to
the nature and incidents of suretyship. The liability of a principal
debtor and the liability of a surety which is co- extensive with that of
the former are really separate liabilities, although arising out of the
same transaction. Notwithstanding the fact that they may stem from
the same transaction, the two liabilities are distinct. The liability of the
surety does not also, in all cases, arise simultaneously.”
In view of the abovesaid case, it stands proved that the liability of a
principal debtor and guarantor is jointly and severally and both are equally
liable. As such, the plaintiff has discharged the onus to prove issues no. 3 &
4 and both issues are decided in favour of the plaintiff and against the
defendants.
39. Relief:- Plaintiff has discharged the onus to prove issues no. 3 & 4,
whereas the defendants have failed to discharge the onus to prove issues
no. 1 & 2, accordingly the plaintiff shall be entitled for decree of suit
amount. Accordingly, I hereby pass a money decree of recovery of
Rs.11,00,420.14/- along with interest @ 10.50% per annum as agreed,
payable from the date of filing of this suit till its realization, in favour of
CS (Comm) No. 135/2021 Digitally signed
by DEVENDRA
Indian Bank Vs. Himalayan Food Corner & Ors. KUMAR 33/34
DEVENDRA
Date:
KUMAR 2026.07.04
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the plaintiff and against the defendants. Plaintiff also shall be entitled for
cost of the suit.
40. Decree Sheet be prepared accordingly. File be consigned to Record
Room. Digitally signed
by DEVENDRA
KUMAR
DEVENDRA
Date:
KUMAR 2026.07.04
04:05:36
ANNOUNCED IN OPEN COURT +0530
ON 04th day of July, 2026 (DEVENDER KUMAR)
District Judge (Commercial Court-01)
East District
Karkardooma Courts, Delhi
CS (Comm) No. 135/2021
Indian Bank Vs. Himalayan Food Corner & Ors. 34/34
