IN THE COURT OF SH.

KAMLESH KUMAR, ADJ (CENTRAL) -17, DELHI

Suit No. 673/08

Bank of Baroda
A 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 Soni

M-168A, Greater Kailash-I,
New Delhi-110048

4.

Ms. Shakuntala Soni

M-168A, Greater Kailash-I,
New Delhi-110048

Date of Institution of Suit

Date of Decision

......Defendant
:
:

01.04.2006
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.

-: 1 :-

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 PromissoryNote 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.

-: 2 :-

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
-: 3 :-

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
-: 4 :-

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

-: 5 :-

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,

-: 6 :-

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
-: 7 :-

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
-: 8 :-

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
-: 9 :-

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:-: 10 :-

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
-: 11 :-

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 repaymentschedule 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

-: 12 :-

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.

-: 13 :-

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 coobligation 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.

-: 14 :-

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
-: 15 :-

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
-: 16 :-

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

-: 17 :-

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.
-: 18 :-

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 crossexamination 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
-: 19 :-

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 fixeddeposits. 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.

-: 20 :-

Issue No.3

20)

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

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
Today i.e. on 23 October, 2009

-: 21 :-

(KAMLESH KUMAR)
Additional District Judge
DELHI

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/Delhi
23.10.2009
-: 22 :-

-: 23 :-