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of <h1>Court rules in favor of Indian Overseas Bank in recovery suit, holding defendants liable for loan repayment.</h1> <h3>Indian Overseas Bank Versus RM Marketing & Services (P.) Ltd.</h3> Indian Overseas Bank Versus RM Marketing & Services (P.) Ltd. - [2003] 43 SCL 496 (DELHI) Issues:Recovery suit by Indian Overseas Bank for outstanding loan amount of Rs. 7,92,563.46 against defendants, including personal guarantees and liabilities of directors.Analysis:The suit was filed by Indian Overseas Bank, a nationalized bank, for the recovery of Rs. 7,92,563.46 from the defendants. The plaintiff alleged that defendant No. 1, engaged in consultancy and engineering services, approached the bank for a cash credit limit of Rs. 1 lakh, which was sanctioned along with other facilities. Personal guarantees were provided by defendants 2 and 3 for Rs. 12 lakhs and Rs. 1 lakh each. Despite availing the loan, defendant No. 1 failed to clear the credit limits, leading to the outstanding amount. The defendants confirmed the debt balance of Rs. 4,36,217.45, but failed to adjust the amount, leading to an increased outstanding balance of Rs. 7,92,563.46.The court framed several issues, including whether the plaint was signed and filed by an authorized person, if the plaint was filed within the limitation period, the rate of interest the plaintiff was entitled to, and the maintainability of the suit against defendant No. 2. After defendants 1 and 2 stopped appearing, all defendants were proceeded ex parte. The plaintiff was allowed to present evidence through an affidavit, which included various documents proving the loan amount and guarantees provided by defendants. The plaintiff also provided a statement of account showing the outstanding balance. Defendant No. 3 made a partial payment during the suit, absolving him from further liabilities.Defendants 4 to 6, who were directors of defendant No. 1, were impleaded in the suit. However, as they did not provide personal guarantees, they could not be held liable for the loan repayment. The court held that the defendant No. 1, being a separate legal entity, was responsible for the loan, while defendants 2 and 3, as guarantors, were liable. A decree was passed against defendants 1 and 2 for Rs. 1,96,675.76, with interest at 16.5% per annum from the date of the suit till recovery, along with costs. No decree was passed against defendant No. 3 due to the partial payment made.
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