M/S Housing Development Finance ...

vs Also At on 20 April, 2018

Delhi District Court

M/S Housing Development Finance ... vs Also At on 20 April, 2018
IN THE COURT OF GAURAV RAO, ADJ−02 & Waqf Tribunal /
NEW DELHI DISTRICT, PATIALA HOUSE COURTS, NEW DELHI.

CS No. 58264/16
CNR No. DLND01−005922−2016

M/s Housing Development Finance Corporation Ltd.,

( Through its Authorized Representative)
OLOF PALME MARG, MUNIRKA,
OUTER RING ROAD,
NEW DELHI−110067
....Plaintiff.

Vs.
Sh. Vijay Kaushik

R/o. Flat No. 1816,

AVJ Heights Tower H
GH 12/2 Sector Zeta 01
Greater Noida−201308

Also at:
B−489−490
B Block Weavers Colony,
Ashok Vihar, New Delhi−110052.

Also at:
SMS India Ltd.,
286, Udyog Vihar,
Phase−2, Gurgaon−122016.
...Defendant

CS No. 58264/16 HDFC VS.Vijay Kaushik 1/13

Date of institution : 08.07.2016
Date on which reserved for judgment : 20.04.2018
Date of decision : 20.04.2018
Final Decision : Application seeking leave to
defend dismissed and suit
decreed

JUDGMENT

1. Vide this order/judgment I shall dispose of the application,

moved by the defendant, seeking leave to defend the present suit filed under
Order XXXVII CPC by the plaintiff.

Plaint
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2. It is averred that plaintiff is a registered Financial Company

under the provisions of Indian Companies Act, 1956 and is engaged interalia
in the financial activities namely providing housing loans, loans against the
property etc. It is the case of the plaintiff that Mr. Diganta Baurah, who is
working as Assistant General Manager, Credit Risk Management with the
plaintiff company is authorized to institute the present suit.

2.1 It is further averred that defendant was interested to buy a builder

flat and approached the plaintiff for grant of home loan of Rs.18,00,000/−. It CS No. 58264/16
H D F C V S . V i j a y K a u s h i k 2 / 1 3
is averred that the plaintiff agreed to provide the said loan vide sanction
letter/loan approval letter dated 15.02.2013 and he was allotted a Housing
Loan Account bearing no. 607474788.

2.2 It is further averred that defendant was allotted an apartment No.

H−1816, AVJ Heights, Plot No.GH−12/2, Sector Zeta−1, Greater Noida, vide
allotment letter dated 06.03.2013, issued by AVJ Developers (India) Pvt.
Ltd. and in furtherance thereof, an agreement to sell/Flat Buyer Agreement
was also executed between the defendant and the builder on 06.03.2013. It is
further averred that thereafter, a tripartite agreement vide dated 03.03.2013
was executed among the defendant/borrower, builder and the plaintiff and
the plaintiff received "permission to mortgage" letter from the builder.

2.3 It is further averred that the plaintiff duly disbursed an amount of Rs.16,97,941/− vide
cheque bearing no. 347087 dated 20.03.2013 at Connaught Place, New Delhi, in favour
of the builder having A/C No. 01932320003072, HDFC Bank Ltd., New Delhi at
defendant/borrower's request.

2.4 It is further averred that thereafter defendant furnished a promissory note dated
22.03.2013 and a loan agreement was executed
between the plaintiff and defendant on 22.03.2013 at Cannaught Place, New Delhi, by way of
which defendant agreed to repay the loan, alongwith CS No. 58264/16 HDFC VS.Vijay
Kaushik 3/13 interest @ 10.15%, by way of Equated Monthly installment spread over 240
months. It is further averred that the additional interest @ 18 % per annum or at any such
higher as per rules of HDFC was also payable by the
defendant to the plaintiff in case of default or delay in making the repayment
of the EMI/PEMI. It is further averred that defendant was also liable to pay
incidental charges in recovering the EMI.

2.5 It is further averred that defendant paid the last EMI on 27.12.2015 and thereafter
n o p a y m e n t h a s b e e n m a d e d e s p i t e v a r i o u s
reminders, demands, letters and legal notice dated 17.05.2016.

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2.6 It is further averred that as on 30.04.2016, the total outstanding

comes to Rs.17,84,265/−. Hence, the present suit.

Leave to Defend application

3. In the application seeking leave to defend it is pleaded that the suit of the plaintiff is false,
frivolous & concocted and hence not maintainable.

3.1 It is further pleaded that the plaintiff has not come to the court
with clean hands and has suppressed, concealed true and material facts.

CS No. 58264/16 HDFC VS.Vijay Kaushik 4/13

3.2 It is further pleaded that the suit is not maintainable in its present

form as M/s AVJ Developers ( India) Pvt. Ltd. who is a proper and
necessary party has not been impleaded as a party. It is pleaded that the said
developer, who had fraudulently misrepresented the defendant and cheated
him, has been deliberately and intentionally not impleaded as a party merely
to harass the defendant.

3.3 It is further pleaded that suit is bad for misjoinder and non− joinder of the said
necessary, proper party and hence deserves to be dismissed/rejected.

3.4 It is further pleaded that the present suit is not maintainable on account of the arbitration
clause contained in the agreement dated 06.03.2013.

Reply to leave to defend application

4. In reply to the leave to defend application, plaintiff has pleaded

that in his application for grant of leave to defend, the defendant has failed to
bring forth any triable issues and the same is liable to be dismissed. It is
further averred that defendant has not denied the fact that he had entered into a loan agreement
with the plaintiff and that he had taken loan from the
plaintiff company. It is further averred that he has also not denied that he had CS No. 58264/16
HDFC VS.Vijay Kaushik 5/13 executed a promissory note in favour of the plaintiff.

4.1 It is averred that defendant himself had approached the plaintiff

for a loan to buy a flat from the said developer and he had furnished two
payment receipts and the allotment letter to the plaintiff, in pursuance of
which the sanction loan was granted. It is further averred that M/s. AVJ
Developers (India) Pvt. Ltd. is not the party to the home loan agreement and
it is denied that the suit is bad for its misjoinder.

4.2 It is averred that no agreement was executed between the plaintiff

and defendant which contains an arbitration clause and it is pleaded that the
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arbitration clause is contained in the flat buyer agreement executed between

the defendant and the builder.

4.3 It is thus prayed that the leave to defend be dismissed as it does not raise any triable issue.

5. Heard the parties and perused the records.

5.1 The present suit has been filed by the plaintiff company for

recovery of outstanding loan amount. As per the plaintiff's case the loan was
granted to the defendant vide sanction letter/loan approval dated 15.02.2013 and he was alloted
a housing loan account bearing no. 607474788. It is CS No. 58264/16 HDFC VS.Vijay Kaushik
6/13 further the plaintiff's case that an amount of Rs. 16,97,941/− was disbursed to the builder
i.e. M/s AVJ Developers (India) Pvt. Ltd. in its account no.
01932320003072. None of these facts have been disputed by the defendant. Defendant admits
availing the loan facility from the plaintiff. He admits
execution of loan agreement, promissory note, the tripartite agreement dated
03.03.2013 as well as disbursal of amount to M/s AVJ Developers (India) Pvt. Ltd.

5.2 It is not even once denied in the leave to defend application that
the loan facility was not so availed by him. It is also not claimed that the
loan documents are forged or fabricated or that the terms and conditions
were not agreed to by him. It is also not denied that the loan was to be repaid
in 240 equated monthly installments. No dispute whatsoever has been raised
regarding the outstanding amount as claimed by the plaintiff. In fact it would
be safe to conclude that the defendant admits the plaintiff's case regarding
advancement and non repayment of the loan amount.

5.3 The only limited defence put forth by the defendant is that M/s
AVJ Developers (India) Pvt. Ltd. has not been impleaded as a party in the
present suit. It is his case that M/s AVJ Developers (India) Pvt. Ltd. is a necessary and proper
party. It is further his case that fraudulent
misrepresentation were made by M/s AVJ Developers (India) Pvt. Ltd. and
the defendant was cheated/duped of his hard earned money. Defendant also CS No. 58264/16
H D F C V S . V i j a y K a u s h i k 7 / 1 3
spoke of certain arbitration clause in flat buyer agreement and claimed that
the suit is not maintainable in view of the said clause. However the defence
set up by the defendant does not even remotely entitles him to defend the present case.

5.4 M/s AVJ Developers (India) Pvt. Ltd. is neither a necessary nor a
proper party to the present suit. M/s AVJ Developers (India) Pvt. Ltd. is not a co−applicant,
co−borrower or a guarantor of/to the loan facility, loan

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agreement entered by the defendant with the plaintiff. M/s AVJ Developers
(India) Pvt. Ltd. has no liability whatsoever qua the loan agreement. Merely
because one tripartite agreement dated 03.03.2013 was entered between the
plaintiff, defendant and M/s AVJ Developers (India) Pvt. Ltd. that by itself
would not make M/s AVJ Developers (India) Pvt. Ltd. liable in any manner
towards the loan availed by the defendant. The liability is exclusively of the
defendant. Nonetheless as per the tripartite agreement, the flat, against which
the loan was availed, stands mortgaged in favour of the plaintiff.

5.5 There is no arbitration clause in any of the loan document, loan agreement executed between
t h e p l a i n t i f f a n d d e f e n d a n t . T h e a r b i t r a t i o n
clause is contained in the flat buyer agreement and not the loan agreement and therefore it can
have no bearing upon the loan agreement executed
between the plaintiff and the defendant or the liability of the defendant.

CS No. 58264/16 HDFC VS.Vijay Kaushik 8/13

5.6 At this stage I would like to highlight the observations made by

the Hon'ble High Court of Delhi in Housing Development Finance

Corporation Ltd. Vs. Sandeep Kumar and anr. CS (OS) No. 2502/2012
decided on 11.03.2015 and Housing Development Finance Corporation
Ltd. Vs. Umesh Kumar Rai and anr CS (OS) No. 2894/2012 decided on
02.09.2014. In Umesh Kumar Rai (supra) it was held as under:

"1. This is an application filed by the defendant no. 1 seeking unconditional

leave to defend...........

13. It is submitted that there is collusion between the plaintiff bank and the
builder and further the flat in question was mortgaged by the builder in favour
of the bank and the bank has chosen to give up a valuable security in their
favour. It is further submitted that since the defendant no.1 has not derived
benefit of the flat in question he is not liable to pay the further EMIs.

14. I have heard counsel for the parties and also perused the plaint and
supporting documents, which have been placed on record. There is no
explanation rendered by the plaintiff with regard to the break−up of the amounts
due from the defendant as shown in paragraph 20 of the plaint,
h o w e v e r ,
reliance is placed on the statement of account which is duly certified under the
Bankers' book of Evidence, which reflects that six installments stands paid by
the defendant no.1 to the plaintiff. The tripartite agreement between the parties
h a s a l s o b e e n p e r u s e d b y t h i s c o u r t . I t w o u l d
be useful to reproduce certain clauses of the agreement:
"WHEREAS the Borrower has represented that the Builder is of his choice and that
he has satisfied himself with regard to integrity, capability for quality
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construction of the Builder and the Builder's ability for timely completion and
on time delivery of the project;

AND WHEREAS the Builder and the Borrower have entered into an agreement
dated 24.3.2011 for the purpose of unit no.3072 in the said project of
the Builder;

AND WHEREAS the Borrower and the Builder have jointly approached HDFC
for a Loan of Rs.26,00,000/− (Twenty six lacs only) towards payment of the
sale / purchase consideration of the residential apartment in the Project;

AND WHEREAS HDFC has considered the said request with a clear
understanding and an irrevocable undertaking by the Borrower that subsequent
to the disbursement, if any, as requested by the Borrower, there would be no
repayment default for any reason whatsoever including but not limited to any CS No. 58264/16
HDFC VS.Vijay Kaushik 9/13 concern/ issues by and between the Borrower and the
Builder / Developer;

AND WHEREAS the Borrower has represented, and such representation being
a continuing representation, that Borrower's obligation to repay the Loan shall
be a distinct and independent obligation more particularly independent of any issues/ concern /
dispute of whatsoever nature between the Borrower and Builder;"

15. A careful reading of the above clauses would show that it is the borrower,
who has chosen the builder and also satisfied himself with regard to his ability for timely
completion and delivery of project. Thus the argument of the
defendant of collusion between the plaintiff and defendant no.2 is baseless and
without any force. The agreement would also show that defendant no.1 was the principal borrower
and further after the amount had been disbursed the
borrower would be responsible for the repayment, even if there were concerns
or issues between the borrower and the builder/developer.

16. While argument of counsel for the applicant/defendant no.1 may seem to be
attractive that he has been duped by the builder and the bank, as they were in
collusion, since the bank has disbursed the entire amount of loan to the builder.
Based on the documents, this argument is unacceptable; firstly, for the reason
that the liability to clear the outstanding amount was of the principal borrower
and secondly any issue between the borrower and the builder would not come in
the way of the plaintiff bank, to seek recovery. There is not a single document
placed on record or any averment made in the application for leave to defend,
as to what action has been taken by the borrower to protect his rights with
respect to booking of a flat with the builder.

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17. The Apex Court in the case of M/s.Mechalee Engineers & Manufacturers Vs. M/s.Basic
Equipment Corporation reported at AIR 1977 SC 577 has
drawn up the parameters to be considered by the court while dealing with the
application for leave to defend. Relevant paras of the judgment reads as under:
"8. In Smt. Kiranmoyee Dassi and Anr. v. Dr. J. Chatterjee 49 C.W.N. 246 ,
Das. J., after a comprehensive review of authorities on the subject, stated the
principles applicable to cases covered by order 37 C.P.C. in the form of the
following propositions (at p. 253):

(a) If the Defendant satisfies the Court that he has a good defence to the claim on its merits the
plaintiff is not entitled to leave to sign judgment and the
Defendant is entitled to unconditional leave to defend.

(b) If the Defendant raises a triable issue indicating that he has a fair or bona
fide or reasonable defence although not a positively good defence the plaintiff
is not entitled to sign judgment and the Defendant is entitled to unconditional leave to defend.

(c) If the Defendant discloses such facts as may be deemed sufficient to entitle him to defend, that
is to say, although the affidavit does not positively and
immediately make it clear that he has a defence, yet, shews such a state of facts as leads to the
inference that at the trial of the action he may be able to CS No. 58264/16 HDFC
VS.Vijay Kaushik 10/13 establish a defence to the plaintiff's claim the Plaintiff is not
entitled to judgment and the Defendant is entitled to leave to defend but in such a case the
Court may in its discretion impose conditions as to the time or mode of trial but
not as to payment into Court or furnishing security.

(d) If the Defendant has no defence or the defence set up is illusory or sham or
practically moonshine then ordinarily the Plaintiff is entitled to leave to sign
judgment and the Defendant is not entitled to leave to defend.

(e) If the Defendant has no defence or the defence is illusory or sham or

practically moonshine then although ordinarily the Plaintiff is entitled to leave to sign judgment,
the Court may protect the Plaintiff by only allowing the defence to proceed if the
amount claimed is paid into Court or otherwise
secured and give leave to the Defendant on such condition, and thereby show
mercy to the Defendant by enabling him to try to prove a defence."

18. I am of the view that no reasonable, plausible defence has been raised by
the defendant no.1. The defence which has been raised by defendant no.1 would
fall under illustration (d), as provided in the case of M/s. Mechalee Engineers
& Manufacturers (supra).

The application is accordingly dismissed. The plaintiff would be entitled to

decree with pendente lite and future interest @ 8% P.A."

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5.7 Hence in the above matter despite the borrower and the builder
jointly having approached the bank for the loan facility and despite similar
allegations of collusion between the bank and the builder as in the present
case, the leave to defend application was dismissed. In the case at hand it
was the borrower only i.e. the defendant who had approached the bank for
loan facility and not the builder. The builder not being a party to the loan
agreement dated 22.03.2013 cannot be fastened with any liability towards
the loan account and therefore is neither a necessary nor a proper party. The
relevant portion of the tripartite agreement read as under:

"AND WHEREAS, the Borrower has approached HDFC for a loan of Rs.
18,00,000/− towards payment of the sale/purchase consideration of the residential
apartment in the Project."

CS No. 58264/16 HDFC VS.Vijay Kaushik

5.8 In Sandeep Kumar (supra), wherein also the leave to defend

application was dismissed and which case was based upon exactly similar
facts as the present one, it was held as under:

"10. Hence a conjoint reading of above clauses of Tripartite Agreement clearly

shows that it was at the request of defendant No.1 that the plaintiff has given a
loan of Rs.22 lacs. There is an unconditional undertaking given by defendant No.1
that there would be no repayment default for any reason whatsoever including any
issue between defendant No.1 and 2.

11. Similarly the Home Loan Agreement is exclusively between the plaintiff and
defendant No.1. It spells out the obligations of the plaintiff and defendant No.1
respectively and it stipulates the loan amount as Rs.22 lacs repayable in
240 months @ EMI of Rs.20,868/−.

12. This court in the case of HDFC Ltd. vs. Umesh Kumar Rai & Anr. (supra)
under the similar facts has declined to grant leave to defend. The argument that
defendant No.1 has been duped by the builder and the bank in collusion has also
been rejected.......

15. In my opinion defendant No.1 has failed to make out any ground for leave to
defend. In case evidence is lead, no new facts or issues are likely to be clarified or
likely to evolve. In the facts and circumstances of the case, given the legal position
there is no option but to dismiss the present application for leave to defend. The
present application is without any merit and is dismissed."

5.9 In the present case also the liability of the defendant towards the loan
agreement is absolute in terms of loan agreement and is not to be
influenced by tripartite agreement or for that matter any other agreement
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executed between the defendant and the builder. The relevant portion of the
tripartite agreement is reproduced hereunder:

AND WHEREAS the Borrower had represented, and such representation being a
continuing representation, that Borrower's obligation to repay the Loan shall be a
distinct and independent obligation more particularly independent of any
issues/concern/dispute of whatsoever nature between the Borrower and Developer;

5.10 Therefore in view of above discussion leave to defend application CS No.

5 8 2 6 4 / 1 6 H D F C V S . V i j a y K a u s h i k 1 2 / 1 3
stands dismissed. Plaintiff is entitled to a decree for a sum of Rs. 17,84,265/− along
with pendente lite and future interest @ 6% per annum. I order
accordingly.

6. Decree sheet be prepared accordingly.

7. File be consigned to record room after necessary compliance.

Announced in the open Court (Gaurav Rao)

on 20th April, 2018 ADJ−02 & Wakf Tribunal /
New Delhi District,
Patiala House Courts, Delhi.

CS No. 58264/16 HDFC VS.Vijay Kaushik 13/13

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