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Judgment
This is an Original Application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 initiated by the applicant against the defendants praying for issuance of Recovery Certificate to the tune of Rs.12,36,098.98(Rupees Twelve Lakhs Thirty Six Thousands Ninety Eight and Ninety Eight paisa) only together with interest, cost and other usual reliefs.
The brief facts of the case as made out in the Original Application by the applicant bank is that the defendant No.1 is a proprietorship Firm deals with Omfed Parlour and food items business represented through its proprietor defendant No.2. The Defendant No.3 in order to secure the loan advanced to the defendant No.1, stood as guarantor to the loan sanctioned to the Defendant No.1 and in his personal and individual capacity as Guarantor having guaranteed the repayment of the Applicant's dues as claimed. The Defendant No.3, has also given her personal guarantee and mortgaged her property which are more-fully described in the plaint by depositing the title deeds in order to secure the financial assistance sanctioned by the Applicant Bank to the Defendant No.1.
The Defendant No.3 stood as the Guarantor and issued in her personal and individual capacities as Guarantor having guaranteed the repayment of the Applicant's dues as claimed.
The present original application is filed in order to enforce the securities created by the Defendants in favour of the Applicant as and by way of security for the repayment of the Loan Limits and payment of interest, liquidated damages, costs, etc.
The Defendants were and at all material times, have been and continue to be the owner of various items of moveable properties including the movable plant and machinery, machinery spare, tools, accessories and other movables installed or not and whether lying loose or not or stored in or about or shall hereafter from time to time be brought into or upon or be stored or be in or about all the said immovable properties or elsewhere or held by any person anywhere to the order and disposition of the Defendants or in the course of transit whatsoever and wheresoever's in possession of the Defendants, whether by addition or substitution, more particularly described in the Schedule of the plaint which are marked as Schedule-A.
The Defendant No.3 was and at all material times, has been and continues to be seized and possessed of and/or otherwise well and sufficiently entitled to the immovable properties which are more particularly described in the schedule as Schedule-B.
That Applicant Bank stated that the defendants being the borrower and guarantor respectively, approached the applicant bank at Puri on 01.09.2015 for grant of financial assistance to run their Omfed Parlour and food items business. The Applicant bank after due consideration of the said loan application sanctioned Cash Credit Limit of Rs.10 Lakhs dated 1.9.2015 subject to the terms and conditions contained therein. The terms and conditions of the Letter of Intent (LOI) / Sanction letter dated 01.09.2015 was duly accepted by the Defendants.
In pursuance to the sanction of the said cash credit limit by the Applicant, the Defendant No.1, executed a Hypothecation-cum-Loan Agreement with the Applicant at Puri on 01.09.2015.
The Defendants, inter alia, created a first charge by way of hypothecation of stocks and book debts in favour of the Applicant, for securing the borrowings for Cash Credit limit/Loan requirements in the ordinary course of business and procured and furnished an irrevocable and unconditional personal guarantee(s) from the Defendant Nos. 2 and 3.
The Defendant No.1 also agreed to pay interest to the Applicant on the principal amount of the Loan Limits outstanding from time to time at the rate of Bank BBR as applicable from time to time plus 1.75% viz @ 11.75% at the time of execution of loan agreement per annum (exclusive of interest tax and interest surcharge). The interest was payable on the outstanding amount in Term Loan account.
The defendant No.1 also agreed to pay additional interest, at the rate of 2% per annum (exclusive interest tax) as and by way of liquidated damages on the defaulted amounts under the loan agreement.
In consideration of the Applicant having agreed to grant the Loan Limits and having agreed to make disbursement/interim disbursements to the defendant No.1. Defendant No.3 also executed unconditional and irrevocable Guarantee Agreement at Puri on dt.01.09.2015 in favour of the Applicant, guaranteeing the repayment of the dues under the Loan Agreement.
The applicant Bank stated in the plaint that the Defendant No.1 through defendant No.2 and 3 have also executed Demand promissory Note dated 01.09.2015 separately at Puri for an amount of Rs.10.00 Lakhs, wherein the Defendant No.1, 2 and 3 have promised to pay to the Applicant Bank for an amount of Rs.10.00 lakhs together with interest thereon.
The applicant Bank further stated that the Defendant No.1 through its proprietor i.e. defendant No.2 and the defendant No.3 have also executed letter of undertaking dated 01.09.2015 at Puri for an amount of Rs.10.00 Lakhs, wherein the Defendant No.1 through its proprietor defendant No.2 and the defendant No.3 have promised and undertook not to withdraw the capital and not repay interest free un secured loans and firm shall route all business transactions through the bank account depositing all accounts receivable with other terms and conditions.
In order to further secure the Loan Limits, the defendant No.3 attended the Office of the Applicant at Puri on 02.09.2015 and delivered to and deposited with the Applicant, the title deeds which are more particularly described in Schedule-B of the paper book. The Applicant stated that the said immovable properties described in Schedule-B of the Paper Book are duly and validly mortgaged in its favour as security for the repayment of its dues under the Loan Agreement and accordingly necessary entry dated 02.09.2015 was recorded in the books of Applicant. The defendant No.3 also executed deed of deposit of title deed on 07.09.2015 in favour of the bank in order to secure the loan availed by the Defendant No.1 before the District Sub-Registrar, Puri.
In pursuance to the aforesaid documents executed and securities created by the defendants, at the request of the Defendant No.1, the Applicant Bank disbursed the loan amount of Rs.10,00,000.00 in favour of the defendants and the defendants agreeing the terms and conditions of the loan documents, received the loan amount and utilized the same in their purpose.
Defendant No.1 after availing the above loan limits, has committed defaults in terms of the Loan Agreements in respect of the Loan Limits, as and when the same have fallen due.
In view of various defaults committed by the Defendants, in repayment of monies due under the Loan Agreements, the Applicant became entitled to accelerate repayment and also to make a declaration requiring the Defendant No.1 and 2 make immediate repayment of entire outstanding amount in respect of the Loan Limits. The Applicant Bank issued the letter on 12.09.2017, 10.10.2017 and 09.01.2018 to the defendants, the defendants though duly received the above letters but failed and neglected to pay the dues as demanded.
The Defendants failed and neglected to repay the dues of the Applicant, the Applicant vide, its aforesaid letters addressed to the Defendant No.2 and 3 called upon the Defendant No.2 and 3 by invoking guarantee to make the payment of the outstanding dues in their capacity as guarantors.
The Applicant Bank stated that the defendants from time to time have acknowledged the liability and committed to repay the loan outstanding by admitting their loan liability. But the defendants failed to repay the loan. It is also stated by the applicant bank that the repayment of the aforesaid amount is also guaranteed by the Guarantee Agreement executed by the Defendant No.3.
The Applicant bank stated that the Defendant No.1, 2 and 3 inspite of repeated requests and reminders from the Applicant Bank did not pay their dues under the Guarantee Agreement, in accordance with the terms of the Loan Agreements and the Guarantee Agreement respectively.
In the above circumstances the applicant bank submits that the defendants are liable to pay the outstanding dues of Rs.12,36,098.98(Rupees Twelve Lakhs Thirty Six Thousands Ninety Eight and Ninety Eight paisa) only together with pendentilite and future interest @ 13.75% per annum with cost and charges till full realization.
Notice was issued to the defendants to show cause as to why the relief prayed for by the applicant bank be not granted. Notice sent to defendants through registered post was neither returned nor acknowledged. Adhering to the principle of natural justice, the notice pertaining to the defendants was published in widely circulated Odia Newspaper. But the defendants had neither appeared nor had filed the show cause reply. Consequently, defendants were set ex-parte on 23.9.2019. The Tribunal had no other option but to hear ex-parte against the defendants.
Sri Truptiranjan Nath, S/o. Sri Kulamani Nath, Asst. General Manager of IDBI Bank Ltd., Puri Branch, Puri filed the evidence on affidavit along with the photocopy of the documents, which were compared with the originals by the Registry, have been proved and marked as Annexures-1 to 11 such as Loan application, Sanction letter, Hypothecation-cum-Loan agreement, Guarantee Agreement, D.P. Note, Letter of Undertaking, Memorandum of entry dated 2.9.2015 in respect of the mortgage created on 2.9.2015, Regd. Deed of title deed and other documents relating to the loan and statement of account respectively.
Heard the learned counsel for the applicant bank and perused the records. Having perused the O.A. and also evidence on affidavit filed along with documents proved and marked as annexure-1 to 11 and in view of the uncontroverted averments made in the application, the claim of the applicant bank is proved against the defendants.
In view of the above discussion and after considering the entire evidence-on-affidavit of the applicant bank and the documents filed by the applicant bank, I have no hesitation to hold that the applicant bank is entitled to recover a sum of Rs.12,36,098.98(Rupees Twelve Lakhs Thirty Six Thousands Ninety Eight and Ninety Eight paisa) only from the defendants who is liable for the same. The contentions of the applicant bank is that they shall also be entitled to pendentelite and future interest at the contractual rate of interest @ 13.75% per annum from the date of filing of the Original Application till the date of realization. The interest rate is discretion of Tribunal as per the principles laid down by the Hon'ble Supreme Court in case of Central Bank of India -Versus-Ravindra and other reported in AIR 2001 SC 3095.
From the above discussion, it is held that the contractual rate of interest was @ 13.75% per annum. Certified copy of the statement of account provides that the rate of interest was changed from time to time which are recorded in the statement of account. The rate of interest which was being charged was 13.75% per annum granting of pendentilite and future interest is the discretion of the Tribunal and the provisions of Section 34 of CPC does not necessarily mean that in case of commercial transaction, the court is bound to award contractual interest.
In view of the above discussion and after considering the entire evidence on affidavit of the applicant bank and the original document filed by the applicant bank, I have no hesitation to hold that the applicant bank is entitled to recover a sum of Rs.12,36,098.98 (Rupees Twelve Lakhs Thirty Six Thousands Ninety Eight and Ninety Eight paisa) only from the defendants, which the bank is entitled to get. Considering the facts and circumstances of the case, it will be just and proper to award simple interest @ 10% per annum from the date of filing of the original application till the date of realization.
ORDER
The application for the recovery of Rs.12,36,098.98(Rupees Twelve Lakhs Thirty Six Thousands Ninety Eight and Ninety Eight paisa) only is allowed ex-parte with ex-parte cost against the defendants. The defendants shall pay pendentelitie and future interest @ 10% per annum on the amount due from the date of filing of the original application till full realization of the claim amount. The applicant bank can recover the Bank dues from the defendants' movable and immovable properties to the bank which are more-fully described in the original application which shall form a part of this judgment, if the sale proceeds are insufficient to satisfy the Certificate, than from other properties of the defendants which are uncharged.
The defendants are restrained from depleting, transferring, encumbering or in any way dealing with his assets without first paying the claim of the applicant bank.
Let a Recovery Certificate be issued under Section 19 (22) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the same be forwarded to the Recovery Cell for further action as per law.
The parties are directed to appear before the Recovery Officer on 2.12.2020 for further action in accordance to law in the event the entire amount is not paid by the said date.
Let a copy of the Judgment be supplied to the parties forthwith as per rules.
Dated : 7.10.2020
Judgment signed, dated and Pronounced in open Court.