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Judgment
Applicant Bank has filed initially this recovery suit before the court of Civil Judge, Aligarh bearing Suit No. 429 of 1976 (now transfer application) on 26.11.1976. After constitution of the Tribunal the Ld. Civil Court transferred the said suit to the Debt Recovery Tribunal, Lucknow in the year 2002. The Tribunal registered and renumbered the case bearing T.A. No. 513 of 2002. Thereafter the Ministry of Finance re-notified the jurisdiction of the Tribunals hence the said TA No. 513 of 2002 had been transferred to the DRT, Allahabad in the year 2018. The said suit was originally filed before the Ld. Civil Court for recovery of Rs.11,37,524.48 (Rupees Eleven Lac Thirty-Seven Thousand Five Hundred Twenty-Four and Paise Forty-Eight only) together with pendente-lite and future interest from 26.11.1976 till the date of realization and costs.
The brief facts of case are that the Defendant No.1 is a Registered Partnership Firm and Defendant No. 2 (now deceased), Defendant No. 3 (now deceased) and Defendant No. 4 to 7 were partners and guarantors of the Borrower Firm. The Defendant No.2 (now deceased), Defendant No. 3 (now deceased) and Defendant No. 4 to 7 also stood guarantors for the Defendant No. 1 firm. The Defendant No. 1 through its partners approached the Applicant Bank for Financial Assistance in the shape of Cash Credit (Lock and Key) of Rs. 2,50,000/-, Cash Credit (Factory Type) of Rs.2,50,000/- Cash Credit (NSIC) of Rs.50,000/-, Term Loan of Rs.47,592/- and 10% Special Drawing Account of Rs. 30,000/-. Applicant Bank considered the loan application of the Defendant No.1 and on 16.10.1968 sanctioned Cash Credit (Factory Type) facility of Rs.50,000/-against hypothecation of entire assets and personal guarantee of Defendant No.2 (now deceased), Defendant No. 3 (now deceased) and Defendant No. 4 to 7 in favour of the Applicant Bank. Thereafter, the Applicant Bank enhanced the Cash Credit (Factory Type Loan) from time to time up to 17.09.1969 to the extent of Rs. 2,50,000/- and in consideration thereof the Defendant No.2 (now deceased), Defendant No. 3 (now deceased) and Defendant No. 4 to 7 executed and signed various loan and security documents in between 16.10.1968 to 31.03.1969 in favour of the Applicant Bank.
At the further request of the Defendants the Applicant Bank advanced Rs. 50,000/- vide its sanction letter dated 22.04.1969 and in consideration thereof the Defendants executed and signed various loan security documents in favour of the Applicant Bank namely annexure No. P and Q.
At the further request of the Defendants the Applicant Bank on 01.09.1975 combined the all three account namely Cash Credit (Factory Type), Cash Credit (Lock and Key) and N.S.I.C. Guarantee Scheme which were due in total at that time Rs.10,46,271.60 as on 31.10.1976. The said credit facilities were granted against the primary security of Hypothecation of moveable machinery, equipment and personal guarantee of the Defendant No.2 (now deceased), Defendant No. 3 (now deceased) and Defendant No. 4 to 7 in favour of the Applicant Bank.
At further request of the Defendants the Applicant Bank sanctioned Rs.30,000/- against primary security of hypothecation of entire assets, equitable mortgage of immovable properties and personal guarantee of Defendant No.2 (now deceased), Defendant No. 3 (now deceased) and Defendant No. 4 to 7 in favour of the Applicant Bank. The Defendants 1, 2 (now deceased), 3(now deceased), 4, 5, 6 and 7 executed and signed various loan and security documents in favour of the Applicant Bank.
During the pendency of the case the Defendant Nos. 2 and 3 died leaving behind their legal heirs namely Defendant No. 2/1 and 2/2 and Defendant nos. 3/1 to 3/6 who have inherited the estate of their deceased guardians hence they have been arrayed as parties to this case namely Defendant No. 2/1 and 2/2 and Defendant nos. 3/1 to 3/6.
However, after availing the aforesaid Credit Facilities, the Defendant No. l failed to maintain financial discipline as per terms and conditions of the loan agreement due to which loan account became irregular. Despite repeated reminders and persuasion, the Defendant No.l failed to regularize the accounts. Consequently, the said accounts of the Defendant No. l were recalled by Applicant Bank. Thereafter, Applicant Bank served Demand Notice to the Defendants to repay the outstanding dues but the Defendants failed to make the payment of outstanding dues. Hence, the present Transfer Application has been filed by Applicant Bank against Defendants for recovery of Rs.11,37,524.48 (Rupees Eleven Lac Thirty-Seven Thousand Five Hundred Twenty-Four and Paise Forty-Eight only) alongwith pendente-lite, future interest, costs and for issuance of Recovery Certificate for the said amount.
The averments of Applicant Bank are set out in detail in its Original Application which is supported by affidavit. Therefore, these are not being stated here afresh to avoid a repetition of facts.
The summons were issued to the Defendants. The Defendants after due service appeared before Civil court as well as before DRT, Lucknow but no written statement was filed by them. However, after transfer of case from DRT, Lucknow to this Turbinal none appeared for the Defendants even after due service through substituted mode of publication. Hence, the Defendants were proceeded ex-parte vide order dated 11.09.2019
Applicant Bank filed its evidence by way of affidavit of Sh. B.L. Bansal, Branch Manager of Applicant Bank as AW-1/1 who proved the various loan and security documents.
I have heard the ex-pa rte arguments of Ld. Counsel for Applicant Bank and perused the material on record.
The point for consideration is whether Applicant Bank is entitled to recover the claim as prayed for?
Section 17(1) of the RBD Act of 1993 vests a Tribunal constituted under the Act with the jurisdiction, powers and authority to entertain and decide applications from the Banks and Financial Institutions for recovery of debts due to such Banks and Financial Institutions. 'Debt' is, defined in Section 2(g) of the Act, 1993. The RDB Act, 1993 creates a complete code for the adjudication of matters referred to in Section 17 and provides for the procedure in respect thereof. The jurisdiction of the Civil Courts to try cases in respect of recovery debts of Rs.10.00 Lac and above due to Banks and financial institutions stands ousted by the Act. Hence, Original Application filed U/s 19(1) of the Recovery of Debts and Bankruptcy Act, 1993 is within the jurisdiction and legally maintainable before this Tribunal.
Further, Applicant Bank has fully corroborated the averments made in the O.A. against the Defendants through evidence of witness Sh. B.L. Bansal, Branch Manager of Applicant Bank as AW-1/1. The Applicant Bank has also established its case through documentary evidence. On a careful scrutiny of the evidence on affidavit and documentary evidence, it is proved that Defendant No.1 through its Partners had availed the credit facilities from the Applicant Bank against primary security of hypothecation of entire assets and personal guarantee of Defendant No.2 (now deceased), Defendant No. 3 (now deceased) and Defendant No. 4 to 7 in favour of the Applicant Bank. A perusal of Original Application, evidence and documents relied upon clearly show that Defendant No.1 had utilized the above loan facility as granted to it.
However, after availing the aforesaid Credit Facilities, Defendant No. l failed to maintain financial discipline as per terms and conditions of the loan agreement. Consequently, the said account was recalled by Applicant Bank. The whole case of the Applicant Bank is based on documentary evidence and the witness has duly proved all these documents. In my view there is no question of disbelieving the evidence lead by the Applicant Bank and Applicant Bank has proved its case beyond reasonable doubts.
Further, on perusal of documentary evidence show that Applicant Bank has maintained the Books of account in the ordinary course of banking business showing disbursal of the loan amounts as per provisions of Bankers Books Evidence Act, 1891 and Guidelines of RBI under Banking Regulation Act, 1949. It further shows that Applicant Bank had regularly credited the amount if any, paid by the Defendants in the books of account. Applicant Bank had also charged interest from time to time and the entries are relevant U/s 4 of the Bankers Books Evidence Act, 1891 as reflected from A/c Statements attached with O.A.
Moreover, Applicant Bank has been able to prove that the Defendant No.1 availed the credit facilities and failed to repay the same in terms of loan documents. Since, the transactions are of commercial nature between the parties, the Defendants are bound to repay the loan amount with interest as agreed upon and Applicant Bank is entitled to recover suit amount with interest as claimed by it. The Original Application has been presented on 26.11.1976 i.e. within three years from the date of Acknowledgment of Debt & Balance Confirmation Letter dt. 28.11.1973 admitting debt liability for the purpose of limitation as reflected from Account Statement. Thus, it is proved that the Defendants are jointly and severally liable to pay the claim made in the O.A. to the Applicant Bank.
Applicant Bank has claimed interest @14.00% per annum from the date of filing of the suit i.e. 26.11.1976 till the date of realization and costs. The contract between Applicant Bank and the Defendants comes to an end and after filing of the O.A. as per the provisions of Section 19(20) of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time) which is analogous to Section 34 of the CPC, the Tribunal/Court has discretion in awarding pendente-lite and future interest. I am also supported in my view by the Hon'ble Supreme Court in a case titled Central Bank of India Vs. Ravindra and others reported in AIR 2001 SC page 3095. On the basis of the foregoing discussion, interest of justice will be served if pendente-lite and future interest is granted @10.00% simple interest yearly from the date of filing of the O.A. till the date of realization with costs.
In the light of above discussions, the Original Application deserves to be allowed against the Defendants with costs. However, the liability of the Defendant nos. 2/1, 2/2, 3/1 to 3/6 would be liable to be limited to the extent of the estate of the diseased borrowers/granters inherited by them.
ORDER
(i) The Original Application is allowed declaring that the Defendants are liable to pay a total sum of Rs.11,37,524.48Ps. (Rupees Eleven Lac Thirty-Seven Thousand Five Hundred Twenty-Four and Paise Forty-Eight only) to Applicant Bank along-with cost, expenses and future interest @10.00% simple interest yearly from the 26.11.1976 i.e. date of filing of the O.A. till the date of realization in full, jointly or severally.
(ii) In case of failure to repay the aforementioned adjudicated amount within 30 days, same shall be recovered from the sale of the hypothecated assets of the Defendants in execution proceedings. The amount, if any, already recovered by sale of any hypothecated assets or otherwise shall be adjusted towards the debt and only the balance amount shall be recoverable. If the dues of Applicant Bank still remain unsatisfied, the same shall be recovered by attachment and sale of the personal movable and immovable assets of the Defendants jointly or severally. The cost of litigation be also borne by the Defendants. However, the liability of the Defendant nos. 2/1, 2/2, 3/1 to 3/6 would be liable to be limited to the extent of the estate of the diseased borrowers/granters inherited by them.
(iii) The Defendants are hereby restrained by means of injunction from depleting, transferring, encumbering, alienating, selling or otherwise dealing with hypothecated assets or their other immovable/movable properties/estates without first paying the above claim of Applicant Bank/Certificate Holder. However, the Defendant Nos. 2/1, 2/2, 3/1 to 3/6 are hereby restrained only to the extent of the estate of the diseased borrowers/granters inherited by them.
(iv) In case, any of the Defendants expire, the legal representatives shall be liable to pay in proportion to the inheritance.
(v) Applicant Bank is directed to file revised statement of accounts from the date of filing of O.A. along-with interest as granted by this Tribunal before the Recovery Officer of this Tribunal.
(vi) Any other application pending stands disposed of.
(vii) Recovery Certificate be issued forthwith in above terms U/s 19(22) of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time) and be sent to the Recovery Officer, DRT, Allahabad for execution.
(viii) The Recovery Officer shall realize the amount as per the Recovery Certificate in the manner and mode prescribed under section 25 to 28 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (as amended from time to time) from the above-named Defendants. Parties are directed to appear before the Recovery Officer, DRT, Allahabad on 23.11.2020.
(ix) Copy of this Judgment and Recovery Certificate be given to Applicant Bank as well as to the Defendants free of cost by Registered Post and scanned copy through e-mail in terms of section 19(21)(i) of the RDB Act, 1993 (as amended from time to time) and Rules as well as to the Recovery Officer and after due compliance file be consigned to record room.
Applicant Bank is directed to file a Memo of Cost forthwith, if not filed earlier, for preparing Recovery Certificate U/s 19(22) of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time).
Judgment pronounced in the open court through V.C. and signed on this 9th Day of October, 2020.