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Judgment
This original application has been filed by the applicant bank against defendants for recovery of a total sum of Rs.1,46,87,058.40Ps (Rupees One Crore Forty Six Lakhs Eighty Seven Thousand Fifty Eight & Paise Forty Only) viz., (i) A sum of Rs.13,45,606.62 towards Cash Credit (Hypothecation) together with interest @12.30% p.a. with monthly rests (ii) A sum of Rs.1,16,19,679.71Ps towards Term Loan together with interest @12.50% p.a. with monthly rests and (iii) A sum of Rs.17,21,772.07Ps towards Working Capital Term Loan together with interest at the rate of 13.05% per annum with monthly rests from date of filing of this O.A. till the date of realization, along with costs of the application.
Summons to D-1 returned un-served with postal endorsement "Always Door Locked" & D-2 also returned un-served with postal endorsement "Left". Applicant bank issued private notice and effected paper publication for D1 & D2. Both returned with postal endorsement "Left". Defendants neither made representation nor filed any written statement. Hence D-1 & 2 were called absent and set ex-parte on 15.02.2017. Applicant bank filed Proof Affidavit along with 22 documents, which were marked as Ex.A-1 to Ex.A-22. The O.A. was finally heard and stood over till this day for passing ex-parte final order.
The facts leading to filing of this O.A. are:-
a) 1st Defendant is a Proprietary concern being run under the name & style of M/s.Sri Sun Plastic Mould & Moulding, wherein, 2nd defendant is its Proprietor. 1st Defendant, represented by 2nd defendant approached Applicant Bank along with Loan Application Form (Ex.A-1) for Working Capital under CGTMSE Scheme and Term Loan facilities. Based on request of 1st defendant, Applicant Bank vide its Arrangement Letter dated 07.12.2013 (Ex.A-2) sanctioned a Cash Credit (Hypothecation) of Rs.0.10 Crores under CGTMSE scheme and Term Loan of Rs.1.10 Crores repayable with interest at the rate of 13 % p.a. & 13.15% p.a. respectively with monthly rests. The Cash Credit facility is secured by hypothecation of machineries & stocks purchased out of Bank finance as detailed in Schedule-A and by creation of Equitable Mortgage of the property pertaining to D2 as detailed in Schedule-B. Having availed the aforesaid credit facilities, defendants executed various documents such as Letter of Arrangement dated 07.12.2013 (Ex.A-3), Agreement of Loan-cum-Hypothecation dated 07.12.2013 (Ex.A-4), Consent Letter for Disclosure by 1st defendant (Ex.A-5), Letter furnishing List of Hypothecated Items dated 07.12.2013 (Ex.A-6) and Utilisation Certificate dated 07.12.2013 issued by 1st defendant, declaration-cum- Undertaking-cum-Authority (Ex.A-7) in favour of applicant bank.
b) Subsequently, at the request of defendants, applicant bank vide its Sanction Letter dated 11.03.2015 (Ex.A-8) sanctioned enhanced/ modified Credit facilities from Rs.1.10 Crores to Rs.1.24 Crores as under:-
i)
Cash Credit (Hypothecation) :
Rs.0.10 Crores
ii)
Term Loan (Existing) :
Rs. 0.99 Crores
iii)
Working Capital Term Loan :
Rs. 0.15 Crores
TOTAL :
Rs. 1.24 Crores
c) Having availed the enhanced / modified credit facilities defendants executed the documents viz., Letter of Arrangement dated 23.03.2015 (Ex.A-9), Supplemental Agreement of Loan-cum-Hypothecation dated 23.03.3015 (Ex.A-10) & Utilisation Certificate issued by 1st defendant (Ex.A-11). 2nd defendant on 07.12.2013 deposited the Title Deeds in respect of immovable properties mentioned in Schedule-B property with applicant bank as security for the credit facilities sanctioned to 1st defendant. 2nd defendant also executed a Letter dated 08.12.2013 (Ex.A-12) confirming Deposit of Title Deeds. It is further confirmed that 2nd defendant executed Memorandum of Deposit of Title Deeds (MODTD) dated 11.12.2013 bearing Doc.No.12731/2013 (Ex.A-13). 2nd defendant deposited inter-alia Sale Deed dated 05.04.2013 (Ex.A-14) bearing Doc. No.3793/2013 and Sale / Construction agreement dated 05.04.2013 (Ex.A-15).
d) After availing the above said credit facilities, defendants were not routing the Sales through Cash Credit account maintained by 1st defendant with applicant bank and the conduct of account was not satisfactory. Defendants were not prompt in submitting stock statements & financials and the account was irregular. Despite several reminders, defendants failed and neglected to regularize the account. Hence applicant bank classified the loan accounts as NPA on 08.06.2015. 1st defendant vide Letters dated 13.06.2015 (Ex.A-16) & 24.07.2015 (Ex.A-17) assured to repay the outstanding amount. But defendants failed to keep up their promise. 1st defendant sent Letter dated 09.07.2015 (Ex.A-18) furnishing details of accessories purchased by it. Applicant bank was constrained to issue Legal Notice dated 15.07.2015 (Ex.A-19) and Demand Notice dated 24.07.2015 (Ex.A-20) under section 13(2) of SARFAESI Act to defendants. Since, defendants did not pay the amount demanded within 60 days of demand notice, applicant bank issued Possession Notice dated 04.11.2015 (Ex.A-21) to defendants.
e) During pendency of this O.A, a Memo was filed by the applicant bank stating that pursuant to the E-Auction held on 23.06.2017, the machinery morefully described in Schedule-A (Item Nos.1, 2, 4 and 5) were sold for a sum of Rs.27 lakhs and appropriated to the loan account on 27.06.2017. The memo was taken on record vide proceedings dated 07.08.2017 and part satisfaction of the said amount as against OA claim was duly recorded. Another Memo was filed on behalf of applicant bank submitting that bank realized a sum of Rs.26,26,000/- by sale of the property mentioned in Schedule-B of O.A. under SARFAESI Act and prayed to record the said amount towards Part Satisfaction. Accordingly, Part Satisfaction was recorded and documents relating to schedule property marked as Ex.A-13, Ex.A-14 & Ex.A-15 were returned to applicant bank under proper acknowledgement as per extant guidelines.
f) O.A. has been filed for recovery of a sum of Rs.1,46,87,058.40Ps (Rupees One Crore Forty Six Lakhs Eighty Seven Thousand Fifty Eight & Paise Forty Only) being (i) A sum of Rs.13,45,606.62 towards Cash Credit (Hypothecation) (ii) A sum of Rs.1,16,19,679.71Ps towards Term Loan and (iii) A sum of Rs.17,21,772.07Ps towards Working Capital Term Loan together with interest thereon, as evidenced by the Statement of Accounts (Ex.A-22) filed along with the O.A.
Points for Consideration
Whether applicant bank is entitled for the claim amount in the application from the defendants?
(ii) Whether applicant bank is entitled to get rate of interest as prayed in the OA during the pendent lite period?
Points (i) & (ii)
A careful examination of the pleadings in the Proof Affidavit and documents viz. Exhibits A-1 to A-22 evidence that the borrowal of credit facilities and execution of loan and security documents are true, in terms of averments made in Original Application as well as Proof Affidavit filed by applicant bank establishing its claim. Applicant bank filed Statement of Accounts duly certified under Bankers' Book Evidence Act, evidencing amount claimed against defendants. Defendants were set ex-parte on 15.02.2017, but till this day did not take any action to set aside the ex-parte order and did not choose to contest the claim. Further, a careful scrutiny of records makes it clear that present application is filed well within limitation and this Tribunal possess necessary and proper jurisdiction to entertain and adjudicate the claim. No oral or documentary evidence on the side of defendant is produced or filed to dispute the claim of applicant bank. Defendants neither confronted nor rebutted the documents produced and relied upon by applicant bank. Hence, it can be concluded that applicant bank has proved its claim against defendants.
In view of what has been discussed above, it is observed that applicant bank has proved its O.A. claim against defendants and applicant is entitled to Recovery Certificate in O.A. in terms of the direction given below. Points (i) & (ii) are answered accordingly.
In the result:-
(a) The applicant bank is entitled for a Recovery Certificate as against defendants for a total sum of Rs.1,46,87,058.40Ps (Rupees One Crore Forty Six Lakhs Eighty Seven Thousand Fifty Eight & Paise Forty Only) viz., (i) A sum of Rs.13,45,606.62 towards Cash Credit (Hypothecation) together with interest @ 8% p.a. (simple) (ii) A sum of Rs.1,16,19,679.71Ps towards Term Loan together with interest @ 8% p.a. (simple) and (iii) A sum of Rs.17,21,772.07Ps towards Working Capital Term Loan together with interest @ 8% p.a. (simple) on the amount as determined above and remained unpaid from date of filing this O.A till the date of realization with costs.
b) It is ordered that any amount remitted by the defendants subsequent to the filing of OA or realised by the applicant bank during the pendency of this OA, shall be given due credit to the loan account of the defendants on the respective dates. A sum of Rs.27 lakhs realized on 27.06.2017 by sale of Schedule A hypotheca (Item Nos.1, 2, 4 and 5) and a sum of Rs.26,26,000/- realized on 27.06.2017 by sale of Schedule-B property owned by 2nd defendant be taken into account while preparing DRC.
c) It is ordered that in case of default by the defendants to pay the amount adjudged, applicant bank is entitled to sell the remaining hypotheca morefully described in schedule A as would be sufficient to answer the claim of Recovery Certificate and appropriate the sale proceeds towards amount due.
d) If sale proceeds are not found sufficient after defraying the expenses of such sale for payment of all such amounts, 2nd defendant is personally liable for the deficiency of the adjudged amount with interest and costs until realization.
d) Schedule A (other than Item Nos.1, 2, 4 & 5) mentioned in the OA shall form part of Recovery Certificate.
It is further ordered that 15 days time is granted to the applicant bank to file costs memo from the date of receipt of this order, to enable the Registry to prepare the recovery certificate as directed above. If in case, the cost memo is not filed within the above mentioned time, Recovery Certificate be prepared based on the available records and forwarded to the Recovery Officer for execution in accordance with law.
Recovery Certificate be prepared as per directions given above of this final order and issued accordingly. A copy of the order be communicated to the parties concerned in terms of Rule 16 read with Rule 2(c) of DRT (Procedure) Rules, 1993.
(Dictated to Steno(TS), transcribed by him, corrected, signed and pronounced by me in the Virtual Court, through Video Conference on this the 13th day of October, 2020)