Union Bank Of India vs Manju And Ors.

Applicant Bank has filed this Original Application on 07.12.2018 under section 19(1) of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time) against the Defendants for recovery of Rs.12,78,714.23ps. (Rupees -Twelve Lacs Seventy-Eight Thousand Seven Hundred Fourteen and Paise Twenty-Three only) along-with pendent-lite and future interest @ 8.30% per annum with monthly rests w.e.f. 31.10.2018 till the date of realization and costs.

The brief facts of case are that the Defendant No.1 & 2 are the principal borrowers. On 06.03.2017 the Defendant No.1 & 2 being borrowers approached Applicant Bank for grant of financial assistance in the shape of Term Loan of Rs. 20,00,000/- for purchase of plot and construction of house and submitted loan application. Applicant Bank after considering the loan application on 20.03.2017 sanctioned a Term Loan of Rs.20,00,000/- for purchase of plot and construction to the Defendant No.1 & 2 against primary security by way of equitable mortgage of immovable property purchased out of Bank finance by the Defendant No. 1 & 2 in favour of Applicant Bank. The Defendants executed and signed various loan and security documents on 21.03.2017 in favour of Applicant Bank. The rate of interest was agreed between the parties @ 0.10% above MCLR, applicable at that time @8.30% per annum with monthly rests subject to change from time to time as per RBI Guidelines.

However, after availing the aforesaid Credit Facility, the Defendant No. 1 & 2 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. 1 & 2 failed to regularize the loan account. Consequently, the said account of the Defendant No.1 & 2 was classified as NPA and recalled by Applicant Bank. Thereafter, Applicant Bank served Demand Notice dated 04.08.2018 to the Defendants to repay the outstanding dues but the Defendants failed to make the payment of outstanding dues. Applicant Bank has also initiated action under the S.A.R.F.A.E.S.I. Act, 2002 against the secured assets/mortgaged property but no secured asset has been sold till date. Hence, the present Original Application has been filed by Applicant Bank against Defendants for recovery of Rs.12,78,714.23Ps. (Rupees - Twelve Lacs Seventy-Eight Thousand Seven Hundred Fourteen and Paise Twenty-Three 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. Despite service, none appeared for the Defendants. Hence, the Defendants were proceeded ex-parte vide Order dated 13.01.2020.

Applicant Bank filed its evidence by way of affidavit of Sh. Deepak Kumar, Assistant Manager of Applicant Bank as AW-1/1 who proved the various loan and security documents which are marked as Exhibit- AW-1/1 to Exhibit- AW-1/16.

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 RDB 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 was 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. Deepak Kumar, Assistant Manager of Applicant Bank as AW-1/1. The Applicant Bank has also established its case through documentary evidence being Exhibit- AW-1/1 to Exhibit- AW-1/16. On a careful scrutiny of the evidence on affidavit and exhibits marked as Exhibit- AW-1/1 to Exhibit-AW-1/16, it is proved that Defendant No.1 & 2 had availed the Term Loan facility from the Applicant Bank against collateral security by way of equitable mortgage of immovable property owned by Defendant No.l & 2 by executing various loan & security documents detailed as above in favour of the Applicant Bank. A perusal of Original Application, evidence and documents relied upon clearly show that Defendant No. l & 2 had utilized the above loan facility as granted to them.

However, after availing the aforesaid Term Loan, Defendant No. l and 2 failed to maintain financial discipline as per terms and conditions of the loan agreement. Consequently, the said account was rightly classified as NPA and recalled by Applicant Bank. Thereafter, Applicant Bank served Demand Notice dated 04.08.2018 Exhibit- AW-1/15 to the Defendants to repay the outstanding dues but the Defendants failed to make the payment of outstanding dues. 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 Exhibits AW-1/16 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. Exhibits AW-1/16.

Moreover, Applicant Bank has been able to prove that the Defendant No .1 & 2 availed the Term Loan Facility 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 07.12.2018 i.e. within three years from the date of execution of loan documents on 21.03.2017 admitting debt liability for the purpose of limitation as reflected from Account Statement Exhibit AW-1/4 to 1/8. 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 @ 8.30% per annum with monthly rests from 31.10.2018 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 wil I be served if pendente-lite and future interest is granted @8.00% simple interest yearly from the date of filing of the O.A. till the date of realization with costs.

In the light of above discussion, the Original Application deserves to be allowed against the Defendants with costs. The mortgage property is liable to be sold for recovery of amount due alongwith the personal movable & immovable properties/assets of the Defendants.

ORDER

(i) The Original Application is allowed declaring that the Defendants are liable to pay a total sum of Rs.12,78,714.23Ps. (Rupees -Twelve Lacs Seventy-Eight Thousand Seven Hundred Fourteen and Paise Twenty-Three only) along-with cost, expenses and future interest @8.00% simple interest yearly from the 07.12.2018 i.e. date of filing of the OA 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 mortgaged property of the Defendants in execution proceedings. The amount, if any, already recovered by sale of any mortgage property 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.

(iii) The Defendants are hereby restrained by means of injunction from depleting, transferring, encumbering, alienating, selling or otherwise dealing with mortgage properties or their other immovable/movable properties/estates without first paying the above claim of Applicant Bank.

(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 18.12.2020.

(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 20th Day of October, 2020.