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Judgment
Originally this Original Application was filed by Dena Bank and due to amalgamation of said bank into Bank of Baroda, on an application for amendment, Dena Bank was allowed to be substituted as Bank of Baroda. In this case wherever word "Applicant Bank" appears that will include Dena Bank wherever context so admit.
This Original Application has been filed by the Applicant Bank under Section 19 of The Recovery of Debts Due to Banks and Financial Institutions Act, 1993, now amended as The Recovery of Debts and Bankruptcy Act, 1993, against the defendant nos. 1 & 2 for recovery of an aggregate amount of Rs.47,87,448.00 (Rs. Forty Seven Lac Eighty Seven Thousand Four Hundred Forty Eight only) together with further interest @11.90% per annum with monthly rests for Cash Credit and @12.40% per annum with monthly rests for Term Loan which is inclusive of 2% penal interest (simple) from 19.9.2018 till the date of realization along with cost and other relief as stated.
The case of the applicant bank is that the defendant no.2 is the sole proprietor of defendant no. l and in the year 2015 at the request of defendant no.1 through its sole proprietor defendant no.2 the applicant bank granted Cash Credit Facility of Rs.10.00 lacs and Term Loan of Rs.30.00 lacs in favour of defendant no.1.
Upon sanction of the said credit facilities, the defendant no.2 as sole proprietor of defendant no.1 signed and executed bank's standard loan documents on 04.08.2015. The defendant no.2 to secure the due repayment of the applicant bank, hypothecated entire assets belonging to defendant no.1 in favour of the applicant bank. The details of hypothecated assets has already been described in Schedule - A of the O .A.
The defendant nos. l & 2 availed the said credit facilities but they failed to repay the dues of the Bank as per agreed terms, they also failed to adhere to the financial discipline of the applicant bank and the account of the defendant no. l became irregular and sticky and classified as NPA as per policy and directives of Reserve Bank of India. The applicant bank requested to defendants from time to time to regularize the said account but the defendants failed to repay the dues of the bank. However, the defendants signed and executed letter of acknowledge of debt and acknowledged the debt on 31.03.2017. All these acts and conduct on the part of the defendants were contrary to the terms and conditions of the documents signed and executed by them. Accordingly, the Applicant Bank has moved this Original Application to recover public money.
Soon after the registration of the case the defendants were summoned through registered post with A/D. As per office report, notices sent to defendants returned un-served and thereafter the defendants were served through publication in daily newspaper Gujarat Samachar dated 15.02.2019. Despite publication, none appeared for or on behalf of the defendants. Thus, the case was proceeded exparte against the defendants due to their non-appearance on 18.3.2019.
From the perusal of the records, it is evident that the defendants were provided with fair opportunity to contest the claim of the bank. As the defendants opted not to contest the case, so only point of consideration before this Tribunal is whether the applicant Bank is legally entitled to the amount as claimed in O.A. on the basis of documents and pleadings submitted by it before the Tribunal.
In support of Original Application, Applicant has filed affidavit in support of Suit Claim at Exh.A/08 which is sworn by Mr. Subhas Chandra, Chief Manager of the Applicant Bank. The applicant bank has filed evidence on affidavit and proved on record copies of documents as Exh.AWl/2 to AWl/18 and produced the same for inspection.
The Learned counsel for the Applicant Bank submitted that the Bank has duly proved all the documents on file as required under The Recovery of Debts and Bankruptcy Act, 1993 and thereafter submitted that the defendants are willful defaulters, as they availed the Credit Facilities to their advantage but failed to maintain the financial discipline of the bank. Thus, it is submitted that the defendants are jointly and severally liable to pay the dues of the Applicant Bank and the bank is entitled to the relief claimed in the Original Application.
I have gone through the loan documents of the Original Application and also considered the submission made by learned counsel for the Applicant Bank. The evidence produced by the Bank remains un-rebutted. There is no reason to disbelieve the same. I have considered the claim of the bank, the claim of the Applicant Bank is within time in view of execution of loan document, hypothecation and operation in the account.
On the date of filing of Original Application, the applicant bank claimed Rs.47,87,448.00 (Rs. Forty Seven Lac Eighty Seven Thousand Four Hundred Forty Eight only) together with further interest @11.90% per annum with monthly rests for Cash Credit and @12.40% per annum with monthly rests for Term Loan which is inclusive of 2% penal interest (simple) from 19.9.2018 till the date of realization along with cost but I feel judicious to grant interest @ 10% per annum with monthly rests due to present situation arising out of pandemic COVID- 19 for both the accounts from the date of filing of O.A. The claim for penal interest is declined.
As a result, the Original Application is allowed ex-parte against the defendant nos. 1 & 2 with no order as to cost. The Bank has proved the loan transactions, hypothecation, charge on immovable properties, default and liability of the defendant nos. 1 & 2. The liability of the defendant nos.1 & 2 is/will be joint & several. The hypothecated assets as well as other personal movable and immovable properties of the defendant nos. 1 & 2 of the O.A. are liable to be sold for recovery of amount due.
In this case the bank has failed to serve any demand notice and bank has not placed on record any proof of posting of demand notice. Under these given circumstances it cannot be presumed that bank had served any demand notice upon defendants. The bank was required to issue demand notice pnor to initiation of any recovery proceedings. The bank is/was to enforce its rights under agreement with the borrower and Act of 1993 facilitates procedure for conduct of cases and if there is no specific provision under the Act, 1993 regarding issuance of prior demand notice, even then the bank is/was required to serve notice in view of privity of contract with the borrower. Under these given circumstances, I feel judicious to say that if defendant would pay the entire claimed amount within 04 months, they would not be able to pay any cost of this O.A. and if they failed to pay the amount within 04 months they would be liable to pay costs of the O .A.
It is, therefore ordered:-
(i) That the Original Application No.673 of 2018 initiated by the Applicant Bank for issuance of Recovery Certificate to the tune of Rs.47,87,448.00 (Rs. Forty Seven Lac Eighty Seven Thousand Four Hundred Forty Eight only) together with interest @10% per annum with monthly rests with cost is hereby succeeds and is allowed against the defendant nos. 1 & 2 jointly and severally. If defendant would pay the entire claimed amount within 04 months, they would not be able to pay any cost of this O.A. and if they failed to pay the amount within 04 months they will be liable to pay the amount as claimed in the O.A.
(ii) The defendant nos. 1 & 2 are directed to pay the dues within a period of two months from the date of judgment, failing which the Applicant Bank will be entitled to sell the hypothecated assets as well as other personal movable and immovable properties of the defendant nos. 1 & 2 till the full recovery is made from the defendants.
(iii) Let a Recovery Certificate be issued along with memo of cost immediately u/ s 19(22) of The Recovery of Debts and Bankruptcy Act, 1993 together with the details of the properties, if any, by fixing 12.08.2020 before Learned R.O., DRT-1, Ahmedabad.
(iv) The defendant nos. 1 & 2 are hereby restrained by means of injunction from depleting, transferring, encumbering, alienating or in any way dealing with their properties/ assets without first paying the claim of the Applicant Bank.
Judgment is completed, pronounced in the open court.
Dated: 08.06.2020
Dictated and corrected by me.