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Judgment
The hearing was conducted through virtual hearing amid COVID-19 restrictions. The present 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 for recovery of Rs. 34,66,695.80 (Rupees Thirty Four Lakhs Sixty Six Thousand Six Hundred Ninety Five and Eighty Paisa Only) together with further interest @ 12.65 % for Term Loan and Cash Credit per annum with monthly rests, being the contractual rate plus 2% penal interest from 01.09.2019 till the payment or realization of the entire dues of the bank.
The brief facts of the case as stated in the application of Applicant Bank is that defendant approached the Applicant requesting financial assistance for business purpose. The Applicant bank considering the request so made and the securities offered, sanctioned a Term Loan of Rs. 9.50 Lakhs (against hypothecation of plant & machinery) and cash credit of Rs. 14.25 Lakhs (against hypothecation of Stocks & book debts) under CGTMSE, aggregating to a total amount of Rs. 23. 75 Lakhs.
Sr. No.
Particulars of Credit Facilities
Limit (Rs. In Lacs)
1
Term Loan
Rs.9.50 Lacs
2
Cash Credit
Rs.14.25 Lacs
Total
Rs.23.75 Lacs
In consideration of securing the above facilities, defendant signed and executed following documents:
a) Application form dated 28.12.2010
b) Sanction letter dated 19.05.2011
c) Demand Promissory note dated 19.05.2011
d) Combined Stamped Undertaking (L-516) dated 19.05.2011
e) Hypothecation cum Loan agreement (Plant and machinery & stocks and book debts) dated 19.05.2011
f) Declaration/undertakings dated 19.05.2011
g) Acknowledgement of debts securities dated 01.02.2014
h) Acknowledgement of debts securities dated 15.09.2016
In order to secure the said credit facilities, defendant executed hypothecation agreement of plant & machinery, stocks and book debts etc in favour of the bank, details of which are more particularly mentioned in the schedule A of the Original Application.
The defendant availed the Credit facilities but he failed to repay the dues of the Bank as per agreed terms, he failed to adhere to the financial discipline of the applicant bank and the account of defendant became irregular and sticky. The applicant bank requested the defendant from time to time to regularize the said account but defendant had failed and neglected to regularize the same. Ultimately, the account of the defendant has been classified as N.P.A. on 31.03.2014. The Applicant bank issued a letter/ notice dated 03.09.2019 calling upon the defendant to repay the entire recoverable dues.
All these acts and conduct on the part of the defendant was 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 defendant was summoned through registered post with A/Don 04.10.2019. As per record, notice sent to the defendant was duly served. Applicant bank had also filed purshish at Exh. A/6 enclosing therewith copy of Postal Department's statement showing registration of article & track report. None appeared on behalf of defendant despite service of summons. Thus, the case was proceeded exparte against the defendant due to his non appearance vide order dated 17.01.2020. I have heard the learned counsel for the applicant and have also gone through the case file properly. I have also gone through law applicable to facts and circumstances of the present case.
From perusal of the records, it is evident that defendant was provided with fair opportunity to contest the claim of the bank. As the defendant 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 Original Application 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/7, sworn by Mr. Satish Nath Goswami, Branch Manager of the Applicant Bank.
The Learned counsel for the Applicant Bank has submitted that the Bank has duly proved all the documents on file as required under "The Recovery of Debts and Bankruptcy Act, 1993". He has further submitted that the defendant is willful defaulter, as he availed the aforesaid credit facilities to his benefits but failed to maintain the financial discipline of the bank. In view of the said facts, the Original Application may be allowed for the reliefs claimed.
I have gone through the loan documents; averments made in the Original Application and also considered the submissions made by learned counsel for the Applicant Bank. The documents produced by the Bank remains un-rebutted. There is no reason to disbelieve the same. The loan was sanctioned on 19.05.2011 and the Defendant signed and executed acknowledgment of debts/securities on 01.02.2014 and 15.09.2016. The present O.A. has been filed by the applicant bank on 13.09.2019 and hence it is well within limitation period prescribed.
In view of the aforesaid discussion, I deem it just and proper to allow the claim of the applicant Bank for an amount of Rs. 34,66,695.80 (Rupees Thirty Four Lakhs Sixty Six Thousand Six Hundred Ninety Five and Eighty Paisa Only).
As per the provision of Section 19(20) of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 which is analogous to Section 34 of Civil Procedure of Code 1908, on filing of the suit/ claim, the contract between the parties comes to an end and the Court/Tribunal has a discretion to award the same depending upon the circumstances of each case. Same principle has been laid down by the Hon'ble Apex Court in the case of Central Bank of India Vs. Ravindra & Others. Taking stock of all the circumstances and keeping in view the facts of the case, I am of the opinion that justice will be served if the interest at the rate of 11 % is awarded.
The claim for penal interest of 2% is hereby declined.
In view of the above, the Original Application is allowed.
ORDER
1) I hereby allow this O.A. of the Applicant Bank and direct the defendants to pay jointly and severally to the applicant bank within 60 days from today, a sum of Rs. 34,66,695.80 (Rupees Thirty Four Lakhs Sixty Six Thousand Six Hundred Ninety Five and Eighty Paisa Only) together with further interest @ 11 % per annum simple and cost & expenses from the date of filing of this 0.A. till the date of realisation.
2) In case of failure to deposit the above amount within the stipulated period, the same shall be recovered from the hypothecated assets of the Defendant as described in Schedule A annexed to the Original Application.
3) If there is any shortfall, the same shall be recovered from the sale of other personal movable and immovable properties of the defendant.
4) Recovery Certificate be issued forthwith and be sent to Recovery Officer, Debts Recovery Tribunal-I, Ahmedabad.
5) The registry of this Tribunal is hereby directed to issue the free copy of the order and be sent to the both parties in compliance of Rule 16 of the Debt Recovery Tribunal Procedure Rule 1993.
6) File be consigned to records.
Pronounced in Open Court on this 1st day of October, 2021 at Ahmedabad.