Canara Bank vs Grapco Industries Ltd. And Ors.

This is a Transfer Application under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act' 1993 initiated by the applicant bank against the defendants/ respondents no 1 and 2(a), 2(b) and 2(c) praying for issuance of Recovery Certificate to the tune of Rs.44,23,655.46 together with interest, cost and other usual reliefs.

The brief facts of the case as made out in the Transfer Application by the applicant bank is that the defendant no.1 is a Public Limited Company duly incorporated under the provisions of The Companies Act, 1956. The defendant No.1 was formerly known as Grapco Granites Limited. The defendants No'3 to 8 hold pari pasu charge with the applicant in the immovable and movable properties of the defendant No. 1.

The original defendant No.2, R P. Jhunjhunwala died on 10.08.2001 leaving behind his widow, son and daughter being defendants No 2(a), 2(b) and 2(c) respectively as legal heirs and representatives of the deceased defendant No.2, R. P. Jhunjhunwala.

At the request of the defendant No 1, the applicant bank from time to time sanctioned, granted and disbursed various loans as stated hereinafter to and in favour of the defendant no 1, wherein the defendant No.2 stood as guarantor.

The defendant no. 1 on or about 15th of November, 1989 approached the applicant bank for credit facilities inter alia in a Term Loan Account with a limit of Rs.102.81 lakh sand in a Packing credit Account with a limit of Rs. 75 lakhs. The said facilities were granted by the applicant bank in favour of the defendant no. 1 against the personal guarantee of the defendant no. 2 and first charge of moveable property of any kind including all moveable plant and machinery and immovable properties of the defendant no 1 situate at Somnathpur, Balasore, Orissa by way of joint mortgage with the defendants nos. 3 to 7.

To avail of the aforesaid credit facility in the said Term Loan Account the defendant no.1 executed a personal guarantee on 18.05.1990 in favour of the applicant bank and also a Deed of Hypothecation on 18.05.1990 in favour of the applicant.

To collaterally secure the aforesaid advances the defendant no. 1 on 9th September, 1991 created a joint mortgage in favour of the applicant bank jointly with the defendant no. 3 to 8 by deposit of the Title Deeds relating to its moveable properties situated at Balasore, Orissa.

In terms of the Loan Agreement, the defendant No.1 was required to repay the principal amount of the Loan and pay interest thereon in accordance with the repayment schedule contained in the Loan Agreement. The defendant No.1 failed and neglected to make payment to the applicant of the installment of principal, interest and other charges.

In view of the failure on the part of the defendant no. 1 and/or the defendant no. 1 & 2 to liquidate the dues with the applicant bank in the aforesaid credit facility in spite of repeated requests and reminders, the applicant bank was compelled to call up the said loan through its advocate's letter dated 14th July, 1998.

After giving credit for all sums of moneys paid by and / or realized on behalf of the defendant no. 1 and after adjustment there became due from defendant no. 1 and 2 to the applicant bank a sum of Rs. 44,23,655.46 inclusive of interest calculated up to 15th July, 1998. The applicant bank is entitled to pendentelite and future interest on the said sum @ 18.11% per annum with simple from the date of filing of the Original Application till the date of realization.

Notices were issued to the defendants to show cause as to why the relief prayed for by the applicant bank be not granted. After issuance of the notice, the defendants No.1 and 2 had neither appeared nor had filed their show cause reply. The remaining defendants had appeared through their respective Counsels.

I have perused the relevant documents/materials available on the record.

The defendants No.1 and 2 had not contested the case of the applicant bank. Thus, the point for determination in this case is (i) Whether the claim of the applicant is within time? (ii) Whether the defendants had utilized the loan facilities granted by the bank? (iii) whether the defendants are liable to the amount due to the applicant or not?

During the pendency of the matter, the applicant bank i.e. Canara Bank has filed a note submitting that it is apparent from the report filed by the Joint Receivers on the point of disbursement made by them towards the secured and unsecured creditors of the company from the sale proceeds received after selling out all the moveable and immoveable secured assets of the company that the dues of the other respective creditors are yet to be made.

It is also submitted that the C.O. No.2060 of 2004 filed by the ICICI Bank against the order dated 29th June, 2004 passed by this Ld Tribunal recalling its earlier order in terms of disbursement is dismissed on 20.08.2019.

It is also submitted that in view of such dismissal of the said C.O. No. 2060 of 2004 the order dated 29th June, 2004, being Order No. 92 passed by this Ld. Tribunal, stands revived and as such, it is submitted that ICICI Bank as well as IDBI Bank or any other Bank and/or financial institution be directed to refund the amount received by them (Rs. 2.5 crores each) against their undertaking submitted before this Ld Tribunal with accrued interest forthwith to the Registry of this Ld Tribunal with up to date interest on the said amount for enabling this Ld Tribunal to accumulate the entire amount and disburse it to the respective secured and unsecured creditors. It is further prayed that accordingly, the respective Original Applications filed by the respective Banks including the applicant herein be also disposed of and accordingly certificate be issued in favour of the respective secured creditor.

Since the defendant no.2 had expired and the defendants no.2 (a), 2 (b) and 2 (C) had stepped into the shoes of the deceased defendant no.2 who had inherited the estate of the deceased defendant no. 2, hence the said defendants no.2 (a), 2 (b) and 2 (C) are also liable to the dues of the bank amounting to Rs.44,23,655.46 besides interest accrued to it till the date of realization. However, the liability of the defendants no.2 (a), 2 (b) and 2 (C) shall be limited to the extent they had inherited the estate of Late R. P. Jhunjhunwala and there shall be no personal liability of the defendants no.2 (a), 2 (b) and 2 (C).

During the pendency of the case, the 75 workers of Bangalore Unit of Grapco Industries Ltd. (In Liquidation) have filed their written submissions on 17th December, 2019 before this Tribunal and prayed this Tribunal to implead them as parties to the instant proceedings and submit their adjudicated claim for Rs.16,99,398.00 and Rs.42,72,855.00 respective.

Initially the workers had approached the Hon'ble High Court at Karnataka in W.P. No.46216-46217 of 2002 dated 28.07.2003 filed by the Workers where permission was given to approach this Tribunal. Accordingly, the application was filed.

This Tribunal has passed the order on 22nd February, 2020 in TA No. 04 of 2072 directing the official liquidator attached with the High Court of Orissa, Cuttack of this Company in liquidation which is defendant No. 1 to file a report along with adjudicated claim of the workers' if so invited along with their list and amount.

The official liquidator has filed his report dated 9th March, 2020. As per the report the claim of workers are yet to be invited. The official liquidator further claims that he has no funds of the Company i.e.' defendant no. 1, which is in liquidation, in his hand to invite claims. The official liquidator has prayed for deposit of a sum of Rs. 3,00,000/- with his office for publication of notices in newspapers in accordance with Companies (Court) Rules, 1959. In view of this the official liquidator's report is taken on record.

The provisions of Section 19, Sub-Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 provides as below:

"[(19) Where a certificate of recovery is issued against a company as defined under the Companies Act, 2013 and such company is under liquidation, the Tribunal may by an order direct that the sale proceeds of secured assets of such company be distributed in the same manner as provided in section 326 of the Companies Act, 2013 or under any other law for the time being in force.]"

The applicant by oral and documentary evidence has established its case. The documentary evidence comprises from Annexure/Exhibit-A to Annexure/Exhibit-G, which are available in paper book filed by the applicant bank.

From the perusal of the documents referred above and the certified copy of the statement of account, which is filed as Annexure/Exhibit-A to G, it is established that the defendants had availed the financial facilities from the applicant bank and had withdrawn the amount through the account.

From the perusal of the Statement of Account which is Annexure/Exhibit-E, the total outstanding comes to Rs. 44,23,655.46 which the applicant is entitled to recover from the defendants no. 1 and 2.

In view of the above discussion and after considering the entire case records and the documents filed by the applicant, I have no hesitation to hold that the applicant is entitled to recover a sum of Rs.44,23,655.46 from the defendants no 1 and 2 who are liable for the same. The applicant bank shall also be entitled to pendentelite and future interest on the said amount @ 18.11% per annum with simple from the date of filing of the original Application till the date of realization.

ORDER

(1) ORDER T.A. No. 03 of 2012 filed by the Applicant Bank is allowed and debt is determined with cost against the defendants no.1 and 2. It is hereby ordered that applicant bank is entitled to recover from the defendants the total amount to the tune of Rs.44,23,655.46 (Rupees forty four lakhs twenty three thousands Six hundred fifty five and paise forty six only) with pendentelite and future interest @ 18.11% per annum with simple on the amount due from the date of filing of the Transfer Application, i.e. 16.07.1998 till full and final realization of the claim amount. The liability of the defendants no.2(a), 2(b) and 2(C) to pay the aforesaid amount shall be limited to the extent they had inherited the estate of Late R. P Jhunjhunwala and there shall be no personal liability of the defendant no'2 (a)' 2(b) and 2(c) to Pay the said amount.

(2) Amount, if any, paid by the defendants in the loan account or amount, if any, recovered by the Applicant Bank after filing of the T.A. the same be taken into account while arriving at the exact amount of dues/debt payable by the defendants. Accordingly, pendentelite and future interest shall be calculated on the reduced amount.

(3) The official liquidator is entitled to receive Rs. 3 lakhs out of the amount lying with the Joint Receiver/Registrar of this Tribunal, who is directed to release Rs. 3 lakhs in favour of the official liquidator attached with the High Court of Orissa at Cuttack for inviting the claims of the workers.

(4) The petition of the 75 workers of Bangalore Unit of Grapco Industries Limited is disposed of with the direction to approach the official liquidator attached with the High Court of Orissa at Cuttack of the Companies (in liquidation) as and when he will invite the claims of the workers The official liquidator after adjudication of claims is entitled to receive the amount' Accordingly, the Charge Holder Bank is directed to keep some amount out of the sale proceeds lying with the Joint Receiver/Registrar of this Tribunal, so that as and when official liquidator adjudicates the claims of the workers' this is distributed in the same manner as provided in Section 326 of the Companies Act, 2013 (18 of 2013) or under any other law for the time being in force.

(5) Defendants are debarred from disposing, alienating or dealing with any of the properties belonging to them till the aforesaid decretal debt is recovered from the defendants.

(6) Defendants are given a time of thirty days from the date of the Judgement/Final Order for repaying of the above mentioned dues, so intimated to them. In case the defendants fail to pay the dues within the above mentioned time, the applicant bank is entitled to recover its dues by sale of secured assets' if any. Applicant bank is also entitled to proceed against personal properties of the defendants (Both movable and immovable) and also proceed against the defendants personally to recover the dues in accordance with law.

(7) Let the Certificate of Recovery be drawn up by Ld. Registrar forthwith in terms of Judgement for issuance of the same against defendants in favour of the applicant bank under Section 19 (22) of the Recovery of Debts and Bankruptcy Act, 1993 and put up the same for issuance of the Certificate.

(8) Ld. Recovery Officer shall realize the amount as per the Recovery Certificate from the defendants in accordance with law.

(9) Ld. Registrar of this Tribunal is directed to deliver recovery certificate in term of the final order/judgement for recovery of the sum against the defendants in favour of the Applicant Bank under Section 19 (22) of the Recovery of Debts due to the Bank and Financial Institutions Act, 1993 now known as Recovery of Debts and Bankruptcy Act, 1993.

Accordingly, the original Application being T.A No 03 of 2012 is allowed and stands disposed of.

Copy of the Judgement/Final Order be upload in the Tribunal's website.

File is consigned to the Record Room.

(Dictated to Steno, transcribed by him, corrected, signed and pronounced by me in the virtual Court on this the 28th day of September 2020.)