Partly allowed

Punjab National Bank and Ors. v. Maharashtra Shetkari Sugars Ltd. and Ors.

DRAT8 May 2023REGULAR APPEAL/23/2022

Case brief

AI extract

What is this about?

In an appeal against a DRT order, the Tribunal allowed a partial decree granting a charge over hypothecated movables located in the premises, but dismissed the claim for contractual interest as the appellants had conceded 12.5% during arguments.

What did the court decide?

The judgment and recovery certificate are modified to include a charge over the hypothecated movables found in the premises. Interest remains at 12.5% per annum.

Punjab National Bank and Ors. versus Maharashtra… — Contract and Commercial Disputes | DRAT (2023)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson

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Appeal No. 23/2022

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Between

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Punjab National Bank & Ors. … Appellant/s V/s.

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Maharashtra Shetkari Sugars Ltd. & Ors. …Respondent/s Mr Fenil Sangoi, i/b M/s. Intralegal, Advocate for Appellants.

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-: Order dated: 08 /05/2023:-

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This is an appeal filed by the Appellants consortium of Banks aggrieved by the judgment of the Debts Recovery Tribunal, Aurangabad (D.R.T.) in Original Application (O.A.) No. 1 of 2016 dated 05.07.2017.

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Respondent No. 1 a company was sanctioned credit facilities to the tune of ₹139.50 crores. Respondents Nos. 2 to 7 & 9 stood as guarantors and security documents including mortgage and deed of guarantee were executed. The credit limits were enhanced from time to time to ₹279.90 crores. Documents of security for the enhancement of limits were also executed. Respondent No. 1 defaulted repaying the amount resulting in the debts being classified as non-performing assets (NPA). The facilities were recalled by the Appellants and notice under Sec. 13(2) of the SARFAESI Act issued for an outstanding sum of ₹354,90,83,837/- as on 31.03.2015.

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The Respondents except Respondents Nos. 1 and 5 remained

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ex-parte. No written statements were filed by Respondents Nos. 1 and 5. The D.R.T. allowed the O.A. in part for realisation of the amount with charge over the mortgaged property.

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The Appellants are aggrieved by the impugned judgment for the reason that future interest was restricted to 12.5% per annum instead of the contractual rate of interest @16.6% per annum with monthly rests. Hypothecation claim was also disallowed. Hence, this appeal.

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None appeared for the Respondents.

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The Appellants are aggrieved for not getting a decree of charge over the hypothecated goods and also for not being awarded interest at the contractual rate.

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There is sufficient material regarding the hypothecation of movables belonging to the debtors and this Tribunal finds no reason for the Ld. Presiding Officer to decline to grant a decree on hypothecated movables. It is observed that the Appellants have failed to plead and establish the hypothecation by giving details of hypothecated assets and hence, the decree over the hypothecated goods were declined. There is no dispute that the plant and machinery and other movables found in the premises were hypothecated. The finding that a detailed list of movables is not given is no reason to decline it. The details of the movables found on the premises could very well be ascertained at the time of executing the recovery certificate. Hence, the Ld. Presiding Officer was not justified in declining to grant a decree on the hypothecation of movables.

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The Ld. Presiding Officer has observed that the Ld. Counsel for the

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Appellants had during the course of the argument conceded that pendent lite interest and future interest be granted @ 12.5% per annum. After having conceded that, the Appellants cannot challenge the judgment on the ground that the contractual rate of interest was not granted. I find no reason to interfere with the finding regarding the rate of interest. Hence, the appeal is allowed in part and the judgment and the recovery certificate in favour of the Appellants shall be modified to the extent that there shall also be a charge over the hypothecated movables in the premises. A recovery certificate shall be issued to that effect.

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Sd/-
Chairperson

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mks- 2

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Punjab National Bank and Ors. v. Maharashtra Shetkari Sugars Ltd. and Ors.

Case brief

What is this about?

What did the court decide?

Punjab National Bank and Ors. v. Maharashtra Shetkari Sugars Ltd. and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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