Dismissed

Bank of Baroda v. M/s. Adarsh Metal Industries & Ors.

DRAT18 May 2023REGULAR APPEAL/348/2006

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed the Bank of Baroda's appeal against the Debts Recovery Tribunal's order. The lower court correctly excluded the minor's share from the mortgage due to lack of specific interest findings and allowed 6% future interest within its discretion.

What did the court decide?

None. The appeal was dismissed. The exclusion of the minor's share and the 6% interest rate were upheld.

Bank of Baroda versus M/s. Adarsh Metal Industries & Ors. — Banking and Recovery | 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. 348/2006

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Between

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Bank of Baroda … Appellant/s

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V/s.

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M/s Adarsh Metal Industries & Ors. …Respondent/s

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Mr K. D. Shukla, Advocate for Appellant.

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Ms Jaishree Surati, i/b M/s Ashwini Kumar & LLP, Advocate for Respondent No. 4 &10.

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Mr Rishabh Shah, i/b M/s. Raval-Shah & Co., Advocate for Respondent No.6.

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The Appellant is the Bank of Baroda. The Appellant filed the appeal aggrieved by certain findings in Original Application (O.A.) No. 3276 of 2000 on the files of the Debts Recovery Tribunal No. II, Mumbai (D.R.T.) in the judgment dated 10.03.2006. The original Appellant Dena Bank had merged with the Bank of Baroda and accordingly, the Appellant was substituted.

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The O.A. was filed for recovery of ₹2,04,18,216.43 together with interest @16.50% per annum with quarterly rests from the date of filing of the O.A. till realisation from out of the mortgaged and hypothecated securities.

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The first Respondent the principal borrower is a partnership firm and Respondents Nos. 2 to 8 are the partners. Respondents Nos. 4 to 8 are sued as guarantors while Respondents Nos. 2 to 4, 6 and 9 are the mortgagors of one item of the property while

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Respondents Nos. 4 and 10 are the mortgagors of the other property. Respondent No. 11 is the purchaser of the third mortgage from Respondent No. 9, Flat No. 3 Lamina C.H.S. Ltd. Grant Road Mumbai. Respondents 9 to 11 were brought on record by way of amendment. In 1997, the Appellant had sanctioned a letter of Credit facility for ₹ 6 crores and the debt was sanctioned on hypothecation of stocks cum and book debts facility of ₹40 lakhs to the first Respondent firm. Demand Promissory Notes, agreements of hypothecation letters of guarantee were executed, and title deeds were deposited for the creation of a mortgage.

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The Ld. Presiding Officer allowed the application against Defendants Nos. 2 to 4, 6 and 9 with regard to Shop No. B, Jawahar Mansion Cooperative Hsg Society Ltd. at Fanaswadi, Mumbai excluding the share and interest of the minor Krish s/o the sixth defendant The decree for the realisation of ₹1,68,52,286.43 was granted with interest @ 16.5% p.a. with quarterly rests with effect from 01/04/2000 till the date of filing of the application. But future interest from the filing date of the O.A. till realisation was reduced to @6% per annum. Aggrieved by the judgment, the Appellant is in appeal.

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The Appellant is aggrieved for not being granted future interest at the contractual debt and from 01.01.1999 till 20.05.2000 in the other facility. It is also prayed that the Appellant be allowed to realise its dues against the entire mortgaged property without excluding the share of the minor Krish.

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The sixth Respondent filed a reply on behalf of herself and her minor son Krish. It is pointed out that the Appellant could not

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satisfy the D.R.T. as to whether the sanctioned facility was used for the personal benefit of the minor Krish Shah and whether the Appellant had sought permission from any Civil Court permitting them to create a mortgage of the minor share. It is also pointed out that the 8th defendant was wrongly described as the guardian of her minor son

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The Appellant had failed to show that the mortgage in respect of the minor’s share would bind him and hence it is prayed that the appeal may be dismissed.

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Heard both sides. Records perused. As regards the rate of interest, the Ld. Presiding Officer has granted the contractual rate of interest till the date of filing of the O.A. but future interest is allowed only @6% per annum. Future interest is the discretion of the adjudicating authority and therefore, cannot be interfered with. I find no reason to interfere with the findings of the Ld. Presiding Officer on that count.

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It is only the share of the minor Krish Shah that has been excluded. There should have been specific reasons mentioned for mortgaging the property belonging to a minor to the effect that it was in his interest that the mortgage was created. There is no such recital and therefore, the Ld. Presiding Officer has rightly excluded the share of the minor. There is no reason to interfere with the findings of the Ld. Presiding Officer.

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Resultantly, the appeal is dismissed.

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Chairperson

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mks- 1

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Bank of Baroda v. M/s. Adarsh Metal Industries & Ors.

Case brief

What is this about?

What did the court decide?

Bank of Baroda v. M/s. Adarsh Metal Industries & Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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