Allowed

Canara Bank v. M/s Jaya Industries and others

DRT23 Sept 2022OA/104/2022

Case brief

AI extract

What is this about?

In an ex-parte application, the Debts Recovery Tribunal, Patna allowed Canara Bank's recovery claim against MS_ Jaya Industries and its proprietor for outstanding dues of approximately 24 lakhs, including interest, based on unchallenged documentary evidence and affidavits.

What did the court decide?

Defendants jointly and severally ordered to pay Rs. 24,06,000 with pendente-lite and future interest @10.65% p.a. with monthly rests from filing date till realization. Recovery certificate to be issue

Canara Bank versus M/s Jaya Industries and others — Contract and Commercial Disputes | DRT (2022)

DRT,PATNA

OA 104 of 2022 IJ]

.Debts Recovery Tribunal, Patna.

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Presiding Officer : Shri Kaushalendra Yadav

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OA Case no. : 104 of 2022

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Canara Bank, SME Special Branch, Ashiana Digha Road, Raja Bazar, Patna-8000 14.

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. Applicant

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Vs.

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Mis Jaya Industries through its proprietor Mr. Vivek Anand, S/o Late Prem Chandra Verma, Plot no. 450, Kumhar Toli, Choti Pahadi,Patna-800007.

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Mr.Vivek Anand S/o Late PremChandra Verma, Flat no. 102, Nutan Vihar Apartment, Doctors Colony, Kankarbagh-800020 .

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...Defendants

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Present:

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For the Applicant : Chainika Junior counsel for Shri Raju Kr. Singh, Advocate For the Defendants : None

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Dated: 23.09.2022

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JUDGMENT

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1- The Applicant bank has made this application uls 19 of the Recovery of Debts and Bankruptcy Act, 1993 (here-in-after referred to as Act) on l.2.2022 against the defendants to recover its debts from defendants of Rs.24,06,0001- upto 30.12.2020 alongwith pendente-lite and future interest at the contractual rate from 31.12.2020 with costs till realization.

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2- The application has been duly registered and numbered as above.

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3- The brief facts of the case of the applicant bank as stated in the application are as under-

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The applicant bank is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 and having its Head Office at 112, J.C. Road, Bangalore-560002 and amongst others a Branch at SME Special Branch, Ashiana Digha Road, Raja Bazar, Patna-8000 14.

OA 104 of20221J1

DRT, PATNA

The defendant no. 1 is a proprietorship firm carrying on the business of manufacturing and trading of PVC granuals and powder within the territorial jurisdiction of this Hon'ble Tribunal. The defendant no. 2 applied for credit facilities of Rs.15 lakh for business of manufacturing and trading of PVC granuals and powder on 2.1.2016 as a term loan acc thereafter on 2.1.2016 the defendant no. 2 requested the applicant bank vide his request letter dated 2.l.20 16, for overdraft facilities of rs.15 lakh by way of open cash credit as working capital for above noted business. After considering the proposal of the defendants the applicant bank sanctioned vide sanction letter term loan to the extent of Rs.15 lakh only and open cash credit limit of Rs. 15 lakh as a working capital to the defendants subject to their acceptance of the terms and conditions as stated in the sanction letter. The defendants executed the various loan documents i.e. cash credit agreement, deed of hypothecation.

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As the acc loan facilities were given under the scheme of MSME unnati under which running limit was for two years and accordingly the open cash credit facility was renewed on the basis of letter of renewal dated 14.2.2018 submitted by the defendant no. 2. Due to Covid-19 outbreak, the defendant no. 2 again applied for GECL of Rs.3,00,0001- for her above noted business on 8.6.2020 under the government of India s Emergency Credit line Guarantee scheme by way of working capital term loan as working capital for above noted business. After considering the proposal of the defendants the applicant bank sanctioned dated 8.6.2020 of Rs.3 lakh under GECL as working capital to the defendants subject to their acceptance of the terms and conditions as stated in the sanction letter. The defendants executed the various loan documents i.e. supplemental agreement, take delivery letter, pronote, undertaking letter, letter of undertaking, letter of proprietorship.

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The defendants thereafter enjoyed the benefit of said loan facility but after some time did not adhere to the terms and conditions of the said facility and despite repeated request did not clear dues within specified time as per the agreements of the facility and later on due to non- deposit of the installments by defendants their account become irregular despite regular follow up by telephone and recall notice. As a result the account of defendants had classified as NPA on 30.12.2020 as per guidelines of RBI.

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The total outstanding dues amount comes to Rs.24,06,0001- upto 30.12.2020 and the defendants are liable to pay further interest on the said amount w.e.f. 3l.12.2020.

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The interest Icompound interest has been charged at such rates, and capitalized at such periodical rests as are permitted by and do not run counter to the directives of Reserve Bank of India.

OA 104 of 2022 IJ)

DRT,PATNA

Since, the defendants have failed and neglected in spite of several reminders to make payment of the dues recoverable to bank, hence this application has been filed by the bank.

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4- . U/s 19 (4) of the Act & Rule of the DRT [Procedure] Rules, 1993, copies of application & paper book were sent by this Tribunal to the defendants by registered/speed post on 19.4.2022, and summons/notices issued requiring the defendants to show-cause within 30 days of the service of summons/notices as to why relief prayed for, should not be granted.

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Despite the registered summons/notices and tracking report shows that the items have been delivered to defendants, but defendants have not appeared before this Tribunal to contest the case. The sufficient time has been given to the defendants to defend their case, but they failed to appear and to file WS, hence, the Tribunal has passed an order to proceed exparte against the defendants 23.6.2022.

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5- To prove its case, the applicant Bank has referred various photocopies of documents before this Tribunal. The applicant bank has also given evidence on affidavit by way of affidavit of Shri Rohit Kumar, Senior Manager of the applicant bank. The details of documents are as follows. :-

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SI.No	Description of photocopies Documents	Date of Execution	Amount	Signature of executant	Ex.! Ann. No.
1	Loan application	2.1.2016	...	defendants	1
2	request Letter	2.1.2016	Rs.15lakh	defendants.	2
3	Sanction letter	2.1.2016	R.151akh	bank	3
4	Loan agreement	2.1.2016	Rs. 15 lakh	defendants	4
5	Pronote	2.1.2016	Rs. 15 lakh	defendants	5
6	Deed of hypothecation	2.1.2016	Rs.I0 lakh	defendants	6
7	Letter of renewal	14.2.2018	Rs.151akh	defendants	7
8	Sanction letter	14.2.2018	Rs.15lakh	bank	8
9	Letter evidencing execution of documents	14.202018	....	bank	9
10	Renewal	25.2.2020	Rs.15lakh	defendants	10
11	Memorandum of sanction letter	25.2.2020	Rs.15lakh	defendants	11
12	letter of evidencing	25.2.2020	..	...	12

OA 104of2022 IJI

DRT,PATNA

13	Offer letter	8.6.2020	Rs.3 lakh	defendants	13
14	Letter	7.6.2020	...	bank	14
15	Memorandum of sanction letter	9.6.2020	Rs.3 lakh	bank	15
16	Undertaking letter	9.6.2020	Rs.3lakh	defendants	16
17	Agreement	9.6.2020	Rs.3lakh	defendants	17
18	Letter of evidencing	9.6.2020	...	...	18
19	Acknowledgement of debt	7.11.2020 28.12.2020	...	defendants	19
20	Statement of account	as on 30.12.2020	Rs.24,06,0001-	bank	20
21	legal notice	2.7.2021	...	bank adv.	21

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6- Opportunity of hearing has been fully given to both the parties, but despite several opportunities given to defendants, the defendants have not appeared to contest the case, hence, the ex-parte arguments of learned counsel for applicant bank were heard and perused the case record.

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Ld. Counsel of applicant bank submitted that the' defendants have taken the loan and utilized the same and also executed the various loan documents to secure the loan. Further, submitted that the claim of the bank has been proved by documentary evidence.

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It is further submitted by ld. Counsel of applicant bank that there is no any stay granted by any Higher Court, in respect of the proceedings of the present OA and requested to issue recovery certificate, as claimed for, inOA.

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7- It has been established that defendants are living and carrying on their business in the state of Bihar. Cause of action also arose in the State of Bihar. The said claim on the date of filing of application exceeded Rs.20 lacs. The applicant bank is functioning within jurisdiction of this tribunal. Therefore, this Tribunal has territorial as well as pecumary jurisdiction to adjudicate upon the present application.

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8- On the issue of Limitation, to prove it, the applicant bank has submitted that the applicant bank has declared the account as NPA on 30.12.2020, whereas the present application has been filed on 1.2.2022. Even, it is counted for the purpose of Limitation, then it is established that the applicant bank has filed the case within the limitation period from the date of declaring the account as NPA. As such, it is established that present application has been filed well within the period of limitation.

OA 104 of2022 IJI

DRT, PATNA

9- In the affidavit of Shri Rohit Kumar, Senior Manager of the applicant bank, has stated that he is well acquainted with the facts of the case and has on verification of record, sworn in the affidavit in support of contents of application and the documents as evidence and established on oath the pleadings and documents of the applicant bank as stated above.

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The documents as stated above reveal that the defendants have applied for loan and the bank had sanctioned the loan and to secure the loan and for repayment of loan amount with interests etc., the defendants have executed various loan documents, which strength the case of the applicant bank.

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The applicant bank has also furnished statement of account as above, which is not only admissible but shall be taken as correct statement of account, more so since the entries in the statement of account has not been challenged.

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10Since, the case was proceeded ex-parte against defendants, all contentions raised and documents produced by plaintiff remained unrebutted and the tribunal may act upon the affidavit of the applicant as per law. Defendants have neither denied the utilization of funds advanced by applicant bank nor have pointed out any specific error and discrepancy in the Statement of Account, which is kept in due course of business, evidence on affidavit, which has supported the claim of the applicant bank, established to have fully correct and believable. Provisions contained in Rule 9(2) of Debt Recovery Tribunal (Procedure) Rules, 1993 provide that the documents referred in the application shall be duly stated by senior officer of the bank, or Financial institution as the case may be and numbered accordingly. The rule 12 (10) provides that the provisions contained in section 4 of the Banker's Books evidence that Act, 1891 (18 of 1891) shall applied to certified copy of an entry in a Banker's Books furnished alongwith application filed under sub section 1 of section 19 by the applicant.

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11On consideration of the arguments and on perusal of the application, documents and affidavit, it is proved that the applicant bank has granted the loan facility, documents were executed by the defendants and facility was availed by the defendants as stated in the application.

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12The applicant bank has sought for recovery of a sum of Rs.24,06,0001- with cost and further interest at the contractual rate from 31.12.2020 till realization. 13Learned Advocate appearing for applicant bank submits that the applicant bank has charged interest in terms of the agreements and that interest has been charged at sue: rati an~Pitalized at such periodical

VrP~

OA 104 of20221J]

DRT, PATNA

rests as are permitted by and do not run counter to the directives of Reserve Bank of India.

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14On consideration of the arguments and on perusal of the pleadings, documents and affidavit, it is proved that the applicant has charged interest against defendants in terms of documents and as per directives of RBI.

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15None of the defendants appeared before the tribunal to contest the claim made by the applicant, therefore, it necessarily goes to establish that the claim made by the applicant bank is genuine and true. It is manifest that the defendants have not disputed the claim, therefore, the claim referred to the tribunal is recoverable till full and final realization of the claim.

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16In Indian Bank Vs. Blue Jaggers Estates Limited and others [2010] 8 SCC 129, the Hon'ble Supreme Court of India has observed as under-

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"The Court cannot ·losesight of the fact that the bank is a trustee of public fund. It cannot compromise the public interest for benefiting private individuals. Those who take loan and avail financial facilities from the bank are duty bound to repay the amount strictly in accordance with the terms of the contract. Any lapse in such matters has to be viewed seriously and the bank is not only entitled but duty bound to recover the amount by adopting all legally permissible methods. Parliament enacted the act because it was found that legal mechanism available till then was wholly insufficient for recovery of the outstanding dues of the banks and Financial Institutions."

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17In my view, Facts of the case stand proved by evidence of the applicant bank ex-parte. Accordingly, The applicant bank is entitled to recover from defendants jointly and severally ofRs.24,06,0001alongwith pendente-lite and future interest @10.65% p.a. with compounded monthly rests from 1.2.2022 (The date of filing of this O.A.) till realization. So the final order may be passed accordingly, to meet the ends of justice. ORDER In the result, the application of the applicant bank is, allowed exparte and debt is determined with costs against the defendants. The defendants are hereby jointly and severally, ordered to pay the applicant bank it's debts amounting to Rs.24,06,0001- alongwith pendente-lite and future interest @10.65.% p.a. with compounded monthly rests from 1.2.2022 (The date of filing of this O.A.) till realization of the entire sum due and recoverable with costs. ~ / /'

v ~o..,' Nt"?

OA 104 of 2022 [JI

DRT, PATNA

It is made clear that any amount deposited by the defendants, be deducted in the claim amount, if not deducted.

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Defendants are debarred from transferring, alienating encumbering or otherwise dealing with or disposing of the mortgaged or hypothecated or any other properties and assets without paying the aforesaid adjudicated dues to the applicant bank to secure the ends of justice. Let a certificate of recovery be drawn up forthwith and put up for . signatures in terms of provisions contained in Section 19(22) of the Act to be issued, on the basis of the order of the Tribunal to the Recovery Officer. The Recovery Officer shall realize the amount as per the certificate in the manner and mode prescribed under the Act from the defendants, by sale of mortgaged/ hypothecated assets as well as other personal movable/immovable assets of the defendants.

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Parties are directed to appear before the Recovery Officer, DRT, Patna on 14.11.2022. The order be communicated accordingly.

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Judgment signed, sealed, dated and pronounced in the open c~ ~ on this 23rd Day of September, 2022.

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~ . N ~ _~'rI_

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Dictated & corrected by me.

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[Kaushalendra Yadav] Presiding Officer Debts Recovery Tribunal, Patna

Canara Bank v. M/s Jaya Industries and others

Case brief

What is this about?

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Canara Bank v. M/s Jaya Industries and others

Case brief

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