Allowed

Canara Bank v. M/S Shriya Garments Manufacturing Co.

DRT26 Sept 2022OA/133/2022

Case brief

AI extract

What is this about?

The Tribunal allowed the bank's application under Section 19 RDB Act. It held the defendants jointly and severally liable for loan dues totaling Rs. 45.55 lakhs. A recovery certificate was issued for the principal, interest, and costs.

What did the court decide?

Recovery certificate issued for Rs. 45,55,792.03 plus interest and costs; defendants directed to pay within two months or face property sale.

Canara Bank versus M/S Shriya Garments Manufacturing Co. — Banking and Recovery | DRT (2022)

¶1

IN THE DEBTS RECOVERY TzuBUNAL AT LUCKNOW

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Present: A.H. Khan,^presiding OIIicer

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Case No. Original Application No.133 of 2022

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Dated:26.9.2022

¶5

Canara Bank, a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertaking) Act V act tSZO, having Head Office at ll} JC Road, Bangalore (Kamataka) and a Branch at Noida Main Branch, situated at C-3., Sector-1, Nuidu_ 201301, District Gautam Budh Nagar, Up.

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......Applicant Bank

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Versus

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l. iWs. Shriya Garments manufacturing Co_. (A Partnership firm) having registered office at House No.474, Gali No.9, Village Nithari, Sector-31, Near primary School, Noida, District Gautam Budh Nagar-201 301 . And Also At: C-198/A, Hoisery Complex, Phase II, Noida, Distt. Gautam Budh Nagar.

¶9

Sri Brij Mohan Sharma (partner/Guarantor) S/o Sri Rakesh Kumar Sharma, R/o House No.474, Gali No.9, Village Nithari, Sector_3 1, Near Primary School, Noida, District Gautam Budh Nagar-201301.

¶10

Ms. Priya Sharma, (partner/Guarantor) S/o Sri Rakesh Kumar Sharma, fuo House No.474, Gali No.9, Village Nithari, Sector_3 l, Near Primary School, Noida, District Gautam Budh Nagar-2O1301.

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Defendants

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Counsel for the applicant-Bank : Mr. Safffy Kumar Sharma, Advocate. Counsel forthe defendants : Non".//

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O.A. No.l33 of2022

JUDGMENT

This Original Application has been filed by the applicant Bank under Section 19 of the Recovery of Debts & Bankruptcy Act, 1993, against defendants for the recovery of Rs.45,55,792.03 (Rupees Forty Five Lac, Fifty Five Thousand, Seven Hundred Ninety Two and paisa Three Only) (Rs.10,06,524l- in Cash Credit Loan Account), (Rs.11,66,759l- in Working Capital Term Loan), (Rs.5,45,4g0/_ in Term Loan Account-I), (Rs.8,16,122.31/- in Term Loan Account_Il), (Rs.1,08,390/- in Funded Interest Term Loan Account), (Rs.2,07,613.72/_ in Deferred Interest Term Loan Account), (Rs.41,403/- in Covid Funded Interest Term Loan Account) & (Rs.6,63,500/- in GELC Loan Account) together with pendentelite and future interest, costs and other reliefs etc. 2. The brief facts of the case are that the defendant No.l is partnership firm engaged in .business of Manufacturing and Export of Garments and the defendant Nos.2 & 3 are partners/gr.rarantors. The defendant No.l/firm through its proprietor vide loan application dated 13.12.2018 approached the bank for grant of cash crtdit Limit of Rs.5.00 lac and rerm Loan of Rs.5.70 rac, which were duly considered and sanctioned by the bank vide its sanction letter dated l7.l.20lg on certain terms and conditions (Exhibit No.A-2 to Exhibit No.A-5) to this original application.

¶17

To secure the above credit facilities of total Rs.10.70 lac, the defendant No.2 and Smt. Geeta Sharma (erstwhile partner) had executed and signed various security documents in favour of the applicant-bankⁿ

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O.A. No.l33 of2022

¶19

Supplementary Agreement and Guarantee Agreement (Exhibit No.A-6 to Exhibit No.A-12) to this original application.

¶20

Later, on the request of the defendants, the existing Cash Credit Facility was enhanced from tiine to time and lastly enhanced to Rs.20.00 lac and fresh Term Loan of Rs.7.63/ lac was sanctioned on 17.5.2019 on certain terms and conditions, for which, the said defendants had further executed and signed various security documents in fhvour of the applicant-bank 17.5.2019 (Exhibir No.A-13 to Exhibit No.28) to this original application.

¶21

Thereafter, on 19.5.2020 request for sanction additional facilities of Rs.2.00 lac & GECL Loan of Rs.6. l5l- lacs, which were also considered and sanctioned by the bank on 26.5.2020, for which, the said defendants had further executed and signed various security documents in favqur of the bank on28.5,2020 (Exhibit No.A-29 to Exhibit No.A_45 & Exhibit No. A-47) to this original application.

¶22

The defendants had accepted the debts by executing Letter of Acknowledgment of Debts dated25.6.202l confirming the balance in the loan account (Exhibit No.A-47) to this original application.

¶23

For availing the aforesaid credit facilities, the applicant Bank had opened various loan accounts in the names of defendant No.l/firm in ordertomaintaintheaccountofthesaidloanfaci1ities.

¶24

After availing the aforesaid credit facilities, the defeJrdants failed to maintain financial discipline and also failed to comply with the terms and conditions, consequently, the loan account of defendant No.t/firm n were classified as NPA on 02.5.2021by the bank as per RBI guidelines, / \ therefore, the applicant-bank issued Legal notice dated 23.10.2011/

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O.A. No.l33 of 2022

(Exhibit No.A-48) to the defendants, but they did not considered the same and the loan accounts of defendant No. l/firm are still. un-liquidated, hence, this Original Application has been instituted.

¶29

As per books of the bank maintained in the usual and ordinary course of banking business, an outstanding of Rs.45,55,792.03 (Rupees Forty Five Lac, Fifty Five Thousand, Seven Hundred Ninety Two and Paisa Three Only) (Rs.10,06,5241- in Cash Credit Loan Account), (Rs. I 1,66,759l- in Working Capital Term Loan), (Rs.5,45,4g0/_ in Term Lgan Account-I), (Rs.S,16,122.31/- in Term Loan Account_Il), (Rs.1,08,390/- in Funded Interest Term Loan Account), (Rs.2,07,613.721_ in Deferred Interest Term Loan Account), (Rs.41,403/- in covid Funded Interest Term Loan Account) & (Rs.6,63,500/- in GELC Loan Account) including interest upto 3 I .l .2022 were lying due for payment, for which, the defendants are jointly and severally liable to repay the same, which they did not pay despite repeated requests and demands. The applicant_ bank has filed the copy of Sratement of Account (Exhibit No.A-49 to Exhibit No.A-56) to this original application.

¶30

The cause of action for filing the present application arose firstly when the aforesaid credit facilities was sanctioned and was later enhanced by the applicant-Bank and the same were availed by defendants and necessary documents were executed. The cause of action fuither arose again on 23.10.2021 when the applicant bank had issued Legal Notice to the defendantp-gecalling the entire outstanding dues and they / failed to pay the same.^I I /

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O.A. No.l33 of2022

¶33

The summons were served upon defendants through registered posts, but, the defendants did not appeared before this Tribunal to contest the case, hence, the matter proceeded ex-parte against the defendants. 12. In support of the case, Shri Ranjeet Kumar, Manager of the applicant Bank has filed affrdavit (As per this original application).

¶34

on a careful scrutiny of the evidence on affidavit and Exhibit marked as (Exhibit No.A-l to Exhibit No.A-56 to this original application), it is proved that defendants had availed the abovementioned credit facilities from the applicant bank by executing loan and security documents detailed as above in favour ofthe applicant-Bank. A perusal ofthe application, evidence and documents relied upon clearly show that defendants had utilized the credit facilities as granted to them. The applicant-bank had maintained the Books of accounts in the ordinary ourse of banking business showing disbursal of the loan amount. It further shows that bank had regularly credited the amount paid by the defendants in the books ofaccounts. The Bank had also charged interest from time to time and the entries are relevant r-r/s 4 of the Bankers Books of Evidence Act. It is also proved that the applicant bank,s claim is within limitation from execution of Letter of Acknowledgment of Debts. Therefore, the defendants are jointly and severally liable to pay the dues. 14. Accordingly, the defendants are directed to pay the balance dues to the applicant bark within a period of 2 months from the date ofjudgment failing which the applicant bank will be entitled to sell the personal assets/properties ol defendants.

¶35

The applicant-bank has claimed interest @10.35%, interest @1O.OO%,^interest @g.55%,^interest @7.65%, interest @9.55% andT^/

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O.A. No.l33 of2022

interest @7.50% per annum in the above loan accounts together with pendent-lite and future interest till the date of its realization and costs. The contest between the applicant-bank and the defendants comes to an end and after filing of the o.A. as per the provisions of Section l9(2) of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time) which is analogous to Section 34 to the cpc, the Tribunal/court has discretion in awarding penderlite and future interest. I am also supported in my view by Hon'ble Supreme court in a case titled central bank oflndia vs. Ravindra and others reported in AIR 2001 SC page 3095. on the basis of the foregoing discussion, interest ofjustice will be served if pendente-lite and future interest is granted @lo.ov/o per annum in Cash Credit as well as both the Term Loan Accounts, interest @g.OO% in FITL & CFITL Loan Accounts and interes t @7.OO% in DITL & GECL Loan Accounts with monthly rate on reducing balance from the date of filing of the O.A. till the date of realization with cost$.

¶40

In the result, the Original Application succeeds exparte against the defendants, with costs. The bank has proved the loan execution of loan documents in favour of the bank. The liabilities of the defendants are joint and several and the hypothecated assets as well as personal property/properties ofthe defendants are liable to be sold.

¶41

It is, therefore, ordered:-

¶42

(D That the Original Apptication No.133 of ?.O22 of the applicant bank for issuance of Recovery Certificate to the tune of Rs.45,55,792.03 (Rupees Forty Five Lac, Fifty Five Thousand, (Rs.10,06,524l- Seven Hundred in Cash Credit Ninety Two and Loan Paisa Three Account)Only)^0,

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O.A. No.l33 of2022

¶44

¶45

(Rs.1 1,66,759l- in Working Capital Term Loan), (Rs.5,45,480/- in Term Loan Account-I), (Rs.S,16, 122.311- in Term Loan Account-Il), (Rs.1,08,3904 in Funded Interest Term Loan Account), (Rs.2,07,613.72l- in Defbrred Interest Term Loan Account), (Rs.41,403/- in Covid Funded Inrerest Term Loan Account) & (Rs.6,63,500/- in GELC Loan Account) with interest as mentioned above per annum in the loan accounts with monthly rest from the date of filing of the Original Application i.e. 07.2.2022 till the loan is tully liquidated and costs succeeds and is hereby allowed exparte against defendant Nos. I to 3 jointly and severallv.

¶46

(ii) The defendants are directed to pay the dues within a period of two months from the date of judgment, failing which the applicant-bank will be entitled to recover the same from the personal movables and immovable assets of the defendants. (iii) The applicant-Bank is entitled to recover aforesaid amount by the sale of hypothecated assets (If not sold earlier under the provisions of the S.A.R.F.A.E.S.I. Act,2002) the, amount, if any recovered by sale of hypothecated assets or otherwise shall be adjusted towards the debt and only the balance amount shall be recoverable. Ifthe dues ofthe applicant bank still remain unsatisfied, the same be recovered by the attachment and sale of the personal movable gn{zimmouable assets ofthe defendants jointly and severally. I .'

¶47

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¶48

		O.A.No.l33of2022
(i")	Thedefendantsareherebyrestrained fromdepleting,transferring, anywaydealingwiththeir paying theclaimof the applicantbank.	ofinjunction ingorin withoutfirst
(v)	LetRecoveryCertificatebeissuedimme the RecoveryofDebtsDuetoBanksand Act,1993byfixing26.12.2022,before R	diz Fi .O., uls t9(22)of ialInstitution
The	applicant bank is directedtofileamemo	of forpreparing
Recovery	Certificateu/s19(22)ofthe Recoveryof	Debts Bankruptcy
Act,1993. Dated: 26	Judgmentispronouncedinthe .9.2022	open Khan) Officer /1 ( /

Canara Bank v. M/S Shriya Garments Manufacturing Co.

Case brief

What is this about?

What did the court decide?

Canara Bank v. M/S Shriya Garments Manufacturing Co.

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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