Allowed

Canara Bank v. Ms Sun Shine Trading Co.

DRT5 Aug 2022OA/16/2022

Case brief

AI extract

What is this about?

In an ex parte hearing, the Debt Recovery Tribunal allowed the applicants, a bank, to recover an outstanding loan principal and interest. The court upheld the bank's claim supported by executed security documents and order recovery from hypothecated and personal assets.

What did the court decide?

Recovery certificate of Rs.22,62,640.05 + interest at 10% and costs; sale of hypothecated and personal assets; injunction on disposing properties.

Canara Bank versus Ms Sun Shine Trading Co. — Banking and Recovery | DRT (2022)

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IN TT{E DEBTS RECOVERY TRIBLINAL AT LUCKNOW

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Present: A.H. Khan, Presiding Officer

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Case No. Original Application No.16 of 2022

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Dated: 05.08.2022

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Canara Bank(Erst while Syndicate bank) a body Corporate duly constituted under the Banking Companies (Acquisition & Transfer of Undertakings), Act, 1970 with its Head Office at 772, J.C. Road, Bangaluru-560002 (Karnataka) amongst other one of its Branch Office at Chipyana Bujurg Branch Pargana and ....Applicant Bank Tehsil Dadri, Gautam Budh Nagar U.P through its constituted Attorney Anirudh Raj Singh Versus 1. NzI/s Sun Shine Trading Co. through its proprietor Mamta Rani at House No.l07, Gali No.3, Ram Shyam Enclave Chipyana buzarg Gautambudh Nagar U.P. -20 1 009 2. Mamta Rani Proprietor of IWS Sun Shine Trading Co. R/o House No.47/47-A, Gali No.-2, Sarvodaya Nagar, Vijay Nagar, Ghazaibad-2O I 001 ..defendants Counsel for the applicant-bank : Shri Sanjay kumar Sharma, Advocate Counsel for the defendants : None

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JUDGMENT

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This Original Application has been filed by the applicant Bank

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under Section 19 of the Recovery of Debts & Bankruptcy Act, 1993, against the defendants for the recovery of Rs.22,62,640.05 tn p.", ! Twenty Two Lac, Sixty Two Thousand, Six Hundred Forty and puiru /

'/-tl

o.A. No.16 of 2022

(

Five Only) together with pendentelite and future interest, costs and other reliefs etc.

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The brief facts of case are that, the defendant No.l is a proprietorship firm and defendant No.Z itself proprietor of defendant No.l firm as mention in this O.A., the defendant Nos.l&2 approached through loan application on 10.08.2018 for MSME SOD^loan facility of Rs.14.40 Lac for the purpose of working capital, which^{was considered} and sanctioned by the applicant-bank vide Sanction letter^dated 11.09.2018 again by applicant Bank to borrower on^{25109/2018 for} certain terms and condition^(Annexure No.A-2 to^{AnnexureNo.A-4) to} this Original application.

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To secure the MSME SOD Loan facility of^{Rs.14.40 Lac,the} defendant Nos.l&2 signed and executed Guarantee^{agreement,letter of} Undertaking, Letter describing the usage of^{the loan, Letter of} Undertaking from the borrower for^{compliance of Post release,} composite Hypothecation agreement and Declaration^{letter for} Hypothecation deed and confirmation of^{valuation of the Hypothecated} properties dated24.09.2018 in favour of the applicant bank^(Annexure Nos.A-5 to Annexure No.A-10)^{to this Originalapplication.}

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To availed the repayment^{of Cash Credit Facility, the applicant} Bank had opened a Loan^{accountin the name of defendant No.l in} order to maintain credit^{and debit of sanctioned facility.}

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After availing SOD^{loan facility, the defendantsfailed to maintain} financial discipline and also failed to^{complywith the terms and}

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o.A. No.l6 of 2022

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conditions of the loan agreement as required in the matter, as the defendants had agreed under took to repay the credit facility amount with applied interest thereon due time, as the applicant bank made all possible efforts through Oral Persuasion, Reminder Letter etc but the defendants remains irregular to^pay the dues and^{principalinterest} there on the aforesaid loan account^{becamedefault in repayment} consequently, the said loan account of^{defendants were classifiedas} NPA on 23-05.2019 through issued^{certificate dated 22.10.2021} (Annexure No.l2) under as per R.B.I. Guidelines, thereafter^the applicant Bank issued the^{last notice on 26.03.2019(Annexure No.A-} 1l) to the defendants^{to liquidatethe dues but the defendants createdno} response to any served^{notices or any effort in repaymentthe dues,} hence, this Original^{Applicationhas been instituted.}

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As per books of^{the applicant bank and maintained in the usual} and ordinary course of banking^{business, an outstandingas Total} recoverable of Rs.22,62,640.05^{(RupeesTwenty Two Lac, Sixty Two} Thousand, Six Hundred Forty^{and paisa Fifty Only) includinginterest} for the period from^{25.09.2018 to 30.09.2021in the loan accountof} defendants were lying^{due for payment,for which the defendantsare} jointly and severally liable to repay the same,^{The applicant Bankhas} filed the copy of^{Statementof Account. (Annexure No.A-13to} Annexure No.A-14)^{to this originalapplication.}

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The cause of^{action for filingthe presentapplication arosefirstly} 10.08.2018 on the^{request of defendantsSoD Loan facility was0}

O.A. No.l6 of 2022

sanctioned on I L09.2018 by the applicant Bank, the same were availed by the defendants on the execution of necessary security documents and finally on23.06.2019 when the applicant bank issued and sent the last Notice to pay the entire outstanding dues as they failed to pay the same. 8. Despite sufficient services of summons through registered posts as the defendants already proceeded ex parte, on the date ofnext hearing as none appeared on behalf of defendants as the defendants opted not to contest the case before this Tribunal, hence, the matter proceeded exparte against the defendant Nos.l&2.

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From the perusal of the record, it is evident that the defendants were provided with fair opportunities to contest the claim of the bank. as the defendants opted not to contest the case, so only point of consideration before this Tribunal is as to whether bank is legally entitled to the amount as claimed in Original Application on the basis of documents and pleadings submitted by it.

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In support of the case, Shri Anirudh Raj Singh, Manager of the applicant Bank has filed an affidavit.

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I l On a careful scrutiny of the evidences on affidavii and Annexure marked as Annexure No.A-l to Annexure No.A-14 it is proved that defendants availed SOD loan facility from the applicant bank by executing loan and security documents detailed as above in favor of applicant-Bank. A perusal of the applications, evidences, documents relied upon clearly shows that defendants utilized the above loan facilities granted to them by the applicant Bank, The applicant-bank had^lt

o.A. No.l6 of 2022

maintained the Books of account in the ordinary course of banking business showing disbursal of the loan amounts. The Bank had also charged interest from time to time and the entries are relevant u/s 2A(B) of the Bankers book of Evidence Act, 1891, It is also proved that the applicant-bank's claim is within limitation against the defendants, as defendant Nos.l &2 jointly and severally liable to pay the bank dues. 12. Accordingly, the defendant Nos.l&2 are directed to pay the balances dues to the applicant bank within a period of 2 months from the date of Judgment, failing, which the applicant bank will be entitled to recover from the secured assets, personal movable and immovable assets of defendants and to sell the hypothecated assets as well as personal assets/properties of the defendants.

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The applicant-bank has claimed Base Rate interest MCLR @10.55%^{per annumplus 2Yo penalinterest in loan account} with effect from 01.10.2021 till the date ofactual realization and costs. The contest between applicant-bank and the defendants comes to an end after filing the O.A. as per the provisions of section 19 (2) of the Recovery of the 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 pendentelite and future interest. I am also supported in my view by Hon'ble Supreme Court in a case titled Central Bank of India vs. Ravindra and others reported in AIR 2001 SC pages 3095; On the served if basis pendentelite and of the foregoing future discussion, interest is granted Interest @10.00yo of justice in will Loanbeⁿ

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O.A. No.l6 of 2022

account with monthly rests on reducing balance from the date of filing of the O.A. till the date of realization with costs.

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In the result, the Original Application succeeds ex parte against the defendant Nos.l&2 with costs. The bank has proved the loan execution of security loan documents and availment of credit facilities the liabilities ofdefendants arejoint, several and the hypothecated assets as well as the personal properties/assets are liable to be sold. It is, therefore, ordered:-

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(D The Original ApplicationNo.l6 of 2022 of the applicant bank for issuance of Recovery Certificate to the tune of Rs.22,62,640.05(Rupees Twenty Two Lac, Sixty Two Thousand, Six Hundred Forty and Paisa Five Only) together with pendentelite and future interest @10.00Yo in loan account from the date of filing of Original Application i.e.30.12.2021 till the loan fully liquidated costs succeeds ex parte against the defendant Nos.l& 2.

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(iD The applicant-bank is entitled to recover aforesaid amount by sale of Hypothecated assets (if not sold earlier under the provision of the S.A.R.F.A.S.E.I. Act, 2002) the amount, if any, already recovered by the sale ofany assets or otherwise shall be adjusted towards the debt only the balance amount shall be recoverable, if the dues of the applicant Bank still remain unsatisfied same shall be recovered by attac

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O.A. No.16 of 2022

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and sale of the personal movable and immovable assets of defendants^jointly and severally.

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(iiD The defendants are hereby restrained by means of injunction form depleting, transferring, encumbering, alienating or in any way dealing with their properties/estates without first paying the claim of the applicant-bank

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(iv) Let the Recovery Certificate be issued immediately u/s 19(22) of the Recovery of Debts and Bankruptcy Act, 1993 by fixing 05.11.2022 before Recovery Offrcer, DRT, Lucknow.

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(v) The applicant bank is directed to file a memo of costs for

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preparing Recovery Certificate uls 19(22) of the Recovery of

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Debts and Bankruptcy Act, 1993.

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Judgment is pronounced in the open court.

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Dated: 05.08.2022

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) Presi Officer

Canara Bank v. Ms Sun Shine Trading Co.

Case brief

What is this about?

What did the court decide?

Canara Bank v. Ms Sun Shine Trading Co.

Case brief

What is this about?

What did the court decide?

What the court decided

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