Allowed

Bank of India v. Ms Verma Cement Ent Udyog

DRT8 Aug 2022OA/9/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed the Bank of India's original application ex-parte to recover a loan of Rs.34,96,419.62 along with future interest and costs from the defaulting defendants.

What did the court decide?

Recovery Certificate issued for Rs.34,96,419.62 plus 10% future Interest; defendants directed to pay within 2 months or face asset sale; injunction granted.

Bank of India versus Ms Verma Cement Ent Udyog — Banking and Recovery | DRT (2022)

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IN THE DEBTS RECOVERY TRIBUNAL AT LUCKNOW

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Present: A.H. Khan, Presiding Officer

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Case No. Original Application No.09 of 2022

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Dated:08.8.2022

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Bank of India, a body corporate constituted under the Banking Companies^(Acquisition and Transfer of Undertaking), Act 1970, having its Head Oflice at Star House, C-5, G Block, Bandra Kurla Complex Bandra^(East) Mumbai-40005 I and a Branch at Raebareli, Branch, House No.920, l" Floor, Lodhwari Building Near Firoj Gandhi Degree College, Raebareli,^IJP-229001.

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......Applicant Bank

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Versus

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l. Ir#s. Verma Cement Ent Udyog, a proprietorship concem of Shri Akhilesh Verma, having its principal place of busineSs at Village Shora, Post-Gangaganj, Tehsil and Pargana Raebareli, W -229 00 l.

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Shri Akhilesh Verma, S/o Shri Janki Prasad Verma, R/o 361, New Basti, Ratapur, Raebareli, IJP-229001.

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Defendants

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Counsel for the applicant-Bank^: Mr. Ajesh Anand, 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 under Section 19 of the Recovery of Debts & Bankruptcy Act,^1993, against defendants for the recovery of Rs.34,96 ,41g.621-(Rupees Thirty Four Lac, Ninety Six Thousand, Four Hundred Nineteen and Paisa SixtyruY t /,, v/

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O.A. No.09 of 2022

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Two Only) (Rs.26,67,966.85/- in Cash Credit Loan Account) & (Rs.8,28,452.77l- in Term Loan Account) together with pendentelite and future interest, costs and other reliefs etc.

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The brief facts of the case are that the defendant No.l is proprietorship firm carrying business of manufacturing of cement, of which, the defendant No.2 is^proprietor. The defendant^{No.2 on behalf} of the defendant No.l/firm vide their loan application^{dated05'11.2013} approached the applicant-bank for^grant of Cash Credit limit^{of Rs.10.00} lac and Term Loan of Rs.10.00 lac, which^were duly^{consideredand} sanctioned by the bank on 06.12.2013^{on certain terms and conditions} (Exhibit No.A-2 & Exhibit No.A-3) to this original application.

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To secure both the above Credit facilities of^{Rs.20.00 lacs,the} defendant No.2 on behalf of the defendant No.l/firm^{had executed and} signed various security documents in^favour of^{the bank on 06.12.2013} like D.P. Note, Debit Authority^{Letter, BearerLetter,Multipurpose} Document, Declaration to be^{obtained from borrowerand Agreementof} Hypothecation to Secure the^{limits (Exhibit No.A-4 to Exhibit No.A-16)} to this original application.

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Later, on the request ofthe defendants^{vide their loan application,} the existing cash credit facility^{was enhanced from Rs.10.00lac to} Rs.20.00 lacs by the bark^{on 02.6.2015on certain terms and conditions,} for which, the said defendants^{had furtherexecuted and signed various} security documents^{in favour of the bank on 02.6.2015(Exhibit No.A-18} to Exhibit No.A-25) to this^{original application.}

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The defendants^{had also executed and signed Letter of} Acknowledgment of^{Debtsdated02.6.2015& 10.5.2018 confirmingthe}

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O.A. No.09 of 2022

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balance in the loan accounts (Exhibit No.A-17 & Exhibit No.A-26)) to this original application.

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For availing the aforesaid credit facilities, the applicant Bank had opened two loan accounts in the names of defendant No.l/firm in order to maintain the account of the said loan facilities.

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After availing the aforesaid credit facilities, the defendants failed to maintain financial discipline and also failed to comply with the terms and conditions, consequently, the loan accounts of the defendant No.l/firm were classified as NPA on3l.12.2016 by the bank as per RBI guidelines, therefore, the applicant-bank issued Legal Notice dated 18.12.2021 (Exhibit No.A-27) to the defendants, but they did not considered the same and the loan accounts of the defendant No.l/firm are still unJiquidated, hence, this Original Application has been instituted.

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As per books of the bank maintained in the usual and ordinary course of banking business, an outstanding of Rs.34,96,419.62l- (Rupees Thirty Four Lac, Ninety Six Thousand, Four Hundred Nineteen and Paisa Sixty Two Only) (Rs.26,67,966.851- in Cash Credit Loan Account) & (Rs.8,28,452.77l- in Term Loan Account) including interest upto 17.12.2021 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 Statement of Accounts (Exhibit No.A-28 & Exhibit No.A-29) to this original application.

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The cause of action for filing the present application arose firstly when the aforesaid credit facilities were sanctioned by the applicantBank and was also enhanced and the same were availed by defendants

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O.A. No.09 of2022

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and necessary documents were executed. The cause of action further arose again on 18.12.2021 when the applicant bank had issued Legal Notice to the defendants recalling the entire outstanding dues and they failed to pay the same.

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The summons were served upon defendants through registered post, but the defendants did not tum up to contest t}le case, hence, the matter proceeded ex-parte against the defendants.

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I l. In support of the case, Mr. Subhash Chandra Mishra, Senior Manager of the applicant Bank has filed affidavit (As per this original application).

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On a careful scrutiny of the evidence on affidavit and Exhibit marked as (Exhibit No.A-1 to Exhibit No.A-29 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 of the 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 applicanrbank had maintained the Books of account in the ordinary course 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 u/s 4 of the Bankers Books of Evidence Act. It is also proved that the applicant bank's claim is within limitation against the defendants from execution of acknowledgment of debts letters and the applicant-bank had also relied upon the Suo Moto order for extension of limitation period passed by

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0n,

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O.A. No.09 of 2022

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Hon'ble Supreme Court in Writ Petition (Civil) No.3 of 2020. Therefore, the defendants are^jointly and severally liable to pay the dues.

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Accordingly, the defendants are directed to pay the balance dues to the applicant bank within a period of 2 months from the date ofjudgment failing which the applicant bank will be entitled to sell the personal assets/properties of defendants.

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The applicant-bank has claimed interest @11.45% per annum in Cash Credit Loan Account and interest @1230% in Term Loan Account 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 pendet-lite 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

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AIR 2001 SC page 3095. On the basis of the foregoing discussion, interest of^justice will be served if pendeteJite and future interest is granted @10.00% per annum in both the Loan Accounts with monthly rate 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 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 wellyS personal property/properties ofthe defendants are liable to be sold.

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O.A. No.09 of2022

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It is, therefore, ordered:-

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(i) That the Original Application No.09 of 2022 of the applicant bank for issuance of Recovery Certificate to the tune of Rs.34,96,419.62l- (Rupees Thirty Four Lac, Ninety Six Thousand, Four Hundred Nineteen and Paisa Sixty Two Only) (Rs.26,67,966.851- in Cash Credit Loan Account) & (Rs.8,28,452.77l- in Terrn Loan Account) with interest @10.00%^{per annum in the loanaccountwith monthly rest} from the date of filing of the Original Application i.e. 31.12.2021 till the loan is fully liquidated and costs succeeds and is hereby allowed exparte against defendant Nos.l & 2 jointly and severally.

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(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.

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(iii) The applicant-Bank is entitled to recover aforesaid amount by the sale of hypothecated assets (lf 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. If the dues of the applicant bank still remain unsatisfied, the same be recovered by the attachment and sale of the personal movable a2{immovable assets ofthe defendants^jointly and severally. ,/ t

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O.A. No.09 of 2022

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(iv) The defendants are hereby restrained by means of injunction from depleting, transferring, encumbering,^{alienating or in} any way dealing with their^{properties/estateswithout first} paying the claim of the applicant bank.

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(v) Let Recovery Certificate be issued^{immediatelyuls 19(22)of} the Recovery of Debts Due^{to Banksand Financial Institution} Act, 1993 by fixing 08.ll.2022,before^{R.O., DRT, Lucknow.}

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