Allowed

Canara Bank v. M/S Usha Iron Works and Others

DRT19 Oct 2022OA/543/2022

Case brief

AI extract

What is this about?

The DRT allowed the bank's application ex parte, declaring the borrowers liable to pay Rs. 3,72,03,565.29 plus future simple interest at 10% per annum, authorizing recovery via sale of secured properties.

What did the court decide?

Recovery of Rs. 3,72,03,565.29 with simple interest at 10% per annum from 09.03.2022; liberty to recover via sale of secured or personal assets; issuance of Recovery Certificate.

Canara Bank versus M/S Usha Iron Works and Others — Banking and Recovery | DRT (2022)

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DEBTS RECOVERY TRIBUNAL-2, CHANDIGARH, PRESIDED OVER BY M.M. DHONCHAK

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DATED THE 19^th DAY OF OCTOBER , 2022

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ORIGINAL APPLICATION NO.543/2022

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Canara Bank , a Body Corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, having its Head Office at J.C. Road, Bangalore, Karnataka and Branches, amongst others at SME Branch, Faridabad, through Sh. Ratnesh Kumar, Manager, Power of Attorney Holder

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....Applicant Bank

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Versus

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M/s Usha Iron Works a sole proprietary concern through its sole proprietor Sh. Pankaj Bhardwaj S/o late Sh. Jai Ram Sharma, Plot No.214, Sector 24, Faridabad-121005, PAN NO. AAAFS0485R

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Sh. Pankaj Bhardwaj S/o late Sh. Jai Ram Sharma R/o H.No. 1484, Sector-7E, Ballabgarh, Faridabad-121005, PAN No. AAAFS0485R

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Smt. Usha Rani Sharma W/o late Sh. Jai Ram Sharma R/o H.No. 1484, Sector-7E, Ballabgarh, Faridabad-121005

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Sh. Sachin Bhardwaj S/o late Sh. Jai Ram Sharma R/o H.No. 1484, Sector-7E, Ballabgarh, Faridabad-121005, PAN No.ALBPB2173R

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Kiran Batra W/o Vinod Batra R/o H.No.1085, Sector 23-A, Faridabad, PAN No-BJJPB4982K

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....Defendants

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Argued by: Sh. R.S.Bhatia counsel for the applicant bank Defendants ex parte

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FINAL ORDER

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Present Original Application was instituted on 09.03.2022 by the applicant bank under Section 19 (1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, against the defendants for recovery of Rs.3,72,03,565.29/- (Rupees Three Crores, Seventy

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Two lacs, Three Thousand, Five Hundred Sixty Five and Twenty Nine Paisa Only) . It has been filed through Sh. Ratnesh Kumar, Manager

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OA/543/2022 CANARA BANK VS M/S USHA IRON WORKS AND OTHERS 2

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of the applicant bank, who is competent to institute the Original Application. A copy of the Power of Attorney is Annexure-A1 .

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The brief facts of the Original Application are that the defendants had approached the applicant bank for grant of credit facilities to the tune of Rs. 334.00 lacs (Overdraft facility of Rs. 20 lacs enhanced to 30lacs, further enhanced to 35 lacs, further enhanced to 80 lacs, further enhanced to 108 lacs, further enhanced to 160 lacs and further enhanced to 220 lacs, Term loan facility of Rs. 70lacs and WCTL Facility of Rs. 44 lacs) vide request for overdraft facilities dated 14.12.2011, Annexure-A4 (copy), request for overdraft facilities dated 29.09.2016, Annexure-A47 (copy) and request for sanction dated 04.08.2020. Annexure-A72 (copy) 3. The applicant bank sanctioned the credit facilities of Rs. 334.00 lacs (Overdraft facility of Rs. 220.00 lacs, Term Loan Facility of Rs. 70.00 lacs, WCTL Facility of Rs. 44.00 lacs) to the defendants vide sanction letters dated 26.10.2012, 14.08.2014, 29.06.2015, 29.06.2016, 18.01.2018 and 23.06.2020, Annexures-A10, A26, A35, A43, A53 and A73 as per the terms and conditions which were duly accepted by the defendants.

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In order to secure the aforementioned credit facilities, the defendants executed various loan and security documents, i.e. cash credit agreement dated 13.12.2011, Annexure-A2 (copy), Agreement of Collateral Security dated 13.12.2011, Annexure-A5 , Subordinate Agreements dated 13.12.2011, 02.11.2012, 02.02.2018 and 11.10.2019, Annexures-A6, A15, A57 and A67 (copy), Supplement Agreement dated 14.12.2012 and 14.12.2011, Annexures-A12 and A22 (copy), Common Hypothecation Agreement dated 11.08.2014, Annexure-A27 (copy), Supplement Common Hypothecation Agreements dated 14.08.2014, Annexures-A36, A44, A54 and A74 (copy), Demand

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OA/543/2022 CANARA BANK VS M/S USHA IRON WORKS AND OTHERS 3

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promissory notes dated 14.12.2011, 02.11.2012, 17.06.2013, 14.08.2014, 30.06.2015, 29.06.2016 and 03.02.2018, Annexures-A3, A13, A23, ,A28 ,A37 ,A45 and A55 (copy), Letters of Proprietorship dated 14.12.2011, 02.12.2012, 14.11.2017 and 11.10.2019, AnnexuresA7, A19, A58 and A68 (copy), Guarantee Covering Letters dated 14.12.2011, 02.11.2012, 17.06.2013, 14.08.2014, 30.06.2015, 29.09.2016, 03.02.2018 and 25.06.2020, Annexures-A8, A9, A16, A17, A24, A25, A33, A34, A41, A42, A50, A51, A52, A62, A63, A64, A75, A76 and A77 , Letters of Renewal dated 01.11.2012, 02.12.2013, 14.08.2014, 30.06.2015, 29.09.2016, 02.02.2018 and 10.10.2019, Annexures-A11, A18, A29, A38, A46, A56 and A66, Link Letters dated 02.11.2012, 14.08.2014, and 30.06.2015, Annexures-A14, A30, A31 and A39 , Letters from Guarantors dated 02.12.2012 and 11.10.2019, Annexures-A20, A21, A69, A70 and A71, Letters of undertaking dated 14.08.2014, 30.06.2015 and 29.09.2016, AnnexureA32, A40, A48, A49, A59, A60 and A61 , request for disbursement dated 04.08.2020, Annexure-A72, balance confirmatory-cumacknowledgment of debt /securities letters dated 31.10.2012, 02.12.2013, 14.08.2014, 30.06.2015, 29.09.2016, 06.02.2018 and 11.10.2019, Annexures-A95, A96, A97, A98, A99, A100, A101 and A102 (copy).

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The aforesaid limits, TL, WCTL and CFITL were further secured by creation of registered Mortgage in respect of commercial property: i) 2-1/2 storey industrial-cum-residential unit on land measuring 100 Square Yards, Plot No.34, comprising part of Khasra part of 43/8/1, (Dharam Kanta road), Mujessar, Faridabad, owned by Smt. Usha Rani Sharma, defendant No.3.

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ii) EMT at H.No.1484, Sector 7E, Faridabad, measuring 133 square yards owned by Mr. Pankaj Bhardwaj and Mr. Sachin Bhardwaj defendant Nos.2. and 4.

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OA/543/2022 CANARA BANK VS M/S USHA IRON WORKS AND OTHERS 4

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iii) EMT of property at House No.1085, Ground Floor, HIG, Sector-23A, Housing Board Colony, Faridabad, Haryana, measuring 72.74 Square Yards owned by Smt. Kiran Batra W/o Sh. Vinod Batra defendant No.5.

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iv) EMT of Residential building falling in Khasra No.43//8/1/11, in the revenue estate of Mujesar, Tehsil Gonchil, District Faridabad, owned by Mr. Sachin Bhardwaj Defendant No.4. Title Deeds dated 01.10.1980, 10.01.2012, 31.05.2017 and 25.11.2011 are Annexures-A78, A85, A89 and A92 (copy), Acknowledgements of title deeds dated 14.12.2011, 19.09.2016, 03.02.2018 and 20.08.2014 are Annexures-A79, A86, A90, A93 and A94 (copy).

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It is further the case of the applicant bank that the loan facilities were duly availed of by the defendants but they failed to maintain the financial discipline of the applicant bank and resultantly, the loan account became irregular which was declared as NPA on 07.05.2021. The applicant bank recalled the entire outstanding amount vide Demand Notice dated 07.05.2021 u/s 13(2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Annexure-A103 (copy), but to no avail.

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It is further the case of the applicant bank that after adjusting debit and credit entries in loan account, a sum of Rs.3,72,03,565.29/- (Rupees Three Crores, Seventy Two lacs, Three Thousand, Five Hundred Sixty Five and Twenty Nine Paisa Only) is recoverable against the defendants as per statements of accounts duly certified under Banker’s Books Evidence Act, 2000, Annexure-A104, A105, A106 and A107 .

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Since the defendants did not repay the outstanding amount, therefore, the applicant bank preferred the present Original Application for issuance of Recovery Certificate.

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Notices of the Original Application were duly served upon the defendants, but since no one appeared on behalf of the defendants thus, the defendants were proceeded against ex parte vide order dated 30.07.2022.

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OA/543/2022 CANARA BANK VS M/S USHA IRON WORKS AND OTHERS 5

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In support of the contents of the OA, affidavit of evidence of Sh. Ratnesh Kumar, Manager and Authorised Representative of the applicant bank was filed.

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This Tribunal has heard ex-parte arguments advanced by the learned counsel and gone through the record carefully. 10. It was argued by the learned counsel that in view of unrebutted documentary evidence brought on record, the applicant bank had proved its case for recovery of the amount sought against the defendants. From perusal of Annexures A1 to A107, it is clear that the defendants had availed of the loan facilities which were granted to them by the applicant bank and for that he had executed all the relevant documents as stated above in favour of the applicant bank. Unfortunately, the defendants failed to pay back the loan as per terms and conditions of the agreement executed between the parties. From the documentary evidence brought on record, it is proved that applicant bank is entitled to recover a sum of Rs.3,72,03,565.29/- (Rupees Three Crores, Seventy Two lacs,

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Three Thousand, Five Hundred Sixty Five and Twenty Nine Paisa

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Only) from the defendants.

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In so far as pendente lite and future interest is concerned, the applicant bank in relief clause has claimed rate of interest @10.15% per annum in Cash Credit facility with monthly rests and @10.75% per annum in TL facility with monthly rests, @11.20% per annum in CIFTL and @7.50% per annum in GECL facility with monthly rests and in sanction letters, rate of interest has been mentioned @11.30% per annum in Cash Credit facility with monthly rests, @11.70% per annum in TL facility with monthly rests, @11.20% per annum in CIFTL and @7.50% per annum in GECL facility with monthly rests.

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OA/543/2022 CANARA BANK VS M/S USHA IRON WORKS AND OTHERS 6

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This Tribunal is of the considered opinion that sometimes in appropriate cases the prerogative of mercy is the brightest jewel in the crown of the Judge. Keeping in view the facts and circumstances of the instant case including the Pandemic Covid-19 affecting businesses, nature of the mortgaged properties, purpose of loan, i.e. business, quantum of loan, prevalent market rates of interest which have gone drastically downhill in yesteryears and defendant Nos. 3 and 5 being ladies, while exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant uniform simple interest @10% per annum from the date of filing of the OA till realisation of the amount ordered vide this order. It is ordered accordingly.

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In the result, the Original Application is allowed with costs declaring that the defendants are liable to pay to the applicant bank a sum Rs.3,72,03,565.29/- (Rupees Three Crores, Seventy Two lacs, Three Thousand, Five Hundred Sixty Five and Twenty Nine Paisa Only) with current and future simple interest @10% per annum w.e.f. 09.03.2022 , till the date of realisation of the amount. Accordingly, the applicant bank shall be at liberty to recover aforesaid amount from the sale of hypothecated and mortgaged properties of the defendants in execution proceedings, if not sold earlier under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 or otherwise. If the dues of the bank still remain unsatisfied, the applicant bank shall be at liberty to recover the same by attachment and sale of personal assets of defendants. The applicant bank is at liberty to enforce the claim through due process of law.

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Issue Recovery Certificate accordingly.

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Parties to appear before Recovery Officer concerned on 23.11.2022.

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OA/543/2022 CANARA BANK VS M/S USHA IRON WORKS AND OTHERS

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Copy of this order be sent to the applicant bank and the defendants through registered/speed post. This order be also uploaded on the official website of this Tribunal.

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Announced in the open Tribunal (M.M. Dhonchak) Presiding Officer DRT-2,Chandigarh

Canara Bank v. M/S Usha Iron Works and Others

Case brief

What is this about?

What did the court decide?

Canara Bank v. M/S Usha Iron Works and Others

Case brief

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What did the court decide?

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