Partly allowed

Fibro Plast Door Private Limited v. State Bank of India

DRT14 Nov 2022SA/213/2022

Case brief

AI extract

What is this about?

In a securitization and recovery application, the Tribunal observed that a settlement was reached between the bank and applicants. With the full settlement amount paid, the Tribunal disposed of the securitization application as settled and decreed the recovery application subject to payment of enforcement expenses and accrued interest.

What did the court decide?

Securitization Application disposed of as settled; Original Application decreed conditionally upon payment of enforcement expenses and interest.

Fibro Plast Door Private Limited versus State Bank… — Contract and Commercial Disputes | DRT (2022)

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Presented on: 20.05.2022 Registered on: 24.05.2022 Decided on: 14.11.2022 Duration: Y M D 00 05 24

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IN THE DEBTS RECOVERY TRIBUNAL, AT AURANGABAD COMMON JUDGMENT IN

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SECURITIZATION APPLICATION No.213/2022

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M/s Fibro Plast Door Pvt. Ltd; A company registered under Companies Act, through its Director Laxmikant Vishnudasji Karwa,

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Laxmikantji Vishnudasji Karwa, Age: 49 Years, Occu.: Business, R/o.Karwa Business Center, Chainsukh road, Latur, Dist. Latur. 413512. Mob. No.9890045366, [email protected].

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Yogesh Vishnudasji Karwa, Age: 47 Years. Occu. Business, R/o.Karwa Business Center, Chainsukh road, Latur, Dist. Latur. 413512. Mob. No.9422366666 [email protected].

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Kamlabai Satyanarayan Karwa, Age: 85 Years, Occu. Household, R/o Karwa Business Center, Chainsukh road, Latur, Dist. Latur. 413512. Mob. No.976336666

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… Applicants

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[APK] (SA No.213/2022 & OA No.75/2021)

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Page 1 of 14

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Versus

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The Authorised Officer, State Bank of India, Stressed Asset and Recovery Branch Plot No. 1 Town Center CIDCOAurangabad-431003, IFSC Cod No. SBIN0015859

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… Respondents

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APPEARANCE

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For the Applicant nos.1 to 4 Mr. P. T. Dhage – Advocate For Respondent bank Mr. S. V. Adwant – Advocate

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AND ORIGINAL APPLICATION No.75/2021

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STATE BANK OF INDIA a body corporate constituted under the State Bank of India Act, 1955, having one of its branch at Stressed Assets Recovery Branch, CIDCO, Aurangabad.

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… Applicants

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Versus

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M/s Fibro Plast Door Pvt. Ltd; A company registered under the Companies Act, having its registered office at Karwa Business Centre, Chainsukh Road, Latur,

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Smt. Laxmikant Vishnudasji Karwa, Age: Major, Occu.: Business, R/o. Karwa Business Center, Chainsukh road, Latur, Dist. Latur. 413512. Mob. No.9890045366, [email protected].

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Shri Yogesh Vishnudasji Karwa, Age: Major, Occu. Business, R/o. Karwa Business Center, Chainsukh road, Latur, Dist. Latur. 413512. Mob. No.9422366666 [email protected].

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[APK] (SA No.213/2022 & OA No.75/2021) Page 2 of 14

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4.	Sow. Kamlabai Satyanarayanji
	Karwa, Age 85 Yrs. Occu.
	Household, R/o Karwa Business
	Center, Chainsukh road, Latur, Dist.
	Latur. 413512. Mob. No.976336666	… Defendants

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APPEARANCE

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For the Applicants bank Mr. S.V.Adwant – Advocate For Defendant nos. 1 to 4 Mr. P. T. Dhage - Advocate

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Shri Vimal Gupta Presiding Officer

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JUDGEMENT PRONOUNCED ON : 14.11.2022

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JUDGMENT

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The Securitisation Application No. 213/2022 is an application under sub-section (1) of Section 17 of The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Security Interest (Enforcement) Rules and the Original Application No.75/ 2021 application under sub-section (1) of section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 for the recovery of the dues in the sum of Rs. 1,28,94,487.95/- together with future interest on the amount outstanding at the contractual

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[APK] (SA No.213/2022 & OA No.75/2021) Page 3 of 14

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rate with monthly rests from 01^st August, 2020 till its repayment/ realization..

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The Securitization Application is filed by the Applicants to restore the possession of the possession of the property and subsequent actions taken by the respondent no.1 bank as per notice dated 23^rd April, 2022.

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The facts of the Securitisation Application are as under:

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(i) That, the applicant no.1 company is a Pvt. Ltd, company registered with Companies Act, and applicant no.2 & 3 are the directors of applicant no.1 doing the marketing and manufacturing activity of F.R.P. Doors and other materials of F.R.P. The applicant no.4 is the guarantor and mortgagor.

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(ii) The applicants submit that the applicants have availed financial assistance from the then State Bank of Hyderabad for the activity of the company in the year 2009 and subsequently it was reviewed, renewed time to time in the year 2011, 2013, 2017. In the year 2017 the working capital limit was extended to one Crore. The applicant No. 4 has given her Ground floor shop No.1, MCH No. 62/9,

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[APK] (SA No.213/2022 & OA No.75/2021) Page 4 of 14

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B, City Sy. No. 6398/H-3/1, 3, Chainsukh Road, Latur, Adm. 344 sq. ft. bounded as East: Subhash Chowk Road, West: Shop of Rajesh R. Bang, South: Vijaykumar R. Toshniwal, North: Corporation Road.

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(iii) The applicants submit that, after 2017, there was transactions in the account and the account was in good conditions, But the bank officials have not renewed the loan account and has declared the cash credit loan account as a NPA on 28^th May, 2019 and issued a notice under SARFAESI Act, on 03^rd June, 2019 for an amount of Rs.1,03,35,989/-.

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(iv) The applicants submit that, after receipt of notice, the applicant No. 1 approached to the bank and requested for renewal of the account and/ or to continue the loan transaction with an undertaking but the bank has not taken any action for renewal. The applicants further submit that the bank has suggested to open current account in the name of company and also permitted to do the transaction in that account. At the same time the bank has also promised that,

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[APK] (SA No.213/2022 & OA No.75/2021) Page 5 of 14

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their account will be renewed.

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(v) The applicants submit that, on 05^th August, 2019 and on 29^th August, 2019 the bank has issued a possession notice under section 13(4) of SARFAESI Act. The bank has violated the procedure prescribed under SARFAESI Act and Rules. The bank has also obtained revival letters from the applicants on 09^th March, 2020.

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(vi) The applicants submit that, on 22^nd February, 2021 the applicant No.1 has submitted a proposal for OTS for an amount Rs.69,00,000/- along with a cheque of Rs.7,00,000/- which has been accepted by the bank and inform that the balance amount of Rs.60,00,000/- was to be paid before 31^st March, 2021.

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(vii) The applicants submit that, during the Covid-19 period all the family members of the applicant Nos. 2 and 3 suffered from Covid-19 and were hospitalized. The applicant no.2 has lost his fatherin-law. Therefore, the applicant No.1 could not comply the offer of settlement within time period as

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[APK] (SA No.213/2022 & OA No.75/2021) Page 6 of 14

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stated in the letter dated 04^th March, 2021. Thereafter on 31^st May, 2021the applicants have again submitted an application for extension of time limit without considering the genuine reasons it was rejected by the bank vide letter dated 07^th June, 2021

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(viii) The applicants submit that, on 16^th July, 2021 the bank has submitted an application U/Sec 14 against the applicant Nos. 2 and 3 only and has claimed an amount of Rs.1,03,35,989/-. The applicants further submit that, on 18^th January, 2021 the defendant has once again issued. The bank has not obtained physical possession of the alleged secured asset, even then has issued a notice Under 8(6) of the Security Interest Enforcement Rules on 23^rd April, 2022 to the applicant nos. 1 to 3 and public E- auction scheduled on 30^th May, 2022. But no any personal notice has been served by the bank on the applicant No. 4 in respect of putting her property in auction sale.

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(ix) The applicants submit that, after issuance of demand notice dated 03^rd June, 2019 the applicant No.1 has

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[APK] (SA No.213/2022 & OA No.75/2021) Page 7 of 14

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deposited an amount of Rs. 15,17,779/- till 26^th October, 2020 and thereafter Rs.7,00,000/- with upfront amount with compromise letter dated 22^nd February, 2021. Today, the bank has shown the outstanding balance is Rs.81,03,578.29/-. The applicants further submit that, without obtaining the valuation report, the bank has shown the reserve price of the alleged secured asset of Rs. 92 lakhs. The value of the secured asset is more than Rs.2.5 Crore.

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(x) The applicants submit that, the applicant No. 4 is advanced age lady, she has no any other income except from this property and the applicant Nos. 1 to 3 are ready to settle the loan account as per the compromise settlement and lastly the applicants prayed for restoration of possession of the properties of the applicants.

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The respondent bank appeared on 3^rd October, 2022 and filed its say vide Exhibit-05 and prayed to dismiss the securitisation application.

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(i) The respondent bank submits that, the applicants

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[APK] (SA No.213/2022 & OA No.75/2021) Page 8 of 14

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have admitted the sanction of loan, enhancement of loan and execution of documents.

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(ii) The respondent bank submits that, the OTS given by the applicants have been accepted by the bank but the amount under OTS has not been deposited by the applicants in scheduled time.

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(iii) The respondent bank submits that, the property was put to sale on 30^th May, 2022 and a bid for an amount of Rs.1,16,00,000/- has been received.

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(iv) The respondent bank submits that, the bank has taken all actions and measures within the framework of the SARFAESI Act which is appreciated by the Hon'ble Tribunal and lastly prayed to reject the Securitisation Application with cost.

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The bank has filed Original Application no. 213/2022 for the recovery of the dues in the sum of Rs.1,28,94,487.95/which was presented on 04^th August, 2020. The facts of the Original Application are as under:

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(i) The bank submits that, the defendant No.1 was in need of a working capital facility to run its business effectively and efficiently so that on 30^th April, 2009

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[APK] (SA No.213/2022 & OA No.75/2021) Page 9 of 14

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the defendants requested to sanction a Cash Credit limit of Rs.50,00,000/-and offered to pledge Term Deposit Receipts. The defendant No.4 offered to guarantee the loan facility in her individual and personal capacity and also offered to create a security interest of the applicant bank over her property.

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(ii) The bank submits that the bank has then assessed the proposal and has sanctioned the Cash Credit facility of Rs.50,00,000/- vide Sanction Letter dated 28^th May, 2009. The defendant Nos.2 and 3, being the directors of the defendant No.1, have executed the required documents on 28^th May, 2009. The defendant No.4 has guaranteed the loan facility by executing a Deed of Guarantee by depositing the original sale deed No.1880 dated 24^th July, 1995 and other original documents.

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(iii) The bank submits that, in the year 2011 at request of defendants the bank has enhanced the Cash Credit facility from Rs.50,00,000/- to Rs75,00,000/- as per Letter of Arrangement dated 22^nd December, 2011

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[APK] (SA No.213/2022 & OA No.75/2021) Page 10 of 14

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and at very same day i.e. on 22^nd December, 2011 the defendants have executed the relevant security documents in favour of applicant bank.

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(iv) The bank further submits that, on 22^nd April, 2013, the defendants have again requested for enhancement of the Cash Credit facility from Rs.75,00,000/- to Rs.1,00,00,000/- and the bank has accepted to same vide letter of Arrangement dated 19^th August, 2013 and defendants have executed the required documents along with notice of intimation regarding the creation of mortgage by deposit of title deeds registered at No.141 on 19^th August, 2013 to avail the enhanced cash credit facility.

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(v) The bank submits that, on request of defendants, the bank has renewed the Cash Credit facility on 15^th March, 2017. After availing the loan facility, the defendants were not adhering to the financial discipline as such the loan account of the defendant No. 1 was classified as NPA on 28^th May, 2019 and the bank has issued a Demand notice under section 13(2) on 03^rd June, 2019.

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[APK] (SA No.213/2022 & OA No.75/2021) Page 11 of 14

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(vi) The bank submits that, on 09^th March, 2020 the defendants have acknowledged the liability to pay the outstanding in the loan account by executing a Revival Letter. The bank further submits that the defendants are jointly and severally liable to pay to the applicant an amount of Rs.1,26,95.193.51 together with future interest at the contractual rate from 01^st August, 2020 till its realization.

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(vii) The bank submits that, the defendant Nos.2 and 3 have pledged the Term Deposit Receipt No.549282 in favour of the applicant bank, which has been discharged by them and the proceeds thereof of Rs.5,11,759/- have been appropriated to the loan account on 27^th September, 2020.

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Heard the matter at length by all the parties. On 5^th November 2022 the Bank Authorised officer has submitted the Bank is ready and willing to close the matter. The same is recorded in the said orders. I have gone through the record and contents therein and observed as follows:

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(i) The bank has filed Original Application no. 75/2021

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[APK] (SA No.213/2022 & OA No.75/2021) Page 12 of 14

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for recovery of Rs.1,28,94,487.95/- along with interest w.e.f. 20^th August, 2018. In the mean time the bank also proceeded under Securitisation Act and the properties of the applicants were put to auction.

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(ii) During all these proceeding a settlement took place between the applicants and bank for an amount of Rs.69,00,000/-. The applicants have initially deposited an amount of Rs.7,00,000/- and the balance amount of Rs.62,00,000/- could not be deposited in the scheduled time as per the terms and conditions of the settlement.

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(iii) However, the applicants have deposited the balance amount of Rs.62,00,000/- along with delayed period interest of Rs. 2,50,000/- in the bank.

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(iv) In view of the orders passed by this Tribunal dated 05^th November, 2022 both the Original Application and Securitisation Application are to be disposed of with certain terms and conditions.

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In view of the above facts and circumstances and the observations noted herein above, I pass the following order:

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[APK] (SA No.213/2022 & OA No.75/2021) Page 13 of 14

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ORDER

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A. Securitisation Application no.213/2022 is disposed of as settled.

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B. Original Application No.75/2021 is hereby decreed however, since the entire amount under settlement has already been paid by the defendants. The only remains Rs.3,00,000/which is incurred as an expense for enforcing security interest and the amount of interest @ 6% p.a. simple for period of deposit till date to be paid to the bidders whose money is be paid at the earliest. Upon payment of this amount, the claim of the bank under OA shall stand satisfied.

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