Allowed

Canara Bank v. M/s. Extreme Motors

DRT5 Jun 2023OA/127/2022

Case brief

AI extract

What is this about?

The Tribunal allowed an application under Section 19 of the RDBFI Act for a Recovery Certificate. The court held that the bank's documents proved the defendants' liability for outstanding loans. The application was admitted as it was within the limitation period, and the Recovery Certificate was issued against the respondents jointly and severally.

What did the court decide?

Issued a Recovery Certificate for Rs. 23,01,484.09 with future interest at 9.15% p.a. against the defendants jointly and severally.

Canara Bank versus M/s. Extreme Motors — Contract and Commercial Disputes | DRT (2023)

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O.A t27r2o2zDRT€uwahrri

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IN THE DEBTS RECOVERY TRIBUNAL, GUWAHATI

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(North Eastern Region)

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(Tnbunal of Assam, Nagatand, Meghataya, Manipur, M-izor;, Arunachal pradesh & Tripura) Before Shri Shiv Sharan Dubev. prssidino Officer

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O.A. No. 127t2022

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ln the mattor of -

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Canara Bank, Chaygaon SME Branch, P.O. Chaygaon in the District of Kamrup, Assam, Pin-781124

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.Applicant

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V3.

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M/s Extrsmo irotonB Opposite Anukul Mandir, Ne€r Maa-Bagta Hondo, NH 37 Chaygaon, P.O. &^p.S. Chaygaon, Kamrup, Asiim, Pin- 781124.

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Enam Hussain Son of Mazid Ali

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Vi ag-e Chaudhurykhat, p.O. Chaudhurykhat 8.O., P.S. Ciaygaon, District Kamrup, Assa;, Pin- 781141.

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Defendants

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Presonco of the Coun3ol :

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For the Applicant : Ms. Aparna Dev, Sri D.J Nath. Advocates

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For the Defendants : None (Ex_parte)

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Dated :05/06/2023

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JUOGMENT

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This is an application under section 19 of the Recovery of Debts Due to Banks and Financial lnstitutions Act,^.1993 filed by the Canara Bank, Chaygaon SME Branch, P.O. Chaygaon in the District of Kamrup, Assam, pin_78.1124, with a prayer to issue Recovery Certificate for the sum of Rs. 23,0,1,484.09 (Rupoes Twonty Three Lakhs One Thousand Four Hundred Eighty Four and paisa Nine) only as on 15.03.2022 against the defendants joinfly and severally with pendentelite and future interest at contractuar rate of 9.15% per annum at monthry rests tirr rearization with cost, charges etc.

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O.a 127r2022loRT€uyeh.ti

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A few facts giving rise lo the present application are as under.

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The defendant No.1 is a proprietorship unii running under the name and style of M/s. Extreme Motors and was dealing ln business of selling of^yamaha 2 wheeler bikes. The defendant no.2 is the proprietor of defendant no.1. On 13-012020 the defendant no.2 applied to the applicant bank for open cash credit facility of Rs.20,00,000.00 for business purpose. The applicant bank sanctioned the cash credit facility of Rs.20,00,000.00 on 29-01-2020 in the name of defendant no.j on the terms and conditions as embodied in the various documents executed by the defendants in favor of the applicant bank. The applicant bank charged interest '10.30% per annum compounded monthly as and when due and in case of default the defendants were liable to pay overdue interest @ 2yo. An account was open in the name of the defendant no.i bearing OCC Loan Account No. 425526i000026. The cash credit facility was running limit. ln respect of the cash credit facilty the defendant no.2 was to operate the account regularly and liquidate the loan amount ln respect of the cash credit facility ihe defendant no.2 hypoihecated stock of Yamaha 2 wheeler bikes in favor of the applicant bank.

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ln respect of the cash credit facilily the defendant no.2 executed pronole valued of Rs.20,00,000.00, cash credit agreement, Request for overdraft facilities and letter of undertaking re:roans /Advances a[ dated 29- o1-zo2o infavor of lhe applicant bank.

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On 15-05-2020 the defendant no.2 applied to the appticant bank requesting for availing finance under canara credit support to covid-19 Affected customers and the defendant no.2 applied for loan of RS.2,OO,O0O.OO_ On request of the defendant no.2 the appricant bank sanctioned the roan in lhe name of defendant no.1 under the working capitar Demand Loan accounr no.4255753000016 0n 15-05-2020 on the terms and conditions as embodied in the various documenls executed by the defendant in favor of the applicant bank The applicant Bank charged lnterest @ 8.05% per annum compounded monthly as and when due and in case of default the defendants were liable to pay overdue lnterest @ 2%. The defendants were to repay the loan in 1B (eighteen)) monthty installmenb each of

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Rs. 12,434.00 and the last installment of Rs.1i,187.OO and the first installment commenced frcm 15-1'l -2020. ln respecl of the said loan the defendant no.2. hypothecated: stock of Yamaha 2 wheeler bikes in favor of the applicant bank. Oefendant no.2 executed agreemenl cum deed of hypothecation, undertaking letter and letter of undertaking re:loans /Advances a dated 1S-OS-2020.

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Ouring Covid pandemic in terms of Government of lndia,s Emergency Credit Line Guarantee scheme the applicant bank offered the defendants a Guaranteed Emergency Credit line (GECL) by way of working capitat(Term Loan) of Rs.2,00,000.00 an 06-06-2020. The defendant no.2 accepted the working capital (Term Loan) of Rs.2,00,000.00 by executing tetter dated 06-06- 2020. Accordingly the applicant bank sanctioned the cuaranteed Emergency Credit line (GECL) by way of working capital(Term Loan) of Rs.2,00,000.00 on 09-06-2020 in the name of defendant no.1. The defendants were to repay the loan in 36 (thirty six) monthly installments each of Rs.6,221.00 and the last installment of RS,6,2SO.OO and the tirsi lnstallment commenced from 09-06- 2021. An account was opened in the name of defendant no.1 bearing loan account no. 42S575SOOOOO7. The defendant no.2 hypothecated Yamaha 2 wheeler bikes as security to the applicant bank which is mentioned in schedule of the original application.

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ln consideration of the loan sanctioned of RS.2,00,0OO.OO in lhe name of defendant no.1, the defendant no.2 executed undertaking letter from borrower, Agreement cum deed of hypothecation, Letter of Undertaking re: Loans/advances all dated 09-06-2020, vehicle invoice and particulars of vehicles/machinery/EquipmenUlivestock etc. hypothecated both dated 18-06- 2O2O in favor of the applicant bank.

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Another loan of Rs.97,207.00 was sanctioned in the name of defendant no..l under the Covid FITL(CFITL) account no. 4255710000016 on 0.t-09-2020. The tenure of repayment of the loan was 7 months. The applicant bank charged interest @^{9.15olo perannum compounded monthly.}

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On^'17-03-2021 the defendant no.2 applied for renewat of the open cash credit limit of Rs.20,00,000.00. On request of the defendant no.2 the applicant

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O.A. 1272022lDRTCMhali

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bank renewed the cash credit facility of Rs.20,00,000.00 in lhe name of defendant no.1 on 30-03-2021. The applicant bank charged interesl @9.15% per annum compounded monthly. The defendant executed letter of renewal, dated 30-03-2021 in favor of the applicant bank.

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The defendant no.2 applied to the applicant bank for another loan of Rs.1,90,000.00 on 29-06-2021 for business purpose. After scrutinizing the papers the applicant bank sanctioned the loan of Rs..t,9O,OOO.OO on iS-07-2021 in the name of defendant no.1 on the terms and conditions as embodied in lhe various documents executed by the defendant no.2 in favor of the applicant bank The applicant Bank charged interest @ 7.50^0/o per annum compounded monthly as and when due and in case of default the defendants were liable to pay overdue interest @2o/o.^{An accountwas open in} the name of the defendant bearing lO% Additional Assistance Account No. 425571700001. The defendants were to repay the loan in 36 (thirty six) monthly installments each of RS.6,4BB.OO and the last installment of Rs.5,302.00. The defendant hypothecated stock of yamaha 2 wheeler bikes in favor of the applicant bank.

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ln respect of lhe loan sanctioned the defendant executed the document namely the agreement cum deed of Hypothecation on 1S_Ol_2021 in favor of the applicant bank.

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Another loan of Rs.46,41 1.00 was sanctioned in the name of defendant no.1 under the RFITL 2.0-'l account no. 4255757000001 on 1S-O7_202,1. The tenure of repayment of the loan was 24 months. The applicant bank charged lnterest lO..l5% Per^{annum compounded monthly.}

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The defendants have availed the cash credit facility but were irregular in operating the loan account and were irregular in repaying the dues lo the applicant bank. The defendants also failed to repay the loan in other term loan accounts. The defendants failed lo operate/regularize the cash credit loan account and also failed to repay the loans of all other loan accounts. As the defendants failed to repay the remaining instrallments in the loan account, the said account became NpA on 14-11-2021. fhe defendants no.1 and 2 are jointly and severally tiabteto pay

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CI.rcl"a-^4- &'J3 o s-]orlB " ( Presidino Officer I ORT, Guwahati

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O.A 1272022lDRT4uvahali

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Rs.18.15,409.00 in alc no 4255261000026 as on^{o1-o3-2o22, Rs.41,712.22.00in} alc no.4255753000016 as on 15-03-2022, Rs.2,10,354.00 in a/c no.4255755000007 as on 15-03-2022, Rs.20,288.77 in a/c no. 4255710000016 as on 28-02-2022, Rs.1,96,105.10 in a/c no. 4255717000001 as on^{22-02-2022 and} Rs. 17,6'15.00 in alc no. 4255757000001 as on 15-03-2022 with interest and other charges to the applicant bank, which they^{have failed and /or neglectedto pay in} spite of repeated reminders. requests and approaches from applicant^{bank. All} total the defendants no.1 and 2 are iointly^{and severally liable to paytheliabilityof} Rs.23,01,434,09 (Rupees twenty three lakhs^{one thousand fourhundredeighty} four and nine^paisa) only to the^{applicantbank.}

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The applicant bank thus be@me constrained to^{file the presentOriginal} Application for the recovery of Rs. 23,01,/t84.09^{(Rupees Twenty ThreeLakhs One} Thousand Four Hundred Eighty^{Fourand paisa Nine) only as on 15.03.2022along} with interest and cost of the application.

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After filing of the OA the^{Tribunal issuednotices upon the defendants} through registered^{post and the applicant bankfiled service rcpotl on 24.05.2022} and brought on record^{the postal receipts along with track consignmentreport which} shows that lhe notices^{have not been served upon the defendantsThereafter the} Tribunal ordered^{paper publicationof notice upon the defendantsand the applicant} bank issued notice to the^{defendantson 18.06.2022through Paper Publicationin two} newspapers namely 'Ihe^{Timesof lndia " and "DainikAssam".Even after issuance} of notice through^{paper publicationuponthe defendants also therewasno} representation on^{behalf of the defendants either by the counsel or the person and} hence the defendants^{were set ex-parte on'11.08.2022 and the matter wasposted} for ex-parte hearing on^{behalfof the applicant bank.}

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Supporting the claim of^{the applicant bank Sri Sajan Kumar Mishra, Managerof} the applicant^{bank has filed evidence on afiidavitcoupledwith the security} documents marked^{as Exhibit P, AW-1/1to AW-U47, supporting the claim of the} applicant bank. Jl";r]r"a,U.,L

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Jl";r]r"a,U.,L Prssidins otrc€rl f S-lca)%^'l - DRT. GutYahati^'

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O A 127l2o2zoRl-Guwahati

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Heard the learned counsel for the applicant bank who^prayed for issuance of Recovery Certificate against the defendants as per^pleadings made in the Application, supported by evidence on af{idavit of their witness who affirmed on oath the execution of the security and other documents by the defendants and also execution oftheir own documents relied upon, which have been marked exhibits.

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Considering the facts and circumstances of the case, I am of the considered view that the documents filed by the applicant bank are supporting the claim of the applicant bank and establishing the liability of the defendants. lt is^proved that the defendants are liable to^pay to the applicant bank the claim made in the Original Application. The loan was obtained and documents have been execuled on 29.01.2020, 15.05.2020, 09.06.2020, 30.03.2021, 15.O7.2021, the account became NPA on 14.11.2021 and the OA has been filed on 3O.O3.2O22. Hence, the OA is liled well within the^period of limitation and this Tribunal having a iurisdiction to adjudicate the Original Application.

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Considering the unchallenged/unrebutted version of by Sri Sajan Kumar Mishra, the applicant's witness and all the documents marked as exhibits, including duly cenitied copy of the statement of account along with interest calculation sheet maintained by the applicant Bank in it's regular course of business, I hold that the applicant is entitled to^get the Recovery Certificate as^prayed for.

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ln the result, the^present Original Application No. 127 ol 2022 is allowed with cost as under :-

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The defendants No. 1 & 2 are^jointly and severally liable to^pay to the applicant bank a sum of Rs. 23,01,484.09^(Rupees Twonty Three Lakhs One Thousand Four Hundred Eighty Four and^paisa Nine) only with pendentelite and future interest @9.15% p.a. with monthly rests from 16.03.2022 till the date of tull^{paymenurealization} and also cost of^the application.

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ii) The charge of the certilicated amount be^{kept alive on hypothecated properties,}

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as described in Schedule of^{the oA tilt the amount is realizedin full.}

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\k-/ el,,avg^ hJ^ o-fl0-t Pridim Oficol I l[ ORT, Guwehali

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oJd 1272022,/DRT-cuwahati

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iiD The applicant bank is entitled to^proceed against the secured items towards recovery of the debts.

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iv) The applicant bank is also entitled to^proceed against the^personal assets and properties of the defendants towards recovery of the dues.

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v) The applicant bank is entitled to the costs of the O.A. which includes the advocate fees of the applicant bank. Applicant is directed to file the cost memo within 2 weeks from today.

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vi) lssue Recovery Certificate accordingly for a sum Rs. 23,01,184.09 (Rupees Twenty Three Lakhs One Thousand Four Hundred Eighty Four and paisa Nine) only in favour of the applicant bank against the defendants No. I & 2.

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viD Communicate copy of this orderto the concemed pa(ies.

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This order is dictated and corrected by the undersigned.

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Judgment dated Sth June'2023, signed and pronounced in the Tribunal today

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under my signature.

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Copy of the JudgmenuFinal Order be uploaded in the Tribunal's Website and file be mnsigned to Record Room.

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1L,1r4o^+"^A,.j*{. os|ifel3 tl (Shiv Sharan Dubey)r U Presiding Officer DRT, Guwahati.

Canara Bank v. M/s. Extreme Motors

Case brief

What is this about?

What did the court decide?

Canara Bank v. M/s. Extreme Motors

Case brief

What is this about?

What did the court decide?

What the court decided

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