Allowed

Union Bank of India v. M/S Chiraj Sofa Manufacturing

DRT13 Dec 2023OA/1297/2022

Case brief

AI extract

What is this about?

Debts Recovery Tribunal allowed a recovery application filed by Union Bank of India against a manufacturing firm and its proprietor for outstanding dues of approximately 29.45 lakh rupees with simple interest at 10% per annum from the filing date.

What did the court decide?

Recovery Certificate for Rs.29,45,214.56/- with 10% p.a. simple interest from 03.06.2022. Liberty to attach/sale mortgaged property and personal assets.

Union Bank of India versus M/S Chiraj Sofa Manufacturing — Company and Corporate | DRT (2023)

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

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ORIGINAL APPLICATION NO. 1297/2022

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DATE OF INSTITUTION: 03.06.2022

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DATE OF DECISION: 13^th DAY OF DECEMBER, 2023

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Union Bank of India , a body corporate, constituted under the Banking Company (Acquisition and Transfer of Undertakings) Act, 1970, having its Head Office at 239, Vidhan Sabha Marg, Nariman Point, Mumbai, having its Branches all over India amongst other places at Subhash Mandi, Kurukshetra, Haryana, through Sh. Sunil Kumar its Constituted Attorney and Principal Officer

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…..Applicant

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Versus

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M/s Chiraj Sofa Manufacturing, a Proprietorship firm with principal place of business at Near Brahma Chowk, Amin Road, Kurukshetra, Haryana-136118, through its Proprietor, Sh. Sant Singh s/o Sh. Rameshwar Dass

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Sh. Sant Singh s/o Sh. Rameshwar Dass r/o Village Kheri-Ram Nagar, Near Brahma Chowk, Amin Road, Thanesar, Kurukshetra, Haryana

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....Defendants

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Argued by: Sh. Anup Prajapati proxy counsel for Sh. Pancham Sharma counsel for the applicant bank Defendants ex parte vide order dated 10.08.2023

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FINAL ORDER

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Present Original Application was instituted by the applicant bank under Section 19(1) of the Recovery of Debts and

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OA/1297/2022 UNION BANK OF INDIA VS M/S CHRAG SOFA MANUFACTURING AND ANOTHER 2

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Bankruptcy Act, 1993 (hereinafter referred to as ‘the Act’ for brevity), a gainst the defendants for recovery of Rs.29,45,214.56/- (Rupees Twenty Nine Lac Forty Five Thousand Two Hundred Fourteen and Fifty Six Paisa Only) . It has been filed through Sh. Sunil Kumar, Constituted Attorney and Principal Officer of the applicant bank stated to be competent to institute the Original Application vide power of attorney, Annexure-A1 (copy).

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The brief facts of the case of the applicant as per Original Application are that defendant No. 1 through defendant No. 2 had approached the applicant bank for grant of cash credit facility of Rs. 10 lac , further approached for enhancement of cash credit facility to Rs. 22 lac and again approached for CECL term loan facility of Rs. 2.20 lac and again approached for UGECL facility of Rs. 4.39 lac vide loan application dated 29.07.2019, Annexure-A2 (copy). Defendant No. 2 stood as a guarantor for repayment of the loan.

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The applicant bank sanctioned above mentioned credit facilities to the defendants vide sanction letters dated 04.05.2020, 01.06.2020 and 06.02.2021, Annexures-A3, A4 and A5 (copy) as per 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. demand promissory notes dated 29.07.2019, 04.05.2020 and 01.06.2020, Annexures-A6, A13 and A18 (copy), letters of

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OA/1297/2022 UNION BANK OF INDIA VS M/S CHRAG SOFA MANUFACTURING AND ANOTHER 3

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continuity dated 29.07.2019, 04.05.2020 and 01.06.2020, Annexures-A7, A14 and A19 (copy), hypothecation agreement dated 29.07.2019 of goods and book debts, Annexure-A8 (copy), letters of undertaking dated 29.07.2019 and 04.05.2020 from the borrower regarding consent of disclosure of information to CIBIL, Annexures-A9 and A17 (copy), interest agreements dated 29.07.2019, 04.05.2020 and 01.06.2020, Annexures-A10, A16 and A21 (copy), letter of confirmation dated 29.07.2019, Annexure-A11 (copy), letter dated 04.05.2020 regarding terms and conditions, Annexure-A12 (copy), general term loan agreements dated 04.05.2020 and 01.06.2020, Annexures-A15 and A20 (copy) and general form of guarantee dated 29.07.2019, AnnexureA22 (copy).

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The aforesaid loans were further secured by creation of mortgage by defendant No. 1 in respect of industrial unit measuring 388.99 Square Yard situated in the revenue estate of Kheri-Ram Nagar, Near Brahma Chowk, Amin Road, Thanesar, Kurukshetra, Haryana, fully detailed in para No. 5(5.9) of the Original Application. Registered Mortgage deed No. 5607/1 dated 26.09.2018 is Annexure-A23 (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 leading to the loan accounts becoming irregular and those being classified as NPA. The applicant bank recalled entire outstanding amount vide legal notice dated 15.05.2022, Annexure-A24 (copy), but to no avail.

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OA/1297/2022 UNION BANK OF INDIA VS M/S CHRAG SOFA MANUFACTURING AND ANOTHER 4

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It is further the case of the applicant bank that after adjusting debit and credit entries in the loan accounts, a sum of Rs.29,45,214.56/- (Rupees Twenty Nine Lac Forty Five Thousand Two Hundred Fourteen and Fifty Six Paisa Only) , is recoverable against the defendants as per statements of accounts, duly certified under Bankers’ Books Evidence Act, 1891, Annexures-A25, A26 and A27 (colly) (copy).

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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

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the defendants, but since none appeared on behalf of the defendants, thus, the defendants were proceeded against ex parte vide order dated 10.08.2023 .

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In support of contents of the OA, affidavit of evidence of Sh. Sunil Kumar, Branch Manager of the applicant bank was filed.

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This Tribunal has heard ex-parte arguments advanced by the learned proxy counsel and gone through the record carefully.

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It was argued by the learned proxy counsel that in view of unrebutted documentary evidence brought on record, the applicant bank had proved its case against the defendants for recovery of the amount sought. From perusal of Annexures-A1 to A27 , it is clear that the defendants had approached the applicant bank for availing of the loan facilities which were granted to them. It is further clear that the defendants 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

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OA/1297/2022 UNION BANK OF INDIA VS M/S CHRAG SOFA MANUFACTURING AND ANOTHER 5

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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.29,45,214.56/- (Rupees

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Twenty Nine Lac Forty Five Thousand Two Hundred Fourteen and Fifty Six Paisa 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 not claimed any particular rate of interest. In sanction letters dated 04.05.2020, 01.06.2020 and 06.02.2021, Annexures-A3, A4 and A5 (copy), the rate of interest has been mentioned @EBLR+1.75% per annum in cash credit facility, @7.50% per annum in UGECL facility and @8% per annum in CEGL facility, respectively.

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This Tribunal is of the considered opinion that sometimes in appropriate cases the prerogatives of mercy and magnanimity are the brightest jewels 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 property, purpose of loan, i.e. business, quantum of loan, prevalent market rates of interest which have gone drastically downhill in yesteryears, 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 holding that the defendants are liable to pay to the applicant bank a sum of Rs.29,45,214.56/- (Rupees Twenty Nine Lac Forty Five Thousand Two Hundred Fourteen and Fifty Six Paisa Only)

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OA/1297/2022 UNION BANK OF INDIA VS M/S CHRAG SOFA MANUFACTURING AND ANOTHER 6

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with current and future simple interest @10% per annum w.e.f. 03.06.2022 , till the date of realisation of the amount. Accordingly, the applicant bank shall be at liberty to recover aforesaid amount from the sale of mortgaged/hypothecated property 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 the defendants. However, 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 05.02.2024.

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

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

Union Bank of India v. M/S Chiraj Sofa Manufacturing

Case brief

What is this about?

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Union Bank of India v. M/S Chiraj Sofa Manufacturing

Case brief

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