Allowed

Canara Bank v. Subhash and Sons & Ors.

DRT24 Mar 2023OA/1355/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed the bank's application for recovery of Rs. 1,19,56,560/- loan dues. Instead of contractual rates, the Tribunal granted 5% simple interest from filing. It clarified heirs' liability is limited to the inherited estate.

What did the court decide?

Declaration of liability to pay Rs. 1,19,56,560/- with 5% simple interest from 22.07.2022; direction that heirs' liability is limited to inherited estate; liberty to recover via sale of mortgaged or p

Canara Bank versus Subhash and Sons & Ors. — Contract and Commercial Disputes | DRT (2023)

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

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ORIGINAL APPLICATION NO.1355/2022 DATE OF INSTITUTION: 22.07.2022

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DATE OF DECISION: 24^th OF MARCH, 2023

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Canara Bank (erstwhile Syndicate bank) , a body corporate constituted and functioning under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, having its Head Office at 112, J.C. Road, Bangalore and Branches all over India and one of its Branches amongst others at SME Branch, Sun Towers, Mehrauli Road, Sukhrali, Gurugram, Haryana, through its constituted Attorney, Ms Suparna Sarkar

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…..Applicant Bank

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Versus

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1. Sh. Subhash and Sons, Office at Commercial Scheme No. 12, Ground Floor, Shiv Complex, Basai Road Complex, Gurugram, through its Partners:

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2^nd Address: Commercial Scheme No. 12, Second Floor, Shiva Complex, Basai Road Complex, Gurugram through its Partners

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2. Sh. Subhash Chander Verma(deceased), Partner through his legal heirs:

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3. Sh. Vineet Verma, Partner

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4. Sh. Vivek Verma, Partner

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5. Ms Usha Verma, Partner

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All residents of:

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1^st Address : Plot No. 809-P, Sector-4, Gurgaon, Haryana

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2^nd Address : House No. 918, Sector-4, Gurgaon, Haryana

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6. Sh. Sanjeev Dhingra R/o A-40/21, DLF, Phase-I, Gurugaon, Haryana

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…..Defendants

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Argued by: Ms Kanchan Sehgal counsel for the applicant bank Defendants ex parte vide order dated 02.01.2023

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FINAL ORDER

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Present Original Application was instituted by the applicant bank

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under Section 19(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as ‘the Act’ for brevity), against the defendants for recovery of Rs.1,19,56,560/-

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(Rupees One Crore Nineteen lacs Fifty Six Thousand Five Hundred

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OA1355/2022 CANARA BANK V/S SUBHASH AND SONS 2

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Sixty only) . It has been filed through, Ms Suparna Sarkar, Officer of the applicant bank, stated to be competent to institute the Original Application vide Gazette Notification dated 04.03.2020, Annexure-A1 (copy) and authority letter dated 13.07.2022, Annexure-A2 (copy).

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The brief facts as per Original Application are that defendants had approached the applicant bank for grant of mortgage loan of Rs. 77 lacs vide loan application dated 10.01.2015, Annexures-A3 (copy).

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The applicant bank sanctioned the above said loan facility to the defendants as per the terms and conditions which were duly accepted by the defendants.

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In order to secure the aforementioned credit facility, defendants executed various loan and security documents, i.e. general agreement dated 28.01.2018, Annexure-A4 (copy) and guarantee agreements dated 28.01.2015, Annexures-A5 to A9 (copy).

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The aforesaid loan was further secured by creation of equitable mortgage by defendant No. 5 in respect of commercial office space situated at second floor, Plot No.1, commercial scheme No. 12, situated in Shiva Market, Abadi Basai Road, Gurgaon, within Municipal limit of Gurgaon, fully detailed in para No. 5.5 of the Original Application.

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The documents relating to the mortgage are as under:

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i. Document dated 28.01.2015 regarding creation of mortgage/deposit of title deeds, Annexure-A11 (copy).

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ii. Letter dated 20.01.2015 regarding handing over title deeds of properties, Annexure-A10 (copy).

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It is further the case of the applicant bank that the loan facility was duly availed of by the defendants but they failed to maintain the financial discipline of the applicant bank and resultantly, the loan account became

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OA1355/2022 CANARA BANK V/S SUBHASH AND SONS 3

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irregular and it was declared NPA on 31.10.2017. The defendants executed acknowledgement of debt letters dated 10.05.2018 and 15.01.2020, Annexure-A14 (copy). The applicant bank recalled the entire outstanding amount vide legal notice dated 28.10.2016, Annexure-A12 (copy) and notice dated 28.10.2021 under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, Annexure-A13 (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 the loan account, a sum of Rs.1,19,56,560/- (Rupees One Crore Nineteen lacs Fifty Six Thousand Five Hundred Sixty only) is recoverable against the defendants as per statement of account duly certified under Bankers’ Books Evidence Act, Annexure-A17 (copy).

¶36

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 none appeared on behalf of the defendants despite service, thus, the defendants were proceeded against ex parte vide order dated 02.01.2023 .

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In support of contents of the OA, affidavit of evidence of Ms Suparna Sarkar, Officer 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.

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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 A17, it is clear that the defendants had

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OA1355/2022 CANARA BANK V/S SUBHASH AND SONS 4

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approached the applicant bank for availing of the loan facility which was granted to them after they 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. Sh. Subhash Chander Verma had died, leaving behind defendant Nos. 3 to 5 as his legal heirs who have been impleaded as defendants statedly being beneficiaries of the property and estate of the deceased. From the documentary evidence brought on record, it is proved that applicant bank is entitled to recover a sum of Rs.1,19,56,560/- (Rupees One Crore Nineteen lacs Fifty Six Thousand Five Hundred Sixty only) from the defendants.

¶43

In so far as pendent lite and future interest is concerned, the applicant bank in relief sought has claimed interest @11.55% per annum plus @2% per annum penal interest with monthly rests. In general agreement dated 28.01.2018, Annexure-A4 (copy), the rate of interest has been mentioned @13% per annum.

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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, purpose of loan, i.e. business, quantum of loan, prevalent market rates of interest which have gone drastically downhill in yesteryears, death of borrower and guarantor, defendant No.5 being a lady, while exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant uniform simple interest @5% per annum from the date of filing of the OA till realisation of the amount ordered vide this final order. It is ordered accordingly.

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OA1355/2022 CANARA BANK V/S SUBHASH AND SONS 5

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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.1,19,56,560/- (Rupees One Crore Nineteen lacs Fifty Six Thousand Five Hundred Sixty only) with current and future simple interest @5% per annum , w.e.f. 22.07.2022 , till the date of realisation of the amount. The liability of the defendants shall be joint as well as several. 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, applicant bank shall be at liberty to recover the same by attachment and sale of personal assets/property of the defendants. The applicant bank is at liberty to enforce the claim through due process of law. However, it is clarified that there should not be any ambiguity that the liability of the defendants by virtue of their being the legal heirs of the deceased guarantor and borrower shall remain confined only to estate of the deceased guarantor and borrower if it is inherited by them and not beyond that or otherwise. The recovery proceedings shall proceed only after the Recovery Officer is fully satisfied on the aspect of the estate being inherited by the Legal Representatives/Heirs and the liability being incurred accordingly .

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Issue Recovery Certificate accordingly.

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Parties to appear before Recovery Officer concerned on 03.05.2023. 14. Copy of this order be sent to the applicant bank and the defendants through registered/speed post. This order be also immediately uploaded on the official website of this Tribunal.

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Announced in the open Tribunal (M.M. Dhonchak) Presiding Officer

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DRT-2, Chandigarh

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OA1355/2022 CANARA BANK V/S SUBHASH AND SONS

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Canara Bank v. Subhash and Sons & Ors.

Case brief

What is this about?

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Canara Bank v. Subhash and Sons & Ors.

Case brief

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