Allowed

Canara Bank v. M/S Balaji Construction

DRT24 Mar 2023OA/1364/2022

Case brief

AI extract

What is this about?

DRT allowed an original application filed by Canara Bank for recovery of Rs. 2.41 crore along with interest against three respondents. The Tribunal observed that the respondents failed to repay the loan despite sanctions and notices. Considering pandemic impact and prevailing rates, the interest rate was adjusted to 9% per annum. A recovery certificate was issued.

What did the court decide?

Recovery certificate issued directing respondents to pay Rs. 2,41,01,572.84 along with 9% p.a. simple interest; liberty granted to enforce attachment of personal assets.

Canara Bank versus M/S Balaji Construction — Banking and Recovery | DRT (2023)

¶1

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

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ORIGINAL APPLICATION NO.1364/2022

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DATE OF INSTITUTION: 05.08.2022

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DATE OF DECISION: 24^th OF MARCH, 2023

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Canara 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 other places at SME Branch, Sukhrali, Gurgaon, Haryana, through its constituted Attorney, Ms Suparna Sarkar

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…..Applicant Bank

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Versus

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1. M/s Balaji Construction Company, having its Office/premises VPO Dhankot, Kherki Road, Gurgaon, through its Sole Proprietor, Sh. Om Prakash

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2. Sh. Om Prakash S/o Sh. Satbir Singh R/o House No. 731, Plot No. 6C, Kherki Road, Dhankot, Gurgaon, Proprietor of M/s Balaji Construction Company

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2^nd Address: Village Chhara Tehsil and District Jhajjar, Haryana

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3. Smt. Raj Bala W/o Sh. OM Parkash R/o House No. 1878/4, Chharra, Bahadurgarh, Jhajjar, 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 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.2,41,01,572.84/(Rupees Two Crores Forty One lacs One Thousand Five Hundred Seventy Two and Eighty Four Paise only) . It has been filed through, Ms Suparna Sarkar, constituted Attorney of the applicant bank, stated to be competent to institute the Original Application vide gazette Notification dated

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OA 1364/2022 CANARA BANK V/S M/S BALAJI CONSTRUCTION COMPANY AND OTHERS 2

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04.03.2020 and authority letter dated 13.07.2022, Annexures-A1 and A2 (copy).

¶18

The brief facts as per Original Application are that defendant No. 1 through defendant No.2 had approached the applicant bank for grant of Working Capital Limit of Rs. 1.95 lacs, Guaranteed emergency credit line of Rs. 31 lacs, Covid funded interest term loan of Rs. 8.26 lacs/and FITL of Rs. 5.76 lacs vide loan applications dated 25.10.2019 and 16.06.2020, Annexures-A3 and A15 (copy). Defendant No.3 stood as a guarantor.

¶19

The applicant bank sanctioned the above said loan facilities to the defendants vide sanction memorandums dated 14.11.2019 and 28.06.2021, Annexures-A4 and A27 (copy) and sanction letters dated 20.07.2020, 26.06.2020 and 29.06.2020, Annexures-A4, A16, A25 and A26 (copy) as per the terms and conditions which were duly accepted by the defendants.

¶20

In order to secure the aforementioned credit facilities, defendants executed various loan and security documents, i.e. composite hypothecation agreement dated 21.11.2019, Annexure-A5 (copy), charge and hypothecation of book debts agreement dated 21.11.2019, Annexure-A6 (copy), undertakings dated 21.11.2019 regarding sanctioned credit facilities, Annexures-A7 and A8 (copy), undertaking dated 21.11.2019 regarding terms and conditions, Annexure-A9 (copy), letter dated 21.11.2019 regarding sanctioned of credit facilities, Annexure-A10 (copy), letter of undertaking dated 21.11.2019 regarding compliance of post release terms and conditions, Annexure-A11 (copy), Power of Attorney dated 21.11.2019 for collection of bills, book debts and other receivables, Annexure-A12 (copy), guarantee agreement dated 21.11.2019, Annexure-A13 (copy), pre-approved offer letter dated 20.07.2020 of GECL, Annexure-A17 (copy), pre-approved sanction letter dated 20.07.2020 of GECL, Annexure-A18

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OA 1364/2022 CANARA BANK V/S M/S BALAJI CONSTRUCTION COMPANY AND OTHERS 3

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(copy), request-cum-undertaking letter dated 20.07.2020 for disbursement of loan, Annexure-A19 (copy), agreement-cum-deed of hypothecation dated 20.07.2020, Annexure-A20 (copy), letter dated 20.07.2020 regarding demand promissory note, Annexure-A21 (copy), supplementary agreement dated 30.07.2020, Annexure-A22 (copy), draft letter dated 20.07.2020 of LEDTD to be used where additional limit is granted on the very security, Annexure-A23 (copy), request letter dated 29.05.2020 for COVID 19 fund for CC account, Annexure-A24 (copy), debtor credit agreement dated 28.06.2021, Annexure-A28 (copy), debt restructuring agreement dated 28.06.2021, Annexure-A29 (copy), link letter dated 20.07.2020 obtained from the borrower whose limit is to be renewed, Annexure-A30 (copy) and draft letters dated 28.06.2021, Annexures-A31 and A32 (copy).

¶23

The aforesaid loans were further secured by creation of equitable mortgage by defendant No. 3 in respect of non-agricultural (Gairmumkin) immovable property, factory House No. 731 measuring 661 Square Yards having covered area 2500 Square Feet situated in the revenue estate of Dhankot, Sub-Tehsil Kadipur, District Gurugram, fully detailed in para No. 5.7 of the Original Application. Document dated 21.11.2019 regarding confirmation of deposit of title deeds is Annexure-A14 (copy).

¶24

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 NPA because it was irregular. The applicant bank recalled the entire outstanding amount vide notice dated 29.04.2022 under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, Act, 2002, Annexure-A33 (copy) and postal receipts, Annexure-A34 (copy), but to no avail.

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OA 1364/2022 CANARA BANK V/S M/S BALAJI CONSTRUCTION COMPANY AND OTHERS 4

¶26

It is further the case of the applicant bank that after adjusting debit and credit entries in the loan accounts, a sum of Rs.2,41,01,572.84/-

¶27

(Rupees Two Crores Forty One lacs One Thousand Five Hundred Seventy Two and Eighty Four Paise only) is recoverable against the defendants as per statements of accounts duly certified under Bankers’ Books Evidence Act, Annexures-A35 to A38 (copy).

¶28

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

¶29

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 .

¶30

In support of contents of the OA, affidavit of evidence of Ms Suparna Sarkar, constituted Attorney of the applicant bank was filed.

¶31

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

¶32

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 A38, it is clear that the defendants had approached the applicant bank for availing of the loan facilities which were 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. From the documentary evidence brought on record, it is proved that applicant bank is entitled to recover a sum of Rs.2,41,01,572.84/- (Rupees Two Crores Forty One lacs One

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OA 1364/2022 CANARA BANK V/S M/S BALAJI CONSTRUCTION COMPANY AND OTHERS 5

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Thousand Five Hundred Seventy Two and Eighty Four Paise only)

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from the defendants.

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In so far as pendent lite and future interest is concerned, the applicant bank in relief sought has claimed interest @11.25% per annum plus @2% per annum in Working capital limit, @8.25% per annum plus @2% per annum in GECL, @11.25% per annum plus @2% per annum in CFITL and @8.40% per annum plus @2% per annum in FITL with monthly rests. In sanction letters dated 20.07.2020 and 29.06.2020, AnnexuresA16 and A26 (copy), the rates of interest have been mentioned @9.25% per annum and @7.50% per annum.

¶37

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, defendant No.3 being a lady, while exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant uniform simple interest @9% per annum from the date of filing of the OA till realisation of the amount ordered vide this final order. It is ordered accordingly.

¶38

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.2,41,01,572.84/- (Rupees Two Crores Forty One lacs One Thousand Five Hundred Seventy Two and Eighty Four Paise only) with current and future simple interest @9% per annum , w.e.f. 05.08.2022 , till the date of realisation of the amount. The liability of the defendants shall be joint as well as several. If the dues of the bank still remain unsatisfied, applicant bank shall be at liberty to recover the same by

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OA 1364/2022 CANARA BANK V/S M/S BALAJI CONSTRUCTION COMPANY AND OTHERS 6

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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.

¶41

Issue Recovery Certificate accordingly.

¶42

Parties to appear before Recovery Officer concerned on 03.05.2023.

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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 immediately uploaded on the official website of this Tribunal.

¶44

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

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DRT-2, Chandigarh

Canara Bank v. M/S Balaji Construction

Case brief

What is this about?

What did the court decide?

Canara Bank v. M/S Balaji Construction

Case brief

What is this about?

What did the court decide?

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