Allowed

State Bank of India v. M/S Ujas Sales and Another

DRT17 May 2023OA/1503/2022

Case brief

AI extract

What is this about?

Debts Recovery Tribunal allowed an application for recovery of Rs.31,65,215/- by State Bank of India against defaulting borrowers. The court exercised discretion to grant uniform simple interest at 8% per annum instead of the contract rates.

What did the court decide?

Recovery certificate issued for principal of Rs.31,65,215/- with simple interest at 8% per annum from 10.08.2022, enforceable through execution proceedings.

State Bank of India versus M/S Ujas Sales and… — 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.1503/2022

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DATE OF INSTITUTION: 10.08.2022

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DATE OF DECISION: 17^th DAY OF MAY, 2023

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State Bank of India , a body corporate, constituted under the State Bank of India Act, 1955 (Act No.23 of 1955) and having its Central Office at Madam Cama Road, Nariman Point, Mumbai and one of its Local Head Offices at Sector 17-A, Chandigarh and one of its Branches at SMEC Branch, 20 Industrial Area, Yamunanagar, through Sh. Jarnail Singh Mohi, Chief Manager and Principal Officer

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.....Applicant Bank

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Versus

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M/s Ujas Sales, a Sole Proprietorship Concern, Village Fathepur, Sultanpur Road, Yamunanagar, through its Sole Proprietor

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Sh. Vishal Madaan S/o Sh. Hakikat Madaan, Sole Proprietor M/s Ujas Sales R/o House No. 689, Mahavir Colony, Gadwali Mandir Gali, Yamunanagar, Tehsil Jagadhari, District Yamunanagar, Haryana

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....Defendants

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Argued by: Sh. Yogesh Kumar proxy counsel for Sh. Rakesh Gupta counsel for the applicant bank Defendants ex parte vide order dated 23.01.2023

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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.31,65,215/- (Rupees Thirty One lacs Sixty Five Thousand Two

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OA/1503/2022 STATE BANK OF INDIA Vs M/s UJAS SALES AND ANOTHER

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Hundred and Fifteen Only) . The OA has been filed through Sh. Jarnail Singh Mohi, Chief Manager of the applicant bank, stated to be competent to institute the Original Application vide Gazette Notifications dated 27.03.1987 and 17.05.2001, Annexure-A1 (colly) (copy).

¶17

The brief facts of the Original Application are that defendant No. 1 through defendant No. 2 had approached the applicant bank for grant of cash credit facility of Rs.25 lacs vide loan application dated 15.04.2019, Annexure-A2 (copy) and again approached for term loan facility under GECL Scheme of Rs.5 lacs .

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The applicant bank sanctioned aforementioned credit facilities to defendants vide arrangement letters dated 29.04.2019 and 18.08.2020, Annexures-A3 and A5 (copy) as per terms and conditions duly accepted by the defendants.

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In order to secure the aforementioned credit facilities, the defendants executed loan and security documents, i.e. Agreements dated 29.04.2019 and 18.08.2020 of loan-cum-hypothecation, Annexures-A4 and A6 (copy) and letter dated 18.08.2020 regarding execution of documents on that day and their being handed over to the bank, Annexure-A7 (copy).

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It is further the case of the applicant 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 accounts became irregular and those were declared NPA on 28.05.2022. The applicant bank recalled entire outstanding amount vide notice dated 04.06.2022, along with its postal receipt, Annexure-A8 (colly) (copy), but to no avail.

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OA/1503/2022 STATE BANK OF INDIA Vs M/s UJAS SALES AND ANOTHER 3

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It is further the case of the applicant bank that after adjusting debit and credit entries in loan accounts a sum of Rs.31,65,215/- (Rupees Thirty One lacs Sixty Five Thousand Two Hundred and Fifteen Only) is recoverable against the defendants as per statements of accounts, Annexure-A9 and A10 (copy) along with closure balance of both, certified under Bankers’ Book Evidence Act.

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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 the defendants, but since none appeared on behalf of the defendants despite service, thus, the defendants were proceeded against ex-parte vide order dated 23.01.2023 .

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In support of the contents of Original Application, affidavit of evidence of Sh. Jarnail Singh Mohi, Principal Officer and Chief 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 A10 , it comes out that the defendants had approached the applicant bank for availing of the loan facilities which were granted to them. It is further cleared that the defendants had executed all the relevant documents as stated above in favour of the applicant bank. Unfortunately, the defendants failed to pay

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OA/1503/2022 STATE BANK OF INDIA Vs M/s UJAS SALES AND ANOTHER

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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.31,65,215/- (Rupees Thirty One lacs Sixty Five Thousand Two Hundred and Fifteen Only) from the defendants, from the date of filing the present Original Application, till realization of the amount.

¶31

In so far as pendent lite and future interest is concerned, the applicant bank in relief clause has claimed rate of interest and @11.35% per annum in cash credit facility with monthly rests and @8.30% per annum in term loan with monthly rests. In arrangement letters dated 29.04.2019 and 18.08.2020, Annexures-A3 and A5 (copy), rate of interest has been mentioned @12% per annum in cash credit facility and @7.80% per annum in term loan facility, respectively.

¶32

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, while exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant uniform simple interest @8% per annum from the date of filing of the OA till realization of the amount ordered vide this order. It is ordered accordingly.

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In the result, the Original Application is allowed with cost declaring that the defendants are liable to pay to the applicant bank a sum Rs.31,65,215/- (Rupees Thirty One lacs Sixty Five Thousand Two

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OA/1503/2022 STATE BANK OF INDIA Vs M/s UJAS SALES AND ANOTHER

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Hundred and Fifteen Only) with current and future simple interest @8% per annum w.e.f. 10.08.2022 , till the date of realization 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 hypothecated properties of defendants in execution proceedings, if not sold earlier under the provisions of the Securitization 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. 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 24.07.2023.

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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 uploaded on the official website of this Tribunal.

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

State Bank of India v. M/S Ujas Sales and Another

Case brief

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State Bank of India v. M/S Ujas Sales and Another

Case brief

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