Allowed

Bank of India v. M/S Maa Enterprise

DRT12 Oct 2023OA/190/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the bank's application for a recovery certificate of approximately Rs. 30.33 lakh with interest against the proprietor, the enterprise, and the guarantor, finding them jointly liable for the defaulted loan and directed issuance of the certificate.

What did the court decide?

Issued Recovery Certificate for Rs. 30,33,874.52 with pendent lite and future interest at 9.35% p.a. and costs against all defendants jointly and severally.

Bank of India versus M/S Maa Enterprise — Banking and Recovery | DRT (2023)

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gA. t 90|2022/DRTG|,'. ah:ti

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IN THE DEBTS RECOVERY TRIBUNAL, GUWAHATI

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(North Eastem Region)

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(Tribunal ofAssam. Nagaland, Meghalaya, Manipur, Mizoram, Arunachat pradesh & Tripura)

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Bsfore Shri Shiv Sharan Dubev. Pr$idino Officel

O.A. No. '190/2022

ln ths matter of -

Bank of lndia,

Khanapara Branch, VIP Road, Chachal, Sixmile, Khanapara, Guwahati-781 022, Assam.

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.. Applicant

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Vs.

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M/s Maa Enterprase

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Proprietor: - Mr. Radhe Shyam Verma, Hengrabari Road, Near P.H.E Office, District- Kamrup (Metro), Guwahati-781006, Assam.

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Alternate Address: -

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B.K. Kakoti Road, Kachari Basti, Near Boxing Club, Ulubari Road, Guwahati-781 007, Assam.

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Mr. Radhe Shyam Ve;ma,

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Proprietor of M/s Maa Enterprise S/o Mr. Laxman Verma,

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R/O House No. 52, Sixmile, VIP Road, Chachal,

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Oistrict- Kamrup (Metro), Guwahati-781022, Assam

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Alternate Address: -

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House No. 101(A), Classic Residency, Near G.N.R.C. Hospital, Oispur, Guwahati-781006, Assam

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Smt. Lufta Bogum

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Wo Radhe Shyam Verma R/O House No. 52, Sixmile, VIP^Road, Chachal, Distric! Kamrup^(Metro), Guwahati-781022, Assam.

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Alternate Address: -

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House No. 101(A), Classic Residency, Near G.N.R.C. Hospital, Dispur, Guwahati-781006, Assam.

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Defendants

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Presence of the Counsel:

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For the Applicant : Mr. Vishal Kumar Dewan, Advocate For the Defendants : Mr. S. K. Choudhury, Advocate

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Oated 1A1012023

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slio c[ala,)*!'q ,.",ornoil3ilc⁴ J DRT, GuwBhati

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O A 1902022/DRl-Guw!hati

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JU DGMENT

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This is an application under section 1g of the Recovery of Debts Due to Banks and Financial lnslitutions Act,^,1993 tiled by the, Bank of lndaa, Khanapara Branch, VIP Road, Chachal, Sixmile, Khanapara, Guwahati_7g.1022, Assam, with a prayer to issue Recovery Certilicate for the sum of Rs. 30,33,g74.52 (Rupees Thirty Lakh Thirty-Three Thousand Eight Hundred Seventy_Four and paise Fifty'Two onry) as on 07.03.2022 against the defendants with pendenterite and future interest @9.35% per annum at monthly rests ftom 0g.03.2022 till realization along with cost and other relief

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

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The Defendant No: 1_M/s Maa Enterprise is a proprietorship concern and Defendant No: 2 is the sole proprietor of the Defendant No: 1 carrying on his business of trading and suppry of stabirizer. The oefendant No; 1 and 2 are one of the customers and constituents of the Applicant Bank and they are the main Borrowers in the Cash Credit Limit availed from the Applicant Bank

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On 02.0.1.2019, the Defendant No: 2 in the name of his proprietorship concern had requested and appried to the Applicant Bank for financiar assistance to the tune of RS.3O,OO.OOO/_ for the purpose of working capital requirements of his business of trading and suppry of stabirizer, giving a[ necessary detairs ro the Applicant Bank. The Oefendant No; 2 had offered the security of hypolhecalion of stocks and pledge of TDR of Rs. 6 lakhs.

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The Applicant Bank on 12.01.2018 sanctioned a Cash Credit Limit of Rs. 30,00,000/- to the Defendant No: 2 in the name of his proprietorship concern for the purpose of working capitar requirements for financing stocks of his business of trading and supply of stabilizer, on the various terms and conditions. _

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(a) The rate of interest shall be charged at the rate of interest 'y've! b^e e^",r ing 1.1.10% per annum subject to changes from time to time.^-

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(b) The Cash Credit timit sha be primarily secured by way hypothecation of

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stocks.

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(d) The Cash Credit limit shall also be secured against the personal guarantee of the Defendant No: 3.

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ln order to avail the Cash Credit facilities upto Rs 3O,OO,OOO/-, the Defendant No: 2 in the name of his proprietorship concern had executed the following documents on 12.O1.2019: -

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(a) Demand^promissory Note dated^,t2.O,t.2O1B fo( Rs 3O,O0.OO0L.

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(b) Loan "Bearer" Letter dated 12.01.2018 for Rs. 30.OOO.OO/_

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(d) Hypothecation-cum-Loan -Agre€ment (plant and Machinery, Stocks and . . .^{Book debts)dated 12.01.2010 for Rs 12.01.2010 for Rs for Rs Rs3d,OO,OOO/_.}

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. . .^{Book debts)dated 12.01.2010 for Rs 12.01.2010 for Rs for Rs Rs3d,OO,OOO/_.}

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(e) Hypothecation Agreement dated 12.Oi.iOlB for Rs 30,OO,OOO/-.

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The Defendant No. 3 on j2.01.2018 had personally guaranteed the repayment of any outstanding in the aforesaid cash credit Account of the Defendant No. j for Rs 3O,OO,OO0/_ along with interest, expenses or charges etc incurred or to be incurred. The Defendant No. 3 had given the unconditional and continuing guarantee in favour of the Applicant Bank and agreed to the various terms and conditions as incorporated thereon.

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ln pursuance of lhe execution of the loan documents and security documents by the Defendant No: 2 in the name of his proprietorship in favour of the Applicant Bank and other conditions accepted by the Defendants, the disbursement of loan amount was made to the Borrower / Defendant No: .l by the Applicant Bank. The Cash Credit Account was opened in the name of M/s Maa Enterprise vide Cash Credit Account No: 500930110000104 and the account was being operated by^proprietor (Mr. Radhe shyam verma) the Defendant No: 2. The Borrower / Detendant No: 1 represented by its proprietor had availed the Cash Credit facilities time to time and such transactions were duly recorded in the books of account mainrained by the Appricant Bank in the usuar and ordinary course of their banking business.

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The defendants had availed of the said loan facility from the Applicant Bank, but have not paid the loan amount in the loan account as per the terms and conditions as agreed upon with the Applicant Bank, inspite of repeated demands and requests by the Applicant Bank. As the defendants failed to repay the

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oA. 190/2022./DRT€uwairli

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outstanding amount in the loan account, the said account became NpA on 31.03.2021. On 11.O1.2021 Defendant No.2 had acknowledged the balance of Rs 32.95.889.28% as on 08.01.2021 in the Cash Credit Account by executing Acknowledgment of Debt and security dated 1'r.01.202'r. After the account became NPA the appricant bank issued notices for repayment of the due amount, but the defendants failed to repay the loan amount or renew the loan account.

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The applicant bank thus became constrained to lile the present Odginal Application for the recovery of Rs. 30,33,874.52 (Rupees Thirty Lakh Thirty-Three Thousand Eight Hundred Seventy-Four and paise Fifty_Two only) as on 07.03.2022 along with interest and cost of the applicalion.

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After filing of the OA the Tribunal issued notices upon the defendants through registered post and the appricant bank fired service repon on 29.07.2022 and brought on record lhe posial receipts along with track consignment report. The learned counselfor defendants No. 1, 2 & 3 appeared on the same d ay i.e. on 29.07.2022 and verbally submitted that defendanl No. .l firm is dissolved and filed joint written statement and evidence on afridavit on 29.0g.2022 on behalf of defendants No. 2 & 3 only to which learned counsel for the applicant filed rejoinder on 10.03.2023. Thereafter the matter was posted for hearing.

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Supporting the claim of the applicant bank Mr. Ring Tsraw Daw Daulagupu, Oeputy General Manager of the Applicant Bank has filed evidence on affdavit coupled with the security documents marked as Exhibit A_1 to A-14 supporting the claim of the applicant bank details of which are: -

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Nameoftne docurnents Appticationoate@ P:fr.rg*l^{No.2 beingtheproprietorofDefendant} [o.^lforCashCredit limitupio-{",^jo,oo,OOOI_. sanction@ llpl-llirlkI-Is^{30,00.000/_acknowleds;dby} theDefendant No: 2 and3.	ExhibitNo
annum atmonthlvrest. P^em^anoe@ l"o:r^r,:1%^:r^".".*ed.^{byrheDefendant No:z Leinf} theproprietorofM/stt6,gnterpriseln'ta;r;;ftj: Appxcant Bank logether with interest@ 1.l.1}ok pet

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O A 190/2022IDRT-Guwahal

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4	Loan "Beare/'Letterdated12.01.2018forRs. 30,00,000/- executedbytheDefendant No:2being the^proprietorofl\r/sMaaEnterpriseinfavour ofthe ApplicantBank.	A-4
5	LetterofUndertakingdated^'12.01.2018forRs. 30,00,000/- executedbytheDefendant No:2being the^proprietorofM/sMaaEnterpriseinfavour of the ADD	icant Bank.
6	Hypothecation-cum-LoanAgreement(Plantand Machinery,StocksandBook debts)dated 12.01.2018forRs30,00,000/-executedbythe DefendantNo:2beingtheproprietorofM/sMaa EnterpriseinfavouroftheApplicantBank.	A-6
7	Hypothecation Agreementdated12.01.2018forRs 30,00,000/- executed bytheDefendant No:2being the proprietorofM/sMaaEnterpriseinfavourofthe ApplicantBank.
B	DeedofGuaranleedated12.01.2018forRs 30,00,000/- executedbyDefendantNo.3infavour oftheBankforsecuringthecash credit facilitiesof theDefendant No.1.	A-8
o	AcknowledgementofDebtandSecuritydated '11.01.202'lexecutedbytheDefendantNo.2in favouroftheApplicantBank.	A-9
'10	RecallNotice daled02.04.2021issuedbythe ApplicanteBankto theDefendantNo.Irequesting themto^paytheoutstandingamountuncharged interestwithinseven davsofreceipt ofthisnotice.	A-'10
11	SARFAESI Noticedated05.06.2021issued bythe ApplicantBanktotheDefendantNo.2under Section13(2) oftheSARDAESI Act2002requesting topaythe entiredueswithinterestwithin 60 daysof receipt ofthenotice.	A-11
12	SARFAESI Noticedated05.06.2021 issuedbythe Applicant BanktotheDefendantNo.3under Section13(2)oftheSARDAESI Act^{2002requesting} to^paythe entiredueswith^{interestwithin 60 daysof} receiptofthenotice.	A-'12
IJ	Statementofaccountof cashCredit^Accountno: 500930110000104incorporatinginterest^with certificateas oer Bankers Books of Evidence^Act.	A-13
14	Statementofaccountofun-applied interestofCash CreditAccountno:500930110000104.	A-14

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The learned counsel for the defendants No. 1, 2 & 3 has appeared^and contested the claim of the applicant bank by filing^written statement^{and evidenceon} affidavit on behalf of defendant No. 2 & 3 stating^{interalia that the original applicationis} not maintainable in law and facts. lt is further stated that^{the defendantNo. 2, the} proprietor of defendant No.1 deals with the business of trading and supply of stabilizer and its^place of business is situated at Hengerabari^{Road, Near P.H.E. Office, Guwahati-} 781006, in the district of Kamrup^(Metro) Assam.^The defendant^{no. 3 is the guarantorof}

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O.A. 190r2022D RT6uw.h.li

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defendant no. 2. The defendant no. 2 had the monetary lransac{ion with the applicant Bank and the defendant no.1 represented by defendant no. 2 had approached before the applicant Bank to avail Financial Assistance from applicant Bank. lt is further stated that lhe amount of loan was not properly disbursed to the loan account of defendant no. 2 and due to fault, negligence of applicant Bank the defendant no. 2 could not succeed to establish his business. lt is further stated that the defendant no. 2 for extension of his business, approached before the applicant Bank to consult the process of loan facility, but no application was submitted by the defendant no. 2 before the applicant Bank on his visit. However, the official of applicant Bank on 21.01.20ig had meet the defendant no.2 and verified the stocks of defendant no.1 and agreed to sanction the loan facility to the defendant no. 2. The value of stocks on the said date was not more than Rs. 6.00 Lac and the applicant Bank maintained the said stock as collaterar security agreed to sanction the loan, which is beyond purview of Banking Regulation as well as Reserve Bank of lndia Guidelines. The Apptication dated 02.01.20i8, which was shown to be submitted by the defendant no.2 before applicant bank, but in the said document nowhere the signature of defendant no. 2 is appeared and without signature of defendant no. 2 it is difficult to admit the document no. 1, that it was appried or submitted by the defendant no. 2 representing defendant no. 1. As such the document no. 1 is not a genuine document. The Applicant Bank based on hypothecation of stock of defendant no. 1 agreed to sanction a loan amount to the defendant no. 1. The defendant no. 2 and 3 on instruclion of official of applicant bank put their signatures over the document no. 2. The applicant bank however agreed to sancrion an amount of Rs. 30.00 Lac as cash credit roan to the defendant no. 1 on execution of document no. 3, 4, 5, 6 and 7. But the loan amount was not released in time on repeated request, ultimately the defendant no. ,l closed down his buslness. The defendant no. 3 on request of defendant no. 2 agre€d to stand as guarantor and accordingry the Deed of Guarantee dated 12.0'r.2o1g was executed. Due to fault as well as restriction put in rerease of roan amount in due time the defendant no. 2 could not operate the business property and loss his business. Apparenfly the defendant no. 1 failed to operate Cash Credit Account in regular manner and muld not pay the loan amounl in iime. Recall notice dated 02.04.2021 and demand notices dated 05.06.2021

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were not served upon the defendants. The statement of account is not^properiy certified by the concem person as per the Bankers Book Evidence Act,^'1891 and Section 65- B of lndian Evidence Act, 1872. The applicant bank has no right to claim of Rs. 30,33,874.52 from the defendants, as the statement of account is not conect and admissible. The defendants are willing to repay the loan amount to the applicant bank and to recover the loan amount the applicant bank may attach the hypothecated goods and material, stock ofdefendant no.1 and may sell the same in^public auction.

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The learned counsel for the applicant bank has filed rejoinder against the written slatement and evidence on affidavit filed by the defendant No 2 & 3 in which it has been stated that the entire written statement filed by the defendants are vague and the Defendants have made general denials without any basis. The Defendants have not filed any document with the written statement or counter evidence and failed to^ju$iry and prove the statements and allegations made by them against the Applicant. The Defendants in para no: 6, 11,'12, 13, 16 and 18 of the written stalement have admitted the execution of loan documents and loan availed from the Applicant Bank. ln^para no: 26 of the written statement, the Defendants admifted that they are willing to repay the^loan amount to the Applicant Bank. The Defendant^No: 2ⁱⁿ the^{Loan Application dated} 02.01.2018 shall^prove that the Defendant No: 2 had applied forfinancial assistiance for a sum of Rs. 30 lakhs from the Applicant Bank. The Defendants have admitted the Sanction Letter dated 12.01.2018 issued by the Applicant for Rs 30 lakhs to the Defendant No: 2 in the name of his^{proprietorship} concern. The Defendants have admitted their signatures in the Sanction Letter. The Cash Credit Limit of Rs 30 lakhs was sanctioned on 12.01.2018 and the same was availed by the Defendant No: 2 as^per his requirements from time to time. ln^para no: 13 of the written statement, the Defendants have admitted the guarantee given by the Defendant No: 3 for Rs 30 lakhs on 12.01.2018 to secure the Cash Credit Account of the Oefendant No: I and 2. The statement of accounl annexed and exhibited in the Original Application shall^prove the defautts committed by the Defendant No: 1 and 2 in operating the Cash Credit Account. The Cash Credit Account was classified as NPA as per the guideline of Reserve Bank of lndia because of the own fault ofthe Defendant No: 2 for not operating the account, for not

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regularizing the account, for non-payment of interest and principal, for non-submission of stock statemenls, and for non-submission of financial papers for renewal of account. The Defendants have admifted the Letter of Acknowledgement of Oebt and Security dated 11.01.2021 executed by the Defendant No. 2 in favour of the Applicant Bank. The Recall Notice dated 02.04.2021 was himself received by the Defendant No: 2 by putting the signature on the said Recall Notice. The Demand Notice dated 05.06.2021 issued under the SARFAESI Act were properly served upon the Defendants. The Defendants are defaufters in the eye of law and they are .iointly and severally liable for a sum of Rs. 30,33,874.52 as on 07.03.2022 with further interest from 08.03.2022 and mst thereon as claimed in the Original Application.

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

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None has appeared for the defendants to put forth their arguments.

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I have carefully perused the documents on record including original application, evidence on affidavit and exhibited documents as well as written slatement and evidence on affidavit filed by the defendant No. 2 &^g.

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It is observed that the defendants have not denied the availment of loan, execution ofdocuments and their signatures on the same.

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It is evident from the statement of accounl filed by the applicant bank that the defendants have defaulted in repayment of the loan. lfthere is default in repayment of the loan the applicanl bank has every right to proceed against the defendants for realization of the outstanding dues. Hence I have no hesitation to hold that this original application is maintainable.

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The applicant bank has produced on record the copies of the statement of account in respecl of the defendant, duly certified under Bankers, Books Evidence Act. The applicant bank by the evidence-on-affidavit of Mr. Ring Tsraw Daw Daulagupu, Deputy

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General Manager of the Applicant Bank had deposed the correctness of the affdavit and certified copy of the account. Beyond that nothing more has to be deposed by an officer of the bank. lt is thus obvious that apart from the entries ofthe Books of account there are ample evidence on the record to corroborate the said entries.

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The documents executed by the principal borrower as well as guarantor from time to time are duly^proved by the applicant bank and the witness of the applicant. Itis also found that the claim is within the^period of limitation. The applicant has sufficient cause of aclion for filing the instant application due to disbursemenvavailment of loan to/by the defendants and on default in repayment of the loan by the defendants, inspite of demands made, as^per exhibited documents filed by the applicant bank.

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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^jointly and severally liable to^pay to the applicant bank the claim made in the Original Application. The loan was obtained and documents have been executed on 12.01.20'18. On 11.O1.2021 Defendant No.2 had acknowledged the balance of Rs 32.95.889.28% as on 08.0'1.2021 in the Cash Credit Account by executing Acknowledgment of Debt and Security dated 11.01.2021. The account became NPA on 31 .03.2021 and the OA has been filed on 30.05.2022. Hence, the OA is filed well within the^period of limitation and this Tribunal having a^jurisdiction to adjudicale the Original Application.

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Consideing the version of Mr. Ring Tsraw Daw Daulagupu, applicant's witness and all the documents marked as exhibits, including duly certified 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. 190 of 2022 is allowed with cost as under: -

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O A 1go/zo22loRT-Guwahati

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i) The defendants No. 1, 2 & 3 are.iointly and severally liable to pay to the applicant bank a sum of tu. 30,33,874.52 (Rupees Thirty Lakh ThirtyThree Thousand Eight Hundred Seventy-Four and Paise Fifty-Two only) with pendentelite and future interest @9.35olo p.a. with monthly rests lrcm O8.O3.2O22, till the date of fult paymenurealization and also cost of the application.

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ii) The charge of the certilicaled amount be kept alive on hypothecated propenies, as described in Schedule-A of the OA till the amount is realized in full.

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

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iv) The applicant bank is also entifled 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 entifled 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. 30,33,824.52 (Rupees Thirty Lakh Thirty-Three Thousand Eight Hundred Seventy-Four and Paisg Fifty-Two only) in favour of the applicant bank against the defendants No.1, 2 & 3.

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vii) Communicate copy of this order to the concerned parties. This order is diclated and corrected by the undersigned.

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Judgment dated 12s October 2023, signed and pronounced in the Tribunal

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today under my signature.

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Copy of the JudgmenuFinal Order be uploaded in the Tribunal,s Website and lile be consigned to Record Room.

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shi , .r.l,rn\ a, , 2..1,. 1 I t2.(.)3 (Shiv Sharin Dubey) presiding Officer DRT, Guwahati

Bank of India v. M/S Maa Enterprise

Case brief

What is this about?

What did the court decide?

Bank of India v. M/S Maa Enterprise

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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