Allowed

Punjab National Bank v. M/s Santosh Mini Rice Mill and Others

DRT11 Apr 2023OA/22/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the Applicant Bank's application under Section 19 of the RDB Act to recover Rs.26.06 lakhs principal plus interest from Respondents who failed to repay sanctioned loan facilities for rice trade. The Tribunal validated the loan documents and determination of debt.

What did the court decide?

Recovery certificate issued for Rs.26,06,958.89 plus interest at 13.25% p.a. compounded monthly; defendants debarred from transferring assets; attached assets.

Punjab National Bank versus M/s Santosh Mini Rice… — Contract and Commercial Disputes | DRT (2023)

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DRT,PATNA

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OA 220[2022 IJI

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Debts Recovery Tribunal, Patna,

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Karpuri Thakur Sadan, Aashiana Digha Road at PATNA-800025

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Presiding Officer : Shri Kaushalendra Yadav

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OA Case no.: 22 of 2022

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Punjab National Bank, Branch Office-Kabilaspur, District-Kaimur

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....... Applicant -Bank

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1. Mis Santosh Mini Rice Mill through its proprietor Janardan Singh Registered Office-Baijnath P.O.-Devnaliya, P.S.-Ramgarh, DistrictKaimur.

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Janardan Singh S/o Dayashankar Singh Rio House no. 28, VillageSangapur, P.O.-Devnaliya, District-Kaimur, PAN no. BDPPS6633A.

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Dharmdeo Singh S/o Bikram Singh Rio House No. 28, VillageSangapur, P.O.-Devnaliya, District-Kaimur.

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Dayashankar Singh S/o Bikram Singh Rio House No. 28, VillageSangapur, P.O.-Devnaliya, District-Kaimur.

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...Defendants.

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Present:

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For the Applicant Shri S.K. Tiwari, Advocate For the Defendants Shri Sanjeev Nikesh, Advocate

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Dated: 11.04.2023

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JUDGMENT

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1- The Applicant bank has made this application U/S 19 of the Recovery of Debts and Bankruptcy Act, 1993 (here-in-after referred to as Act) on 31.12.2021 against the defendants to recover its debts from defendants of Rs.26,06,958.89 upto 30.11.2021 alongwith pendentelite and future interest at the contractual rate from 1.12.2021 with costs till realization.

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2- The application has been duly registered and numbered as above.

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3- The brief facts of the case of the applicant bank as stated in the application are as under-

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The applicant bank is a body corporate constituted under provisions of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 having its Head Office at plot no. 4,Sector-10,

OA 22 of20221JI

DRT, PATNA

Dwarka New Delhi-ll0075 and Branch Office at Branch OfficeKabilaspur, District-Kaimur.

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The defendant no.1 is proprietorship firm and defendant no. 2 is proprietor and defendant no. 3 and 4 are guarantor. The defendant no. 2 on behalf of defendant no. 1, approached the bank on 21.12.2006 for sanction of cash credit facility of Rs.I0 lakh for the trading of Rice Paddy, Bran. Upon consideration of the loan proposal for the trading of rice paddy, bran as cash credit facility of Rs.l 0 lakh was sanctioned by the bank. The defendants executed the various loan documents i.e. hypothecation of goods to secure a demand cash credit facility, letter of undertaking, consent clause and agreement of guarantee. The defendant no. 3 & 4 created equitable mortgage details given at page 19in scheduleAofOA.

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The defendant no. 2 again approached the bank for enhancement of credit facility from Rs.I0 lakh to Rs.20 lakh on 11.1.2014. Upon consideration of the enhancement of loan proposal for the trading of Rice Paddy, Bran of Rs.20 lakh was sanctioned by the bank. The defendants executed the various loan documents i.e. hypothecation of goods, consent clause, supplementary agreement, PDR and renewal of cash credit limit. The defendant no. 3 & 4 have executed the agreement of guarantee and further created mortgage of the properties for which the title deeds were deposited.

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The bank made persistent efforts by approaching defendants in order to get the overdue amount deposited but all such efforts did not yield any result. Hence the applicant bank regularly made demands by serving demand notices on various dated to the defendants calling him to regularize the account failing which bank would be free to exercise its right in terms of agreement for recovery of due amount of loan. As the defendants failed to regularize the account hence the loan account became irregular and classified as NPA on 6.7.2020.

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As per the statement of loan account total outstanding due amount ofloan is Rs.26,06,958.89 as on 30.11.2021 and further unapplied interest from 1.12.2021 is also due and the defendant is liable to pay the same to the bank.

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The interest /compound interest has been charged at such rates, and capitalized at such periodical rests as are permitted by and do not run counter to the directives of Reserve Bank of India.

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Since, the defendants have failed and neglected in spite of several reminders to make payment of the dues recoverable to bank, hence this application has been filed by the bank.

OA 22 of 2022 [J)

DRT,PATNA

4- U/s 19 (4) of the Act & Rule of the DRT [Procedure] Rules, 1993, copies of application & paper book was sent by this Tribunal to the defendants by registered/speed post on 23.5.2022, and summons/notices issued requiring the defendants to show-cause within 30 days of the service of summons/notices as to why relief prayed for, should not be granted.

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On perusal of the case records, it is clear that on 23.5.2022, summons/notices were sent to the defendants, but the defendants have not appeared, hence, the Registry of this Tribunal has ordered to publish the notice in newspaper and subsequently, substituted service by publication of notice by way of advertisement in newspaper was also made against the defendants on 12.7.2022in "Prabhat Khabar" newspaper.

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In response of defendants no. 1,2 & 4 has appeared and filed Vakalatnama and defendant no. 3 has not appeared. But statuary period for filing the written statement has already been expired. Hence right to file written statement was closed on 5.11.2022.

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In response, the defendants no. 1 & 2 appeared and filed counter affidavit stated that the contention of bank with regard to non payment of loan amount is correct. It is further stated that the correct that on 21.12.2006 cash credit facility of Rs.10 lakh for the trading of Rice Paddy was sanctioned on 21.12.2006 and cash credit of the defendants Rice Mill was enhanced from 28.4.2014. It is further stated that the defendant no. 4 sold his land vide sale deed no. 11400 and 11200 dated 21.8.2018 and 28.8.2019 respectively to Birbal Kumar Yadav and Sanjay Kumar Singh. It is further stated that the defendant no. 4 which was pledged with the bank as a guarantee but after sale of the land by the defendant no. 4 to another person the Rice Mill is became non functional and as such the loan amount was not paid by the defendant no. 1 & 2. It is further stated that the a title suit bearing no. 264 of 2021 was filed by the defendant no. 1 to 3 against the defendant no. 4 and their purchaser as also against the Punjab National Bank with prayer that the land mortgage is joint family property. As such the sale deed be declared void and further prayed that after payment of loan amount of Santosh Mini Rice Mill to the bank, partition will be made in accordance with share. The defendant no. 4 filed a Civil Misc. no. 316 of 2021 before the Hon'ble Patna High Court which is still pending.

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However, the defendants in their counter affidavit have not denied the sanction of loan amount, its utilization and further to secure the loan, execution of relevant documents.

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Arguments of ld. Counsels of the applicant bank and ld. Counsel of defendants were heard and record perused and considered.

OA 22 of 2022 (J)

DRT,PATNA

5- To prove its case, the applicant Bank has referred various photocopies of documents before this Tribunal. The applicant bank has also given evidence on affidavit by way of affidavit of Md. Aqueel Jawed Khan, Chief Manager of the applicant bank. The details of documents are as follows. :-

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SI.No	Description photocopies Documents	of	Date of Execution	Amount	Signature of executant	Ex.! Ann. No.
1	Loan application		21.12.2006	Rs.I0 lakh	defendant no. 1&2	1
2	Sanction letter		27.9.2007	Rs.I0 lakh	bank	2
3	Hypothecation goods	of	27.9.2007	Rs.10 lakh	defendant no. 1&2	3
4	letter undertaking	of	27.9.2007	Rs.I0 lakh	defendant no. 1&2	4
5	consent clause		...	Rs.I0 lakh	defendants	5
6	Agreement guarantee	of	27.9.2007	Rs.I0 lakh	defendant no. 3 & 4 and Bikram Singh	6
7	copy of sale dee	d	...	...	defendant no. 3&4	7
8	Loan applicatio	n	11.1.2014	Rs.20 lakh	defendant no. 1&2	8
9	Hypothecation goods	of	11.1.2014	Rs.20 lakh	defendant no. 1&2	9
10	consent clause		...	Rs.20 lakh	defendant no. 3 & Bikram Singh	10
11	supplementary agreement		11.1.2014	Rs.20 lakh	defendant no. 1&2	11
12	PDR		11.1.2014	Rs.20 lakh	defendant no. 3, 4 & Bikram Singh	12
13	Application renewal	for	11.1.2014	Rs.20 lakh	defendant no. 1&2	13
14	Agreement guarantee	of	11.1.2014	Rs.20 lakh	defendant no.3,4 & Bikram Singh	14
15	Draft letter continuity	of	25.11.2014	...	defendant no.3,4 & Bikram Singh	15
16	Balance confirmation let	ter	11.7.2010 7.5.2011	...	defendant no. 1&2	16

OA 22 of 2022 IJ)

DRT,PATNA

			28.4.2014
17	Legal notice		1.7.2019 4.9.2020 2.6.2020 26.2.2020	...	bank	17
18	Statement account	of	as on 30.11.2021	Rs.26,06,958.8 9	bank	18

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6- It is submitted by ld. Counsel of applicant bank that the defendants have admitted the loan facilities, granted to them and there is no any specific denial of execution of loan documents by the defendants. It is further submitted that there is no any stay granted by the Hon'ble Higher Court in the matter.

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It is further submitted that the applicant bank has filed the Original Application, for recovery of due amount, after deducting all the amounts, deposited by the defendants and by calculating the interest charged, as agreed by the defendant. It is further submitted that the defendants have not deposited any amount, after filing of the OA.

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It is requested that the recovery certificate may be issued for the claim amount, as made in OA, as there is no any specific denial by the defendants.

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7- It has been established that defendants are living and carrying on their business in the state of Bihar. Cause of action arose in the State of Bihar. The said claim on the date of filing of application exceeded Rs.20 lacs. The applicant bank is functioning within jurisdiction of this tribunal. Therefore, this Tribunal has territorial as well as pecuniary jurisdiction to adjudicate upon the present application.

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8- On the issue of Limitation, to prove it, the applicant bank has submitted that the account was declared as NPA on 6.7.2020, whereas the present application has been filed on 31.12.2021. Even, it is counted for the purpose of Limitation, then it is established that the applicant bank has filed the case within the limitation period. As such, it is established that present application has been filed well within the period of limitation.

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9- In the affidavit of Md. Aqueel Jawed Khan, Chief Manager of Applicant bank, has stated that he is well acquainted with the facts of the case and has on verification of record, sworn in the affidavit in support of contents of application and the documents as evidence and established on oath the pleadings and documents of the applicant bank as stated above.

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10On perusal of the above documents, it is clear that the applicant bank has granted loan facility to the defendants and to secure the loan, various loan documents were executed by the defendants and loan facility

OA 22 of 2022 IJ]

DRT,PATNA

was availed by the defendants as stated in the application. Further, on perusal of Agreement of Guarantee annexed with the OA shows that one Bikram Sinha has also executed guarantee agreement with the bank but he has not been made party in the present matter. Hence, he cannot be held liable to pay outstanding dues of the bank.

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11The documents as stated above reveal that the defendants have applied for loan and bank had sanctioned loans, thereafter, to secure the loan and for repayment of loan amount with interests etc., the defendants have executed various loan documents, which strength the case of the applicant bank.

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12The applicant bank has also furnished statement of account as shown above, which is not only admissible but shall be taken as correct statement of account, more so since the entries in the statement of account has not been challenged.

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13Defendants have neither denied the utilization of funds advanced by applicant bank nor have pointed out any specific error and discrepancy in the Statement of Account, which is kept in due course of business, evidence on affidavit, which has supported the claim of the applicant bank, established to have fully correct and believable. Provisions contained in Rule 9(2) of Debt Recovery Tribunal (Procedure) Rules, 1993 provide that the documents referred in the application shall be duly stated by senior officer of the bank, or financial institution as the case may be and numbered accordingly. The rule 12 (10) provides that the provisions contained in section 4 of the Banker's Books evidence that Act, 1891 (18 of 1891) shall applied to certified copy of an entry in a Banker's Books furnished alongwith application filed under sub section 1 of section 19 by the applicant.

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14On consideration of the arguments and on perusal of the application, documents, affidavit, it is proved that the applicant bank has granted the loan facilities to the defendants and to secure the loan, various loan documents were executed by the defendants and facilities were availed by the defendants as stated in the application.

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15-The Section 58 of the Indian Evidence Act, 1872 reads as under-

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"58. Facts admitted need not be proved.- No fact need to be proved in any proceeding which the parties thereto or their agents agree to admit at the hearing, or which, before the hearing, they agree to admit by any writing under their hands, or which by any rule of pleading in force at the time they are deemed to have admitted by their pleadings: Provided that the Court may, in its discretion, require the facts admitted to be proved otherwise than by such admissions.

OA 22 of 2022 [J]

DRT,PATNA

16In Indian Bank Vs. Blue Jaggers Estates Limited and others [2010] 8 SCC 129,the Hon'ble Supreme Court of India has observed as under-

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"The Court cannot lose sight of the fact that the bank is a trustee of public fund. It cannot compromise the public interest for benefiting private individuals. Those who take loan and avail financial facilities from the bank are duty bound to repay the amount strictly in accordance with the terms of the contract. Any lapse in such matters has to be viewed seriously and the bank is not only entitled but duty bound to recover the amount by adopting all legally permissible methods. Parliament enacted the act because it was found that legal mechanism available till then was wholly insufficient for recovery of the outstanding dues of the banks and Financial Institutions."

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17Facts of the case, in my view, are well proved by evidence of the applicant bank as well as admission of defendants. The applicant bank is entitled to receive from defendants jointly and severally of Rs.26,06,958.89 together with pendentelite and future interest @13.25% p.a. compounded monthly rests from 31.12.2021 The date of filing of this O.A.) till realization. So the final order may be passed accordingly, to meet the ends ofjustice.

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ORDER

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In the result, the application of the applicant bank, is allowed and debt is determined with costs against the defendants and it is, hereby jointly and severally, ordered that the applicant bank is entitled to receive from sole defendants, it's debts with interest, amounting to Rs.26,06,958.89 together with pendentelite and future interest @13.25% p.a. compounded monthly rests from 31.12.2021 (The date of filing of this O.A.) till realization of the entire sum due and recoverable with costs.

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It is further made clear that any amount deposited by the defendants, be deducted in the claim amount, if not deducted.

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Defendants are debarred from transferring, alienating encumbering or otherwise dealing with or disposing of the mortgaged or hypothecated or any other properties and assets without paying the aforesaid adjudicated dues to the applicant bank to secure the ends of justice. The mortgaged or hypothecated assets to secure the loan in question are hereby attached and shall be subject to the final order under the recovery proceedings in pursuance of the Recovery certificate issued under Section 19(22) of Recovery of Debts and Bankruptcy Act 1993. The applicant may submit the certified copy of this Judgment and the Recovery Certificate before the Registrar! Sub- registrar to endorse the charge over the secured assets.

DRT,PATNA

OA 22 of 2022 [J]

Let a certificate of recovery be drawn up forthwith and put up for signatures in terms of provisions contained in Section 19(22)of the Act to be issued, on the basis of the order of the Tribunal to the Recovery Officer. The Recovery Officer shall realise the amount as per the certificate in the manner and mode prescribed under the Act from the defendants, by sale of mortgaged/ hypothecated assets as well as other personal movable/immovable assets of the defendants.

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Parties are directed to appear before the Recovery Officer, DRT, Patna on 24.5.2023. The order be communicated accordingly.

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Judgment signed, sealed, dated and pronounced in the open court on this 11th Day of April, 2023.

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Dictated & Corrected by me

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[Kaushalendra Yadav] Presiding Officer Debts Recovery Tribunal, Patna

Punjab National Bank v. M/s Santosh Mini Rice Mill and Others

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. M/s Santosh Mini Rice Mill and Others

Case brief

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What did the court decide?

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