Allowed

Punjab National Bank v. M/S Shree Ram Industries

DRT19 Dec 2023OA/236/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an application filed by Punjab National Bank seeking issuance of a Recovery Certificate. The Tribunal found that the Defendants executed loan documents and security agreements, failed to repay, and the accounts became NPA. The application was within limitation.

What did the court decide?

Issuance of Recovery Certificate for Rs. 24,13,266.26 with future interest at 13.60% p.a.; charge kept alive on hypothecated properties; right to proceed against secured and personal assets.

Punjab National Bank versus M/S Shree Ram Industries — Banking and Recovery | DRT (2023)

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O A 2362022/ORl-Guwahati

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IN THE DEBTS RECOVERY TRIBUNAL, GUWAHATI

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(North Eastern Region)

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(Tribunal of Assam, Nagaland, Meghalaya, I/anipur, Mizoram, Arunachal Pradesh & Tripura)

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Before Shri Shiv Sharan Dubev.^{PresidinqOfficer}

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O.A. No. 235/2022

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ln the matter of -

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PUNJAB NATIONAL BANK^{(Erstwhile United Bank of lndia)} Lalganesh Branch,

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Lalganesh Tiniali, Guwahati-78¹ 034, ln the District of Kamrup^{(Metro), Assam.}

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Applicani

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Vs.

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M'S SHREE RAM INDUSTRIES A Proprietorship Firm,

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Represented by its Proprietor^{Mr.ManashSaha,} 2 No. Karabi Path, Ohopolia,^{P.O- Saukuchi,}

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Guwahati-781 040,ⁱⁿ the^{District of Kamrup (Metro), Assam.}

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MR MANASH SAHA son of Mihir Chandra Saha, Office Address: 2 No. Karabi Path,^{Dhopolia, P.O- Saukuchi,}

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Guwahati-781 040,ⁱⁿ the^{District of Kamrup (Metro), Assam.}

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Defenda nts

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Preaence of the Counsel:

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For the Applicant

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For the Defendants

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Mr. Shoubhik Chanda, Advocate

None (Ex-parte)

Dated :1911212023

JUDGMENT

This is an application under^{section 19 of the Recoveryof Debts Due to Banks} and Financial lnstitutions^{Act,1993filed by the Punjab National Bank,(Erstwhile} United Bank of lndia)^{LalganeshBranch, LalganeshTiniali, Guwahati-781 034, in the} District of Kamrup^{(Metro),Assam, with a prayerto issueRecovery Certificate for the} sum of Rs. 24,13,266.26^{(Rupees Twenty-FourLakhs Thirtaen ThousandTwo} Hundred sixty-Six and^{Paise Twenty'six) only as on 31.05.2022 againstthe} defendants with^{pendentelite and future interest at the contractual rate with monthly} rests till realization along^{with cost and other relief.} Sl^;rt{.o4@"

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Sl^;rt{.o4@"^e"q P.""idins oLtll'^2J [/ DRT. Guwahal

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O.A. 236/2022DRT€uwandi

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

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The Defendant No.1 is a Proprietorship Firm of^{DefendantNo.2the business} of manufacturing & supplier of^steel &^{woodenfurniture availed variouscredit} facilities from the Applicant Bank^{as Borrower.}

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The Defendant No.2 as Proprietor of Defendant^{No.1 Firm had approached} before the District lndustries^{& CommerceCentre, Kamrup, Guwahatiand applied} for financial assistance^under the^{Prime MinistersEmploymentGeneration} Programme^(PMEGP) by^{submittingan Application daled26.02.2011and after} considering the said application, the^{District lndustries& Commerce Centre,} Kamrup had forwarded the^{said applicationto the applicant bank vide Letter dated} 25.'11.2011 for extending^{financial assistanceto the Defendantfor setting up of the} said Proprietorship^{Firm namely M/S Shree Ram lndustries.}

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Thereafter the Oefendant^{No.2 as Proprietor of DefendantNo l vide Letter} daled 26.12.201'l^{requestedthe Applicant Bank to disburse the amount of} RS.2O,OO,O0O/-^{(RupeesTwenty Lacs) only and after consideringthe aforesaid} application and other documents,^{the applicant bankvide Sanction Letterdated} 26.'12.2011 had sanctioned^{a sum of Rs.20,00,000/- Lacs (Rupees TwentyLacs)} only^(1.e. Rs. 17,76,500.00^{as Cash Credit Facility and Rs.2,23,500.00as Term.} Loan) to the Defendant No.1^{at the interest rate of 13.60% (base rate+30/o) per} annum with monthly rest,^{rate of interest being subiectedto changes as decidedby} the Bank from time to^{time. Thecash creditlimit is payable on demand and the} Term Loan was repayable in 60^{Monthly installments w.e.f of Rs. 5,150.00} commencing from March 2012.^{Moreover, as per sanction Letter dated24.122011,} the primary security for the aforesaid^{purpose wasHypothecationof Plant &} Machinery and Hypothecation^{of raw materials& finished goods.Further,the said} loan was covered under the CGTSME^Scheme.

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ln consideration of the aforesaid Credit^{Facilityof Rs.20,00,00000 (Rupees} Twenty Lacs) only, the Defendant^{No. 2 as Proprietorof the Defendant No.1 Firm,} duly executed the following documents^{in termsof the sanction, inter-alia giving}

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Slr.i, s{d^a-.U.L Prcsidins otu6J? lZ,2) DRT. Guwahatr

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O.A. 23O2022/DRT€w.h.ri

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due effect to the terms and condition of sanction, promising to repay the loan and to secure lhe dues ofApplicant Bank: -

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a) Demand Promissory Note dated 26.1,22011 .

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b) Letter of Continuity daled 26.12.2011.

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c) Hypothecation of coods dated 26.12.2011.

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d) Hypothecation of Debts & Moveabte Assets d ated 26.12.2O1,1.

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The Defendant No.2 as Proprietor of Oefendant No.1 Firm, vide Letter dated 21.04.2012 requested the Applicant Bank for Temporary Overdraft of Rs.'1,80,000.00 for 30 days and after considering the said request, the Applicanl Bank had allowed the aforesaid Temporary Overdraft for 30 days

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ln consideration of the aforesaid temporary overdraft limit and existing cash credit facility availed by the defendant No.l, the Defendant No.2 as proprietor of Defendanl No.'l Firm executed a Demand Promissory Note dated 21.04.2012 lot Rs. 19,56,500.00 in terms of the sanction, inter-alia giving due effect to the terms and condition of sanction, thereby promising to repay the loan and to secure lhe dues of Bank.

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The Oefendant No.2 as Proprietor of Defendant No.1 Firm vide another Letter dated 19.07.2012, requested the Applicant Bank for Temporary Overdraft of Rs.1,87,000.00 for 30 days and afler considering the said request, the Applicant Bank had allowed the aforesaid Temporary Overdraft for 30 days.

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ln consideration of the aforesaid temporary overdraft limit and existing cash credit facility availed by the defendant No.1, the Defendant No.2 executed another Demand Promissory Note dated 20.07.2012 in terms of the sanclion inter-alia giving due effect to the terms and condition of sanction, thereby promising to repay the loan and to secure the dues of Bank,

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Thereafter, the Defendant No.2 as Proprietor of Defendant No.l again executed a Demand Promissory Note dated 20.02.2015 for Rs.^{'18,17,686.04} in

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S[.^)gr.1g?,Utt PB6iding Officer^{' I''} 7 ORT, Guwehati

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O.A. 2362022/ORl4uwehrli

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terms of the sanction, inter-alia giving due effect to the lerms and condition of sanction, thereby^promising to repay the loan and to secure the dues of Bank.

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The Defendant No.2 as Proprietor of Oefendant No.1 Firm vide Letter dated 13.02.2017 requested the Applicant Bank for Temporary Overdraft of Rs.1,70,000.00 fo l5 days and after considaring the said request, the Applicant Bank had allowed the aforesaid Temporary Overdraft fo|l5 days.

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ln consideration of the aforesaid temporary overdraft limit and existing cash credit facility availed by the defendant No.1, the Defendant No.2 execuled a Demand Promissory Note dated 14.02.2017 for Rs. 19,46,500.00 in terms of the sanction, inter-alia giving due effect to the terms and condition of sanction, thereby promising to repay the loan and to secure the dues of Bank.

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Again the Defendant No.2 as Proprietor of Oefendant No.1 Firm vide Letter dated 02.08.2017 requested the Applicant Bank for granl of Temporary Overdrafl of Rs.1,70,000.00 only for 25 days and lnconsideration of said request, the Applicant Bank again had granted the Temporary overdraft facility to the Defendant No.1 Firm.

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Again vide Letter dated 27.03.2019, the Defendant No.2 as Proprietor of Oefendanl No.l Firm requested the Applicant Bank for granting a Temporary Overdraft of Rs.1,70,000.00 only for 30 days and inconsideration of said request, the Applicant Bank had granted the Temporary overdraft facility to the Defendant No.1 Firm.

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The Defendant No.2 as Proprietor of Defendant No.l Firm in terms of the existing cash credit limit and Temporary Overdraft Limit had executed a Demand promissory note for Rs.17,76,500.00 only, Demand Promissory Note for Rs.'19,46,500.00 only, a Letter of continuity, Letter of Lien and Hypothecation Agreement (all dated 27.03.2019) in favour of the Applicant Bank, thereby promising lo pay the said amount with interest on demand and hypothecated the stock of steel Almirah, Wooden Furniture etc. in favor of the Applicant Bank. ^

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n r

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SU,!,1 lr.o.ia,u&,try p,""iaing om""l t'^{1 L} 4I DRT, Guwahali

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q.a. 236/2o2zDRT€uwahao

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The Defendant No.2 in terms of the existing cash credit limit and Temporary Overdraft Limit had executed a Demand promissory note for Rs.21,26,500,00 only dated 15.10.2019 in favour of the Applicant Bank, thereby promising lo pay the said amount with interest on demand.

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The Defendant No.2 as Proprietor of Defendant No.l Firm again vide another Letter dated 04.01.2020 requested the Applicant Bank for sanctioning of Temporary Overdraft Facility of Rs.3,50,000.00 (Rupees Three Lacs Fifty Thousand) only for 30 days and inconsideration of said request, the Applicant Bank had sanctioned the Temporary overdraft facility of Rs 3,50,000.00 (Rupees Three Lacs Fifty Thousand) only to the Defendant No.'l Firm for 30 days.

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The Defendant No.2 in terms of the existing cash credit limit and Temporary Overdraft Limit had executed a Demand promissory note for Rs.21,26,500.00 only and a Letter of continuity both dated 06.01.2020 in favour of the Applicant Bank, thereby promising to pay the said amount with interest on demand.

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The Defendant: No.2 as Proprieior of Defendant No.1 Firm vide Application dated NIL requested lhe Applicant Bank for credit under Guaranteed Emergency Credit Line (GECL) scheme and on such Application, the Applica Bank vide Sanction Letter dated 20.06.2020 had sanctioned a sum of Rs.3,45,000.00 (Rupees Three Lacs Forty-Five Thousand) only as working capital Term Loan under Guaranteed Emergency Credit Line (GECL) scheme with rate of lnterest @ 7.65% (RLLR+1.00%) per annum. The aforesaid Term Loan was repayable in 36 Monthly installments of Rs.9584.00+ lnterest charge, after the moratorium^period of '12 Months and during the period of moratorium interest was served as and when due. The Defendant No.2 as Proprietor of Oefendant No.'l Firm had signed on the said sanction letter thereby accepting all the^terms and^{conditionscontained} therein.

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The defendants had availed the said loan^facilities from the^applicant bank but have not^paid the outstanding^{loanamountas per terms and conditions as} agreed upon with the applicant bank,ⁱⁿ spite^{of repeateddemands and requestby the}

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S{.,, S{o.o"t+n P,""idi"s oIi""'19 'l² ry / DRT. Guwahati

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o.A, 23ozozzoRl-cuwahati

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applicant bank. As the defendants failed lo repay the loan amount, the said loan accounts became NPA on 12.05.2021. After the accounts became NpA the applicant bank issued notices for repayment of the due amount, but the defendants failed to repay the loan amount.

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The applicant bank thus became constrained to file the present Original Application for the recovery of Rs. 24,i3,266.26 (Rupees Twonty-Four Lakh3 Thirteen Thousand Two Hundred Sixty-Six and^paise Twenty-Six) only as on 31.05.2022 along with interest and cost of the apptication.

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After filing of the OA the Tribunal issued notices upon the defendants through registered post and the applicant bank filed service report on 26.08.2022 and brought on record the postal receipts along with track consignment report which shows that notices have not been served upon the defendants. Thereafter the Tribunal ordered paper publication of notice upon the defendants and the applicant bank issued notice to the defendants on 16.09.2022 through Paper Publication in two newspapers namely "The Times of lndia" and "Niyomiya Barta'| Even after issuance of notice through paper publication also there was no representation on behatf of the defendanls either by the counsel or the person and hence the defendants were set ex-parte on 02-01-2023 and their right to file written statement cum evidence on affidavit was closed and the matter was listed for hearing on behalf of the applicant bank.

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Supporting the claim of the applicant bank Sri Guru Prasad Talukdar, Chief Manager of the Applicant Bank has flled evidence on affidavit coupled with the security documents marked as Exhibit 1 to 37 supporting the claim of the applicant bank.

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Heard lhe learned counsel for the applicant bank who prayed for issuance of Recovery Cenificate 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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S^n lrqf-qe Prosiding Offcor ' ' -.,2 oRT, Guwahati

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O.A 236/202ZDRT-Gwahati

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Considering ihe facts and circumslances of the^{case, I am of the considered} view that the documents flled by the applicant^{bankare supportingthe claimof the} applicant bank and establishing^{theliabilityof 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 loanwas obtainedand documents have been} executed on 26.12.20'11, 21.O4.2O12,^{20.07.2012, 20.02.2015,14.02.2017} ' 27.03.2019,15.10.2019 &^{06.01.2020. The accountsbecame NPA on 12.05.2021and} the OA has been filed^{on 28.06.2022. Hence, the OA is filed well within the periodof} limitation and this Tribunal^havinga iurisdiction^{to adjudicatethe Original Application.}

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Considering the unchallenged/unrebutted^{version of Sri GuruPrasad Talukdar,} the applicant's witness^{and all the documents markedas exhibits, including duly} certified copy of the slatement of^{account alongwith interest calculation sheet} maintained by the applicant^{Bankin it's regular courseof 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^{ApplicationNo. 236 of 2022is allowed with} cost as under: -

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(D The defendants No. 1 & 2 are iointly^{and severallyliable to pay to the} applicant bank a sum of^{Rs. 24,13,266.26(Rupees Twsnty-FourLakhs} Thirteen Thousand Two Hundred^{Sixty-Sixand PaiseTwenty-Six) only} with^pendentelite and^{fulureinterest} @13.60%^{p.a. with monthlyrests from} 01.06.2022 till the date of full^{paymenurealizationand also cost of the} application.

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ii) The charge of the certificated amount be^{kept alive on hypothecated} properties, as described in Schedule-A of the OA till the amount is realized in full.

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iii) The applicant bank is entitled to^proceed against^{the secured items towards} recovery of the debts. s:0.", - S-{,ara^.q..,lrtta,t l'1-\ I

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s:0.", - S-{,ara^.q..,lrtta,t l'1-\ I Pr8iding Officer^| ' ---l V DRT, Guwahati

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OA 236/2022rDRT€uw.hati

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iv) The applicant bank is also entitled lo proceed against the personal assets and properties of the defendanls towards recovery of the dues.

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v) The applicant bank is entitled 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. 24,13,266.26 (Rupse3 Twenty-Four Lakhs Thirteen Thousand Two Hundred Sixty-Six and paise Twenty€ix) only in favour of the applicant bank against the defendants No. I &2.

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vii) Communicate copy of this orderlo the concemed parties.

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This order is dictated and corrected by the undersigned.

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Judgment dated 19h December 2023, signed and pronounced in the Tribunal

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today under my signature.

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Copy of the JudgmenyFinal Order be uploaded in the Tribunal's Website and file be consigned to Record Room.

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S[rdc/,q\q-,q""L+ (shiv sharan DJV"y\t:, t'l Prssiding Officer DRT, Guwahati,

Punjab National Bank v. M/S Shree Ram Industries

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. M/S Shree Ram Industries

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

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