Allowed

Punjab National Bank v. M/s Arcadia

DRT3 Oct 2023OA/274/2022

Case brief

AI extract

What is this about?

The DRT allowed the bank application for recovery of Rs. 5.52 Crores advanced as cash credit in favor of proprietorship concern and its proprietor, allowing sale of mortgaged properties for realization of dues with simple interest @ 10% p.a.

What did the court decide?

Declaration of liability to pay Rs. 5.52 Crores with interest @ 10% p.a.; Recovery Certificate issued; liberty to enforce through sale of properties.

Punjab National Bank versus M/s Arcadia — Contract and Commercial Disputes | DRT (2023)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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ORIGINAL APPLICATION NO.274/2022

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PRESIDED OVER BY MRIDULESH KUMAR SINGH

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DATE OF INSTITUTION: 22.12.2021

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DATE OF DECISION: 03.10.2023

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Punjab National Bank, a body corporate and a nationalized bank duly constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act V of 1970 having its Head Office at Plot No.4, Sector-10, Dwarka, Delhi-110075 and the successor of Oriental Bank of Commerce, by scheme of Amalgamation of Oriental Bank of Commerce, passed by the Central Government under Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, through one of its Branch having office at SBS Nagar (e-OBC), 7-B, Pakhowal Road, Near Vishal Nagar Chowk, Ludhiana, Punjab141013 through its constituted Attorney Sh. Vineet Dhingra, Senior Manager

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……..Applicant

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Versus

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M/s Arcadia, a proprietorship concern having its Registered Office at B-VIII-1417, Mochpura Bazar, Ludhiana, Punjab-141008, through its Proprietor Sh. Vinay Malhotra (Borrower)

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2^nd Address : Shop No.9, First Floor, First Mall, Mall Road, Above Ganpati Jewellers, Ludhiana, Punjab-141001

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Sh. Vinay Malhotra S/o Sh. Bir Parkash Malhotra, R/o H.No.B- XXXV-3400/3-A, Panchsheel Vihar Colony, Backside Magnet Resorts, Ferozepur Road, Ludhiana, Punjab-141012 (Proprietor, Mortgagor and Guarantor)

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2^nd Address : B-XIX-504, Dasondha Singh Road, Civil Lines, Opposite Sahara Hospital, Ludhiana, Punjab-141001

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3^rd Address : H.No.246, Mahavir Enclave, Barewal Road, Ludhiana- 141012

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………Defendants

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Advocates: Argued by Sh. Tarun Bhutani, Nodal Officer of Punjab National Bank Defendants are ex-parte

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FINAL ORDER

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Present Original Application was instituted by the applicant bank under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, against the defendants for recovery of Rs.5,52,09,325.00 (Rupees Five Crores Fifty Two Lacs Nine Thousand Three Hundred and Twenty Five only). The Original Application has been filed through Sh. Vineet Dhingra, Branch Manager of the applicant bank, who is competent to institute the Original Application vide General Power of Attorney dated 05.12.2005, which is Annexure A1 to this OA. 2. The brief facts of the OA are that the defendant No.1 i.e. firm through its proprietor defendant No.2 had approached the applicant bank for the grant of Cash Credit Limit of Rs.3.00 Crores vide Loan Application dated 19.05.2016 and further for enhancement of the CC limit to Rs.4.00 Crores vide Loan Application dated 02.02.2019, which are Annexures A2 and A11 to this OA. 3. The applicant Bank sanctioned the Cash Credit Limit of Rs.3.00 Crores vide Sanction Letter dated 30.06.2016 and further enhanced the CC limit to Rs.4.00 Crores vide Sanction Letter dated 20.03.2019, which are Annexures A3 and A12 to this OA and the terms and conditions were duly accepted by the defendants. 4. Defendant No.2 had mortgaged his immovable properties detailed as: a) Shop No.9 bearing MC No.B-19-85/5E/1 old and B-19/85/5E/1B new, only First Floor without any roof rights, measuring 632 sq. ft. (70.22 sq. yds.) situated at First Mall Complex, Mall Road, Civil Lines, Ludhiana, Punjab vide Sale Deed bearing Vasika No.6365 dated 01.07.2013 along with its translation and Letters of Confirmation of Mortgage on LTR 21 dated

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02.07.2013 and 20.03.2019, which are Annexures A8 to A10 and A18 to this OA;

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b) Plot No.10, measuring 120 sq. yds., situated at Village Haibowal Kalan, Hadbast no.102, Tehsil and District Ludhiana, Abadi New Maya Nagar, Chuharpur Road, Ludhiana vide Sale Deed bearing No.11223 dated 27.12.2016 along with its translation and Confirmation of Mortgage on LTR 21 dated 22.03.2019, which are Annexures A19 to A21 to this OA; and

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c) Shop No.7-8 measuring 33.32 Sq. Yards situated at Abadi Khanna Colony, Village Threeke, Hadbast no.156, Tehsil and District Ludhiana, Punjab vide Sale Deed bearing No.13729 dated 06.03.2017 along with its translation and Confirmation of Mortgage on LTR 21 dated 22.03.2019, which are Annexures A22 to A24 to this OA.

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Documents executed:- Notification dated 04.03.2020, which is Annexure AA to this OA; Agreement for hypothecation of assets, Common agreement and Sole proprietorship letter all dated 01.07.2016, which are Annexures A4 to A6 to this OA; Affidavit dated 02.07.2016, which is Annexure A7 to this OA; Supplemental agreement to secure credit/loan facilities, Common agreement, Sole proprietorship letter, Undertaking for assignment of receivables and cash flows and Various undertakings all dated 20.03.2019, which are Annexures A13 to A17 to this OA; Balance and security confirmation dated 20.03.2019, which is Annexure A25 to this OA; Legal notice with postal receipts dated 09.08.2019, which are Annexures A26 and A27 to this OA; Statement of account, which is Annexure A28 to this OA; Memorandum of interest, which is Annexure A29 to this OA and Valuation report dated 17.10.2019, which are Annexures A30 to A32 to this OA.

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The loan account became irregular and was classified as NPA and after adjusting debit and credit entries in loan account there was a debit of Rs.5,52,09,325.00, which is recoverable and the defendants were served recall notices but they did not repay the outstanding

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amount, therefore, the applicant bank requested to accept the application and to issue Recovery Certificate accordingly.

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The defendants were served notices to appear before this Tribunal. Defendants appeared before this Tribunal through their counsel but later due to non-appearance, they were proceeded exparte on 13.09.2023.

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In support of the OA, affidavit of Sh. Vineet Dhingra, Branch Manager, Punjab National Bank has been filed.

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Heard ex-parte arguments and perused record.

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It was argued by Nodal Officer of the applicant bank that in view of the documentary evidence brought on record which had gone unrebutted, the applicant bank had proved its case. From the perusal of all the Annexures A1 to A32 to this OA, it is proved that the defendants approached applicant bank for availing of the loan facility which was granted to them and for that they had executed all the relevant documents in favour of the bank. The defendants failed to pay back the loan as per terms and conditions of the agreement between the parties. Subsequently, account of the defendants was classified as NPA. From the documentary evidence brought on record, it is proved that applicant bank is entitled to recover a sum of Rs.5,52,09,325.00 (Rupees Five Crores Fifty Two Lacs Nine Thousand Three Hundred and Twenty Five only) along with interest from the defendants, jointly and severally, from the date of filing of the present Original Application till realization of the account.

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In so far as pendent elite and future rate of interest is concerned, the applicant bank in relief clause has claimed interest @10.90%p.a. along with @2%p.a. penal interest with monthly rests from 17.11.2021 till the realization.

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The Tribunal is of the considered opinion that sometimes in appropriate cases the prerogative of mercy is the brightest jewel in the crown of the Judge. Keeping in view the facts and circumstances of the instant case including nature of the mortgaged property, undertaking of the defendants, quantum of loan and prevalent market rates of

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interest which have gone drastically downhill in yester years, while exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant uniform simple interest @10.00%p.a. in the loan account from the date of filing of the OA till realization of the amount ordered vide this final order. It is ordered accordingly.

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In the result, the application is allowed declaring that the defendants are liable to pay to the applicant a total sum of Rs.5,52,09,325.00 (Rupees Five Crores Fifty Two Lacs Nine Thousand Three Hundred and Twenty Five only) jointly and severally, with costs, current and future simple interest @10.00%p.a. in the loan account from the date of filing of OA till the date of realization of the amount. Accordingly, the applicant bank shall be entitled to recover aforesaid amount from the sale of hypothecated/mortgaged properties of the defendants in execution proceedings if not sold earlier under the provisions of the SARFAESI Act, 2002. If the dues of the bank still remain unsatisfied, it shall be entitled to recover the same by attachment and sale of personal assets of the defendants. The applicant is at liberty to enforce the claim through due process of law. 12. Any other application pending stands disposed of. 13. Issue Recovery Certificate accordingly.

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Parties to appear before Learned Recovery Officer of this Tribunal on 11.10.2023. 15. Copy of this order be given dasti to the applicant bank and be sent to defendants through registered/speed post and this order be also uploaded on the official website of this Tribunal and record be consigned.

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Pronounced by me in the Open Tribunal. Dated: 03.10.2023

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(MRIDULESH KUMAR SINGH) Presiding Officer, DRT-III, Chandigarh

Punjab National Bank v. M/s Arcadia

Case brief

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Punjab National Bank v. M/s Arcadia

Case brief

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