Allowed

Punjab National Bank v. Messers Kamakhya Steel

DRT1 Aug 2023OA/296/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the Bank's application for a recovery certificate against two defendants jointly and severally liable for an outstanding loan of Rs. 37,00,045.25 with future interest, based on unchallenged documentary evidence of execution and default.

What did the court decide?

Recovery Certificate issued for Rs. 37,00,045.25 plus future interest at 9.30% p.a.; charge kept alive on hypothecated properties; costs awarded to applicant.

Punjab National Bank versus Messers Kamakhya Steel — Execution and Attachment | DRT (2023)

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o A. 296/202zoRT-Guwahali

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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, l\4anipur, Mizoram, Arunachal Pradesh^{& Tripura)}

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Before Shri Shiv Sharan Dubev. Presidino^officer

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O.A. No.296/2022

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ln the matter of -

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Punjab National Bank^(Erstwhile United^{Bankof lndia)} Haiborgaon Branch A.T.Road, Haiborgaon,^{District-Nagaon,} Assam-782002.

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Applicant

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V3'

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M/s. Kamakhya Steal Proprietor:-Smt Pooja Sharma Wo Vinay Maheshwari Khutikatia, NH-37

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P.O.-Haiborgaon,^{District- Nagaon,} Pin-782002, Assam.

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Smt Pooia Sharma Proprietor of M/s^{Kamakhya Steel} w/o Vinay Maheshwari Shantipur, P.O.-Haiborgaon, 782002, Assam.

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Defendants

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Presence ot the^Counsel:

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: Mr. Vishal Kumar^{Dewan,Advocate} For the Applicant

For the Defendants

: None^(Ex-Parte)

Dated:01/08/2023

J U D GM E^{N T}

This is an application^{under section 19 of the Recoveryof OebtsDueto Banks} and Financial^{lnstitutionsAct, 1993 filed by the Punjab National Bank(Erstwhile} United Bank of^{tndia),Haiborgaon Branch, Haiborgaon, District-Nagaon' Assam-} 782002, with a^{prayer to issueRecovery Certificate for the sumof Rs' 37'00'045'25} (Rupees Thirty Seven^{Lakhs Forty Five and PaisETwBntyFive) only as on} 28.02.2022 against^{the defendants jointly and severally with pendentelite and future} interest @9.30%^{per annum at monthlyreststill realizationalong with cosl and other} relief

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Sli"rI4&-+-4, Presiding Oflicd I - DRT, Guwahata

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O.A 296/2022lDRT€uw.hiri

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

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The Defendant No:^,l is a proprietorship lirm and the Defendant No. 2 is its proprietor and they are the main Eorrowers in the Cash Credit Account of the Defendant No: 1.

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On 03.06.2017, the Defendant No: 2 in the name of her proprietorship concem had requested and applied to the Applicant Bank for financial assistance to the tune of Rs. 30,00,0001 by way of Cash Credit Limit for the purpose of her business of steel fabrication and supply, giving all necessary details to the Applicant Bank.

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The Applicant bank on 16.06.20.t7 considered the proposal given by the Defendant No.2 and sanctioned a Cash Credit Limit of Rs 3O,OO,OOO/- to the Defendant No 2 in the name of her proprietorship concern for the purpose of working capital requiremenls of her business of steel fabrication and supply, on various terms and conditions. The rate of interest was to be charged at the rate of 11.75o/o pe( annum on monthly rests subject to changes from time to time as per the guidelines of Head Office/RBl guidelines. The defendant No. 2 had offered the security of hypothecation of entire stocUinvenlory/receivable, plant and machinery^ransport equipment and other movable assets of the tirm. The Cash Credit shall be covered under Credit Guarantee Scheme of Stand up lndia by NCGTC.

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ln order to avail the aforesaid Cash Credit facilities upto Rs 3O,OO,OOO/_ the Defendant No. 2 in the name of her proprietorship concern had executed the necessary loan documents on 23.06.2017, such as Demand promissory Note, Hypothecation Agreement (Goods, Book Debts, plant and Machineries), Hypothecation of Debts and Movable Assets, Hypothecation of Goods, Declaration of Sole Proprietorship, Letter of Continuity, Letter of Lien, Declaration, Consent Clause.

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$iu9o^a- &,A"" "*"^^noflJo9lzz DRT. Guwahati⁶

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o.A. 296r2022/oRT€ueahsri

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ln pursuance of the execution of the loan documents and security

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documents by the Oefendant No. 2 in the name of her proprietorship concern in favour of the Applicant Bank and other conditions accepted by lhe Defendants, the disbursement of loan amounts were made to the Borrower Defendant No:^.l by the Applicant Bank. The Cash Credit Account was opened in the name of M/s Kamakhya Steel vide Account No: 2062250000170 and the account was being operated by iis Proprietor (Smt Pooja Sharma) the Defendant No: 2. The Borrower Defendant No: 1 represented by its proprietor had availed the Cash Credit facilities from time to time and such transactions were duly recorded in the books of account maintained by the Applicant Bank in the usual and ordinary course of their banking business.

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ln the course of time it was observed by the Applicant Bank that there were series of overdues in the Cash Credit Account of the Defendant No: 1 from the month of June 2020 to August 2020. Due to non-servicing of accumulated interesl in the Cash Credit Account, in terms of reslructuring and allied policies of the Bank one FITL Account was opened by the Applicant Bank in the name of the Defendant No: 1 on 03.09.2020 for Rs 1,79,666/- as a part of its efforts to restructure the Cash Credit account and prevent it from being declared as NpA. The Applicant Bank had transferred a sum of Rs^'1,79,666/- from the Cash Credit Account to the said FITL Account on 03.09.2020. The FITL Account was opened in the name of Defendant No: 1 vide FITL Account No: 2062300005197 and the accounl was being operated by its proprietor the Defendant No: 2. This FITL account was to be repaid trom January 2021 till March 2021 and the interest in the said FITL Account was to be charged on monthly basis and the same was to be paid by the Defendant No: 1 as and when charged. The lransactions were duly recorded in the books of account maintained by the Applicant Bank in the usual and ordinary course of their banking business.

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Subsequently al the request of the Defendant No: 2, the Applicant Bank on l5.Og 2020 had renewed the existing Cash Credit Limit upto Rs 30,00,0001of

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.sli/S,oro" &-f--' Preriding Otr&r o rlo9l l-- ),r n\J DRT. Guwahati

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gA. 2962022/DRr€L,y.h.ri

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Defendant No: 1 to fulfill the working capital requirements of her existing business of manufacturing and selling of steel domestic appliances and further reviewed the existing Term Loan (FITL) of Rs 1.79,000, on the various terms and conditions. The said Cash Credit Limit was to be repayable on demand. The rate of interest was @ RLLR+z.10o/o i.e. 8.9o/o p.a. subject to changes from time to time as per HO Circular/RBl guidelines. The said limit was primarily secured by hypothecation of (a) First charge on entire current assets both current and future including stocks consisting of raw materials, work in progress and finished goods, book debts etc. (b) First charge on Plant and Machineries and other fixed assets of the firm as we as unit, bolh present and future. The Cash Credit Limit was covered under the Credit Guarantee Scheme for Stand Up tndia (CGSSI).

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ln order to continue to avail the credit facilities the necessary documents were execuled by the defendant No. 2 on 19.09.2020, such as Hypothecation of Goods to Secure a Demand Cash Credit, Hypothecation of Goods and Book Debts and Master Agreement.

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From time to time the defendant No. 2 had confirmed lhe correctness of balance and securities in her loan accounts more specifically on 3i.12.2019 and 19.09.2020 when the defendant No. 2 had acknowledged the existing liabitity in her loan accounts by executing Balance Confirmation Letter dated31.12.2019 and 19.09.2020.

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The defendants had availed the loan facilities from the applicant bank but have not paid the outstanding amounl as per terms and condition made with the applicant bank in spite of repeated demands and request by the applicant bank. As the loan account being Cash Credit account FITL account of defendants were running extremely irregular and due to non-payment of principal amounl and anterest, both the accounts were classified as a NPA on 3,1.03.2021. After the accounts became NpA the applicant bank issued notices for repayment of the due amount, the defendanb have neither chosen for repayment of the remaining installments in the FITL account

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H*jffiEY

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O.A. 29€i/2022lORTCuwrhati

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nor approached to the applicant bank for setfling the loan account nor renewed the cash credit account.

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The applicant bank thus became constrained to iile the present Odginal Application for the recovery of Rs. 32,00,045.25 (Rupees Thirty Sevon Lakhs Forty Five and^paise T\ renty Fivo) onry as o n 2g.o2.2022 arong wrth interest and cost of the application.

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After filing of the OA the Tribunal issued notices upon the defendants through registered post and the appljcant bank filed service report on 07.11.2}2|and brought on record the postal receipts along with track consignment report which shows that notice has not been served upon the defendants. Thereafter the Tribunar ordered paper publication of notice upon the defendants and the applicant bank issued notice to the defendants on 09.02.2023 through paper publication in two newspapers namely 'Sentinel" and "Dainik Asom". Even after issuance of notice through paper publication also there was no rcpresentation on behalf of the defendants either by the counsel or the person and hence the defendants were set ex_parte on .l .1.04.2023 and their right to file written statement cum evidence on affidavit rrvas closed and the matter was posted for hearing on behalf of the applicant bank.

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Suppoding the claim of the applicant bank Smt. Bobby Baruah, Senior Manager of the Applic€nt Bank has fled evidence on affdavit coupled with the security documents marked as Exhibit A-.1 to Exhibit A_22 supporting the claim of the applicant bank.

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

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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 ofthe

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s[-"/d;fif1*L^L"l Presding oficei l - I DRT, Guwahal

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o.A. 296/2o22/DRlcueeh.ti

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applicant bank and establishing the liability of the defendants. lt is proved that the defendants are joinfly and severally liable to pay to the applicant bank the claim made in the Original Application. The loans were obtained and documents have been executed on 23.06.2017 &^,19.09.2020. From time to time the defendant No. 2 had confirmed lhe correctness of balance and securities in her loan accounts more specifically on 3,1.12.2019 and 19.09.2020 when the defendant No. 2 had acknowledged the existing liability in her loan accounts by executing Balance Confirmation Letter dated 31.12.20,19 and 19.09.2020. The accounts became NpA on 31.03.2021 and the OA has been fited on 30.07.2022. Hence, the OA is fited well within the period of limitation and this Tribunat having a jurisdic{ion to adjudicate the Original Apptication.

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Considering the unchallenged/unrebutted version of Smt. Bobby Baruah, the applicant's witness and all the documents ma*ed as exhibits, including duly certified copy of the stalement of accounl along with interesl 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 Cerlificate as prayed for.

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ln the result, the present Original Application No.296 of 2l22is a,owed with cost as under :-

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The defendants No. .l & 2 are joinfly and severally liable to pay to the applicant bank a sum of Rs. 37,00,045.25 (Rupoes Thirty Seven Lakhs Forty Five and paise Twenty Five) onry with pendenterite and fulure interest @9.30% p.a. with monthly rests from 0,t.03.2022 tilt the dale of fu paymenvrealization and also cost of the application.

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ii) The charge of the ce(iticated 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 entifled to proceed against the secured items towards recovery of the debts.

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oa 296/2022lDRT4uNrah.ti

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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 appricant bank is entifled to the costs of the o.A. which incrudes the advocala fees of the applicant bank_ Applicant is directed to rile the cost memo within 2 weeks from today.

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v0 lssue Recovery Certificate accordingly for a sum Rs. 37,00,045.28 (Rupees Thirty Ssvon Lakhs Forty Five and paise Twenty Five) only in favour of the applicant bank against lhe defendants No. I & 2.

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vii) Communicate copy of this order to the concemed parties.

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This order is dictated and corrected by the undersigned.

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Judgmenr dated 1{ August 2023, signed and pronounced in the Tribunar today under my signature.

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copy of the Judgment/Finar order be uproaded in the Tribunals website and lile be consigned to Record Room.

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-Slclg<ar. A-ir. r.n* - Presidtng "n",."nt Oflicer^6l,t?Jr}' '^rf DRT, cuwahati.

Punjab National Bank v. Messers Kamakhya Steel

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. Messers Kamakhya Steel

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

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Case details

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