Allowed

Uco Bank v. M/s Bhagwati Vastralay and Others

DRT22 Feb 2023OA/314/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an ex-parte application filed by UCO Bank to recover outstanding dues of Rs.20.60 lakhs plus interest from borrowers who failed to repay a cash credit and term loan facility. The court determined the debt and directed the issuance of a recovery certificate.

What did the court decide?

The defendants are ordered to jointly and severally pay Rupees 20,60,224.48 along with pendente-lite and future interest at 7.90% p.a. compounded monthly from 08.06.2022 till realization.

Uco Bank versus M/s Bhagwati Vastralay and Others — Banking and Recovery | DRT (2023)

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OA 314 of20221J)

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DRT,PATNA

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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. : 314 of 2022

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UCO Bank through its Branch Manager, Katarmala, Branch District-Begusarai.

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. Applicant

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Vs.

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MIS Bhagwati Vastralay through its proprietor Surya Narayan Jha at Katarmala, PO-Katarmala, PS-Dandari, District-Begusarai, Pincode851130.

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Surya Narayan Jha Son of Bambholi Jha resident at Katarmala, POKatarmala, PS-Dandari, District-Begusarai, Pincode-851130, PAN No-BPSPJ3717Q

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Jitendra Kumar Son of Surya Narayan Jha resident at Katarmala, PO-Katarmala, PS-Dandari, District-Begusarai, Pincode-851130, PAN No-EIPPK3272R.

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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 : None

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Dated: 22 .02.2023

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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 8.6.2022 against the defendants to recover its debts from defendants of Rs.20,60,224.48 upto 2.6.2022 alongwith pendente-lite and future interest @10.25% in CC and @7.90% in TL p.a. with monthly rest from 3.6.2022 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 is a Bank constituted under The Banking Companies (Acquisition & Transfer of Undertaking) Act 1970, having its Head Office at 10, BTM Sarani. Braboume Road, Kolkata-700 001. It has branches throughout India and one of such branch is situated at Begusarai Branch, District-Begusarai, Bihar.

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The defendant No-I, is proprietorship firm and defendant No-2, is proprietor (Borrower) and defendant No-3, is guarantor. The Defendant2, in the name and style of defendant No-I, approached the applicant Bank along with the application on 16.01.2018 for grant of a Cash Credit facility of Rs.20.00 lakh under uca Traders Scheme for Readymade

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OA 314of2022(J]

DRT,PATNA

(Garments) business at Katarmala District-Begusrai. upon consideration of the loan proposal for Readymade (Garments) business on various parameters a Cash Credit facility of Rs.20.00 lakh was sanctioned by the applicant Bank on 08.03.2018 in favour of defendant No-I, on various terms and conditions as set out in loan documents and Sanction Letter agreed by defendant No-2 in the name and style of defendant No-I. The defendants have executed the various loan documents i.e. DP note, hypothecation of goods and defendant No-2, agreement of guarantee and further created equitable mortgage of property details given at page 20 in schedule- A

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Again the defendant No-2, in the name and style of defendant No1, approached and applied For Term Loan Facility of Rs.2,00,000,l- under GECL Scheme (under RBI guidelines due to Covid-19,) to the Applicant Bank on 20.06.2021 for improving and running his business and use as working capital. The defendants executed the various loan documents i.e. DP note, composite deed of hypothecation, term loan agreement etc.

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The defendants thereafter enjoyed the benefit of said loan facility but after some time did not adhere to the terms and conditions of the said facility and despite repeated request did not clear dues within specified time as per the agreements of the facility and later on due to non- deposit of the installments by defendants their account become irregular despite regular follow up by telephone and recall notice. As a result the account of defendants had classified as NPA on 02.04.2022 as per guidelines of RBI.

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The total outstanding dues amount comes to Rs.20,60,224.48 upto 2.6.2022 and the defendants are liable to pay further interest on the said amount w.e.f. 3.6.2022.

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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.

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4Dis 19 (4) of the Act & Rule of the DRT [Procedure] Rules, 1993, copies of application & paper book were sent by this Tribunal to the defendants by registered/speed post on 26.7.2022 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 26.7.2022, 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

OA 314 of20221J]

DRT,PATNA

of notice by way of advertisement in newspaper was also made against the defendants on 16.9.2022in" Hindustan" newspaper.

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Despite the registered summons/notices and publication of notice in newspaper, the defendants have not appeared before this Tribunal to contest the case. The sufficient time has been given to the defendants to defend their case, but they failed to appear and to file WS, hence, the Tribunal has passed an order to proceed ex-parte against the defendants on 1.12.2022.

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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 Shri Maharana Pratap Singh, Branch Manager of the applicant bank. The details of documents are as follows. :-

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SI.No	Description of photocopies Documents	Date of Execution	Amount	Signature of executant	Ex.! I Ann. No.
I	Power of Attorney	.....	....	....	I
2	Loan application	16.01.2018	Rs.20.00 lakh	Defendant no. 1&2	2 , "
3	Sanction Letter	08.03.2018	Rs.20.00 lakh	bank	- 3 I
4	Demand Promissory Note	06.03.2018	Rs.20.00 lakh	Defendant no. 1&2	4/4A 14B
5	Hypothecation of Goods to Secure a Demand Cash Credit	06.03.2018	Rs.20.00 lakh	Defendant no. 1&2	5 I
6	copy of Sale deed No- 6667	19.12.1992	......	Defendant No-2	6 I
7	Agreement of guarantee	15.10.2020	Rs.20.00 lakh	Defendant No-3	7
8	of CERSAI Registration ID	04.04.2020	....	....	8 , I
9	Loan application	20.06.2021	Rs.2.00 lakh	Defendant no. 1&2	9
10	Demand Promissory Note	29.06.2021	Rs.2.00 lakh	Defendant no. 1&2	10
11	Agreement relating to Term Loan	29.06.2021	Rs.2.00 lakh	Defendant no. 1&2	11 I
12	Composite Deed of Hypothecation.	29.06.2021	Rs.2.00 lakh	Defendant no. 1&2	12
13	Agreement of Guarantee	29.06.2021	Rs.2.00 lakh	Defendant No-3	13 ,
14	RecalllDemand Notice	11.02.2022 14.03.2022	...	Bank	14 , , I
15	demand Notice	02.06.2022	.....	Bank	15
16	Statement of account	As on 2.6.2022	Rs.20,60,224.48	Bank	16

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6- Opportunity of hearing has been fully given to both the parties, but despite several opportunities given to defendants, the defendants have not appeared to contest the case, hence, the ex-parte arguments of learned counsel for applicant bank were heard and perused the case record.

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DRT,PATNA

OA 314 of2022[J]

Ld. counsel of applicant bank submitted that the defendants have taken the loan and utilized the same and also executed the various loan documents to secure the loan. Further, submitted that the claim of the bank has been proved by documentary evidence.

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It is further submitted by ld. Counsel of applicant bank that there is no any stay granted by any Higher Court, in respect of the proceedings of the present OA and requested to issue recovery certificate, as claimed for, inOA.

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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 also 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 pecumary 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 applicant bank has declared the account as NPA on 2.4.2022, whereas the present application has been filed on 8.6.2022. 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 from the date of declaring the account as NPA. 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 Shri Maharana Pratap Singh, Branch Manager of the 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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The documents as stated above reveal that the defendants have applied for loan and the bank had sanctioned the loan and 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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The applicant bank has also furnished statement of account as 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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10Since, the case was proceeded ex-parte against defendants, all contentions raised and documents produced by plaintiff remained unrebutted and the tribunal may act upon the affidavit of the applicant as per law. Defendants 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

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DRT,PATNA

OA 314 of2022[J)

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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11On consideration of the arguments and on perusal of the application, documents and affidavit, it is proved that the applicant bank has granted the loan facility, documents were executed by the defendants and facility was availed by the defendants as stated in the application.

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12The applicant bank has sought for recovery of a sum of Rs.20,60,224.48 with cost and further interest at the contractual rate from 3.6.2022 till realization.

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13Learned Advocate appearing for applicant bank submits that the applicant bank has charged interest in terms of the agreements and that 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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14On consideration of the arguments and on perusal of the pleadings, documents and affidavit, it is proved that the applicant has charged interest against defendants in terms of documents and as per directives of RBI.

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15None of the defendants appeared before the tribunal to contest the claim made by the applicant, therefore, it necessarily goes to establish that the claim made by the applicant bank is genuine and true. It is manifest that the defendants have not disputed the claim, therefore, the claim referred to the tribunal is recoverable till full and final realization of the claim.

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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." , ,

OA 314 of2022[J]

DRT,PATNA

17In my view, Facts of the case stand proved by evidence of the applicant bank ex-parte. Accordingly, The applicant bank is entitled to recover from defendants jointly and severally of Rs.20,60,224.48 alongwith pendente-lite and future interest @7.90% p.a. with compounded monthly rests from 8.6.2022 (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 exparte and debt is determined with costs against the defendants. The defendants is hereby jointly and severally, ordered to pay the applicant bank it's debts amounting of Rs.20,60,224.48 alongwith pendente-lite and future interest @7.90% p.a. with compounded monthly rests from 8.6.2022(The date of filing of this O.A.) of the entire sum due and recoverable with costs.

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It is 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 ofjustice.

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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 realize 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 1.4.2023.The order be communicated accordingly.

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Judgment signed, sealed, dated and pronounced in the open court on this 22nd Day of February, 2023. "-z:,. >~ >~

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"-z:,. >~ >~

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,\ ~/v ,,-/1. : " ' ) ~ ~'v"___/' [Kaushalendra Yadav] Presiding Officer Debts Recovery Tribunal, Patna

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Dictated & corrected by me.

Uco Bank v. M/s Bhagwati Vastralay and Others

Case brief

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Uco Bank v. M/s Bhagwati Vastralay and Others

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