The Tribunal disposed of an application filed by Canara Bank for issuing a Recovery Certificate against a proprietorship firm and its guarantors for a loan amount outstanding as on 31.05.2022.
Issuance of Recovery Certificate for Rs. 29,25,175.57 with interest and direction to proceed against secured and personal assets.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
I
o.A. 433r2o22DRT€mahari
IN THE DEBTS RECOVERY TRIBUNAL, GUWAHATI
(North Eastern Region)
{TribunalofAssam, Nagaland, Meghalaya, Manipur, Mizoram,Arunachal Pradesh& Tripura)
Before Shri Shiv Sharan Dubev. Presidinq Officer
O.A. No. 433/2022
ln the matter of -
Canara Bank
Dimapur Branch, First Floor, Near Plaza Bakery, Nyamo Lotha Road (Church Road), Oimapur, Nagaland- 797112.
Applicant Vs.
Proprietorship firm of Mr. Atoho Shikhu House No. 31, Angami, Khel, Notun Basti Dimapw- 797 1 12.
House No. 31, Angami, Khel, Notun Basti Oimapur 797112.
House No. 31, Angami, Khel, Notun Basti Dimapw- 797'l'12.
Defendants
Presence of the Counsel :
For the Applicant : Sri Mukesh Sharma, Sri Ellora Bharali, Advocates For the Defendants : None (Ex-parte)
Dated .2410712023
JUDGMENT
This is an application under section 19 of the Recovery of Debts Due to Banks and Financial lnstitutions Act,'1993 filed by the Canara Bank, Dimapur Branch, First Floor, Near Plaza Bakery, Nyamo Lotha Road (Church Road), Dimapur, Nagaland- 797112, with a prayer to issue Recovery Certificate for the sum of
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o.A. 433,.2o2zoRT-Gwahati
Rs.29,25,'175.57 (Rupees Twenty Nine Lakhs Twenty Five Thousand One Hundred Seventy Five and Paisa Fifty Seven) only as on 31.05,.2022 against the defendants .iointly and severally with pendentelite and future interest thereon at the contractual rate till realization along with cost and other relief.
A few facts giving rise to the present application are as under.
Defendant No.'l is the proprietorship firm of Defendant No.2 as well as the borrower and Defendant No.3 is the guarantor to the loan availed by the defendant No-1 firm
The Defendant No. 2 as proprietor had approached the Applicant Bank and applied for financial assistance by submitting a Loan Application dated 1S.09.2OOB for ils business and after considering the said Application, the Applicant Bank vide its Sanction Letter dated 03.10.2008 had sanctioned an Term Loan facility of Rs.5,00,0001 Lacs only to the Defendant flrm, with interest @ 14+i (pLR+i)% per annum compounded monthly subject to changes from time to time as per ganks guidelines. The loan facility was repayable in monthly installments. The EMI was fixed at Rs.10,450.00/- in addition to interest. ln the event of default, the bank shall also be entitled to charge at its own discretion and the borrower shall be liable to pay such enhanced rate of interest on the said cash credit account. The Defendant had signed on the said Sanction Letter, thereby agreeing to the lerms and condition laid down therein.
ln connection with the sanction of the Term Loan Facility of Rs. S,OO,OOO/_ Lacs, sanctioned by the Applicant Bank and availed of by the Defendant firm, a Composite Hypothecation Agreement dated O3.1O.2OOS has been signed and executed by the Defendant No. 2 as the proprietor of the firm in favour of the Applicant Bank as security for repayment of the loan, thereby agreeing to all the terms and conditions laid down in the said Agreement and also charged/ hypothecation of present and future stocks, furnitures and fixtures etc. in favour of the Applicant Bank. It is stated by the applicant bank that at present lhere are no stocks available as the business has become defunct.
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oA. a33/2022loRT€wah.ti
ln connection with the sanctioning of the cash credit facility of Rs. 5,00,000/Lacs sanctioned by the applicant bank and availed by the defendanl no.'l firm, Guarantee Agreement dated 03.10.2008 was signed and executed by the defendant no. 3, who stood as thepersonal guarantor to the said loan facility availed by the defendant no.1 firm. The said Guarantee Agreement in Defendant No.3's capacity as the personal guarantor had not only confirmed the signing and execution of the Guarantee Agreement dated 03.10.2008 but also acknowledged its obligation as the personal guarantor to the loan facility availed by the defendant no. 1 firm.
The Defendant No. 2 asproprietor of Defendant No.1 had confirmed and acknowledged its indebtedness towards the bank by signing and executing Acknowledgement of Oebt and Security dated 10.09.201'1, 05.09.2014, 01.09.2017, 29.08.2020 also confirmed the execution of loan documents and the relative securities in connection with the said loan facility availed of by the Defendants.
The defendants had availed the loan facility from the applicantbank but have not paid the outstanding amount asper ierms and conditionmade with the applicant bank in spite of repeated demandsand requestby theapplicant bank. As theloan accounl being the term loan account of defendantswas running extremelyirregular and due to non-payment ofpdncipal amount and interest, the saidaccount was classified as a NPA on 01.08.2010. After the accountbecame NPA the applicant bank issued notices for repayment of the due amount, the defendants have neither chosen for repayment of lhe remaining installments in the loan account nor approached to the applicant bank for settling the loan account.
The applicant bank thus became constrained to file theptesentOriginal Application for the recovery of Rs. 29,25,175.57(Rupees Twenty Nine Lakhs Twenty Five Thousand One Hundred SeventyFive and Paisa Fifty Seven) only as on 31.05.2022 along with interest and costof the application.
After filing of the OA the Tribunal issuednotices upon the defendants through registeredpost and the applicantbank filed service reporton 06.01.2023 and brought on record thepostal receipts alongwith track consignment reportwhich shows that notice has not been servedupon the defendants. Thereafrer the Tribunal ordered
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o.A. a33l2oizlDRr-c*h.r.
paper publication of notice upon the defendants and theapplicant bank issued notice to the defendants on 07.02.2023through Paper Publicationin two newspapers namely "Morung Exr1P-s! and"Tir YimYim". Even after issuance of notice throughpaper publication also there was norepresentationon behalf of the defendantseither by the counsel or thepersonand hencethe defendants were set ex-parte on 06 04 2023 and their rightto file written statement cumevidence on affidavit was closed and the matter wasposted for hearing on behalfof the applicantbank'
SuPportingthe claim of the applicant bankMr' Purtoshi AO' Senior Manager of the ApplicantBank has iled evidenceon affidavit coupled with the securitydocuments markedas Exhibit-P' ExhibitAW-1 to AW-10' supportingthe claim of theapplicant bank.
Heardthelearned counsel for theapplicant bank who prayedfor issuance of RecoverycertificateagainstthedefendantsaSperpleadingsmadeinthe Application,supported by evidenceon aftidavit of theirwitness who affirmed on oath theexecution of the securityand other documents by the delendanisand also executionof their own documents relied upon' which have been markedexhibits'
Consideringthe facts and circumstancesof the case' I am of theconsidered view thatthe documentsfired by theappricantbank are supporting the craim of the applicantbank and establishing the liability of the defendants'lt is proved that the defendantsare jointryand severaryriabre to pay to the appricant bank the craim madein the Original ApPlication'Theloanwas obtained and documents have been executedon 03 10 2OO8 TheDefendantNo 2 as proprietor of DefendantNo 'l had confirmedand acknowledgedits indebtednesstowards the bankby signing and executingAcknowledgementof Debt and Securitydated 10092011'0509'2014' 01.09.2017& 29 08 2O2O Theaccountbecame NPA on 01 08 2OlO and the OA has beenfiled on 2g''l[ 2v?z'Hence' the OA is filed well within the period of limitation andthisTribunalhavingaiurisdictiontoadiudicatetheoriginalApplication. Consideringthe untebutted version of Mr' PurtoshiAO' the applicant's witness andall the documents markedas exhibits' includingdulycertilied copy of thestatement of account along with interest calculation sheet maintainedby the
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O.4.,13312022/DRT-Gwahaii
applicant Bank in it's regular course of business, I hold that the applicant is entifled to get the Recovery Certificate as prayed for.
ln the result, the present Original Application No. 433 ot 2022 is aflowed with cost as under:-
The defendants No. 1, 2 & 3 are jointly and severally liable to pay to the applicant bank a sum of Rs. 29,25,175.57 (Rupees Twonty Nine Lakhg Twenty Five Thousand One Hundred Seventy Five and paisa Fifty Seven) only with pendentelite and future interest @14+1 (pLR +.1)o/o p.a. with monthly rests from 01.06.2022 till the date of full paymenyrealization and also cost of the application.
iii) The applicant bank is entitled to proceed against the secured items towards recovery of the debts.
Copy of the JudgmenuFinal Order be uploaded in the Tribunat's Website and file be consigned to Record Room.
S[-$q1?fiH,l,g (Shiv Sharan DJGi)l-, ,l Presiding Officer DRT, Guwahati.
2 issues framed by the court
Whether the application for issuance of Recovery Certificate is maintainable within the period of limitation.
Whether the Relief granted is in accordance with the decree of DRT.
1 provisions across 1 enactments
Canara Bank, Dimapur Branch
M/s Cinnamon Tree
Mr. Atoho Shikhu
Ms. V Kaholi Zhime
Shiv Sharan Duba
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
