Allowed

Punjab National Bank v. M/s Ayush Agro Industries and Others

DRT4 Jul 2023OA/460/2022

Case brief

AI extract

What is this about?

The Patna Debt Recovery Tribunal allowed an application by Punjab National Bank to recover Rs. 40,99,209.76 plus interest from borrowers who failed to repay credit and term loan facilities. The court relied on admitted execution of loan documents and the bank's certified Statement of Account, rejecting defenses regarding arbitrary NPA declaration and interest capitalization.

What did the court decide?

Recovery certificate issued for Rs. 40,99,209.76 with interest at 11% p.a. compounded monthly from 19.8.2022 till realization; attachment of mortgaged assets.

Punjab National Bank versus M/s Ayush Agro Industries and Others — Banking and Recovery | DRT (2023)

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OA 460 of 2022 [J[

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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-80002S

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Presiding Officer : Shri Kaushalendra Yadav

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OA Case no. : 460 of 2022

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Punjab National Bank, MG Road, Aurangabad, P.O. and DistrictAurangabad Pin 824101.

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. Applicant

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Vs.

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Mis Ayush Agro Industries through its proprietor Babita Singh @ Babita Devi registered address at Amar Bigha, Tola Hasauli, AnchalDeo District-Aurangabad-824101.

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Babita Singh @ Babita Devi Proprietor Mis Ayush Agro Industries W 10 Sri Santosh Kumar Singh, Rio At Anugrah Nagar, Ramdih, Town and District-Aurangabad-824101, PAN no. DWYPS1080M.

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Santosh Kumar Singh Sio Shri Vishwanath Singh Rio Anugrah Nagar, Ramdih, Town and District-Aurangabad-824101 PAN no. CDAPS7326A.

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...Defendants.

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Present:

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For the Applicant : Dr.B.B.Sinha Advocate For the Defendants Shri Arun Kumar Sinha, Advocate

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Dated: 04.07.2023

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JUDGMENT

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1- The Applicant bank has made this application uls 19 of the Recovery of Debts and Bankruptcy Act, 1993 (here-in-after referred to as Act) on 19.8.2022 against the defendants to recover its debts from defendants of Rs.40,99,209.76 as on 30.4.2022 alongwith pendente-lite and future interest at the contractual rate from 1.5.2022 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 bank body corporate constituted under Banking companies (Acquisition and Transfer of Undertakings) Act V of 1970 having its Head office at Plot no. 4, Sector-10,Dwarka New Delhi-110075 and branches at various places in India including one at M.G. Road, Aurangabad.

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The defendant no. 1 is proprietorship firm and defendant no. 2 is proprietor. Defendant no. 3 is guarantor. The defendant no. 2 itself and on behalf of the defendant no. 1 availed and utilized the loan amount as provided by the bank in the shape of cash credit facility of Rs.14.53 lakh.

·,

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Further defendant no. 2 itself and on behalf of the defendant no. 1 approached the bank for enhancement of cash credit facility upto Rs.30 lakh on 7.9.2016. The bank after considering the said application as submitted by the defendant no. 2 enhanced the cash credit facility upto Rs.30 lakh. The defendants executed the various loan documents i.e. hypothecation of goods and book, consent clause, PDR and supplementary agreement and guarantee agreement. The defendant no. 2 mortgaged her landed property details given at page 13 & 14 in scheduleA of ~A. The defendants further approached the bank for term loan of Rs.2.50 lakh and the bank after proper considering provided the same to the defendants on 26.7.2019 and agreed to pay the 11.90% p.a. interest with monthly rests.

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All the transactions were entered in the ledger of the loan accounts in the name of the defendant duly maintained by the applicant bank in its usual course of business. After availing the sanctioned credit facilities became irregular in repayment of their dues as per agreed terms and failed to adhere to the financial norms of the bank and avoiding the repayment of its dues to the bank, in spite of several assurances given by it to the applicant bank resulting in the account turning as NPA on 31.3.2021

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Thus the total liability in the loan account is RsAO,99,209.76 with pendentelite and future interest at the contractual rate from 1.5.2022till the realization.

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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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4- Uzs 19 (4) of the Act & Rule of the DRT [Procedure] Rules, 1993, copies of application & paper book was sent by this Tribunal to the defendants by registered/speed post on 15.9.2022, 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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In response of defendants have appeared and defendants have filed written notes of arguments stated that the bank had initially granted working capital finance under cash credit facility to the limit of Rs.14.53 lakh to the defendants in the year 2016. The cash credit limit was further enhanced to Rs.30 lakh on 14.12.2016 as per request of the borrower, after considering all the related aspects viz satisfactory conduct of business and transactions in the account and working capital requirement as per market needs the bank enhanced the cash credit limit. The bank a sum of Rs.2.50 lakh was further granted to the borrowers in the shape of a term loan on 26.7.2019. However neither copy of request letter for the said term loan has been furnished by the bank nor copy of any documents

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to this effect has been filed as per list of documents submitted before this tribunal by the bank. The bank declared the cash credit account of borrower as NPA on 31.3.2021 in a most arbitrary manner and without any prudence. It is quite evident from this fact that the applicant bank in its sanction letter dated 14.12.2016 has clearly mentioned that the CC hypothecation limit was being sanctioned for 12 months only and yearly renewal will be done on the basis of submission of required papers by the borrowers. Thus it may be assumed that the bank has renewed the cash credit limit on or before 14.12.2017, 14.12.2018, 14.12.2019 and 14.12.2020 and each time appropriate entry for renewal of limit would have been also feeded in the computer system of the bank. It is further stated that the bank declared the account as NPA on 31.3.2021 and issued a legal notice. When the bank debited the processing charge for renewal on 25.3.2021, who the account was declared as NPA category on 31.3.2021. It is further stated that the Hon'ble Supreme Court of India have already given direction not to capitalize penal interest charged to the borrowers account but contrary to apex court's direction the bank has capitalized the penal interest applied by it to the defendants. Loan account. It is further stated that the defendants had requested the bank to restructure the account in view of genuine difficulties in running the business in the wake of post Covid-19 circumstances, however, the bank paid a deaf ear to their request and acted in a most arbitrary manner. It is further stated that eh bank issue notice uls 13(2)of the SARFAESI Act on 28.9.2021 and revised notice on 28.12.2021. In both the notices the total demand has been made for Rs.34,51,607/- however when the applicant bank filed this OA the amount has been increased to RsAO,99,209.76. Neither the bank has submitted any calculation sheet showing that how they have added the amount of unrealized interest and legal expenses if any. It is prayed that the petition filed by the bank in OA 460/2022 be rejected and quashed or any order be passed which this Hon'ble Court may deem fit and appropriate.

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However, the defendants in their written statement have not denied the sanction of loan amount, its utilization and further to secure the loan, execution of relevant documents.

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Arguments of ld. Counsels of the applicant bank and ld. counsel for the defendants were heard and record perused and considered.

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5- To prove its case, the applicant Bank has referred various certified photocopies of documents before this Tribunal. The applicant bank has also given evidence on affidavit by way of affidavit of Shri Jai Nath Kumar, Chief Manager of the applicant bank. The details of documents are as follows. :-

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SI.No	Description photocopies Documents	of	Date of Execution	Amount	Signature of executant	Ex.! Ann. No.
1	Loan application		7.9.2016	Rs.30 lakh	defendant no. 1&2	1
2	sanction letter		14.12.2016	Rs.30 lakh	bank	2

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3	Hypothecation of goods and book	15.12.2016	Rs.30 lakh	defendant no. 1&2	3
4	Consent clause	...	...	defendant no. 1& 2	4
5	Consent clause	...	...	defendant no. 3	5
6	PDR	15.12.2016	Rs.30 lakh	defendants	6
7	Balance confirmation	10.12.2019	...	defendant no. 1&2	7
8	Loan confirmation letter	15.12.2016	Rs.30 lakh	defendant no. 1& 2	8
9	supplementary agreement	15.12.2016	Rs.30 lakh	defendant no. 1 & 2 and bank	9
10	supplementary agreement	15.12.2016	Rs.30 lakh	defendant no. 1& 2	10
11	Agreement of guarantee	15.12.2016	Rs.30 lakh	defendant no. 3	11
12	copy of sale deed no. 2345 and sale deed no. 9157	2.2.2016 5.7.2012	...	...	12
13	sanction letter	26.7.2019	Rs.2.50 lakh	bank and accepted by defendants	13
14	legal notice	15.2.2022	...	Adv.	14
15	Statement of account	as on 30.4.2022	Rs.40,99,209.76	bank	15

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6- It is submitted by ld. Counsel of applicant bank that the defendants have admitted the loan facilities, granted to them and there is no any specific denial of execution of loan documents by the defendants. It is further submitted that there is no any stay granted by the Hon'ble Higher Court in the matter.

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It is further submitted that the applicant bank has filed the Original Application, for recovery of due amount, after deducting all the amounts, deposited by the defendants and by calculating the interest charged, as agreed by the defendants. It is further submitted that the defendants have not deposited any amount, after filing of the OA.

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It is requested that the recovery certificate may be issued for the claim amount, as made in OA, as there is no any specific denial by the defendants.

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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 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 pecuniary 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 account was declared as NPA 31.3.2021, whereas the

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present application has been filed on 19.8.2022. 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. 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 Jai Nath Kumar, Chief Manager of 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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10On perusal of the above documents, it is clear that the applicant bank has granted loan facility to the defendants and to secure the loan, various loan documents were executed by the defendants and loan facility was availed by the defendants as stated in the application.

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In the argument of the ld. Counsel of defendants have admitted the loan facilities, granted by the applicant bank and its utilization and further admitted the execution of loan documents, by the defendants, to secure the loan facilities.

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So far as the dispute regarding charging of higher rate of interest, is concerned, in this matter, the applicant bank has sanctioned the loan facility with interest and on perusal of the documents and statement of accounts, it appears that the bank has charged the rate of interest, as agreed by the defendants. Further it was certified by the applicant bank that 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 the RBI. The statement of account is certified under the Banker's Books of Evidence Act. Therefore, this dispute is not acceptable and is hereby rejected.

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12The documents as stated above reveal that the defendants have applied for loan and bank had sanctioned loans, thereafter, 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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13The applicant bank has also furnished statement of account as shown 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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14Defendants 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 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

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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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15On consideration of the arguments and on perusal of the application, documents, affidavit, it is proved that the applicant bank has granted the loan facilities to the defendants and to secure the loan, various loan documents were executed by the defendants and facilities were availed by the defendants as stated in the application.

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16-The Section 58 of the Indian Evidence Act, 1872 reads as under-

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"58. Facts admitted need not be proved.- No fact need to be proved in any proceeding which the parties thereto or their agents agree to admit at the hearing, or which, before the hearing, they agree to admit by any writing under their hands, or which by any rule of pleading in force at the time they are deemed to have admitted by their pleadings: Provided that the Court may, in its discretion, require the facts admitted to be proved otherwise than by such admissions.

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17In 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."

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18Facts of the case, in my view, are well proved by evidence of the applicant bank as well as admission of defendants. The applicant bank is entitled to receive from defendants jointly and severally of RsAO,99,209.76together with pendentelite and future interest @11% p.a. with compounded monthly rests from 19.8.2022 (The date of filing of

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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 and debt is determined with costs against the defendants and it is, hereby jointly and severally, ordered that the applicant bank is entitled to receive from sole defendants, it's debts with interest, amounting to RsAO,99,209.76together with pendentelite and future interest @11% p.a. with compounded monthly rests from 19.8.2022 (The date of filing of this O.A.) till realization of the entire sum due and recoverable with costs.

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It is further 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 of justice. The mortgaged or hypothecated assets to secure the loan in question are hereby attached and shall be subject to the final order under the recovery proceedings in pursuance of the Recovery certificate issued under Section 19(22) of Recovery of Debts and Bankruptcy Act 1993. The applicant may submit the certified copy of this Judgment and the Recovery Certificate before the Registrar/ Sub- registrar to endorse the charge over the secured assets.

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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 realise 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 01.09.2023. The order be communicated accordingly.

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Judgment signed, sealed, dated and pronounced in the open court on this 4th Day of July, 2023.

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Dictated & Corrected by me

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~~i/r -f 0'"'-\J [Kaushalendra Yadav] Presiding Officer Debts Recovery Tribunal, Patna

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.. ..

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FORM NO.9 [See Regulation 24( I)]

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DEBTS RECOVERY TRIBUNAL PATNA

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2nd Floor, (A. B & F Wing) Karpuri Thakur Sadan, Kendriya Karamchari Parisar (GPOA). Ashiana Digha Road. Patna-8OO025.

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RECOVERY CERTIFICATE UNDER SECTION 19(7) READ WITH SECTION 19(1l) OF THE RECOVERY OF DEBTS & BANKRUPTCY ACT,lm, AS AMENDED FROM TIME TO TIME.

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'or

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RC No. 432/2023

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IN Case No: OA/460/2022

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In the Matter of:

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(CH- I) PUNJAB NATIONAL BANK MG ROAD PO AURANGABAD AURANGABAD ,BIHAR -824101

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Applicant(s)

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------ Versus -------

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To, (CD- I) MIS AYUSH AGRO INDUSTRIES AND OTHERS, Through its Proprietor Babita Singh @ Babita Devi Registered Address at Amar Bigha, .Tola- Hasauli, Anchal- Deo. Aurangabad ,BIHAR -824101

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(CD- 2) BABITA SINGH @ BABITA DEVI PROPRIETOR MIS AYUSH AGRO INDUSTRIES WIFE OF SRI SANTOSH KUMAR SINGH RESIDENTIAL ADDRESS AT ANUGRAH NAGAR, RAMDIH TOWN AND DISTRICT-AURANGABAD (BIHAR) 824101 (BORROWER)

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Defendant( s)

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(CD- 3) SANTOSH KUMAR SINGH SON OF SHRI VISHWANATH SINGH RESIDENT AT-ANUGRAH NAGAR, RAMDIH TOWN AND DISTRICT- AURANGABAD (BIHAR) 824101 (GUARANTOR)

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~y. Certificate (or Rs 4099209.76 L..Rl!~y. Lakhs NinetY.Nine Thousands Two Hundred Nine And Paise SeventYM Qn!Y-1

¶105

In terms of final order dated 04/07/2023 passed by this Tribunal in the above mentioned case, it is ordered that the Applicant Certificate Holder Bank is entitled to recover a sum ofRs. 4099209.76 along with cost, expenses and interest from the 19/08/2022 i.e. date of tiling 1 with effective date of the OA/46012022 and future interest from order date till the date of realisation in full,jointly or severally from the Certificate Debtors, hereinafter referred to as:-

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Int. Type/Mode	Effective Date	Order Date	Amount(Rs.)	Liability Type	Interest (as on Order Date)	RC Amount(Rs.)
						;4099209,76

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In case of failure to pay the aforementioned adjudicated amount within 30 days, same shall be recovered from the sale of the mortgaged/hypothecated assets as well as other personal movablel Immovable assets of the certificate debtors..

¶108

The mortgaged or hypothecated assets to secure the loan in question are hereby attached and shall be subject to the final order under the recovery proceeding in pursuance of the Recovery certificate issued under Section 19(22) of Recovery of Debts and Bankruptcy Act 1993

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Parties are directed to appear before MANOJ KUMAR, Recovery Officer, DEBTS RECOVERY TRIBUNAL PATNA on 01/09/2023.

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"I"

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The Recovery Officer shall realize the amount as per this Certificate in the manner and mode prescribed under Sections 25 to 28 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993(as amended from time to time) from the above named Certificate Debtors.

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This Certificate has been issued under my signature and seal of the Tribunal on this 04/07/2023

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V PRESIDING OFFICER DEBTS RECOVERY TRIBUNAL PATNA

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FORM NO. 10

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'.,.

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[See Regulation 24(2)]

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DEBTSRECOVERYTRIBUNALPATNA

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2nd Floor, (A. B & F Wing) Karpuri Thakur Sadan, Kendriya Karamchari Parisar

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(GPOA), Ashiana Digha Road, Patna-800025.

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SCHEDULE TO RECOVERY CERTIFICATE MEMO OF COSTS

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RC No. 432/2023

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Case No: OA/460/2022

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Applicant(s): PUNJAB NATIONAL BANK

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Versus

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Defendant(s): MIS AYUSH AGRO INDUSTRIES AND OTHERS

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'.,.

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!Sr.No. Item of Costs

¶129

000
43000

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Place: PATNA

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Date: 04/07/2023

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PRESID~R DEBTS RECOVERY TRIBUNAL PATNA

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'.,.

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Note: Strike out whichever is not applicable

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•

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Date of order or proceeding	DEBTS RECOVERY TRIBUNAL, PATNA Order with the Signature of the Court	Office action taken with data
	OA 460 of 2022
04.07.2023	Judgment written on separate sheets kept on the case file and pronounced. Certificate of recovery be issued to the ld. Recovery officer for its execution.
	presid~cer
04.07.2023	Certificate u/s 19(7& 22) of the DRT Act, 1993 as amended from time to time in the form no. 09 of the Rules and procedures made there under prepared and signed by me for sending it to ld. Recovery Officer for its execution in accordance with law. V Presiding Officer

Punjab National Bank v. M/s Ayush Agro Industries and Others

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. M/s Ayush Agro Industries and Others

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

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