Allowed

Pegasus Assets Reconstruction Pvt. Ltd. v. M/s. Khodal Impex

DRT26 Jul 2023TA/20/2023

Case brief

AI extract

What is this about?

The Tribunal allowed an application for recovery of dues from borrowers and guarantors. The Court rejected objections regarding the regulation of mortgage assignment and alleged inaccuracies in the Statement of Accounts, accepting the applicant's documentary evidence and awarding adjusted recovery.

What did the court decide?

Recovery of Rs.3,58,07,318/- adjusted by Rs.54,85,573/- recovered via sale of mortgaged properties, along with pendentelite and future interest.

Pegasus Assets Reconstruction Pvt. Ltd. versus M/s. Khodal Impex — Banking and Recovery | DRT (2023)

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Registered On: 20.03.2009 Decided on: 26.07.2023

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IN THE DEBT RECOVERY TRIBUNAL-I AT MUMBAI

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TRANSFER ORIGINAL APPLICATION NO. 20 of 2023

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Pegasus Assets Reconstruction Private Limited (Assignee of Allahabad Bank) Registered Office at:Free Press House, 55-56, 5^th Floor, Nariman Point, Mumbai-400021

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Applicant

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Versus

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1. M/s Khodal Impex Head Office at:316-321, 2^nd Floor, Shreyas Diamond Centre, Mini Hira Bazar, Varachha Road, Surat-395006 Branch office at:1218, Prasad Chambers, Opera House, Mumbai-400004

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2. Khodabhai Laljibhai Patel Adult, Indian inhabitant carrying on business in the name of M/s Khodal Impex at:1218, Prasad Chambers, Opera House, Mumbai-400004 and residing at:Khodiyar Bhavan, Opp. Vasant Bhikaniwadi, Saurashtra Society, Lambe Hanuman Road Surat

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3. Nareshbhai Laljibhai Patel Adult, Indian inhabitant carrying on business in the name of M/s Khodal Impex at:1218, Prasad Chambers, Opera House, Mumbai-400004 and residing at:F/2, Triven Co-Operative Society, Walkeshwar Road, Mumbai-400006

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T. O. A. NO. 20 of 2023

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4. Laljibhai Raghavbhai Patel Adult, Indian inhabitant carrying on business in the name of M/s Khodal Impex at:1218, Prasad Chambers, Opera House, Mumbai-400004 and residing at:Khodiyar Bhavan, Opp. Vasant Bhikaniwadi, Saurashtra Society, Lambe Hanuman Road Surat

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5. Smt. Samujben Laljibhai Patel Adult, Indian inhabitant residing at:Khodiyar Bhavan, Opp. Vasant Bhikaniwadi, Saurashtra Society, Lambe Hanuman Road Surat

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6. Babubhai Virjibhai Patel Adult, Indian inhabitant residing at:24, Shankar Nagar Co-operative Society, Varachha Road, Near Kapodra Char Rasta Hira Bagh, Taluka Choryasi, Surat

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7. Kanubhai Vashrambhai Patel Adult, Indian inhabitant residing at:Shankar Nagar Co-operative Society, Varachha Road, Near Kapodra Char Rasta Hira Bagh, Taluka Choryasi, Surat

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… Defendants

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: Counsel for the Applicant Adv. Sagarika Bekal i/b Adv. Jayesh Patel Counsel for the Defendants : Ex-parte

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J U D G M E N T

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The Original Application filed by Original Applicant i.e. Allahabad Bank against the Defendant Nos.1 to 7, for recovery of Rs.3,58,07,318/- (Rupees Three Crores Fifty Eight Lakhs Seven

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Thousand and Three Hundred Eighteen only) alongwith pendentelite and future interest @12% p.a. with monthly rests from the date of filing of the present OA till its realization.

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During the pendency of the present OA, the Allahabad Bank has assigned its debt in favour of the Assignee, “Pegasus Assets Reconstruction Pvt. Ltd.” vide duly registered Assignment Agreement dated 27.09.2013 and the Assignee is brought on record by way of substitution pursuant to the order passed by this Tribunal on 20.05.2016.

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Facts as succinctly set out in the O.A./T.A. are that the Defendant No.1 is a partnership firm carrying on business as Diamond Manufacturers, Importers & Exporters. The Defendant Nos.2, 3 & 4 were the partners of the firm. The Defendant Nos.2, 3 & 4 are sued in their capacity as partners of the firm and also in their capacity as guarantors and mortgagors. Defendant Nos.5, 6 & 7 are sued in their personal capacity as the guarantors and also in their capacity as mortgagors.

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It is stated that on or about 29.4.2005 at the request of the Defendant No.1, the Original Applicant sanctioned to the Defendant No.1 the Post-Shipment Credit limit of Rs.250 lakhs on the terms and conditions as stipulated in the sanction letter dated 29.04.2005. The Defendant Nos.2, 3 & 4 in their capacity as partners of the Defendant No.1 acknowledged receipt of the sanction letter dated 29.04.2005 and accepted the terms and conditions and agreed to execute necessary documents in favour of the original Applicant. In terms of

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the sanction the Defendant No.1 executed several documents for securing the repayment of the said credit facility such as Demand Promissory Note dated 17.5.2005 for Rs.250 lakhs; Special Letter of Indemnity dated 17.5.2005 and a letter dated 17.5.2005. The Defendant No.1 also executed a General Letter of Hypothecation (ADV-30) dated 17.5.2005 inter alia creating in favour of the Original Applicant a charge by way of pledge and hypothecation in respect of all the movable property of the firm. Further, the Defendant Nos.2, 3 & 4 and Defendant No.5, 6 & 7 executed their respective Guarantee dated 17.5.2005 in favour of the Applicants guaranteeing the sum of Rs.250 lakhs with interest, charges, legal and other expenses which the Original Applicant may incur for obtaining payment of the money in respect of the said facility.

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It is further stated that in terms of the sanction, the Defendant Nos.2, 3 & 4 attended at the International Branch of the Original Applicant on 18.5.2005 and deposited with the Applicant the documents of title relating to immovable properties viz. (1) Office No.318, 319, 320 & 321 in Shreyas Diamond Centre situate at Katargam, Varachha Main Road, F.P. No.165, T.P.S. No.4, Surat and more particularly described in Exhibit “J”, (2) Office No.316 & 317 in Shreyas Diamond Centre, Katargam situate at Varachha Main Road, F.P. No.165, T.P.S. No.4, Surat and more particularly described in Exhibit “R”, (3) Plot Nos.1,2 & 3, Moje – Sayan, Revenue Block No.594, Tal. Olpad, Dist. Surat and more particularly described in Exhibit “L” & (4) Plot Nos.10 to 15, Moje – Sayan, Revenue Block No.594, Tal. Olpad, Dist. Surat and more particularly Exhibit “M” with intent to create security in favour

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of the original Applicant as first mortgage of the said immovable properties as security for the credit facility of Rs.250 lakhs granted to the Defendant No.1.

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It is further stated that the Defendant No.5 also attended at the International Branch of the Original Applicant on 18.5.2005 and deposited with the Applicant the documents of title relating to her immovable properties viz. Plot Nos.16 to 21, Moje – Sayan, Revenue Block No.594, Tal. Olpad, Dist. Surat and more particularly described in Exhibit “U” with intent to create security in favour of the Applicants as first mortgage of the said immovable properties. The same was followed by a letter of confirmation dated 19.5.2005 executed by the Defendant No.5. Prior to the deposit of the documents of title, the Defendant No.5 had executed a Declaration on 17.5.2005.

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It is further stated that the Defendant No.6 also attended at the International Branch of the Original Applicant on 18.5.2005 and deposited with the Original Applicant the documents of title relating to his immovable properties viz. Plot Nos.7, 8 & 9, Moje – Sayan, Revenue Block No.594, Tal. Olpad, Dist. Surat and more particularly described in Exhibit “Y” with intent to create security in favour of the Original Applicant as first mortgage of the said immovable properties. The same was followed by a letter of confirmation dated 19.5.2005 executed by the Defendant No.6. Prior to the deposit of the documents of title the Defendant No.6 had executed a Declaration on 17.5.2005.

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It is further stated that the Defendant No.7 also attended at the International Branch of the Original Applicant on 18.5.2005 and deposited with the Original Applicant the documents of title relating to his immovable properties viz. Plot Nos. 4, 5 & 6, Moje – Sayan, Revenue Block No.594, Tal. Olpad, Dist. Surat with intent to create security in favour of the Original Applicant as first mortgage of the said immovable properties. The same was followed by a letter of confirmation dated 19.5.2005 executed by the Defendant No.7. Prior to the deposit of the documents of title, the Defendant No.7 had executed a Declaration on 17.5.2005.

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Further, it is stated that the Defendant No.1 handed over to the Original Applicant their duly endorsed Deposit Receipt No.382535/ 567 dated 19.5.2005 for Rs.15 lakhs to be held by them as security for advance to the extent of Rs.250 lakhs along with their letter dated 19.5.2005 inter alia authorizing the Applicants without their further consent to adjust the amount of the outstanding from the proceeds of the Fixed Deposit Receipt either on its due date or even before its maturity in case they fail to adjust the account before that date.

¶38

It is further stated that in pursuant to the application for review and renewal of the credit facility made by the Defendant No.1, the Applicants sanctioned renewal and enhanced the limit to Rs.375 lakhs on the terms and conditions as stipulated in the sanction letter dated 16.10.2006. The terms and conditions of the same was duly acknowledged by the Defendant No.1 vide receipt dated 16.10.2006. The Defendant No.2, 3 & 4 in their personal capacity and also as partners of the Defendant No.1 executed several documents in

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favour of the Original Applicant such as Demand Promissory Note dated 26.12.2006, Letter of Continuing Security; Special Letter of Indemnity dated 26.12.2006, A Letter dated 26.12.2006 inter alia giving specified claim and lien on all goods and merchandise mentioned therein. The Defendant No.2, 3 & 4 also executed First Supplemental to the General Letter of Hypothecated dated 26.12.2006. The Defendant No.2, 5 & 7 and Defendant No.3, 4 & 6 in their personal capacity executed their respective Guarantee dated 26.12.2006.

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It is further stated that in order to secure the said enhanced facility, the Defendant No.2 to 7 attended at the International Branch of the Original Applicant on 26.12.2006 and admitted and declared that the mortgage by deposit of title deeds created on 18.05.2005 shall also extend to the enhanced aggregate limit of Rs.375 crores.

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However, after availing the aforesaid facilities, the Defendant No.1 has defaulted on the repayment of the amount payable on the due dates due to non-realisation of the export bills, thereby the account was highly irregular and the entire outstanding was overdue. The original Applicant therefore advised the Defendant No.1 about the irregularities and the Defendant No.1 vide their letter dated 15.10.2007 promised to regularize the account by 29.02.2008. However, there was no progress in regularization of account and hence the original Applicant vide their letter dated 25.02.2008 asked the Defendant No.1 to rectify the irregularity within a week’s time failing which to take appropriate steps to recover the dues. The Defendant No.1 vide their letter dated 28.02.2008 confirmed having

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availed the said facility and also that due to non receipt of funds from their debtors the payment was delayed and assured the original Applicant to clear the dues till 20.03.2008 and further requested the original Applicant to bear with them till then. Thereafter the Defendant No.1 vide their letter dated 9.04.2008 again confirmed the availment of the loan as well as irregularity of payment due to delay in payment from their debtors and further requested the original Applicant to grant extension of due date for another 3 months in respect of all overdue bills. Subsequent to the aforesaid letter dated 09.04.2008, the Applicants had followed up with the Defendant No.1 for liquidating the outstanding in respect of the said bills and even suggested to the Defendant No.1 to come out with the concrete plan of repayment. However the Defendant No.1 did not take any concrete steps in that regard and again requested the Applicants for extension of time for payment in respect of the said bills. Ultimately, the original Applicant vide their letter dated 21.04.2008 advised the Defendant No.1 that they have not been operating the account satisfactory, as a result of which the account has become irregular and ultimately it has become NPA. The Applicant further informed the Defendant No.1 the amount outstanding as narrated in the said letter and called upon the Defendant No.1 to repay the entire outstanding amount within 15 days with interest failing which they will take further recovery measures. Copy of the aforesaid letter was sent to the Defendant Nos.2 to 7 as partners/guarantors with a request to repay the said amount with interest as mentioned therein. The Applicants state that inspite of the above the Defendants did not liquidate the outstanding.

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T. O. A. NO. 20 of 2023

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It is further stated that in view of the default committed by the Defendant No.1, the Fixed Deposit Receipt No.382535/567 dated 19.5.2005 for Rs.15 lakhs was held by the original Applicant as security, the original Applicant exercised their right and adjusted/appropriated the proceeds of Rs.83,53,319/- towards the outstanding amount in respect of the said facility on 21.04.2008 in terms of the authority letter dated 19.05.2005.

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It is further stated that the original Applicant issued individual Notice dated 21.4.2008 to the Defendant Nos.2 to 7 under Section 13(2) of the SARFAESI Act, 2002 and called upon them to pay the outstanding to the extent of Rs.3,17,25,977/- with interest. In response to the said Notice, the Defendant No.1 raised objections through their letter dated 18.06.2008 but the Defendant Nos.2 to 7 did not raise any objections to the aforesaid Notice. The original Applicant considered the said objections and replied by communicating non-acceptance thereof together with reasons thereof through their its letter dated 26.06.2008 addressed to the Defendant No.1 with copy to the Defendant Nos.2 to 7. Due to nonpayment of the amount due and payable as mentioned in the said Notices, the Authorised Officer of the original Applicant has taken symbolic possession of the mortgaged properties on 11.10.2008 and issued Possession Notice dated 11.10.2008 which was affixed on the mortgaged properties and published in the newspapers viz. Business Standard & Divya Bhaskar on 14.10.2008.

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T. O. A. NO. 20 of 2023

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It is stated that since the Defendants failed to pay the outstanding dues, the Original Applicant has let with no other option but to approach this Tribunal hence, the present OA has been filed.

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Notices were issued to the Defendants. Defendant No.2 to 7 put their appearance through counsel and filed the WS as well as Additional WS however, no claim affidavit has been filed on behalf of these Defendants thus, their right to file the same was closed vide order dated 14.02.2017. Since 20.07.2022, no one appeared for the Defendant No.2 to 7. Despite service through publication, none appeared for the Defendant No.1 thus, it was proceeded ex-parte vide order dated 20.07.2022.

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In the Written Statement and Additional Written Statement, the Defendant No.2 to 7 have admitted the credit facility granted by the Bank and its utilization, further there is no any specific denial of the Defendants, regarding execution of security documents, to secure the credit facility. However, the Defendant No.2 to 7 have raised the following objections:-

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(i) The alleged Assignment Deed dated 27.09.2013 is an illegal document;

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(ii) The Original Applicant bank has sold all the secured properties and the entire outstanding under this account is being fully recovered by the Applicant.

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(iii) The Statement of Account filed by the Applicants is illegal and incorrect and same is not certified under the Bankers Books of Evidence Act;

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The Original Applicant has filed its claim affidavit by way of affidavit of Sh. Rahul Kardey, Manager of the Applicant who has proved all the loaning and security documents filed by the Original Applicant.

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I have heard the Ld. Counsel for the Applicant and perused the record.

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Now hereinafter, I would like to decide the issue raised by the Defendant No.2 to 7 in their Written Statement.

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(i) In so far as, the objection raised by the Defendant No.2 to 7 regarding stamp duty and registration of the Assignment Agreement is concerned, the said issue has already been decided by this Tribunal vide order dated 20.05.2016 passed on the substitution application being I. A. No. 105 of 2014 and rejected these pleas and the said order has attained the finality.

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(ii) The next objection raised by the Defendant No.2 to 7 is that the Original Applicant bank has sold all the secured properties in total 8 lots including movables and immovable’s and recovered more than Rs.1 crores. It is also stated that the entire outstanding under this account is being fully recovered by the Applicant even prior to filing the present OA from Exports Credit and Guarantee Corporation of India Ltd. at page no.290 of the OA, bank has made

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endorsement that “this amount is recovered from, which in turn it to be recovered from the borrower as per the ECGC condition” .

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I have gone through the record.

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Record reveals that in the claim affidavit filed by Sh. Rahul Kardey, Manager of the original Applicant, he stated at para No.32 that during the pendency of the OA, the Original Applicant has sold the mortgaged assets viz. office premises being Office No. 318, 319, 320 & 321 & Office No. 316 & 317 belonging to the Defendant Nos. 2 & 3 on 14.09.2010 to the highest bidder viz. Mrs. Kiran Amit Nagia for Rs.40,05,000/- under the provisions of the SARFEASI Act and handed over possession to the said purchaser on 21-9-2010 on receiving the entire price and issued sale certificate. The Original Applicant also sold other mortgaged assets viz. Industrial Plots being Plot No. l, 2 & 3, Plot No. 10 to 15, Plot No. 16 to 21, Plot No.7, 8 & 9 and Plot No. 4, 5 & 6 belonging to Defendant Nos. 3, 4, 5, 6 & 7 on 14.09.2010 to the highest bidder viz. M/s. Nishant Textiles Ltd. for Rs.77,25,000/- under the provisions of the SARFEASI Act and handed over possession to the said purchaser on 24.09.2010 on receiving the entire price and issued sale Certificate. Thus, the Bank realized a total sum of Rs.l,15,30,000/- from the sale of the mortgaged assets. The Bank spent a total sum of Rs.7,58,853/- towards costs, charges & expenses incurred by them for the steps taken under the Act and incidental thereto and appropriated the same u/s. 13(7) of the Act from the said sale proceeds, leaving balance amount of Rs.l,09,27,147/-, out of which the Bank refunded 50% i.e., Rs.54,85,573/- to the ECGC on 18.10.2010 vide Cheque No.254856

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dated 18.10.2010 sent along with the Bank’s letter dated 18.10.2010 (Annexure “77” & Annexure “78”). He also stated that the balance amount of Rs.54,85,573/- has been applied/appropriated by the Bank in part discharge of the dues claimed from the Defendants in the present OA.

¶74

Therefore, in view of the above submission made by the witness of the Original Applicant in his claim affidavit, the amount of Rs.54,85,573/- has to be deducted from the total sum of Rs.3,58,07,318/-.

¶75

(iii) The next objection raised by the Defendant No.2 to 7 is that the Statement of Accounts are uncertified under Bankers Books of Evidence Act. It is stated that no certificate attached with the Statement of Accounts. Even statements of accounts are not signed by the competent signatory. It is also stated that last page of the statement of account are made up, handmade entries and not original part of the statement of account. It is stated that at page No.286, there is one entry of balance brought forward of Rs.2,74,99,802/-. There is no source from where balance has been brought forward. At page No.289 statement is showing closing balance on 21.04.2008 is Rs.2,53,23,506/- after appropriation of FDR whereas at Page No.290 alleged handwritten statement is showing closing balance on 21.04.2008 is Rs.3,17,25,977/-.

¶76

Record reveals that the Original Applicant has filed the Two Statement of Accounts (Annexure “75” & “76”) respectively. The said statement of accounts are duly signed by the Authorized Officer of

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the Applicant and duly certified under the Banker’s Books of Evidence Act. Further, the witness of the Applicant in claim affidavit has stated that the amount claimed herein does not include penal interest. On the other hand, the Defendant No.2 to 7 did not state the facts pleaded in the written statement and the additional written statement on oath and avoided to lead evidence. Therefore, I do not find any merit in the objection raised by the Defendant No.2 to 7 and same is hereby rejected.

¶80

The witness of the Applicant has fully corroborated the averments made in the OA. Even otherwise the whole case of the Applicant is based on documents and the witness has duly proved all these documents as against the defendants. In my view there is no question of disbelieving the evidence led by the Applicant and the Applicant has proved its case beyond reasonable doubt. The liability of the Defendant no. 1 to 7 is joint and several.

¶81

In the light of above discussions, the Original Application filed by the Applicant deserves to be allowed against the Defendant No.1 to 7.

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O R D E R

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(i) I allow this OA and direct the Defendant no. 1 to 7 to pay to the Applicant, jointly and severally, within a period of 60 days, a sum of Rs.3,58,07,318/- (Rupees Three Crores Fifty Eight Lakhs Seven Thousand and Three Hundred Eighteen only) alongwith pendentelite and future interest @12% p.a. with monthly rests from the date of filing of the present OA till its realization. (After adjusting the amount of Rs.54,85,573/- recovered during the

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pendency of the present OA, from the sale of mortgaged properties) .

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(ii) Failing which the aforesaid amount shall be recovered from the sale of hypothecated assets as well as other personal movable and immovable assets of the Defendants.

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(iii) Defendant No.1 to 7 are hereby directed not to deal with their assets till further direction of Ld. Recovery Officer.

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(iv) Defendant No.1 to 7 shall also pay the cost and expenses of the OA.

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(v) Recovery Certificate be issued forthwith and be sent to the Recovery Officer of this Tribunal

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(vi) Copy of this order be sent to the parties as per rules.

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File be consigned to record.

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Place: Mumbai. (Dr. Rekha G. Dhakar) Date : 26.07.2023 Presiding Officer, DRT-1, Mumbai.

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Pegasus Assets Reconstruction Pvt. Ltd. v. M/s. Khodal Impex

Case brief

What is this about?

What did the court decide?

Pegasus Assets Reconstruction Pvt. Ltd. v. M/s. Khodal Impex

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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Statutes considered

Parties & counsel

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