Allowed

State Bank of India v. M/s Pioneer industries and Trading Corporation

DRT11 Jan 2023TA/377/2022

Case brief

AI extract

What is this about?

The Tribunal allowed the applicant bank's application for a recovery certificate after finding that the respondents defaulted in paying the balance compromise amount, thereby triggering the default clause in the Joint Compromise Memo to revert to the original claim.

What did the court decide?

Recovery certificate issued for Rs. 4,95,85,301.29 with interest and costs; respondents jointly and severally liable to pay.

State Bank of India versus M/s Pioneer industries… — Contract and Commercial Disputes | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 11^th day of January, 2023

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PRESENT: SHRI T. RAJESH

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PRESIDING OFFICER

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TA No.377 of 2022

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(Originally filed before DRT-I, Chennai as OA No.86 of 2021 and thereafter transferred to this Tribunal and renumbered as TA No.377 of 2022)

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STATE BANK OF INDIA Stressed Assets Management Branch, No. 32/52, Montieth Road, Egmore, Chennai – 600008

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…,Applicant Bank

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Versus

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1. M/s Pioneer industries and Trading Corporation,

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Represented by its partners, Mr.R.Ramesh Kumar and Mrs. Karthigai Rani Jayabal, No 28, Panagal road, Shenoy Nagar, Madurai – 625020

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2. Mr.R.Ramesh Kumar,

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S/o Rajeshwaran Vadivelu, No.1/350, Venkatachalapathy nagar, Near BPCL Petrol Bunk, Thuvariman, Madurai – 625019.

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Also residing at, Flat No.1 K V Apartments, No.35, Poes Garden, Chennai- 600086.

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3. Mrs. Karthigai Rani Jayabal, W/o Mr.Jayabal Velladurai, No.1-14/1-13, Middle Street, Periyur, Sankarankoil-627756

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Also at, Door No.1, Selai Road, Jayanagar, Tiruvallur, Chennai-602001.

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M/s Sukruti Properties Private Limited, Represented by its director Mrs. T.SelvanSundari B1, Gulmohar apartments, No 35, South boagroad, T Nagar, Chennai – 600 017 …Defendants

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FINAL ORDER

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This application is filed by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 against the defendants’ seeking issuance of a Recovery Certificate for recovery of a sum of Rs.4,95,85,301.29p together with further interest at the rate of 10.60% per annum with monthly rests plus 3% penal interest from the date of filing of this application till the date of realisation along with costs of the application and for sale of schedule properties.

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Summons sent to the defendants were served. Various Ld. Counsels undertook to file vakalat on behalf of defendants 1 to 4, however, no such vakalat was filed and hence were called absent on 26.7.2021.

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When the case came up for hearing on 4.7.2022, there was no representation for either sides. However, this Tribunal having found that a Joint Compromise Memo was available on file, filed in SR No.236/2022 dated 28.1.2022, this Tribunal recorded the terms of compromise on 4.7.2022 and adjourned the matter to 18.7.2022 with a direction to the Registry to issue notice to the AGM, SAMB Chennai and for hearing the applicant as regards the present status of settlement. When the case came up for hearing on 18.7.2022, it was reported by the Ld. Counsel for the Applicant that the terms of settlement was not complied,

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on which day, proxy counsel for defendants was also present. This Tribunal adjourned the case to 27.9.2022 with a direction to the Manager of the applicant to file an affidavit regarding the compliance before this Tribunal and an affidavit came be filed in SR No.3659/2022 dated 26.09.2022

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It is stated in the affidavit of the Assistant General Manager, Chennai that as per the compromise, if the defendants default to pay the balance compromise amount of Rs. 4.14 crores on or before 28.04.2022, the compromise settlement sanction will stand cancelled and the Defendants are liable to pay the entire amount as claimed in OA No. 86/2021. It is also stated that the Defendants had agreed that in the event of failure to pay the balance compromise settlement amount on or before 28.4.2022, they consent for issuance of Debt Recovery Certificate against them for the entire OA claim with interest and cost by the Tribunal.

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It is also stated that the defendants paid only a sum Rs.2.35 crores and defaulted in payment of the balance amount of Rs.2.01 crores within the stipulated period. It is stated that as per the default clause contained in the joint compromise memo, the OTS sanctioned has been rendered infructuous and the defendants are liable to pay the entire amount as claimed in the OA less the amount already paid, together with interest and other charges.

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At this stage, pursuant to the Notification issued by the Ministry of Finance, Department of Financial Services in SO No.4717(E) dated 04.10.2022, this case was transferred to this Tribunal and renumbered as TA No.377 of 2022.

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The case was taken up for hearing in this Tribunal on 15.12.2022, on which date there was no representation for both sides and therefore the case was adjourned to today for orders recording Joint Compromise Memo filed.

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Perused the Joint Compromise Memo dated 28.1.2022 filed in SR No.236/2022 dated 28.1.2022 and the affidavit filed on behalf of the applicant dated 26.9.2022 in SR No.3659/2002.

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It is evident from the above that the parties have entered into a settlement and have signed a Joint Compromise Memo and as per the same the parties have agreed for a settlement of the OA claim for a sum of Rs.4.36 crores. It is also clear that the defendants were communicated about the compromise settlement on 29.12.2021. It is further evident that the defendants had to remit an upfront amount of Rs.0.22 crores on the date of conveying the sanction and the balance amount has to be paid on or before 28.4.2022 and in the event of default the defendants shall be liable for the amount claimed in the OA.

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A reading of the Memo filed by the Assistant General Manager of the applicant clearly reveals that the defendants had paid only the upfront amount and defaulted in payment of the balance amount of Rs.4.14 crores by or before 28.4.2022 and hence as per the default clause in the Joint Compromise Memo the applicant is entitled for a Recovery Certificate as prayed for in the OA.

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In view of the afore mentioned discussions, the OA is disposed off in the following manner: -

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(a) TA No.377 of 2022 stands allowed.

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(b) Applicant is permitted to realize an amount of Rs.4,95,85,301.29p with further interest @10.60% per annum with monthly rests plus penal interest @3% per annum with monthly rests from the date of filing of the application till the date of realization in full, from the defendants jointly and severally after deducting all the amounts received by them during the pendency of OA, and also by selling the schedule properties and other assets of the defendants.

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(c) If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant Bank, the defendants 2 to 4 are personally liable for all such amounts due.

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(d) Applicant is permitted to realize cost of the proceedings and shall file cost memo within 7 days from the date of the order.

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(e) The Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of this final order.

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Communicate a copy of the order to the parties concerned in terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993.

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(Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 11^th day of January, 2023)

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Sd/(T. RAJESH ) PRESIDING OFFICER DRT-II, CHENNAI

State Bank of India v. M/s Pioneer industries and Trading Corporation

Case brief

What is this about?

What did the court decide?

State Bank of India v. M/s Pioneer industries and Trading Corporation

Case brief

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What did the court decide?

What the court decided

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