Allowed

State Bank of India v. M/s My Foods

DRT30 Mar 2023TA/378/2022

Case brief

AI extract

What is this about?

In this Debt Recovery Tribunal application, the bank sought a Recovery Certificate for a loan loan facility defaulting defendants. The Tribunal examined the filed documents, which were unchallenged, and allowed the application, permitting the bank to recover the principal sum with interest from the defendants jointly and severally.

What did the court decide?

Recovery Certificate issued for Rs. 1,22,60,791/- with interest to be recovered from defendants jointly and severally by selling schedule properties.

State Bank of India versus M/s My Foods — Banking and Recovery | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 30^th day of March, 2023

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PRESENT: SHRI T. RAJESH

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PRESIDING OFFICER

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TA No.378 of 2022

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(Originally filed before DRT-I, Chennai as OA No.242 of 2020 and thereafter transferred to this Tribunal and renumbered as TA No.378 of 2022)

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State Bank of India SME, Siruthozhil Branch No.1, Harrington Road, 5^th Floor Chetpet, Chennai – 600 031 Represented by its Relationship Manager …Applicant

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Versus

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M/s My Foods Multi Cuisine Restaurant Rep. by Prop. Mr. Sathish Arockiasamy No.12, 13, SPM Complex, Anna Street Potheri, Chennai – 603 203

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Mr. A. Sathish S/o Arockiasamy

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No.12, 13, SPM Complex, Anna Street

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Potheri, Chennai – 603 203 … Defendants

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Counsel for the Applicant Bank : M/s M. Suresh Defendants : Ex-parte

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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 an aggregate sum of Rs.1,22,60,791/- comprising of a sum of Rs.10,60,689/- together with interest at the rate of 12.75% per annum with monthly rests being the amount due under Cash Credit facility and a sum of Rs.1,12,00,102/- together with interest

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at the rate of 12.80% per annum with monthly rests being the amount due under Term Loan facility 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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The subject matter of the case is the “Cash Credit facility and Term Loan facility” availed by the defendants from the applicant bank.

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It is the case of the applicant that the 1^st defendant carrying on business of running multi cuisine restaurant approached the applicant bank for grant of credit facilities for the purpose of its business and considering the said request the applicant vide its sanction letter dated 8.2.2019 sanctioned Cash Credit facility of Rs.10,00,000/- and Term Loan facility of Rs.97,00,000/-. It is also the case of the applicant that the 1^st defendant having availed the credit facility executed various loan documents on 8.2.2019 viz., Letter of Arrangement, Agreement of Loan cum Hypothecation and Demand Promissory Note. It is the further case of the applicant that the 2^nd defendant executed guarantee agreement dated 8.2.2019 thereby guaranteeing due repayment of the credit facility availed by the 1^st defendant.

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It is the further case of the applicant that the defendants committed default in repayments and failed to regularize the loan accounts despite repeated request and hence the loan account was classified as NPA on 05.12.2019 in accordance with the guidelines of the Reserve Bank of India.

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It is the case of the applicant that after availing the loan, the defendants were irregular in remitting the loan amount. The efforts of the applicant bank to make the defendants to settle the loan did not yield any result, and hence the

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applicant approached this Tribunal seeking issuance of a Recovery Certificate allowing recovery of the amount due in the account.

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Summons were taken out to the defendants which returned with endorsement “No such person” and hence the defendants were served with notice by substituted service by effecting paper publication. As there was no representation on behalf of the defendant continuously, the defendant was called absent and set ex-parte on 26.11.2021. Applicant Bank filed Proof Affidavit along with 9 documents, which were marked as Ex. A-1 to A-9 on 08.07.2022. The Ld. Counsel for Applicant Bank made his submissions on 07.03.2023 and thereafter the matter stood till this date for passing final orders.

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The following issues arise for consideration in the matter: -

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(a) Whether the applicant had succeeded in proving the liability of the defendants?

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(b) What order as to cost of the proceedings need be passed?

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These issues are considered together.

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Heard the Ld. Counsel for the applicant, perused the OA averments and the record placed before the Tribunal.

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The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-9 along with the proof affidavit. Exhibit A-1 is the Letter of Arrangement dated 8.2.2019 issued by the applicant bank. Exhibit A-2 is the Agreement of Loan cum hypothecation dated 8.2.2019 executed by the 1^st

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defendant. Exhibit A-3 is the Guarantee Agreement dated 8.2.2009 executed by the 2^nd defendant. Exhibit A-4 is the Demand Promissory Note dated 8.2.2019 for a sum of Rs.1,07,00,000/- executed by the 1^st defendant. Exhibit A-5 is the Statement of Accounts in respect of the loan accounts. Exhibit A-6 is the certificates under Bankers’ Book Evidence Act in respect of Cash Credit facility. Exhibit A-7 and A-8 are the statement of accounts in respect of the loan accounts along with certificates under Bankers’ Book Evidence Act in respect of the Term Loan Account. Exhibit A-9 is the authorization letter issued by the applicant bank.

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Exhibit A-1 evidences that the applicant bank at the request of the 1^st defendant vide Letter of Arrangement dated 8.2.2019 sanctioned credit facilities aggregating to Rs.1,07,00,000/- to the 1^st defendant. Exhibit A-2 evidences that the 1^st defendant executed Agreement of Loan cum Hypothecation dated 8.2.2019 hypothecated all the movables available in the premises of the 1^st defendant in favour of the applicant. Exhibit A-3 evidences that 2^nd defendant executed guarantee agreement dated 8.2.2019 thereby guaranteeing due repayment of the credit facility availed by the 1^st defendant. Exhibit A-4 evidences that the 1^st defendant had executed necessary loan document on 8.2.2019 to secure the credit facilities availed by it. Exhibit A-5 to A-8, the statement of accounts in respect of the loan accounts produced and certified under the Banker’s Book Evidence Act, clearly indicates that the amount claimed by the applicant is due from the defendant. It is clear from the statement of accounts that penal interest is not capitalized. Exhibit A-9 evidences that the Manager of the applicant bank has been authorized to institute and defend the case on behalf of the applicant.

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The proof affidavit of the applicant bank remained unchallenged and unrebutted. Therefore, on careful consideration of proof affidavit along with Exhibits filed on behalf of the applicant bank, besides the material placed before the Tribunal, the Tribunal is satisfied that the applicant bank has successfully proved the OA claim against the defendants. Point is answered accordingly.

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In view of the fact that the loan facility availed by the 1^st defendant is for its business and despite repeated requests the defendants have not come forward to clear the dues, this Tribunal is not inclined to interfere with the interest rate claimed by the applicant.

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In view of the afore mentioned discussions, the only conclusion this Tribunal can draw is that the applicant had clearly proved the disbursement of the loan, which the applicant is entitled to realize. Hence, OA is disposed off in the following manner: -

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(a) TA No.378 of 2022 stands allowed.

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(b) Applicant is permitted to realize an aggregate sum of Rs.1,22,60,791/comprising of sum of Rs.10,60,689/- together with interest at the rate of 12.75% per annum with monthly rests and a sum of Rs.1,12,00,102/together with interest at the rate of 12.80% per annum with monthly rests from the date of filing of the OA till date of realization 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 2^nd defendant is 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 30^th day of March, 2023)

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

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State Bank of India v. M/s My Foods

Case brief

What is this about?

What did the court decide?

State Bank of India v. M/s My Foods

Case brief

What is this about?

What did the court decide?

What the court decided

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