Allowed

M/s Deutsche Bank Ag v. M/s.Bindu Appalam Depot

DRT12 May 2023TA/574/2022

Case brief

AI extract

What is this about?

The Tribunal allowed the application filed by Deutsche Bank seeking a recovery certificate against M/s Bindu Appalam Depot for a loan default of Rs.20,90,725.54. The court found the bank's claim established and unrebutted due to the lack of a Counter Proof Affidavit. Interest was awarded at a reduced rate of 11% per annum.

What did the court decide?

Recovery Certificate issued for Rs.20,90,725.54 plus 11% per annum simple interest from the date of filing till realization.

M/s Deutsche Bank Ag versus M/s.Bindu Appalam Depot — Banking and Recovery | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 12^th day of May, 2023

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PRESENT: SHRI T. RAJESH

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PRESIDING OFFICER

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TA No.574 of 2022

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(Originally filed before DRT-I Chennai as OA No.457 of 2019 and thereafter transferred to this Tribunal and renumbered as TA No.574 of 2019)

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M/s Deutsche Bank AG 4-4A, Western Tower Sunny Side, Ground Floor Shafi Mohammed Road Thousand Lights, Chennai – 600 006 Represented by its Authorised Representative Mr. M. Deiveegan …Applicant

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Versus

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M/s Bindu Appalam Depot Represented by its Proprietor Mr. A. Bharathan Having Business at No.38/40, SBI Colony, 2^nd Street Jamaliya, Chennai – 600 012 Residing at No.19, Hyder Garden, 1^st Street Chennai – 600012 …Defendant

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Counsel for the Applicant Bank : M/s Sai Krishnan Associates Counsel for Defendant : M/s A. Chandrasekaran & R. Anandkumar

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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.20,90,725.54p with further interest at the rate of 13.15% per annum with monthly rests from the

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date of the application till the date of realisation along with costs of the application.

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It is the case of the applicant that the defendant approached the applicant for grant of Business Installment Loan vide loan application dated 26.12.2016 and considering the said request the applicant sanctioned a loan of Rs.40 lakhs to the defendant under Loan Account No.250025962190028 on 31.12.2016 and the defendant executed the Loan Agreement on the same day. It is stated that the defendant also executed guarantee agreement dated 31.12.2016. It is also stated that the said loan was repayable in 36 equated monthly installments of Rs/1,34,295/- commencing from 5.2.2016 to 05.01.2019.

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It is also the case of the applicant that the defendant committed default in repayment and failed to regularize the loan account despite repeated demands and therefore the applicant sent a legal notice on 31.10.2018 demanding a sum of Rs.24,52,433.87p due as on 05.10.2018. The said notice returned with endorsement “Left: on 10.11.2018 at the business address and was served at residential address.

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It is the case of the applicant as the defendants did not come forward to clear the outstanding dues and hence the applicant is constrained to file this application for recovery of its legitimate dues.

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The defendant filed reply statement contending therein that the application is not maintainable either in law or on facts and that the claim is not supported by any legal basis and is excessive and exorbitant. The defendant while admitting the availing of loan and execution of loan documents submitted that

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the defendant was prompt in repayment till October 2016 and subsequently due to demonetization policy and introduction of GST the defendant suffered huge loss and could not keep up the repayment schedule. It is stated that the defendant therefore approached the applicant and requested for grant of time to pay the over dues, but the applicant instead of considering the request of the defendant had filed this OA.

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It is contended by the defendant that the applicant obtained signature of the defendant in many printed blank forms and later on utilized the same for the purpose of filing this OA. It is also contended that the applicant failed to give credit to various payments made by the defendant. It is further contended that the applicant has claimed usurious interest and the amount claimed by the applicant is not correct and is exorbitant. It is stated that the applicant has capitalized penal interest which is contrary to the dictum laid down by the Hon’ble Supreme Court of India. Thus submitting the defendant prayed for dismissing the OA.

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The applicant bank filed its proof affidavit along with 10 documents, which are

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marked as Exhibits A-1 to A-10, the details of which are as under: -

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Sl. No.	Date	Description of Documents	Exhibits
1.	20.09.1991	Certificate of establishment of place of business in India	A-1
2.	05.04.1988	Licence No.BOM-41 issued by Reserve Bank of India	A-2
3.	19.03.2019	Power of Attorney	A-3
4.	26.12.2016	Loan Application Form	A-4
5.	31.12.2016	Loan Agreement	A-5
6.	31.12.2016	Personal guarantee executed by the defendant	A-6

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Sl. No.	Date	Description of Documents	Exhibits
7.	31.10.2018	Legal notice	A-7
8.	10.11.2018	Returned cover of the legal notice with respect to the business address	A-8
9.	12.11.2018	Proof of service of the legal notice with respect to residential address	A-9
10.		Statement of Accounts	A-10

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The defendants though filed their reply statement remained absent on several hearings and hence were set ex-parte on 7.3.2023.

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Heard the Ld. Counsel for the Applicant Bank. Perused the records.

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Having heard the Ld. Counsels for the applicant and after perusing the records, the Tribunal framed the following points for consideration: -

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1. Whether the applicant bank has established its claim against the defendant? If so, for what amount?

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2. Whether the applicant bank is entitled for pendent lite and future interest, if so, at what rate ?

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Point No.1

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Whether the applicant bank has established its claim against the defendant? If so, for what amount?

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The applicant bank in its endeavor to establish its claim against the defendant examined its official as AW1 and got marked exhibits Ex.A-1 to A-10. Ld. Counsel for Applicant placing reliance on the proof affidavit of AW-1, besides Exhibits A-1 to A-10 strenuously contended that the claim of the applicant stands established, as such, the applicant is entitled for a recovery certificate.

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Ld. Counsel for Applicant Bank would contend that even as per the Reply Statement filed, the defendants have not denied availing of credit facility, execution of loan and security documents and creation of mortgage in favour of the applicant and as such the said admission is sufficient enough to allow the claim of the applicant. Ld. Counsel would contend that the contention of the defendant that the applicant obtained their signatures in blank printed documents and filled them later on to suit their convenience is false and it is the allegation that is raised by every defaulting borrower and hence the same is liable to be rejected. Ld. Counsel would also contend that the statement of accounts filed is proper and supported by appropriate certificates under Bankers’ Book Evidence Act and Information Technology Act and hence the contention of the defendants regarding the amount claimed and charging of usurious interest and capitalization of penal interest cannot be countenanced. It is further contended that the defendant though filed the reply statement, did not choose to file any CPA despite sufficient opportunity and therefore the claim of the applicant stand unrebutted.

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As rightly contended by the Ld. Counsel for Applicant, barring filing of reply statement, the defendant did not choose to file Counter Proof Affidavit substantiating the pleas taken in reply statement. Here it is to be stated that as per the scheme of adjudication of a claim/counter under the RDB Act, parties shall file their respective affidavits/counter affidavits in support of their claim or counter claim as the case may be and the Tribunal shall on the basis of the affidavits filed, adjudicate and decide the claim/counter claim. Therefore, in the absence of any Counter Proof Affidavit, as rightly contended by the Ld. Counsel for Applicant, the defense put forth by the defendant

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remain unsubstantiated hence cannot be considered, thus the claim of the applicant stands unrebutted.

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Further, the applicant bank has filed the statement of accounts accompanied by certificates under Bankers’ Book Evidence Act and therefore the claim of the defendants that the amount claimed is not proper and supported by documents and the applicant had charged usurious interest or has capitalized the penal interest fails.

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In so far as the contention of the defendants that the applicant had got the signatures of the defendants in blank printed forms and later on filled the same to suit their convenience is concerned it is to be stated that Hon’ble DRAT, Mumbai in the matter of Sangli Bank Ltd. Vs. Prabha K.Maheshwari and others reported in MANU/DM/0025/2005 held in paragraph 8 that;

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“8. The grant of loan as alleged by the Bank and defendant Nos.6 to 10 having signed a guarantee agreement is an admitted position. Their contention is that on 30^th July, 1992, defendant Nos. 1 to 5 had sent blank letter of lien, demand note for grant of Rs.30 lacs to the Bank, which indeed, appears to be correct. However, it has to be pointed out that settled legal position is that the person who signs blank standard documents takes responsibility for the same and the plea of non est factum is not available to him”

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Thus, the said contention of the defendants fails.

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Therefore, in the light of the discussion as aforesaid, it is clear that the proof affidavit and the documents filed along with by the applicant remain unchallenged by the defendant. Further, the Tribunal on careful perusal of the unrebutted Proof Affidavit of AW-1 besides Exhibits A-1 to A-10 is fully

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satisfied that the applicant has established its claim. This point is answered accordingly.

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Point No.2

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Whether the applicant bank is entitled for pendent lite and future interest, if so, at what rate?

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In terms of Sec. 19 (20) of the RDB Act, the Tribunal has been empowered to pass an order regarding payment of interest from the date on or before which payment of the amount is found due, up to the date of realisation or only payment, as it think fit to meet the ends of justice. Further, Hon’ble Supreme Court, in the judgement (reported in II 2009 BC pg. 696) in the matter of State Bank of India – vs – Sarath Textiles, held that “ Sec. 19 (20) of the RDDB & FI Act confers discretion on the Tribunal to award interest on the applicant being as it thinks fit to meet the ends of justice. ”. Further, Hon’ble Supreme Court of India in the matter of Central Bank of India – vs – N. Raveendra (reported in 2002 [1] SCC pg. 367) held that “ Sec. 34 of CPC confers discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit de-horse notwithstanding the contract between the parties. ” Sec. 19 (20) of the RDDB & FI Act is akin to Sec. 34 CPC.

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While it is the case of the applicant that the applicant bank is entitled for contractual rate of interest till discharge of the entire outstanding dues, however, the defendant would contend that in so far as pendente lite and future interest is concerned, the contractual rate of interest may not be applied. It is to be stated that the claim of the applicant bank includes the rate of interest and other charges payable as per the contract. The Tribunal

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already held that the applicant bank is entitled for the amount claimed in the OA. As already stated, the Tribunal has awarded contractual rate of interest as claimed by the applicant bank till the date of filing the OA and the lending rate had considerably come down, the Tribunal is of the view that the defendants are entitled for a reduced rate of interest. Therefore, under these circumstances, the Tribunal is inclined to grant pendente lite and future interest at reduced rates on the OA claim amount from the date of filing till the date of realization. Point No.2 is answered accordingly.

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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.574 of 2022 stands allowed.

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(b) Applicant is permitted to realize an amount of Rs.20,90,725.54p with further interest @11% per annum (simple) 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 other assets of the defendants.

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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 12^th day of May, 2023)

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Sd/-

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

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M/s Deutsche Bank Ag v. M/s.Bindu Appalam Depot

Case brief

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What did the court decide?

M/s Deutsche Bank Ag v. M/s.Bindu Appalam Depot

Case brief

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