Allowed

City Union Bank Limited v. M/s.Chakra Realities Pvt. Ltd.

DRT10 Mar 2023TA/64/2022

Case brief

AI extract

What is this about?

The Tribunal allowed an application for issuance of a Recovery Certificate. It found the bank's claim established via documentary evidence and rejected defenses regarding blank signatures. The Tribunal granted interest at 15% per annum and dismissed the plea for penal interest.

What did the court decide?

Recovery certificate issued for Rs. 18,02,566/- plus interest at 15% p.a. simple from filing till realization.

City Union Bank Limited versus M/s.Chakra Realities Pvt. Ltd. — Company and Corporate | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 10^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.64 of 2022

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(Originally filed before DRT-III Chennai as OA No.589 of 2016 and thereafter transferred to DRT-1 Chennai and renumbered as TA No.445 of 2018 and now transferred to this Tribunal and renumbered as TA No.64 of 2022)

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City Union Bank Ltd.,

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Kumbakonam Main Branch Represented by its Chief Manager Mr. S.K. Ravi Son of Sri S. Sivakunchithapatham With place of business at No.149, T.S.R. Big Street, Kumbakonam

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…Applicant

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Versus

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M/s Chakra Realities Pvt. Ltd. Registered Office: No.48/2, Luz Church Road Mylapore, Chennai – 600 004

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Also at No.9A, Krishnaswamy Iyengar Street Gandhi Nagar, Kumbakonam – 612 001

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B-4, Cauvery Street, 14-17 Bakthapur Street Kumbakonam – 612 001

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R. Gopalan S/o N. Rengachari Director, M/s Chakra Realities Pvt. Ltd., No.9A, Krishnaswamy Iyengar Street Gandhi Nagar, Kumbakonam – 612 001

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B-4, Cauvery Street, 14-17 Bakthapur Street Kumbakonam – 612 001

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Residing at C/o K.U. Srinivas & Krishnan K-16, Jupiter Complex, Vathi Tower Kasi Block, Durga Bai Desh Mukh Road R.A. Puram, Chennai – 600 028

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Mrs. G. Sasikala W/o R. Gopalan Director, M/s Chakra Realities Pvt. Ltd., No.9A, Krishnaswamy Iyengar Street Gandhi Nagar, Kumbakonam – 612 001

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B-4, Cauvery Street, 14-17 Bakthapur Street Kumbakonam – 612 001

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Residing at C/o K.U. Srinivas & Krishnan K-16, Jupiter Complex, Vathi Tower Kasi Block, Durga Bai Desh Mukh Road R.A. Puram, Chennai – 600 028 …Defendants

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Counsel for the Applicant : M/s R. Sivaraman Counsel for Defendants : M/s R. Mangaimannan

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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 defendant Nos. 1, 3 and 4 seeking issuance of a Recovery Certificate for recovery of a sum of Rs.18,02,566/- with further interest at the rate of 15.25% per annum with monthly rests plus 2% penal interest from the date of filing of this 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 1^st defendant company represented by its Directors, the 2^nd and 3^rd defendants approached the applicant bank for grant of credit facility for the purpose of its business and the applicant considering the said request sanctioned Short Term Loan of Rs.15,00,000/- to the first defendant under Loan Account No.501812080009511. It is also the case of the applicant that the to secure the said loan the 1^st defendant represented by defendants 2 and 3 executing various loan and security documents on 31.3.2015 viz., Demand Promissory Note for a sum of

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Rs.15,00,000/-, Sanction Letter for advances, Application cum undertaking for loan, consent letters and the guarantee agreements executed by the defendants 2 and 3.

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It is also the case of the applicant that the defendants having availed the credit facility defaulted in repayments and failed to clear the outstanding dues despite repeated demands and hence the loan account was classified as NPA on 31.12.2015. It is the case of the applicant that as the defendants did not come forward to clear the outstanding dues despite repeated demands, the applicant is constrained to file this OA.

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The defendants 1 and 2 filed their written statement contending therein that the application is liable to be dismissed. It is contended that the efforts of the defendants to settle the loan account by One Time Settlement was not accepted by the applicant stating that they are not bound by the guidelines of the Reserve Bank of India. It is also contended that the application is liable to be dismissed for the reason that the applicant failed to club together all the accounts, however, the applicant has filed this OA for an individual loan account. It is further contended that the amount claimed by the applicant is totally wrong and exaggerated. It is stated that the applicant took signatures of the defendants on various forms and later on filled the same to suit their case and fro the purpose of filing this OA. The OA is liable to be dismissed on the ground that it is portrayed by the applicant as if those defendants applied for loan and the same was sanctioned and withdrawn on the same day. On the basis of above averments the defendants prayed for dismissing the OA.

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The applicant bank filed its proof affidavit along with 9 documents, which are

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marked as Exhibits A-1 to A-9, the details of which are as under: -

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S. No.	Date	Description of Documents	Exhibits
1.	31.03.2015	Sanction Ticket issued by the applicant bank.	A-1
2.	31.03.2015	Demand Promissory Note for a sum of Rs.15,00,000/- executed by the defendants.	A-2
3.	31.03.2015	Sanction letter for advances executed by the defendants.	A-3
4.	31.03.2015	Application cum undertaking for loan executed by the defendants.	A-4
5.	31.03.2015	Consent letter executed by the defendants.	A-5
6.	31.03.2015	Consent Letter executed by the 2^nd defendant.	A-6
7.	31.03.2015	Guarantee agreement executed by the defendants.	A-7
8.	31.03.2015	Guarantee agreement executed by the 2^nd defendant.	A-8
9.		Statement of accounts in respect of the loan account.	A-9

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The defendants filed Counter Proof Affidavit reiterating the contentions raised in the reply statement and added the loan amount was withdrawn by the officials of the applicant bank and deposited in various accounts. It is stated that the applicant was aware of the fact that huge amounts were due from majority flat purchasers to whom „No objection certificates‟ were yet to be issued. It is also stated that the applicant knowing fully well that on receipt of such amount the defendants could settle the loan without any difficulty, instead of allowing the defendants to recover the amounts issued NOC after taking paltry amounts from them in total violation of their own pre-condition for issuing NOCs. It is stated that it is clear from the documents that the loan

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was provided at the 11^th hour for vested interest without even any request letter for sanctioning the loan. It is also stated that the applicant is misleading this Tribunal as if the claim is a secured loan. On the basis of above averments the defendants prayed for dismissing the OA.

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Heard the Ld. Counsel for the Applicant Bank and perused the records.

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Having heard the Ld. Counsel 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 defendants? 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 defendants? If so, for what amount?

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The applicant bank in its endeavor to establish its claim against the defendants examined its official as AW1 and got marked exhibits Ex.A-1 to A- 9. Ld. Counsel for Applicant placing reliance on the proof affidavit of AW-1, besides Exhibits A-1 to A-9 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 the said admission is sufficient enough to allow the claim of the applicant. Ld. Counsel would further

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contend that the amount claimed is exaggerated and further that the defendants were made to sign various blank documents, which were later on utilized for the purpose of filing the OA is all false. Ld. Counsel would also contend that the statement of accounts filed is proper and supported by appropriate certificate under Bankers‟ Book Evidence Act and Information Technology Act and hence the contention of the defendants regarding the amount claimed cannot be countenanced. It is further contended that the defendant though filed the reply statement and Counter Proof Affidavit and made various allegations against the applicant, it did not choose to file any documents to prove the same and therefore the claim of the applicant stand unrebutted.

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In the absence of any documents being filed along with the Counter Proof Affidavit substantiating the allegations against the applicant, as rightly contended by the Ld. Counsel for Applicant, the defense put forth by the defendants 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 fails. Even otherwise no evidence was let in against or no anomaly is pointed out in the statement produced by the applicant.

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In so far as the contention of the defendants that the applicant obtained their signatures in various blank documents and later filled the same to suit their claim and for the purpose of filing this application is concerned, it is to be stated

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that it is a usual claim made by every defaulting borrower. Further, 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 above 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-9 is fully 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

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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 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 in view of the fact that the subject loan being a business loan 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 @ 15% p.a. simple on the OA claim amount from the date of filing till the date of realization and the claim for grant of penal interest is rejected. 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 N0.64 of 2022 stands allowed.

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(b) Applicant is permitted to realize an amount of Rs.18,02,566/- with further interest @15% 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 receipt 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 10^th day of March, 2023)

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

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City Union Bank Limited v. M/s.Chakra Realities Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

City Union Bank Limited v. M/s.Chakra Realities Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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