Allowed

Bank of Baroda v. M/S Edu Infotech

DRT10 Mar 2023TA/88/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the bank's application for recovery under the RDB Act after examining evidence of loan disbursement, guarantee, and default. The tribunal ordered recovery of the principal plus 10% simple interest and permitted sale of scheduled properties.

What did the court decide?

Applicant permitted to realise sum of Rs.1,71,29,662.41 with 10% simple interest from 25.09.2020; sale of scheduled properties permitted; recovery certificate to be issued.

Bank of Baroda versus M/S Edu Infotech — Execution and Attachment | 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 PRESIDING OFFICER

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TA No.88 of 2023

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(Originally filed before DRT-I Chennai as OA No.462 of 2022 and thereafter transferred to this Tribunal and renumbered as TA No.88 of 2023)

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Bank of Baroda

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Rep. by its Assistant General Manager Egmore Branch, Dugar Towers, No.123, R.L. Road, Egmore Chennai – 600 008 …Applicant

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Versus

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M/s Edu Infotech Rep. by its Partners 15/5, II Floor, Chakrapani Street Extension West Mambalam

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Chennai – 600 033

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Mr. Mahesh S/o Chinnathambi Flat No.517, 2^nd Floor, Block-5 Sai Engg. Apartments Urapakkam – 603 210

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Mr. Ramasubramanian S/o Jayaraman No.5/31, Eswaran Koil Street Kozhumanivakkam Chennai – 600 122

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Mrs. Uma, W/o Krishnan No.22/34, Ramanujam Garden Street Pattalam, Perambur Baracks Chennai – 600 012 …Defendants

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Counsel for the Applicant Bank : M/s S. Pandurangan Counsel for 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 for recovery of a sum of Rs.1,71,29,662.41p with further interest at the rate of 10.35% per annum with monthly rests from 25.09.2020 till the date of realization in full along with costs of this application and for sale of schedule mentioned properties.

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The subject matter of the case is the “Overdraft Limit” availed by the defendants from the erstwhile Vijaya Bank.

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It is the case of the applicant that the 1^st defendant is a Partnership firm represented by defendants 2 to 4 as it partners, who are also the guarantors to the credit facility availed by the 1^st defendant. It is also the case of the applicant that the 1^st defendant represented by defendants 2 to 4 approached the erstwhile Vijaya Bank by loan application dated 28.8.2018 requesting for grant of credit facilities and the applicant considering the said request by their sanction letter dated 11.9.2018 sanctioned overdraft limit of Rs.120 lakhs to meet the working capital requirements of the 1^st defendant. It is the further case of the applicant that the 1^st defendant to secure the said limit executed various loan and security documents on 11.9.2018 viz., Loan Agreement cum Hypothecation deed, overdraft agreement, Letter of guarantee by defendants 2, 3 and 4, Letter of undertaking by 3^rd defendant and Letter of Access,

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It is also the case of the applicant that at the request of 1^st defendant, the applicant vide its sanction letter dated 26.4.2019 sanctioned Adhoc limit of

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Rs.30,00,000/- to the 1^st defendant to tide over its temporary financial difficulties subject to conditions repayable within 2 months of the sanction. It is stated that the 1^st defendant vide its letter dated 3.10.2019 also requested for enhancement of credit limit without submitting requisite details, which was not considered by the applicant. However, in the above letter the 1^st defendant acknowledged the availment of the limits from applicant bank.

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It is the further case of the applicant 4^th defendant deposited the title deeds of the schedule mentioned property with the applicant with an intention to create equitable mortgage over the property in favour of applicant and confirmed the same by executing a Registered Memorandum of Deposit of Title deeds dated 6.9.2018 registered as Doc. No.5352 of 2018 on the file of SRO, Purasawalkam.

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It is the case of the applicant that the defendants having availed the credit facility defaulted in repayments and failed to regularize the loan account despite repeated demands and also failed to comply with the terms and conditions of sanction. It is also stated that as the defendants did not come forward to clear the outstanding dues despite repeated demands the loan account was classified as NPA on 22.12.2019. It is further stated that as no payment was forthcoming the applicant invoked the provisions of SARFAESI Act and issued the demand notice on 3.1.2020 under Section 13(2) of the SARFAESI Act, followed by a possession notice dated 26.8.2020 under Section 13(4) of the SARFAESI Act. It is stated that the 4^th defendant submitted a letter dated 13.3.2020 undertaking to clear the dues. It is also stated that the 2^nd defendant submitted letters dated

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16.3.2020 and 03.09.2020 undertaking to clear the dues but failed to repay the dues as undertaken.

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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 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 and the summons to the 1^st defendant returned with endorsement “Left”, summons to the 2^nd defendant returned with endorsement “Intimation delivered. Returned to Sender” and the summons to defendants 3 and 4 were served, hence the summons to defendants 1 and 2 were served by substituted service by causing paper publication. As there was no representation on behalf of the defendants on 02.12.2021 the defendants were set ex-parte on that day. Applicant Bank filed Proof Affidavit along with 19 documents, which were marked as Ex. A-1 to A-19 on 17.08.2022. The Ld. Counsel for Applicant Bank made his submissions on 09.02.2023 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-19 along with the proof affidavit. Exhibit A-1 is the application for grant of credit facilities dated 28.8.2018 submitted by the 1^st defendant. Exhibit A-2 is the sanction letter dated 11.9.2018 issued by the applicant bank. Exhibit A-3 is the Partnership deed dated 25.07.2017 of the 1^st defendant. Exhibit A-4 is the Loan Agreement cum hypothecation deed dated 11.9.2018 executed by the 1^st defendant. Exhibit A-5 is the overdraft agreement dated 11.9.2018 executed by the 1^st defendant. Exhibit A-6 is the Letter of guarantee dated 11.9.2018 executed by defendants 2, 3 and 4. Exhibit A-7 is the letter of undertaking dated 11.9.2018 executed by the 2^nd defendant. Exhibit A-8 is the Letter of Access dated 11.9.2018 executed by the 1^st defendant. Exhibit A-9 is the letter dated 26.4.2019 by 1^st defendant requesting for grant of adhoc limit of Rs.30 lakhs. Exhibit A-10 is the letter dated 3.10.2019 by 1^st defendant requesting enhancement of limit of Rs.50 lakhs. Exhibit A-11 is the sale deed dated 11.10.1982 executed in favour of 4^th defendant. Exhibit A-12 is the Registered Memorandum of Deposit of Title deeds dated 6.9.2018 executed by 4^th defendant. Exhibit A-13 is the Reminder dated 10.12.2019 by applicant bank. Exhibit A-14 is the demand notices dated 03.01.2020 issued by the borrower and guarantors. Exhibit A-15 is the Possession Notice dated 26.8.2020 issued by the

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applicant. Exhibit A-16 is the letter of undertaking dated 13.3.2020 by the 4^th defendant. Exhibit A-17 is the letter of undertaking dated 16.3.2020 by the 2nd defendant. Exhibit A-18 is the letter of undertaking dated 3.9.2020 by the 2^nd defendant. Exhibit A-19 is the statement of accounts in respect of the loan account along with Certificates under Bankers’ Book Evidence Act.

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Exhibit A-1 evidences that the 1^st defendant represented by defendants 2 to 4 approached the erstwhile Vijaya Bank for grant of credit facility for the purpose of meeting its Working Capital requirements by submitting application dated 28.8.2018. Exhibit A-2 evidences that the erstwhile Vijaya Bank considering the request of the 1^st defendant sanctioned overdraft facility of Rs.1,50,00,000/- to the 1^st defendant vide its sanction letter dated 11.9.2018. Exhibit A-3 evidences that the 1^st defendant is a Partnership firm represented by defendants 2 to 4. Exhibit A-4 to A-8 evidences that the 1^st defendant executed various loan documents in favour of the applicant on 11.9.2018. It also evidences that the defendants 2 to 4 stood as guarantors to the credit facilities availed by the 1^st defendant. Exhibit A-9 evidences that the 1^st defendant requested the erstwhile Vijaya Bank by letter dated 26.4.2019 for grant of adhoc credit facility of Rs.30 lakhs, which the erstwhile Vijaya Bank sanctioned adhoc limit of Rs.30 lakhs. Exhibit A-10 evidences that the 1^st defendant again by letter dated 3.10.2019 approached the applicant for enhance of credit limit but the same was not acceded to by the erstwhile Vijaya Bank. Exhibit A-11 and A-12 evidences that the 4^th defendant is the owner of the schedule mentioned property and she deposited the title deeds of the property with the applicant bank with an intention

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to create equitable mortgage over the same in favour of the same by executing Memorandum of Deposit of Title deeds dated 6.9.2018 registered as Doc. No.5352 of 2018 on the file of SRO, Purasawalkam. Exhibit A-13 to A-15 evidences that the defendants defaulted in repayment of credit facility and failed to regularize the loan account despite repeated demands and hence the loan account was classified as NPA on 22.12.2019. As the defendants failed to regularize the loan account the applicant invoked the provisions of SARFAESI Act and issued the demand notice dated 3.1.2020 under Section 13(2) of the Act followed by Possession Notice dated 26.8.2020. Exhibit A-16 to A-18 evidences that the defendants 2 and 4 by their letter dated 13.3.2020, 16.3.2020 and 3.9.2020 undertook to discharge the loan account but failed to do so. Exhibit A- 19, the statement of accounts as duly certified evidenced the defaults occurred in the account and that the amount as claimed in the OA is outstanding in the account. It also evidenced that the penal interest is not capitalised.

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From the discussion and findings entered in herein before paragraphs, this Tribunal is of the view that the applicant is entitled to recover the amount due in the accounts from the defendants and also to proceed against the scheduled properties. It also evidence that the amount as claimed in the OA is outstanding in the account and that the same can be recovered by the applicant. It is also clear that the claim of the applicant is well within the period of limitation.

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The entitlement of the applicant for cost of the proceedings have to be up held as by the defaults the defendants had compelled the applicant to approach this Tribunal. The applicant is claiming interest of 10.35% per annum with monthly

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rests and had arrived at the OA claim by calculating interest at the above rate. Since the recovery of the amount as claimed is not revisited, this Tribunal is of the view that the prayer for monthly rest can be declined and the applicant can be allowed to recover the amount with 10% simple interest.

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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.88 of 2023 stands allowed.

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(b) Applicant is permitted to realize a sum of Rs.1,71,29,662.41p with further interest at the rate of 10% per annum (simple) from the defendants jointly and severally, from 25.09.2020 till date of realization 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 receipt of the copy 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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Bank of Baroda v. M/S Edu Infotech

Case brief

What is this about?

What did the court decide?

Bank of Baroda v. M/S Edu Infotech

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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