Allowed

Bank of India v. M/s Sheel Auto Industries Pvt. Ltd.

DRT23 Jan 2024OA/1820/2022

Case brief

AI extract

What is this about?

The DRT allowed the Original Application filed by Bank of India against Sheel Auto Industries and guarantors. The Tribunal held defendants jointly liable for the outstanding amount, adjudicated uniform interest, and directed issuance of a recovery certificate authorizing attachment and sale of properties under SARFAESI.

What did the court decide?

Defendants ordered to pay Rs.7,04,23,468.26 jointly and severally with interest at 8.85% p.a.; Recovery Certificate issued; execution proceedings directed.

Bank of India versus M/s Sheel Auto Industries Pvt. Ltd. — Company and Corporate | DRT (2024)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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ORIGINAL APPLICATION NO.1820/2022

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PRESIDED OVER BY MRIDULESH KUMAR SINGH

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DATE OF INSTITUTION: 25.05.2022

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DATE OF DECISION: 23.01.2024

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Bank of India, a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) having its Head Office at “Star House”, Plot no.C-5, Block G, Bandra Kurla Complex, Bandra (East), Mumbai-400051 and a Branch Office amongst other places known as Ludhiana Industrial Area Branch, G.T. Road, Dhandari Kalan-141010, Ludhiana, Punjab, through Sh. Kailash Kumar Sagar, its Constituted Attorney and Principal Officer

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……..Applicant

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Versus

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M/s Sheel Auto Industries Pvt. Ltd., a company incorporated under the Companies Act, 1956 and having its Regd. Office: E-472-473, Phase VI, Focal Point, Ludhiana, Punjab, through its Managing Director (Borrower/Mortgagor)

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Works: M/s Sheel Auto Industries Pvt. Ltd., E-472-473, Focal Point, Phase VI, Ludhiana-141010

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Shri Ravi Sarda, son of Shri Har Raj Sarda, resident of House No.401/1, Housefed Complex, Block-E, SBS Nagar, Basant Avenue, Ludhiana-141001, Punjab (Director-Guarantor)

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Smt. Sangeeta Sarda, wife of Shri Ravi Sarda, resident of House No.401/1, Housefed Complex, Block-E, SBS Nagar, Basant Avenue, Ludhiana-141001, Punjab (Director-Guarantor)

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Shri Har Raj Sarda, son of Shri Tej Karan Sarda, resident of House No.401/1, Housefed Complex, Block-E, SBS Nagar, Basant Avenue, Ludhiana-141001, Punjab (Director-Guarantor)

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Smt. Sheela Sarda, wife of Shri Har Raj Sarda, resident of House No.401/1, Housefed Complex, Block-E, SBS Nagar, Basant Avenue, Ludhiana-141001, Punjab (Director-Guarantor)

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….……Defendants

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Advocates:

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Argued by Sh. Mohan Prasad, counsel proxy for Sh. G.S. Anand, counsel for the applicant Defendants are ex-parte

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FINAL ORDER

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Present Original Application was instituted by the applicant bank under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, against the defendants for recovery of Rs.7,04,23,468.26p (Rupees Seven Crores Four Lacs Twenty Three Thousand Four Hundred Sixty Eight and Twenty Six Paisa only). The Original Application has been filed through Sh. Kailash Kumar Sagar, Chief Manager o f the applicant bank, who is competent to institute the Original Application vide Power of Attorney dated 13.12.2019, which is Annexure A1 to this OA.

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The brief facts of the OA are that the defendant No.1 through its Directors had approached the applicant bank from time to time for the grant of credit facilities i.e. CC Limit against Hypothecation of Stocks & Tangible Movable assets for Rs.150.00 Lacs, CC Limit against Hypothecation of Book Debts of Rs.350.00 Lacs, Letter of Credit against security of Rs.150.00 Lacs, Working Capital Demand Loan against Hypothecation of Stocks & Book debts of Rs.49.00 Lacs and Working Capital Term Loan against Hypothecation of Stocks and Book Debts of Rs.70.00 Lacs.

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The applicant Bank sanctioned the credit facilities i.e. CC Limit against Hypothecation of Stocks & Tangible Movable assets for Rs.150.00 Lacs, CC Limit against Hypothecation of Book Debts of Rs.350.00 Lacs, Letter of Credit against security of Rs.150.00 Lacs, Working Capital Demand Loan against Hypothecation of Stocks & Book debts of Rs.49.00 Lacs and Working Capital Term Loan against

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Hypothecation of Stocks and Book Debts of Rs.70.00 Lacs vide Sanction Letters dated 24.07.2006, 19.02.2010, 18.09.2012, 23.05.2016, 02.08.2017, 04.12.2018 and 01.05.2020, which are Annexures A11 to A17 to this OA; and the terms and conditions were duly accepted by the defendants.

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Defendant Nos.1, 2, 3 and 5 had hypothecated/mortgaged their movable and immovable properties as primary/collateral securities i.e.

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(i) Assignment of LIC Policies in the name of Defendants No.2, 3 and 5;

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(ii) Pledge of TDR for Rs.30.00 Lacs;

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(iii) Pledge of TDR in the name of Defendant No.2;

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(iv) Pledge of TDR in the name of Defendant No.5;

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(v) Pledge of TDR in the name of Defendant No.1;

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(vi) Hypothecation of Stocks and Debts & Plant and machinery vide Hypothecation cum Loan Agreements dated 03.08.2017, 01.05.2020 and 15.06.2020, which are Annexures A19, A30 and A39 to this OA; and

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(vii) Equitable mortgage of lease hold rights in factory land and building measuring 2366 Sq. Yards (4 Kanal 10 Marla) bearing No. E- 472-473, situated at Phase VI, Focal Point, Ludhiana; vide lease deed no.744 dated 25.08.2003, Letter of PSIEC ltd. dated 01.05.2006 & Supplementary lease deeds no.29660 and 29671 dated 17.03.2006 and Lease Deed no.7138 dated 16.05.1994 along with their translations, which are Annexures A46 and A47 to this OA; Documents executed:- Certificate of Incorporation together with Memorandum and Article of Association of defendant no.1 dated 14.03.2005, which is Annexure A2 to this OA; Resolutions dated 01.04.2005, 11.01.2007, 13.01.2007, 19.06.2007, 24.09.2012, 01.08.2017 and 01.06.2020, which are Annexures A3 to A9 to this OA; Documents of Registration/ modification of charges relating to the Defendant No.1, which is Annexure A10 to this OA; D.P. Notes, Composite Letters, Letter of declaration, undertaking and authority, Agreement re: inter alia, Cheques, Bills, hundies and other

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instruments, Letter re: Jointly & severally Guarantee the due fulfillment by the opener when made request to open letter of credit from time to time, Form of Guarantee for letter of credit where a person or company guarantee and Irrevocable Undertaking all dated 03.08.2017, which are Annexures A18 and A20 to A27 to this OA; Marginal Cost of Fund Based Lending Rate date 17.09.2019, which is Annexure A28 to this OA; D.P. Notes, Composite Letter, Letter of declaration, undertaking and authority, Affidavit cum Undertaking, Undertaking and Declaration, Repo Based Lending Rate agreement and Unconditional and irrevocable undertaking dated 01.05.2020, which are Annexures A29 and A31 to A36 to this OA; D.P. Note, Letter re: repayment in installments dated 15.06.2020, which are Annexures A37 and A38 to this OA; Letter of declaration, undertaking and authority, Affidavit cum undertaking and Undertaking and confirmation dated 15.06.2020, which are Annexures A40 to A42 to this OA; Deeds of Guarantee dated 03.08.2017, 01.05.2020 and 15.06.2020, which are Annexures A43 to A45 to this OA; Oral Assents and Relevant portion of attendance register dated 20.06.2006, 05.08.2017, 01.05.2020 and 15.06.2020, which are Annexures A48 to A55 to this OA; Letters of Acknowledgment of Debts and security dated 03.08.2017, 01.05.2020, 15.06.2020, 03.09.2020, 03.08.2017, 01.05.2020, 15.06.2020 and 03.09.2020, which are Annexures A56 to A66 to this OA; Agreement cum Acknowledgment of Debt/Securities dated 01.05.2020, which is Annexure A67 to this OA; Legal Notices and Postal receipts dated 02.07.2021, which is Annexure A68 to this OA; Demand Notices dated 28.06.2021, which is Annexure A69 to this OA; True copy of the office copy of the complaint with Ludhiana Police, which is Annexure A70 to this OA and Statements of accounts along with Certificates, which are Annexures A71 to A74 to this OA.

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The loan accounts became irregular and were classified as NPA and after adjusting debit and credit entries in loan accounts there was a debit of Rs.7,04,23,468.26p, which is recoverable and the

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defendants were served recall notices but they did not repay the outstanding amount, therefore, the applicant bank requested to accept the application and to issue Recovery Certificate accordingly. 6. The defendants were served notices to appear before this Tribunal but no one appeared on behalf of defendants and they were proceeded ex-parte on 23.11.2023.

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In support of the OA, affidavit of Sh. Kailash Kumar Sagar, Chief Manager, Bank of India has been filed. 8. Heard ex-parte arguments and perused record. 9. It was argued by learned proxy counsel that in view of the documentary evidence brought on record which had gone unrebutted, the applicant bank had proved its case. From the perusal of all the Annexures A1 to A74 to this OA, it is proved that the defendants approached applicant bank for availing of the loan facilities which were granted to them and for that they had executed all the relevant documents in favour of the bank. The defendants failed to pay back the loans as per terms and conditions of the agreement between the parties. Subsequently, accounts of the defendants were classified as NPA. From the documentary evidence brought on record, it is proved that applicant bank is entitled to recover a sum of Rs.7,04,23,468.26p (Rupees Seven Crores Four Lacs Twenty Three Thousand Four Hundred Sixty Eight and Twenty Six Paisa only) along with interest from the defendants, jointly and severally, from the date of filing of the present Original Application till realization of the accounts.

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In so far as pendent elite and future rate of interest is concerned, the applicant bank in relief clause has claimed interest @11.85%p.a. in both CC Limits, @8.85%p.a. in Working capital demand loan and @9.85%p.a. in Working capital Term Loan with monthly rests in all the loan accounts; from the date of filing of this OA till the realization.

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The Tribunal is of the considered opinion that sometimes in appropriate cases the prerogative of mercy is the brightest jewel in the crown of the Judge. Keeping in view the facts and circumstances of the

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instant case including nature of the mortgaged property, undertaking of the defendants, quantum of loans and prevalent market rates of interest which have gone drastically downhill in yester years, while exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant uniform simple interest @8.85%p.a. in all the loan accounts from the date of filing of the OA till realization of the amount ordered vide this final order. It is ordered accordingly. 11. In the result, the application is allowed declaring that the defendants are liable to pay to the applicant a total sum of Rs.7,04,23,468.26p (Rupees Seven Crores Four Lacs Twenty Three Thousand Four Hundred Sixty Eight and Twenty Six Paisa only) jointly and severally, with costs, current and future simple interest @8.85%p.a. in all the loan accounts from the date of filing of OA till the date of realization of the amount. Accordingly, the applicant bank shall be entitled to recover aforesaid amount from the sale of hypothecated/mortgaged properties of the defendants in execution proceedings if not sold earlier under the provisions of the SARFAESI Act, 2002. If the dues of the bank still remain unsatisfied, it shall be entitled to recover the same by attachment and sale of personal assets of the defendants. The applicant is at liberty to enforce the claim through due process of law. 12. Any other application pending stands disposed of. 13. Issue Recovery Certificate accordingly. 14. Parties to appear before Learned Recovery Officer of this Tribunal on 12.02.2024. 15. Copy of this order be given dasti to the applicant bank and be sent to defendants through registered/speed post and this order be also uploaded on the official website of this Tribunal and record be consigned. Pronounced by me in the open Tribunal. Dated: 23.01.2024

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(MRIDULESH KUMAR SINGH) Presiding Officer, DRT-III, Chandigarh

Bank of India v. M/s Sheel Auto Industries Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Bank of India v. M/s Sheel Auto Industries Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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