Allowed

Canara Bank v. Messrs Rehan Shirts Collection and Another

DRT3 Aug 2024OA/1875/2022

Case brief

AI extract

What is this about?

The DRT allowed the bank's claim for recovery of outstanding dues of approximately Rs. 36.63 lakhs against a proprietorship firm and its proprietor for default in loan repayment, granting the order ex-parte.

What did the court decide?

Recovery of Rs. 36,63,733.30 plus costs and simple interest at 8.00% p.a. from filing date; Recovery Certificate issued.

Canara Bank versus Messrs Rehan Shirts Collection and Another — Banking and Recovery | DRT (2024)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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ORIGINAL APPLICATION NO.1875/2022 PRESIDED OVER BY MRIDULESH KUMAR SINGH

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DATE OF INSTITUTION: 25.10.2022

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DATE OF DECISION: 03.08.2024

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Canara Bank, having its Head Office at 112, J.C. Road Banglore and having branches all over India and one of its branches amongst other places at Sunder Nagar, Ludhiana, Punjab through its Authorized Signatory/ GPA Holder Ms. Pratima Singh.

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……..Applicant

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Versus

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M/s Rehan Shirts Collection, a proprietorship Firm, through its proprietor Sh. Kamal Deep Rehan S/o Sh. Khub Chand Rehan, having its work place at 544/117/4/2, Near Gulshan Hatti, Street No. 2, New Shivpuri, Ludhiana-141008.

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Sh. Kamal Deep Rehan S/o Sh. Khub Chand Rehan sole proprietor of a Proprietorship Firm M/s Rehan Shirts Collection, having its work place at 544/117/4/2, near Gulshan Hatti, Street No.2, New Shivpuri, Ludhiana-141008

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Also At:- House No. 1931/ B-2, Street No. 5, Gandhi Nagar, Near Adarsh Vidyaya School, Ludhiana (Punjab) 141001

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………Defendants

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Advocates:

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Argued by Sh. S. C. Prajapati, counsel proxy for Sh. Nitin Grover, 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.36,63,733.30p (Rupees Thirty Six Lacs Sixty Three Thousand Seven Hundred Thirty Three and Paisa Thirty only). The Original Application has been filed through Ms. Pratima Singh, Authorized

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Signatory of the applicant bank, who is competent to institute the Original Application vide Authority Letter dated 31.05.2022, 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 proprietor i.e. defendant no.2 had approached the applicant bank for the grant of Cash Credit Limit of Rs.20.00 Lacs (Sub Limit Rs.10.00 against Book Debts) and further for the grant of Term Loan (WCDL) of Rs.2.00 Lacs and Guaranteed Emergency Covid Loan (GECL) for Rs. 3.20 Lacs vide Request Letter, which is Annexure A20 to this OA. Later, defendant No.1 through its proprietor i.e. defendant no.2 had again approached the applicant bank for renewal of CC Limit, Vide Letter of Renewal dated 08.06.2020, which is Annexure A26 to this OA and Further for its enhancement to Rs.30.00 Lacs vide Loan Application dated 10.11.2020, which is Annexure A30 to this OA Thereafter, defendant No.1 through its proprietor i.e. defendant no.2 had again approached the applicant bank time to time for renewal of CC Limit vide Letter of Renewal dated 19.11.2020, 11.11.2021, which are Annexures A36 and A42 to this OA. 3. The applicant Bank sanctioned the Cash Credit Limit (Covered under CGTMSE) of Rs.20.00 Lacs (Sub Limit Rs.10.00 against Book Debts) vide sanction Letter dated 27.06.2019, which is Annexure A3 to this OA and later sanctioned Term Loan (WCDL) of Rs.2.00 Lacs vide sanction Letter dated 20.04.2020, which is Annexure A13 to this OA and Guaranteed Emergency Covid Loan (GECL) for Rs. 3.20 Lacs. The applicant bank sanctioned the renewal of Cash Credit Limit and further enhancement it to Rs.30.00 Lacs vide Sanction Letter dated 12.11.2020, which is Annexure A31 to this OA and Renewed the Cc Limit Time to time vide Letters dated 05.10.2021, 11.11.2021 and 01.01.2022, which are Annexures A41 and A43 to this OA and the terms and conditions were duly accepted by the defendants. 4. Defendant no.1 had hypothecated its movable properties i.e. Stocks and book debts vide Agreement cum deed of hypothecation

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dated 22.04.2020, 08.06.2020, which are Annexures A15 & A21 to this OA.

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Documents executed:- Registration Certificate dated 24.04.2019,
which isAnnexure A2to this OA; Letter of Proprietorship, Pronote,
Cash Credit Agreement, Request letter of Overdraft facilities
Undertakings all dated 29.06.2019, which areAnnexures A4 to A12
to this OA; Letter of Proprietorship, Take Delivery Letter to DPN,
Pronote and Undertakings all dated 22.04.2022, which areAnnexures
A14, A16 to A19to this OA; Take Deliver Letter, Pronote,
Undertakings all dated 08.06.2020, which areAnnexures A22 to A25
to this OA; Letters of Undertaking dated 22.06.2020, which are
Annexures A27 to A29to this OA; Letters of Undertaking, Letter of
Proprietorship, Supplemental Agreement, Pronote, Link Letter and
Request letter of Overdraft facilities all dated 19.11.2020, which are
Annexures A32 to A35, A37 to A39to this OA; Acknowledgment of debt and security dated 22.06.2020, which isAnnexure A40to this
OA; Demand Notices U/s 13(2) of SARFAESI Act dated 02.06.2022
with postal receipts, which isAnnexure A44to this OA and Account
Statements and Interest Calculate Sheet with are certified under
Banker’s Book Evidence, which areAnnexures A45 to A47this OA.
5. The loan accounts became irregular and were classified as NPA
and after adjusting debit and credit entries in both the loan accounts
there was a debit of Rs.36,63,733.30p, which is recoverable and the
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 28.05.2024.
7. In support of the OA, affidavit ofMs. Pratima Singh, Authorized
Signatory, Canara Bank has beenfiled.
8. Heard ex-parte arguments and perused record.

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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 A47 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 loan as per terms and conditions of the agreement between the parties. Subsequently, both the 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.36,63,733.30p (Rupees Thirty Six Lacs Sixty Three Thousand Seven Hundred Thirty Three and Paisa Thirty only) along with interest from the defendants, jointly and severally, from the date of filing of the present Original Application till realization of both 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 @17.00%p.a with monthly rests in Cash Credit Limit from 01.08.2022 and @11.05%p.a. with monthly rests in WCDL from 23.07.2022 and @10.90%p.a. with monthly rests in GECL from 09.08.2022 till their 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 instant case including nature of the mortgaged property, undertaking of the defendants, quantum of loan 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 @8.00%p.a. in both 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.

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In the result, the application is allowed declaring that the defendants are liable to pay to the applicant a total sum of Rs.36,63,733.30p (Rupees Thirty Six Lacs Sixty Three Thousand Seven Hundred Thirty Three and Paisa Thirty only) jointly and severally, with costs, current and future simple interest @8.00%p.a. in both 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.

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Any other application pending stands disposed of.

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Issue Recovery Certificate accordingly.

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Parties to appear before Learned Recovery Officer of this Tribunal on 26.08.2024.

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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.

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Pronounced by me in the open Tribunal .

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Dated: 03.08.2024

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

Canara Bank v. Messrs Rehan Shirts Collection and Another

Case brief

What is this about?

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Canara Bank v. Messrs Rehan Shirts Collection and Another

Case brief

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What did the court decide?

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